The Wall Street Journal…
…has more to say about the Carrier deal.
As I wrote yesterday, I think this particular deal was mostly symbolic (although not to the workers whose jobs were saved), to make a point that Trump was trying to make about being the sort of guy who was going to solve things. It’s going to be followed by policy, and the policy will affect companies in general—and the results will be either good, bad, or mixed.
In unrelated news: Hollande says he won’t be running again. I wrote about the French election last Wednesday, here.
http://blog.dilbert.com/post/153905823756/the-new-ceos-first-moves-and-trump
Any individual situation depends on Trump’s leverage. If a company has a lot of business with DoD, it’s not like there aren’t other competent potential contractors out there.
In fact, any business contracting with government should be presumed to have paid somebody under the table one way or another until proven innocent. Which means, by definition, the good or service provided is not up to what could have been procured. So practically every contract can be, 1, replaced with equal or better and, 2, has leverage to be used against it.
Daniel just beat me to the punch with Scott Adams’ insightful “New CEO’s First Move” blog post (but Tom G and T beat us both with their comments to yesterday’s post).
Love or hate his blog, Scott Adams’ quirky intelligence is quite entertaining. And the thing is, he’s often right. I’m reading him every day now which is odd because six months ago I didn’t even realize that the creator of Dilbert has a blog.
Anyone who quotes dilbert are just meat puppets. He his masterb..persuading them to believe his crap. They are admitting, by implication, that they don’t have a mind of their own.
/s?
Dear Mag, We’re sorry that your NeverTrump planet has been consigned to the bizarro universe. Here’s hoping the mother ship comes back for you real soon.
Van:
Time will tell who is in the bizarro universe. That concept applies to all, including you.
‘It’s going to be followed by policy, and the policy will affect companies in general–and the results will be either good, bad, or mixed.’
It will be followed by bad policy since this deal and any more like it will make things worse and Trump has no clue about economics. Kevin Williamson has it essentially right in this article.
http://www.nationalreview.com/article/442665/trump-carrier-bailout-economically-unsound
Here is another one.
http://www.redstate.com/patterico/2016/12/02/incoming-trump-pence-administration-free-market-failed/
BTW, Trump wants a government stimulus as well. He combines all the economic stupidity from the left and the right.
This will not end well for the United States.
Neo, this is 2016. Symbolism is the new reality. (TIC– maybe)
I saw an analysis by someone, I forget who, that illustrated the economic impact of the deal. Some argue that those 1,100 jobs may seem like small potatoes (unless it is personal), and the tax breaks can be questioned; but, in truth the net economic benefits to Indiana are quite significant. The deal is symbolic; and it is also tangible.
We are all in one bizarro universe or the other. It is just a question of which one you occupy. I happen to be in the California universe, where I just read that Janet Napolitano, who rules the U of Cal system, assured illegal students that they will have a safe home; and will continue to pay in-state tuition. In other words students who trespass across our borders are granted benefits not accorded to U.S. citizens of neighboring states. Surprised that some enterprising Legal Beagle hasn’t put together a class action law suit for out-of-state tuition payers. Maybe Mr Trump will take note of how many federal dollars go to the scoff- law U of Cal system.
Not just the 1000 workers were saved, but their families and a lot of down stream jobs. 1000 families spend a lot of money so other jobs and professions were affected. So it might really be say 10,000 people were “saved”. Not really a small number.
“Many liberals would be likely to dismiss it, answering that greed isn’t what they’re exhibiting when they advocate income redistribution.” And they would be wrong. I have pointed out many times that Liberal like to portray themselves as Robin hood robbing from the rich and giving to the poor. But of course that’s wrong, first of all because Robin Hood didn’t rob from the rich and give to the poor, he returned to the poor what was stolen from them by a usurper King. Governments pretending they are practicing charity by taking what someone else has worked for is not virtue or charity at all. They aren’t giving away their money, they are giving away yours. And the redistribution always begins by giving a portion of the take to themselves and their crony friends. Very little goes to the poor and what does go the poor has strings attached and is taxed a second time.
SteveD,
We’re 20+ Trillion in debt. There are only two basic approaches to that problem (they can of course be combined). Solely and severely cutting spending would result in a horrific depression or… cut taxation to grow our way to increased revenues through a growing economy.
