November 30, 2016

Carrier will keep its factory in Indianapolis. It's not moving to Mexico, and Trump will take credit. Rightly.

Here's how the NYT expands on the story:
And just as only a confirmed anti-Communist like Richard Nixon could go to China, so only a businessman like Mr. Trump could take on corporate America without being called a Bernie Sanders-style socialist. If Barack Obama had tried the same maneuver, he’d probably have drawn criticism for intervening in the free market.
Obama could have done it, if only his haters weren't so ready to brand him a socialist. Trump has more freedom, because he's not hounded by haters and critics like poor, beset Obama.
Political symbolism aside, saving 1,000 Carrier jobs doesn’t loom so large in an economy that’s created an average of 181,000 jobs a month this year, noted Jared Bernstein, a liberal economist who served as adviser in the Obama administration from 2009 to 2011.

Still, he confessed a grudging admiration for Mr. Trump’s political jujitsu. “If I weren’t so scared of the damage a Trump administration might do, I’d find it refreshing to see an administration fighting for factory jobs like this,” he said. “That said, no one should confuse what Trump is doing here with sustainable economic policy.”
Thanks for the breath of fresh air, liberal economist!
Over the long term, and for less prominent firms, the temptation to move to cheaper locales for manufacturing will stay great, said Robert Reich, a prominent liberal Democrat who served as secretary of labor in the Clinton administration.

“Memories are short but the economic fundamentals remain the same,” he said. “Wall Street is breathing down companies’ necks to cut costs, and the labor savings in Mexico is too great.”
What this story needed was the perspective of a prominent liberal Democrat to tell us what Trump seems to have done is actually impossible.

So... how did Trump do it?
Mr. Trump first announced he was talking to Carrier on Thanksgiving Day via Twitter...
Oh, that man won't stop tweeting!!
... which the company quickly confirmed. The discussions have continued this week, and with a tentative deal in hand on Tuesday, transition officials scheduled Mr. Trump’s and Mr. Pence’s visit to Indianapolis....
So... he talked to them and got to a deal in 5 days. What, is he some kind of deal artist?

119 comments:

David said...

"Political symbolism aside, saving 1,000 Carrier jobs doesn’t loom so large in an economy that’s created an average of 181,000 jobs a month this year, noted Jared Bernstein, a liberal economist who served as adviser in the Obama administration from 2009 to 2011."

How the Democrats lost the election in a single statement. It looms about as large as possible to the 1000 people losing the jobs. And their families. And countless thousands of other people who fear that the same thing might happen to them.

AReasonableMan said...

Robert Reich is correct. It is Wall Street's obsession with releasing shareholder value that drives these moves and this hasn't changed. When only one parameter is important then all other interests get squashed.

Susan said...

One job loss is a tragedy. A thousand jobs saved is a statistic.

Anglelyne said...

If Barack Obama had tried the same maneuver, he’d probably have drawn criticism for intervening in the free market.

True, but so will Trump. I'd be surprised if this comment thread closes with none.

Still not sure if this is really "net jobs prevented from moving to Mexico" or smoke-and-mirrors PR that doesn't really represent any change in Carrier's plans.

At any rate, perhaps this will get interesting. Free trade absolutists or, rather "free" trade absolutists, are due for a proper airing of their received wisdom.

Brando said...

It's obviously for the better if we can keep some jobs, though the "how" is important. When Obama (and Kerry before him) talked about cracking down on companies "shipping jobs away" (as if that's how it works and we could just stop them at the border) by penalizing those companies, it was a lousy idea (just forces U.S. companies to become less competitive and we lose more in the long run). But if instead we're implementing policies to make it more profitable to do business here (labor reform, regulatory reform) there's nothing wrong with that.

What direction Trump will take remains to be seen.

Brando said...

"It is Wall Street's obsession with releasing shareholder value that drives these moves and this hasn't changed."

Always been the case and always will be, what's different now is they have far more information available to enable them to react to these incentives.

Not that there's anything inherently wrong with it--companies have to be profitable and adaptive. We do ourselves no favors pretending otherwise.

Once written, twice... said...

I am much more in favor of Trump strong arming U.S. corporations than minorities and immigrants.

rehajm said...

If Barack Obama had tried the same maneuver, he’d probably have drawn criticism for intervening in the free market.

First Obama would have never tried the same maneuver. He would have gone in with the same rolled up newspaper or the same tire iron he uses on bankers and 'Wall Street' and started whacking. We don't know exactly what Trump said but he needed only to explain what's coming. You catch more flies with honey than vinegar...

This morning Steve Mnuchin and Wilbur Ross are making the rounds on the financial networks to explain what's coming. Every CEO is getting what they want for Christmas...

Hagar said...

Carrier is a big name and a quality product. "Keeping them here" may have taken as much, or more, carrot than stick, but it sends a signal that the Trump administration seriously intends to work on making manufacturing in USA economically attractive again.

And did I see an article the other day about a Chinese tycoon working on moving a fairly large Chinese operation to America?

What about all those Japanese and European car manufacturing plants we already have here? Chopped liver? Do not fit the narrative?

