Posted on 12/04/2016 11:05:28 AM PST by SeekAndFind
Because market freedoms create an environment for economic growth, thriving businesses and job creation, many people confuse "pro-market policies" with "pro-business" favors.
But they aren't the same thing, and President-elect Trump hurts his own agenda when he conflates the two. He did so at the Indiana Carrier plant Thursday, when he announced a deal to keep some Mexico-bound Carrier jobs in Indiana.
The deal is bad policy because it is loaded with at least $7 million in corporate welfare. It's bad politics because it rhetorically demolishes the crucial distinction between free-market policy on one hand, which benefits all businesses and thus the whole economy, and corporatism on the other, which benefits the big and well-connected.
Trump is fortunate that his vice president-elect, Mike Pence, also happens to be Indiana's governor. Carrier is lucky, too. Pence extended a $7 million tax break to the manufacturer this week. This is a subsidy. It is what Republicans spent the past eight years blasting as corporate welfare and crony capitalism.
House Speaker Paul Ryan in 2012 rightly criticized President Obama's industrial policy, which the president peddled as "investment."
Ryan objected, saying, "It's borrowing money and spending money through Washington, picking winners and losers. Spending money on favorite, you know, people like Solyndra or Fisker. Picking winners and losers in the economy through spending, through tax breaks, through regulations does not work."
Ryan was correct. A tax break for Carrier is not laissez-faire economics. Every other company and family in Indiana has to bear a greater share of the state's tax burden. Every company competing with Carrier for sales, capital and other resources, is at a disadvantage because they're paying for the favor Trump and Pence have given Carrier.
When you pick a winner, you automatically pick a thousand losers: smaller companies who lack Carrier's clout, less-connected companies not close to Pence and so on. The economy loses because corporate welfare means politicians rather than markets are deciding the allocation of money and resources. It's the opposite of free market economics.
There is also moral and political cost. Every corporation big enough to throw around some weight can threaten to leave the country and expect to get some government goodies to placate them. Trump explicitly welcomed other big companies to "negotiate good deals with the different states and all of that." This corrupts both business and government.
If we get four years of this sort of Trumponomics, we'll increasingly see companies with clout playing by one set of rules while the regular guy competes under a stricter rule book.
Pence on Thursday glossed over the $7 million subsidy. He said Carrier was persuaded to stay by Trump's "plans to make America more competitive. To reduce taxes. To roll back regulations."
"These companies aren't going to be leaving anymore," Trump said Thursday, because "we're going to do great things for businesses." He pledged to reduce the corporate income tax from 35 percent to 15 percent.
These promises are indeed great. This is the formula for economic growth: low taxes, low regulation, good schools and good infrastructure. They are "pro-business" by being "pro-market," not anti-market because by being a favor for a particular business.
Liberals will bash Trump and Pence's proposed tax cuts and regulation reform as "corporate welfare" and "crony capitalism." The Left doesn't distinguish between a reform that gets government out of the way of business and an intervention that puts government power in the service of business.
In this case, however, it seems that Trump doesn't either.
With this deal and his victory lap about it, Trump is buying into that pernicious left-liberal thinking that regards broad-based tax cuts and deregulation as special favors for business.
Trump pleasingly has promised tax and regulatory reform. He should stick to those broad, economy-wide changes that benefit everyone. Pleased though he is with his first deal to save a few hundred jobs, he needs to understand that it militates against his larger plans to help the entire economy. We urge him not to repeat this misguided process.
soooooooo to keep jobs here should we tax their products that are made by third world labor coming into this country?
the precise details of these (early) ad hoc Job Saving actions........ may be open to some criticism
but they DO underscore the new American policy to at least CARE about Americans losing their jobs
this is VERY VERY refreshing, especially after these last 8 years of the Democraps not giving a rats-ass-damn about American citizens
IN due course, President Trump will work out reformed trade, tax, environmental, and labor policies...etc...
that will SYSTEMIZE this concern for Americans that we should have employment opportunities and NOT be callously thrown onto the scrap-heap of economics and life
once some reasonable, more balanced systemic policies are put in place, any criticisms of ‘crony capitalism’ or ‘picking winners and losers”...etc.... should ameliorate, dissipate
Mr Trump seems very aware of the direction we need to go in.
(It remains to be seen if such as McCain/Graham/etal. will help us or not)
The left hates tax breaks regardless.
You’re right though PENCE did this deal and was working on it before he was even vice president elect.
states always give tax breaks to attract business.
#neverreagan
>>I also don’t understand by reducing taxes on a business is welfare.
Because, in the Progressive mindset, all money is the government’s money and what you keep is their “gift” to you. But you already know that. It’s what separates us from them.
SEE POST 20
I’m a big supporter of protectionism in certain situations.Trade with our friends and allies (Canada,Europe,Japan and South Korea,for example) is one thing...trade with enemies like China and Mexico is an entirely different thing.
“Right. This article is just so much bull and i wonder why anyone is wasting space by posting it.”
I’m trying to figure out what all of these people are so outraged over.
Trump didnt give them a tax cut. Indiana did. Just like my state gives tax incentives to keep companies here and to lure them here. We gave out some to land a huge data center that has pumped millions into the local economy, with the promise of billions in the future.
http://www.mlive.com/business/west-michigan/index.ssf/2016/02/switch_putting_400m_into_first.html
Trump just helped negotiate it. Big whoop!
Trump, Ross and Mnuchin don’t need economic advice from bloggers, journalists and Senators who never created a single private sector job
This is not sensical. I am from Washington State. When Lowery was gov., he gave Boeing many tax breaks to keep them in Washington. By keeping Boeing in Washington State, the jobs at Boeing were kept as well as the jobs from companies that supplied Boeing. And, that save many, many jobs that aren't readily apparent and are mostly hidden.
When Locke was gov., Boeing asked for some tax relief or they would move their headquarters to Chicago. He didn't give it to them and they move the headquarters. Boy, was he surprised. Typical, stupid democrat.
Corporations are godless dictatorships.
Let's revive Main Street USA.
This would be like an NFL referee giving the 49ers 10 points per touchdown just so they have a chance at winning a game.
BTW, I don't care how the 9ers are doing right now. Couldn't care less. I just used them as an example because they suck.
See Post #27
There is state income tax of about 6%. The deal with the state is to get lowered income tax by aid for not moving. Trump only gave a promise to lower federal tax and regulations. Indianapolis had to offer something to keep them from going somewhere else in the USA.
Exactly how do you revive “Maistreet” without more jobs?
Kasich guy, huh?
Trump gave no favor to Carrier. The state of Indiana did in order to keep them from moving to another state. Trump didn`t need the tax break to keep them in the U.S.. He had all the leverage he needed to keep them here without it.
Nafta with those huge trade deficits equals free trade?
Not Presidents.
I realize Pence cut this deal but obviously at Trump's behest. Kind of a bummer.
I don't know how many A/C manufacturers there are in Indiana but I'm pretty sure there is only one airliner manufacturer in Warshington so that kind of falls under the apples and oranges thing.
Besides, as far as I know, Chicago is still in The U.S.
Its murder rate might rival that of Mexico's but, still.
The Trump rationale for the deal would include the consideration that the US government is at fault for actively rigging the game against its own businesses and employees in favor of Wall Street connected foreign industrial and financial interests. From that perspective, the special inducements given to save jobs at Carrier are in part relief and compensation for damages previously done by the US government.
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