If Carrier leaves, revenue from the lost jobs cannot continue, much less increase. If it stays, the revenue both corporate and individual (directly and indirectly) at least continues and if the economy grows, revenue increases.
Wlliamson’s comparison between Carrier and Solyndra is bogus. Carrier provides a real world product that stands on its own. Solyndra a failed, economically unsustainable product that must be subsidized.
Even a layman like myself understands that with a trauma patient, the first thing to do is to stop the bleeding.
Trump partially put his thumb on the scales, and partially threatened Carrier. He didn’t save those jobs, he just shifted the firings to someone else.
“He didn’t save those jobs, he just shifted the firings to someone else.”
@Matt_SE – IDK if it was DirtyJobsGuy, SteveD or Other Chuck who recently mentioned Bastiat’s essay on “What is Seen, and What is Not Seen”, but you hit on a similar point.
It is always super easy for a politician to bestow favors and demonstrate some “positive effect”.
The problem is we never see the consequences on the other side, and they will never talk of it.
For example, just one impact of these style of policies… that small companies won’t ever qualify for such deals, as they are too small to matter much, politically, hence, they are put at a further competitive disadvantage.
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As mentioned elsewhere, yes, there is the individual case to look at with Carrier, but it is largely a myth (lie) that the manufacturing sector is “exporting jobs”. I provided links to articles with data and charts that show that to be a myth. It’s really about technological adoption / innovation.
If we insist that there must be a role for government, perhaps it is more sensible to assist the people displaced with the two things that are barriers for their employment (at the level of pay the had previously): knowledge / skills for the new opportunities, location to where those jobs are.
That is, as opposed to doing these one-off deals that essentially picks corporate winners and losers.
No doubt there are issues even with such a program.
But, it is probably far more effective than trade barriers and trade deal “renegotiations”, which I fear will be coming. And, while the “laymen” will be cheering it on, it WILL be destructive to our economy. Who will they blame then? Will they say it was just “not enough”?
One of the most striking statements on how this Carrier deal represents a major problem:
“Trump has made it abundantly clear that he is beholden to no core ideological program. He’s a “pragmatist” who goes by his gut (after all, he only intervened with Carrier because he saw a story on the news). But I’ve been to too many tea-party rallies and GOP rubber-chicken dinners to let the rest of them off the hook. You cannot simultaneously spout off about F. A. Hayek, Milton Friedman, and Adam Smith and the superiority of the market economy, limited government, and the Constitution and have no problem whatsoever with what Trump did here.”
http://www.nationalreview.com/g-file/442719/donald-trump-carrier-intervention-golden-ticket-promise
It is increasingly looking to now be a Red team vs Blue team world, consistency and core ideas / principles be damned.
An example of the Red vs Blue switcheroo… Exhibit A: Steven Moore…
“”[T]his is 2016 not 1986. The world is a different place. The concerns and priorities of the American people are different today from what they were 30 years ago. The voters spoke with a thunderclap. … I don’t approve of all of these shifts, but they are what the voters voted for.” – Steve Moore
Moore’s broader argument seems to be that Donald Trump won, and thus all of his policies should win. … Moore radically exaggerates the popularity of Donald Trump’s program in order to make this case: … Trump won the lowest percentage of the primary vote since Reagan in 1968 (Reagan lost that nomination to Nixon), and had the most votes cast against him of any nominee in history. Trump did not win a sweeping national victory – in fact, he lost the popular vote by well over two million votes and came in 44th out of 54 elections in terms of the Electoral College. That’s not the mark of a sweeping mindset change among Americans.“ – Ben Shapiro
https://www.conservativereview.com/commentary/2016/12/trump-economic-adviser-moore-doubles-down-this-is-trumps-party-now
Problem with what Trump did wrt Carrier is that, given the extravagant promises politicians have to make to one-up the competition, voters start believing they not only can but should do these things.
It’s become, to one degree or another, a matter of degree. How far do we go? Not whether.
Trump jawboned Carrier. Obama said it didn’t matter since the BS unemployment rate is down. Both are being pressured by the need to perform extra-constitutionally.
Big Maq…”it is largely a myth (lie) that the manufacturing sector is “exporting jobs”. I provided links to articles with data and charts that show that to be a myth. It’s really about technological adoption / innovation.”