MaxedOutMama said...

There were screams of wrathful agony on Democratic Underground.

He appears to have accomplished something before even taking office, and this will certainly make for a happier holiday season for many in the location.

Nor is keeping 1000 jobs at a factory only saving 1000 jobs. Generally the figure is 3-6 adjunct jobs for each actual manufacturing job - jobs in local services (retail, restaurant, education), jobs in support services, transportation, etc.

The point is that he tried, and politicians haven't BEEN trying, and maybe other politicians will sit up and take notice.

AReasonableMan said...

A precedent has been now set that having the federal government micromanage individual companies to take account of interests other than shareholder value is a good thing.

Scott McGlasson said...

The point is that he tried, and politicians haven't BEEN trying, and maybe other politicians will sit up and take notice.

Dr. Raymond Stantz (paraphrasing): You've never left politics. I've been in the private sector. They expect results.

Kevin said...

All this negativity from the people who brougt you "jobs created or saved".

TreeJoe said...

That NYTimes article puts the grudging in begrudging....

It doesn't take a ton to shift the tide. Businesses don't make these decisions on a 4 year presidential timetable, they make these decisions on a 10-20-50 year forecast. Obviously political likelihoods don't last that long, but if they see a President elect promoting policies that fundamentally change their immediate forecast than it is LIKELY more and more businesses will choose NOT to change right now. Meaning stay here.

It remains to be seen whether Trump policies actually encourage businesses to invest more in the US. If he and the repub congress can actually get business taxes back into a competitive zone, then we could see some real progress on that front.

Kevin said...

All this negativity from the people who brougt you "jobs created or saved".

Mike said...

NYT is having a helluva time figuring out how to report positive Trump news with as negative a spin on it as possible. Although the opening paragraph strains so hard to defend Obama, we might be in the Fake News Zone before he even gets to the "nut graf."

AprilApple said...

The first sentence is total bullcrap.

Socialists don't care about private industry - other than how can private industry pay higher taxes, how can private industry be shaken-down and forced to donate to the democrat, or how can the government take it over.

AprilApple said...

The NYT is Paul Krugman - economic idiocy.

Jersey Fled said...

There are many things that Obama "could have" done.

Like begin healing the racial divides in this country that he was so uniquely positioned to do.

Instead he missed his Nixon moment and portrayed himself as Travon Martin's dad instead.

Bob Ellison said...

Steve Mnuchin. That seems like a typo. If the left decides to attack him collectively, they'll probably go with "Steve Munchkin". He looks tall, though. Maybe they'll do "Sleeve Much-In". No, that's too weird, and he's not famous enough. "Steve Moochin'"?

Limited blogger said...

It's morning in America, again.

Basil said...

Fake news from the alt-left.

Should be banned from Facebook, at least, if not Google.

rehajm said...

Steve Mnuchin. That seems like a typo.

With all that personal wealth he could buy a vowel.

William said...

Some analysts claim that Mexico's competitive advantage came not from lower manufacturing costs, but from lower shipping costs and the more favorable export deals they have negotiated with trade partners......Whatever. This is a plus for Trump, the Carrier workers, and the Carrier brand. For me personally, the best part of the deal is watching libs squirm and twist and try to find some angle of attack that will let the workers of America see how Trump has let them down.

Drago said...

AReasonableMan: "Robert Reich is correct."

Lol

If he were it would be a first.

Plus: very little hands.

Drago said...

AReasonableMan: "A precedent has been now set that having the federal government micromanage individual companies to take account of interests other than shareholder value is a good thing"

If you truly believe this action establishes that precedent then you truly know nothing.

AReasonableMan said...

Drago said...
If you truly believe this action establishes that precedent


The precedent is that it is now a good thing.

rehajm said...

A precedent has been now set that having the federal government micromanage individual companies...

The guy's not the federal government yet.

tim in vermont said...

I agree with ARM that the free trader,losers can go to hell, open borders, cheap labor Republicrats are on the outs.

tim in vermont said...

Get back to me though when he fires the CEO for criticizing him, like Obama did to GM.

Mike said...

AReasonableMan: A precedent has been now set that having the federal government micromanage individual companies to take account of interests other than shareholder value is a good thing.

Ignorance is bliss, I guess. So you don't think Truman seizing the steel mills was micromanaging their business? This ain't the only example of far more intrusive federal actions, usually by Democrats. But Nixon's wage and price controls were pretty micromanagery too.

Let me explain shareholder value to you before you continue to beclown yourself on that topic too. You see individual investors, and as an aggregate "Wall Street" is a suitable term to use, have few ways of putting their money to work (especially now that the incompetent Fed and our lousy economy have made interest-bearing savings accounts a thing of the past) other than stocks, bonds or complicated instruments. Of these three choices, only stocks are easily engaged, mostly because Democrat-run municipalities with unfunded pensions and Obama's unlawful GM bailout screwed bondholders so hard that you can't use this "safe" investment any longer.

