Trump took an undeserved “victory lap” in Indiana yesterday while economists condemned his move to keep Carrier from moving a thousand jobs to Mexico over the next three years.
The economists aren’t alone. In “Trump’s Carrier Shakedown,” the traditionally conservative Wall Street Journal tells us that, “Workers don’t prosper when politicians force companies to make noneconomic decisions.”
Most of us are concerned about taxpayers taking the hit so Carrier can prosper, but WSJ comes at this from another direction. Here is the problem as they see it:
“[A]s U.S. auto workers have learned the hard way, real job security depends on the profitability of the business. Carrier wanted to move the production line to Mexico to stay competitive in the market for gas furnaces. If the extra costs of staying in Indianapolis erode that business, those workers will lose their jobs eventually in any case.”
Just to be clear, the WSJ isn’t slamming Carrier, or Gregory Hayes, the CEO of United Technologies Corp. (UTC) that owns Carrier, but Trump:
“This isn’t to fault Mr. Hayes’s decision, since Mr. Trump made him an offer he couldn’t refuse. The state of Indiana threw in $7 million in tax incentives, but those weren’t decisive. Mr. Trump’s real hammer is his threat to impose a tariff on Carrier imports to the U.S. Carrier has a 30% share of the U.S. gas-furnace market, and a 35% tariff could kill the business.”
Trump’s use of a very real bully pulpit seems to unsettle WSJ because, as they point out, “United Technologies also gets about 10% of its revenue from sales to the Pentagon, another source of government leverage.”
And what Trump has done combined with what Trump has promised to do can have some very serious consequences:
“A mercantilist Trump trade policy that jeopardized those exports would throw far more Americans out of work than the relatively low-paying jobs he’s preserved for now in Indianapolis. Mr. Trump’s Carrier squeeze might even cost more U.S. jobs if it makes CEOs more reluctant to build plants in the U.S. because it would be politically difficult to close them.”
So on the one hand, we have the suffering of the little guy – the taxpayers – and on the other, the suffering of the corporations themselves, with WSJ asking, “who would you rather have making a decision about where to make furnaces or cars? A company whose profitability depends on making good decisions, or a branding executive turned politician who wants to claim political credit?”
“Some conservatives will be tempted to tolerate bad policies that appear to be popular that they’d never accept from President Obama,” says the paper, and warns Republicans should not make that mistake.
Trump’s move helped Trump. It did not help Carrier. It did not help the people of Indiana. WSJ found all kinds of things to hate about Trump’s move, and for very good reason. For one thing, what does Trump’s move say about the GOP’s free-market values?
“The free market has been sorting it out and America’s been losing,” Mike Pence said yesterday, while in the background Trump could be heard singing the chorus: “Every time, every time.”
Trump said in Ohio yesterday that, “We had people running our country that truly didn’t know what the hell they were doing. Okay?” The Wall Street Journal, long critical of President Obama, seems to be suggesting that under a Trump presidency, that remains true.
There is a lesson to be learned here, even if WSJ avoids drawing the obvious conclusions: The sooner people learn that Trump is going to base his decisions on what’s good for Trump and on nobody and nothing else, the better off everyone will be.