There are something like 90 million manufacturing workers in China…surely at least half of them are producing for export. Of course, not all the exports go to the US, but also, China is by no means the only country producing for the US market. It is probably safe to estimate that at least 20-30 million people in other countries are making things that go to the US.
This does not represent a direct displacement of US labor, owing to higher US productivity (employee-driven, process-driven, and equipment-driven)…probably comes out to somewhere around 3-6 million US manufacturing workers not required because of product imports. There are of course many additional jobs in the economy that are also displaced indirectly.
Yes, technological change reduces labor intensity of manufacturing…as it has been doing for two centuries..but it’s not either-or. The effects of automation and of imports have a combined effect on employment and wage levels.
@David – The measure of the health of an economy and of an industry is not the amount of jobs employed.
The US manufacturing sector is (and has been steadily for decades but for 2008) increasing output, while, yes, their employment levels have decreased dramatically.
At the same time manufacturing has had a declining share of the global GDP.
Is the US “losing out”?
Maybe, the explanation is that we are collectively paying less for manufactured goods, which allows us collectively to have more to purchase other goods and services!
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Perhaps the real question is what does one do with folks who do get displaced in a dynamic economy?
Arguing for trade barriers, special tax incentives and subsidies for those in the industry treat the symptom, not the real problem.
What happens to those employed in those other sectors, if we follow through with what you imply you want for the manufacturing sector?
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If we are only looking at the jobs part of the economic balloon, and ignoring the other part of the balloon….
…With employment as the basis for justifying serious economic intervention by the government, then perhaps it should shut down Amazon and all internet shopping.
Why not? Consumers will go back to shopping at physical locations, and then people can get their jobs back at those brick and mortar retailers.
After all, retailers have long argued it is “unfair” competition.
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I’ve written in more detail here on this topic:
http://neoneocon.com/2016/12/01/the-showman-president/#comment-2004134
@David – I think too many people underestimate the impact technology can have in changing industries, and the economic value it brings.
Another link I recently came across:
http://www.dallasnews.com/business/real-estate/2015/05/21/facebook-looking-at-north-fort-worth-for-huge-data-center
Yes, it is an example of yet more government incentives, which I do not favor, BUT, the striking thing is the dollar value vs the jobs…
“A project worth nearly $1 billion that’s in the works for North Fort Worth hopes to lure social media giant Facebook to Texas. … The data center in the works for North Fort Worth is projected to have about 40 workers. … “There are municipalities and states that have figured out that just because it’s not a lot of people, it’s still important,” Holcomb said”
Big Maq…of course the number of people needed for manufacturing a fixed amount of product will decline over time…will probably decline in absolute terms…as a function of technological progress and without considering imports. But it is still millions of people, and there are plenty of policy things that can be done to make the US a more hospitable home for manufacturing. Tax policy, in particular: for example, Forbes has calculated that the incremental cost of assembling iPhones in the US is influenced considerably more by tax costs than by labor costs.
@David – I am all for reducing tax rates and complexity, and for eliminating a good portion of our regulations which hardly serve their original purpose anyway, are probably the least effective ways to serve those purposes, and carry a high burden for businesses (particularly favoring large over small ones), and thus the economy, to flourish.
I am not for new regulations that intervene in the dynamism of our economic system, nor playing favorites over industries and corporations. That all just invites more corruption, as well.
If we need to help people, let’s keep the focus to providing THEM help, not on obstructing everyone else’s economic decision.
Late to the thread, but….
Anyone who believes any combination of regulatory reform and tax cuts can lead to mid or lomg term salvation from the overwheling burden of 100+ trillion unfunded liabilities should contact me. I have ocean front property in Iowa available for 10 cents per 100 foot of frontage. BTW, ocean beaches in Iowa come with coconut palms and 72 dancing naked virgins; female virgins of course.
@parker – right, doing the other doesn’t address the spending side. Unfunded liabilities are increasingly a Damocles Sword over us.
Ha, glad you made clear which people you were referring to. 😉
Interesting article at Vox.
Why not move much of the government operations throughout flyover country (article suggests mid-west, but it ought to be wider / more spread out than that)?
That is certainly within the POTUS’ power to do, and doesn’t involve much, if any, hand into the private economy (i.e. industrial policy).
http://www.vox.com/new-money/2016/12/9/13881712/move-government-to-midwest