So we are left with stocks, which are sold by "shares" of a company. That's the only option left. So the investor has ONLY the value of his shares increasing to count on growing his investment. Like so many progressives tell me, not just anyone can be an entrepreneur, so we are left with the investments available to store something away for the future and grow our nest eggs. So why is AReasonableMan so opposed top the little guy earning some interest or dividend income?

Since you are completely ignorant of what drives share values, we'll stop here for now. But I'd like to give you a hint that the universe of investors is full of people who take into account a very wide range of actions, results, ratios and reports. Some play "stocks" like a casino. But most are like me, and the money they invest is put into long-term growth, stable companies. Sometimes staying put and keeping people employed here is the best tack toward increasing value per share. Many people appreciate this "social" aspect of company responsibilities.

Also they want to take advantage of the new 15% corporate tax rate coming from president Trump, which will more than make up for staying put. That's also why other overseas firms are looking to move here.

Michael McClain said...

Will be interesting to see how this works out.

AprilApple said...

Many companies who are pushed to do business elsewhere because of punitive anti-business policies of the American left - simple fact is they feel relief.


ARM says:

..having the federal government micromanage individual companies to take account of interests other than shareholder value is a good thing.

ARM - the moderate, believes holy government micromanagement of individual business is a good thing.

Behold the moderation and the reasonableness.

MadisonMan said...

David nailed it right out of the gate at 724 AM.

Democrats are so in bed with Wall Street -- as are Republicans!! -- that they are blind to see how Wall Street is driving middle America into the ground. But look at all those service jobs created!!

traditionalguy said...

Mnuchin explained it on Fox Business this morning. It is not the labor costs that attract our companies to Mexico. It is the tariff free exports deal that Mexico made on shipping products from Mexico overseas.

And our paid off idiots pretending to be concerned American politicians arranged nothing like that to favor products made in the USA.

Trump is the Lone Ranger of politics who favors Americans...with his faithful Indiana companion, Penseto.

jacksonjay said...

So, Indiana is going to pay Carrier to stay. Let's see, Mike Pence is Governor of which state? How is this not crony capitalism? Deal making is rather easy, when the public's money is used to make the deal! "Osama is dead, and GM ..."

My dear neighbor, a retired and very successful small businessman, cusses our city officials and the multi-national corporations in town for just this this kind of "deal making." He is a donating, Trump voting, Republican who never got a sweet deal from the city!

I have a feeling this deal maker is gonna cost me. On the other hand, he identified himself as The King of Debt, so my kids will be stuck with the cost!

I know, Negative Nelly gotta worry about the details.

Hagar said...

AReasonableMan: "A precedent has been now set that having the federal government micromanage individual companies to take account of interests other than shareholder value is a good thing"

Bullshit. Trump would never say any such thing. This is "leftspeak." What Trump has somehow done is convince Carrier that staying here is going to be good for their bottom line.

Paul Zrimsek said...

If the left decides to attack him collectively, they'll probably go with "Steve Munchkin".

If they want to invite a chorus of "Ding, dong, the Witch is dead", sure.

Michael said...

The envisioned changes in the corporate tax rate will accelerate growth and result in companies repatriating operations and capital.

Chuck said...

QUESTION:
What is the "deal" that Trump has made, to get Carrier to stay? What did Trump give to Carrier? What did they get out of their "deal" with Trump?

I ask this, because being in Detroit (where the auto industry is covered on a daily, detailed basis unlike any other place in the world) I happen to know that Trump's wailing about the Ford Motor Company's assembly plants in the U.S. and Mexico has had zero effect on what Ford is really doing. Ford -- Bill Ford Jr. in particular -- has made it clear that they'd be happy to listen to Trump and there are lots of reasons for Ford to prefer a Trump administration to an Obama administration. But that Trump's pronouncements about things like a 35% import tax on foreign cars and car parts were all baloney and non-starters.

I just want to know what is the "deal" for which Trump should get credit?

tim in vermont said...

If this election forces Nancy Pelosi to step down, Trump should just climb on his winged white horse and fly to Heaven from the Capitol Dome right now.

Robert Cook said...

"First Obama would have never tried the same maneuver. He would have gone in with the same rolled up newspaper or the same tire iron he uses on bankers and 'Wall Street' and started whacking."

Ha! Obama's "whacking" of Wall Street and the bankers has been an 8 year long massage, complete with frequent happy endings.

Michael said...

MadisonMan

Do you have any idea what "Wall Street" does? It is a serious question.

Sebastian said...

"I have a feeling this deal maker is gonna cost me." Now don't start claiming that limiting free trade might actually hurt consumers, and benefit small groups of favored workers and the politically connected, like those radicals Adam Smith and David Ricardo used to argue. Commenters on this blog know better, so save yourself the trouble.

mockturtle said...

Brando states: But if instead we're implementing policies to make it more profitable to do business here (labor reform, regulatory reform) there's nothing wrong with that.

Both the carrot and the stick, I think, as he intends to use tariffs as a disincentive.

320Busdriver said...

Bravo President elect Trump....a rising tide lifts all boats..he gets it! It's not that hard so why does the current potus seem incapable of seeing the forest for the trees?

