It is a problem; isn't it...
Posted on 12/01/2016 1:04:51 PM PST by SeekAndFind
There's no doubt Team Trump is delighted by Carrier's decision to keep in Indiana roughly half of the 2,100 jobs that the maker of heating and air conditioning equipment had planned to shift to Mexico. As Steven Mnuchin, Trump's pick for treasury secretary, told CNBC yesterday, "This is a great first win without us even having to take the job."
Actually, it's their second win. Trump also lobbied/nudged/cajoled Ford into changing its mind about shifting a sport utility vehicle production line to Mexico from Kentucky, not that doing so actually would have cost American jobs. But Carrier, especially, had become a potent symbol of Trump's economic nationalism after video of Carrier's initial offshoring decision went viral. And in response to Carrier's reversal, Trump took a victory lap on Twitter: "Big day on Thursday for Indiana and the great workers of that wonderful state. We will keep our companies and jobs in the U.S. Thanks Carrier."
But how many Trump "wins" can the American economy afford? By themselves, the moves by Ford and Carrier are inconsequential — maybe even to Carrier's workers over the longer term. It's hardly an uncommon practice at the state level to offer incentives to lure corporate relocations or to keep firms from leaving. But the practice has mixed results. For instance, Dell closed a North Carolina plant in 2009 just five years after receiving millions in state tax incentives to open it. Production then moved to Mexico.
But more broadly, this is all terrible for a nation's economic vitality if businesses make decisions to please politicians rather than customers and shareholders. Yet America's private sector has just been sent a strong signal that playing ball with Trump might be part of what it now means to run an American company. Imagine business after business, year after year, making decisions based partly on pleasing the Trump White House. In addition, Trump's hectoring on trade and offshoring distracts from the economic reality that automation poses the critical challenge for the American workforce going forward.
To be fair, exactly why Carrier reversed course is still something of a mystery. Carrier says state "incentives" were an "important consideration," along with Trump's commitment to creating a more pro-business climate in the country. Those would be the carrots. Then there are potential sticks, which may have been far more critical than tax incentives or other potential subsidies. Carrier's parent company, United Technologies, is a large federal government contractor and perhaps views the potential costs of keeping those factory jobs — a small fraction of the company's 200,000 employee workforce — in America as the price of doing business with Trump's "America First" administration. Indeed, one Indiana official, Politico reports, thinks the deal was driven by concerns United Technologies "could lose a portion of its roughly $6.7 billion in federal contracts."
Of course it wasn't so long ago that Republicans were attacking the Obama White House for its "crony capitalism," including the auto bailouts and clean energy investments in firms like Solyndra. Republicans, on the other hand, were supposedly stalwarts for competitive capitalism and vehemently against government "picking winners and losers." Some even said they were "pro-market" rather than "pro-business."
Now, not so much. Which makes you wonder if either party is willing to strongly fight for free enterprise and market-driven economic policy anymore. In her 1998 book, The Future and Its Enemies, Virginia Postrel saw the major dividing line in American politics as less left vs. right than the "dynamists" vs. the "stasists." The former values change and experimentation, as messy as those things can be. Dynamists live in anticipation of the future because they just know it will be a great place. The stasists often are nostalgia-ridden and willing to use top-down control to keep things as they are or try to shape them into familiar forms. Today they fight globalization, tomorrow it might be robots and artificial intelligence in order to "save jobs."
This time, at least, score one for the stasists and the cronyists.
Again, nonsense. Tax breaks to businesses cannot “cost the citizenry anything” because it isn’t the citizenry’s money. It certainly isn’t the state’s money, but philosophy aside, the math doesn’t support your argument. The loss of jobs caused by over taxation and over regulation deprive the tax base of far more revenue. I’ll trade a dollar for ten, and the state should too.
No; it is NOT 'silly'!
Re-defining things today is an art form; done by those who wish to mask the TRUE nature of that being re-defined.
Undocumented workers? Illegal aliens?
No; border invaders.
Alternate lifestyle? LGBT 'rights'?
No; SIN.
Choice? Unwanted woman's tissue?
No; death of a HUMAN being.
There are many more; but you get my drift; I hope.
It is a problem; isn't it...
Good point!
Who's money pays for the state services that the business uses?
So I guess George Washington was an anti capitalist. LOL. History is on my side not yours.
Ah if Paco was getting paid $30/hr no company would move to Mexico. It’s about the cheap labor. You can fool yourself and into believing otherwise but that doesn’t make it true.
As I asked upthread, if a public university chooses to charge one favored group of students les for the same education as everyone else would you object to calling that a subsidy?
If not, what's the difference between that and a state choosing to charge one entity less in taxes than the others yet providing them the same level of services?
I didn't say it wasn't.
I merely pointed out that labor is only ONE piece of the pie.
Businesses WILL do whatever it takes to lower production costs.
The Republican Party is becoming the dominant political party in the USA because Trump had successfully marginalized the teeny tiny minority of Free Trader Crony global capitalist that run(ruin) the Party to the point where the average person actually believes in the Party - again. The Republican Party is returning to its protectionist roots - hurray! Not a minute to soon.
No.
But; businesses WILL 'charge' whatever the market will bear.
GM will take a Chevy pickup; plunk GMC logos on it, call it PROFESSIONAL and charge MORE for it because there are some customers that perceive a greater value in what they are buying.
What “state services” are you referring to that aren’t being paid for, exactly?
An educated workforce, public roads used by the business and it's employees, a functioning court system, state police services, a state tax collection system.
Want more?
There’s that math again... There is MORE money coming in with the business taxes reduced and 1000 more people employed than with the business CLOSED and 1000 people out of work.... Those are your only choices.
Where is the money for those things coming from once the business moves to mexico? I’m not going to waste my time explaining where public highway money comes from to a person who’s being wilfully obtuse.
True nuff. How can people be so hard hearted, so played by evil.
Actually, there's a third choice. Indiana has a 4.4% unemployment rate. How about the employees laid off from Carrier get jobs with businesses that can make an acceptable profit operating in Indiana without taxpayer subsidies?
Lots of businesses in the state failed or had to lay off employees last year. Why didn't the state jump in to subsidize them? Why Carrier?
And the problem is making a slow mess of America.
I’d be in favor of putting an exception into the minimum wage law, if not getting rid of it, and go ahead and let companies that stay in America scrape the low end as low as they think they can make it viable. Paco is some uneducated dude that they trained in Mexico. Why can’t they do that to our urban unemployed here? It would lighten the welfare budget and some of these people would be able to use this as a stepping stone to a more lucrative career.
I read you are still butt hurt over Carrier and Indiana working out an agreement to keep a plant in Indiana. What you have ignored from the 'get - go' is, government using we the people (as we are government) to tax and regulate a business out of business. Taxation is NOT a compact, it is big daddy using the force of law to control business and people. Then the layer upon layers of 'regulations' spewed out of these control freaks from upon high, are for the purpose to harm/control one aspect of the business world while benefiting a favored business.
Perhaps your bottom line is being harmed by Carrier staying in Indiana?
Right. And the other services I mentioned?
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