It might have something to do with the fact that his SOS is spouting off around the globe that air conditioners are killing the planet. That merely a symptom of a greater deficit in leadership capability.

On a local level, the left had put up one Mary Burke of Trek bicycles to challenge Scott Walker in the last governors race in WI. Trek is very a successful company with a good product, but they manufacture 99.5% of their product in China/overseas. Yes the Burkes are millionaires, but do they really understand the implications of their business decisions? Maybe Trump should push the Burkes to rethink them.

Michael said...

Because people think Trump is crazy he has a certain amount of real leverage when he threatens retaliation, tariffs, etc.

Unlike BHO who is the absolute worst negotiator ever to draw breath because it is know to a certainty that he will not let you cross that red line!!

AReasonableMan said...

Hagar said...
Bullshit. Trump would never say any such thing. This is "leftspeak." What Trump has somehow done is convince Carrier that staying here is going to be good for their bottom line.


The invisible hand looks distinctly visible right now.

Original Mike said...

"If Barack Obama had tried the same maneuver, he’d probably have drawn criticism for intervening in the free market."

As was demonstrated many times, Barack Obama couldn't negogiate his way out of a paper bag.

Brando said...

"Both the carrot and the stick, I think, as he intends to use tariffs as a disincentive."

I do hope we don't go the tariff route. That'll have a lot of unintended effects. But if they follow through with corporate tax cut and employment law reforms, that'll go a long way towards keeping more jobs here. Ultimately, if it helps the bottom line to go overseas that's what they're going to do.

rehajm said...

Ha! Obama's "whacking" of Wall Street and the bankers has been an 8 year long massage, complete with frequent happy endings.

Your happy endings assessment aside I'm glad all sides can finally begin to agree he was a terribly ineffective president.

bagoh20 said...

Being that Carrier's parent company has the federal government as it's biggest customer, I doubt it was hard for the new CEO of that customer for the next 4 years to extort them.

That's the cynical view, which I think was at least an unspoken part of the negotiation, but I suspect that the Carrier execs like most of us wants to keep those jobs here. Trump and Pence just needed to put a thumb on the scale by offering offsetting incentives like additional government business and softened regulations. You need to remember that Carrier made this decision to leave back when it seemed that the Democrats would remain in charge. Hillary's loss probably did as much to change their mind as anything, which is still to Trump's credit.

I was forced at one time by foreign competition to explore moving work to Mexico. It's not that great an attraction. Mexico has even worse regulation on labor than here. It's very hard and expensive to fire even bad employees, or get good productivity, and the corruption is rampant. After looking at it hard, we decided against it, and chose to automate more of the work, which is how you get around both countries' job killing labor policy. We have to compete with China, which is far cheaper and easier than Mexico. We are only still in business because we found a way to do the same work with less than half the people. I hate being forced into that, and I'm sure most of the Carrier execs do too, but at some point you have to think about how many people you can get in the lifeboat, because the ship is sinking. Trump could save a thousand times as many jobs with a few signatures and phone calls, but I bet most Americans would oppose those reforms. They take away "safety nets" which are really crutches sold by American lawyers and bureaucrats for their own profit while providing nothing to the nation.

I think Carrier didn't need much arm twisting at this point, and might not have ever decided to leave in the first place if someone more conservative than Obama had been in the White House the last 8 years. The voters could save millions of their own jobs if they had the balls to fire the nannies.

tim in vermont said...

I used to believe all of that free trade nonsense too. How exactly do you define "small groups"?

American workers should be favored by our government, even if it costs more than importing cheap labor and closing factories where wages are "too high."

William said...

Here's suitable angle of attack for ARM to use. As a Hollywood producer, Munchkin has a credit for both Batman vs Superman and Tarzan . Do we really want such a man in charge of the Treasury Department?. I didn't see Tarzan, but that Superman movie was awful. What killed no of man green lights such an atrocity? If word of his scandalous record gets around, Trump will lose the youth demographic decisively and for all time. I would prefer someone with a heavier background in Marvel Comics rather than a supporter of the DC brand.

MadisonMan said...

Michael

Can you do something besides asking vacuous questions? It is a serious question.

Matthew Sablan said...

"A precedent has been now set that having the federal government micromanage individual companies to take account of interests other than shareholder value is a good thing."

-- That's been something the left, and to a lesser part the right, have been doing to companies for at least a generation, if not more. It's just that now Boogeyman Trump has done it, so the left can shed some crocodile tears about principles they never cared about until this tweet happened.

Ron Winkleheimer said...

Obama didn't do anything about it because Obama is a free trader. He has publicly stated that Globalism is inevitable. If companies in the US move overseas that's just how it is. If people from overseas want to come here and compete for jobs with the native born, well borders are anachronisms that need to be eliminated and why should the native born have an advantage over those not lucky enough to be born in the US?

And if all of this financially benefits the people who fund the political parties? That's just a fortuitous happenstance. It's all about the principles you know.

Bob Ellison said...

AReasonableMan said, "The invisible hand looks distinctly visible right now."

That's correct. Trump is not yet inaugurated, and he's already playing the heavy. Watch out.

Paul Snively said...

So Trump cares about his optics. That's good, on balance.

But, from the article:

"Many industrial companies face intense pressure from Wall Street to increase profits, even when the economy grows slowly — a major reason United Technologies decided to move.

That won’t change after Mr. Trump takes office — especially when hourly pay in the Indianapolis plant is equivalent to what workers in Mexico make in a day."

If we make the important assumption that the quality of the work in Mexico is close enough to the quality of the work in Indiana, it's insanity not to move the facilities to Mexico. And I say this as a Hoosier, born and raised.

Labor is another commodity to be traded. Why labor should be protected in ways other commodities aren't is a difficult question. Yes, of course, we're talking about human beings, so I applaud:

"When Carrier announced in February that the two Indiana factories would be closing, it did offer benefits to employees facing layoffs, including paying for them to go back to school and retrain for other careers."

That's the ethical responsibility a company has, in addition to the fiduciary responsibility to shareholders they have. It sounds like Carrier was seriously striving to address both, and Trump (and Indiana's Pence) get a nice visual out of stopping it. But (for once in my life) I'm with the New York Times: this doesn't actually change anything.

bagoh20 said...

Although I voted for him and I'm very happy he won, I did not like the rhetoric of his campaign. It sounded like more big government nannyism to me, just spoken in a more authentic way. I know Trump understands the problems better than most politicians. That's why he sent much of his own jobs overseas and imported workers for others. I have great expectations for him, but playing big magnanimous daddy to throngs of supporters is an alluring siren that every politician falls for. My only hope is that he different. Isn't that mostly why many of us voted for him?

Otto said...

Sour grapes from a Stein ( knew Hillary had too much excess baggage) voter.
Note how AA uses the university faculty go- to- term "hate".
You see AA never hates - oh wait, she does hate racism. That hatred is ok.Sentimentality and wordsmithing the only tools left to a dying liberal ideology - there actual policies have been a failure.

Larvell said...

Trump is so anti-semitic that he's naming a Jewish guy treasury secretary -- talk about stereotyping. I hear he's also in the movie business.

320Busdriver said...

Blogger bagoh20 said...
Being that Carrier's parent company has the federal government as it's biggest customer, I doubt it was hard for the new CEO of that customer for the next 4 years to extort them.

This is the cudgel that was used here. It might be extortion, but there is undoubtedly a cozy relationship between the two that was ripe for renegotiation.

bagoh20 said...

"American workers should be favored by our government, even if it costs more than importing cheap labor and closing factories where wages are "too high."

The government can't do a damned thing about it unless the American people stop choosing cheaper imports, but if those imports are not available as an option, the prices of American products will skyrocket, and quality will slide. When everything cost double, the sales will decline and the jobs will still be gone. Everyone blaming business should ask themselves how many Chinese products they have in their home right now, and how many of those things would they have just not bought if the cost was double or triple. Americans lose their jobs because of American consumers not being willing to pay the higher prices, and the higher prices are due in great part to government policy that American voters mostly support. There is no free lunch.

Delayna said...

"Fake news from the alt-left."

The proper term is "ctrl-left."

320Busdriver said...

I'm sure none of Obama's regulations ever touched Carrier or UTC.

"Greg Hayes, UTC's chief executive officer, said in an appearance at the Council on Foreign Relations in New York Nov. 1 that with more than 200 new regulations on efficiency standards for air conditioners, labor costs were the "only way to be competitive in the marketplace."

Heymann said Trump could be "more accommodative" with environmental regulations, finding a trade-off between job locations and rules governing the manufacturing of air conditioning and heating equipment."

http://www.courant.com/business/hc-trump-carrier-20161128-story.html

Michael said...

MadisonMan

Your use of the term "Wall Street" is the very definition of vacuous. Silly. Inane.

Etc.

Alexander said...

A precedent has been now set that having the federal government micromanage individual companies to take account of interests other than shareholder value is a good thing.

Like managing bathroom policy? Or health insurance policy? Or cake baking policy?

Get off your high horse you political termite.

As the economist said 8 years ago, we is all socialist now!

Trump Train (made in USA!) continues!

readering said...

I'm happy carrier is staying. It's a marathon not a sprint.

rightguy2 said...

The NYT's (just as the east coast intellectual elite often does), is overlooking the totally obvious reality; that is that this an unconditionally good thing for everyone directly affected, as well as the country as a whole.

And they refuse to ask the obvious question ; why hasn't President Obama done anything at all like this in 8 years? Solyndra?

Alexander said...

Labor is another commodity to be traded. Why labor should be protected in ways other commodities aren't is a difficult question. Yes, of course, we're talking about human beings, so I applaud:,

Why shouldn't the People of the United States form a government that uses its power to advance and protect their own interests? What is fundamentally wrong about this?

If 'free trade' means reducing ones self, nation, people, and posterity to cogs, then you cannot be surprised when most people cheer its death.

"Many industrial companies face intense pressure from Wall Street to increase profits, even when the economy grows slowly — a major reason United Technologies decided to move.

Face pressure how? If your business/market/industry is actually a slave to a cartel of bankers in a city a thousand miles away, then that's not free trade at all! Econ 101 was about a market of buyers and sellers all with negligible market power, not a small group of people who can put enormous pressure on all industries in the country! In which case, all Trump's doing is rearranging the decidedly unfree market in a way that puts more priority on the American worker than on a New York banker.

Fine with me!

Free trade has failed. What worked in the 19th century will not work in the 21st, because labor is now genuinely mobile. And as such, free trade is now directly incompatible with homogeneous people and homogeneous nations. Billions of people will fight and die for their kin, kind, and kids long before they will fight to ensure cheap foreign manufacturing.

AReasonableMan said...

MadisonMan said...
Democrats are so in bed with Wall Street -- as are Republicans!! -- that they are blind to see how Wall Street is driving middle America into the ground. But look at all those service jobs created!!


I have no problem with laissez faire capitalism in principle. In practice it has been a disaster for the average American over the last forty years. There are various arguments for why this is but the most obvious is that laissez faire capitalism is very vulnerable to attack by states determined to use economic policy as a form of economic warfare, as the Chinese state has done. Foreign actors have effectively co-opted quislings within the US to sell off much of the manufacturing expertise that the US created over the preceding century in return for their personal enrichment. It was a one time sale that enriched a small subset of the country while impoverishing large swathes of average working people.

During the Republican primary Trump attacked two pillars or Republican policy, laissez faire capitalism and US military interventionism. He won. Elections have consequences.

Big Mike said...

I recall Jay Leno claiming that Trump needed to get punched good and hard in the face so he could learn how to negotiate. From the success of Trump's deal with Carrier I conclude that someone slipped past Trump's Secret Service detail and hit him good and hard.

khesanh0802 said...

@ARM You mistake crony capitalism for laissez faire capitalism. The trade deals are made, as you say, to benefit big business. That is anything but "laissez faire". If you think the Chinese are practicing laissez faire economics you haven't been paying attention. We have been getting our asses whipped at the negotiating table precisely because it benefits large corporations.

I think we agree in principle I just think you are using the term inaccurately.

Delayna said...

"The government can't do a damned thing about it unless the American people stop choosing cheaper imports"

It can lower corporate income tax to be somewhere in the ballpark of what other countries charge.

It can reduce regulations to be reasonable and understandable without having an entire corporate branch dedicated to avoid breaking the laws. (Or in some cases, dedicated to writing the laws and slipping them to lawmakers across the lunch table, wrapped around a campaign donation.) Changing regulations to be neutral instead of favoring one party over another might help too.

It's still hard to believe things can get better instead of worse, but I haven't quite given up yet.

Brando said...

"The government can't do a damned thing about it unless the American people stop choosing cheaper imports, but if those imports are not available as an option, the prices of American products will skyrocket, and quality will slide. When everything cost double, the sales will decline and the jobs will still be gone. Everyone blaming business should ask themselves how many Chinese products they have in their home right now, and how many of those things would they have just not bought if the cost was double or triple. Americans lose their jobs because of American consumers not being willing to pay the higher prices, and the higher prices are due in great part to government policy that American voters mostly support. There is no free lunch."

It's more than that, which is why the people saying "I'd be happy to pay an extra few dollars for a set of dishes if I can get them made in Ohio instead of China!" are missing a key part of the picture. It's not just direct consumer goods that are affected by the import and export market. It's also much of the components and business equipment that our own companies use. Take that American factory in Ohio, which makes the dishes--if they have to pay more for say the paint they use in the dishes, or pay more for the machine parts they use in the factory, they become less competitive and in some cases it may mean not actually getting the right equipment at all (e.g., if the foreign company has IP rights over their invention, or if the locally made "equivalent" isn't really the best piece of equipment to use).

Free trade isn't just about cheaper end products, but about everything that is intertwined into our own economy. Bush learned that when he raised tariffs on foreign steel to help our steelmakers, but it made steel cost a lot more for U.S. automakers.

Now, if you still think we're better off with these barriers and can do better by shielding our economy from competition, make that case, but at least recognize the full costs of what you're doing. And ultimately you may not be saving the jobs you think you are.

Brando said...

"It can lower corporate income tax to be somewhere in the ballpark of what other countries charge.

It can reduce regulations to be reasonable and understandable without having an entire corporate branch dedicated to avoid breaking the laws. (Or in some cases, dedicated to writing the laws and slipping them to lawmakers across the lunch table, wrapped around a campaign donation.) Changing regulations to be neutral instead of favoring one party over another might help too."

Exactly how we should be approaching this. Figure out how we can improve our competitive advantages, rather than paper over our weaknesses with barriers to trade. The Left lives in its fantasyland where they can control economic forces but reality can be cruel.

bagoh20 said...

Where is this planet that has laissez faire capitalism? There isn't a nation on earth with such a thing. There isn't even any object or service made by humans within sight of any of us all day long that is not subject to a plethora of government regulation down to the finest details. This also goes for all the materials used, the equipment, the methods, and the people involved along with their bathroom facilities, and how they keep and spend their hard earned money. Laissez faire capitalism is as real as unicorns, but wouldn't we all like to see either of the mythical things just once?

tim in vermont said...

I have no problem with laissez faire capitalism in principle. In practice it has been a disaster for the average American over the last forty years. There are various arguments for why this is but the most obvious is that laissez faire capitalism is very vulnerable to attack by states determined to use economic policy as a form of economic warfare, as the Chinese state has done. Foreign actors have effectively co-opted quislings within the US to sell off much of the manufacturing expertise that the US created over the preceding century in return for their personal enrichment. It was a one time sale that enriched a small subset of the country while impoverishing large swathes of average working people.

During the Republican primary Trump attacked two pillars or Republican policy, laissez faire capitalism and US military interventionism. He won. Elections have consequences.
- ARM

Jeezum Crow! I was going to keep selecting until I got to something I didn't agree with, once I was two sentences in and, Holy Shit! I got to to the end of the post!

A lot of these free trade arguments seem to consist of hand-waving and assumptions, I can drive through my home town, which I left due to extreme lack of opportunity, to see that these "small groups of advantaged workers" were kind of a big slice of America.

Sure we went too far one way and the vast majority of automotive production in the '70s showed we did. Stuff headed for the junk yard after 60K miles, but so what if rich Hillary voters can afford shiny new BMWs in the new economy, and the roads are paved with Hondas and Mazdas?

n.n said...

Trump will need to review whether the causes of environmental, regulatory, and labor arbitrage are legitimate or contrived. The same as immigration "reform" that has obfuscated the conditions in second and third-world nations, and the consequences of wars saved and created for social causes.

Mike said...

Bagoh, that planet used to be Hong Kong. Not sure if there is a good example of free "let it be" type of capitalism now.

Alexander said...

"The government can't do a damned thing about it unless the American people stop choosing cheaper imports"

At a bare minimum, the US govt. can force overseas companies to bear costs that the US govt. believes US companies have a moral obligation to pay. Workers Compensation, Safety Codes, Buildings that meet occupational standards, leave time, etc. Anything like that, the US should impose a tariff on foreign trade to cover. If it is wrong to make a product in the USA without adhering to certain requirements, it is wrong to buy it from a country that doesn't.

Loads of things like this that add up. If the government can prioritize contracts for reasons other than costs - say, prioritizing federal contracts to companies owned by a non-whites or women... then why can't it prioritize a building contract to a company that uses 51% American steel?

Anglelyne said...

bagoh20: The government can't do a damned thing about it unless the American people stop choosing cheaper imports, but if those imports are not available as an option, the prices of American products will skyrocket, and quality will slide. When everything cost double, the sales will decline and the jobs will still be gone.[Etc., standard mostly correct but not the whole story free trade bullet points...]

That's the theory, and its mostly true - except when it isn't. (It's hard to imagine that the quality of some categories of imported manufactured goods can get any shittier than they are right now, lol.) Not to get into an extended economics argument, but it's just false, empirically and historically, to say that "the lack of competition imposed by protectionism always results in lowered quality and ends up making a people poorer". That depends on the "protectionist" policy itself and a host of other variables. That's why I'd prefer a trade policy based on attention to reality, and not dogma, right or left.

coupe said...
This comment has been removed by the author.
coupe said...

Deputy Crown Prince Mohammad bin Salman, who is tasked with transforming Saudi Arabia from an oil based economy, said:

"Manufacturing is 20th Century."

In that, it isn't driving anyone's economy anymore.

The sad thing is, a furnace and air conditioning system needs very little human labor. They are built by robotic manufacturing.

The humans are there just to bring in and direct the raw materials, and load the product onto shipping containers.

Mules basically.

Brando said...

"Where is this planet that has laissez faire capitalism? There isn't a nation on earth with such a thing."

There isn't, and never really will be. Think of laissez faire capitalism as a value system to strive for, while accepting that there are limits to how far we want to take it (e.g. moral hazards).

Government interference isn't always in every form wrong, of course. But we have to at least recognize the market forces that affect everything when we use it. For example, a higher minimum wage isn't going to make a job that's only worth $8 an hour to an employer suddenly be worth more. Government may still decide to impose the minimum, but it must accept the consequences (or it could just lie about it).

tcrosse said...

Since Obama is still POTUS, one must ask whether Carrier allows trans-gender employees to use the bathroom of their choice.

n.n said...

Capitalism is a price determination mechanism. Whether it is capitalism or some Marxist derivative (e.g. communism, socialism), there is an unavoidable need to distribute products and services in a world where they are finitely available and accessible. The Capitalist mechanism is correlated with labor and production, while the Marxist mechanism is correlated with politics and planning. Whereas the establishment of monopolies and practices is the bane of capitalism, progressive corruption and preferences are the bane of Marxist derivatives.

Martin said...

This used to be called "jaw-boning" back when JFK and LBJ did it.

Yes, it is not a substitute for real policy, but it looks like it is tied to real policy--reform of the corporate income tax, a headline issue of Trump's.

The controversy over inversions was a perfect opportunity for the Democrats to get out front on corporate tax reform as an instrument of economic improvement--but being statists, they chose to club potential inverters rather than address the underlying tax incentives. Now, it's Trump's issue.

AllenS said...

Assembling furnace and air conditioning systems require a large human presence. Did you not see videos on tv of the shop floor of Carrier, coupe?

Larry J said...

"Political symbolism aside, saving 1,000 Carrier jobs doesn’t loom so large in an economy that’s created an average of 181,000 jobs a month this year, noted Jared Bernstein, a liberal economist who served as adviser in the Obama administration from 2009 to 2011."

How many of those 180,000 jobs created each month are full time at a good salary and benefits, like those 1,000 Carrier jobs? Odds are one of those Carrier jobs is worth several of the new economy jobs.

As for improving the business environment in the US, I read recently there are some 450,000 pages of government regulations in effect. While not all regulations apply to every business, the cost of complying with government regulations is high. Some of these regulations are beneficial while others produce nothing of value except protecting and expanding the bureaucracy. Supporting the good regulations while eliminating the bad ones should be a priority. Likewise, the US has high corporate taxes with very high compliance costs. Trump can go a long way towards making the cost of doing business in the US more competitive by reducing regulatory and tax compliance costs. Do those things and watch the economy boom.

paminwi said...

CNBC says United Technologies, of which Carrier is a part, has $6 BILLION in DOD contracts. They can afford to do this and did it not to piss off the new administration.

paminwi said...

A Reasonable Man:this was truly NOT the Feds making this deal. This was the State of Indiana making the deal. As it should be. The Feds should stay out of micromanaging businesses. I hated the car company bailouts because of the crap the Feds did. I would have hated this, too if the Feds were making the deal.

Alexander said...

So Carrier is keeping 1,000 jobs in the Great Lake States...

Let's assume that between the worker, the worker's spouse, and jobs dependent on those jobs (local retail/service sector), we're talking 5,000 voters. We could go on all day about the ripple effects, concerned workers in other sectors, empathy in the community... but keep it simple, 5000 voters where this was a Yuge issue.

Trump won Michigan by 11,000 votes
Trump won Wisconsin by 30,000 votes
Trump won Pennsylvania by 70,000 votes
Trump lost Minnesota by 40,000 votes

Call me crazy, but maybe - even for purely political reasons - coastal Democrats should be a little more interested in saving a thousand jobs.

Unknown said...

I applaud Trade Rep. Donald Trump for the 1000 jobs saved. In context, I would have to say I would still condemn President Elect Donald Trump for fecal pollution of the great name of the USA.

Cheers, peasants!

320Busdriver said...

"Get in the back, we're drivin now!"

EMD said...

"A precedent has been now set that having the federal government micromanage individual companies to take account of interests other than shareholder value is a good thing"

Good thing Trump doesn't work for the Federal Government until January.

EMD said...

"Cheers, peasants!"

Fuck off.

Livermoron said...

Obama couldn't save those jobs...didn't save those jobs, because he didn't care enough to put in any effort.

bagoh20 said...

" it's just false, empirically and historically, to say that "the lack of competition imposed by protectionism always results in lowered quality and ends up making a people poorer".

I know. Sometimes it even leads to a worldwide depression.

The folly of protectionism in the modern time is that even if we restrict our own access to products, that won't stop foreign workers from making them, especially with modern communications and manufacturing that allows copying of technology to be fast and easy. Our international competitors will copy our products at will and sell them to the world at costs we can't compete with, and we will be the only ones who can't buy them cheap.

In addition, without the trade agreements to use as leverage, your proprietary protections can be ignored even more than now. Sure they lose a big market here, but eventually we lose too. The only way Trump's protectionist threats help is if they are limited to truly unfair practices and are rarely used at all. If we go to war on trade, everybody loses and the people with the most to lose, lose the most, and that's us.

bagoh20 said...

On this Carrier deal, it's important to know that the majority of the jobs that were leaving are still leaving: 1200 leave and 1000 stay, maybe.

Alexander said...

It's funny that we don't allow free trade in doctors and lawyers. Or politicians! Imagine if you had to be a certain age, reside in a certain place, be a citizen just to manufacturer hats!

AReasonableMan said...

paminwi said...
A Reasonable Man:this was truly NOT the Feds making this deal.


paminwi said...
CNBC says United Technologies, of which Carrier is a part, has $6 BILLION in DOD contracts. They can afford to do this and did it not to piss off the new administration.


The stick is the Feds.

Brando said...

"In addition, without the trade agreements to use as leverage, your proprietary protections can be ignored even more than now. Sure they lose a big market here, but eventually we lose too. The only way Trump's protectionist threats help is if they are limited to truly unfair practices and are rarely used at all. If we go to war on trade, everybody loses and the people with the most to lose, lose the most, and that's us."

I'm hoping it's just bluster--an actual tariff war would be a mess. But putting some new protections (particularly over our IP when dealing with countries like China) would be helpful.

"It's funny that we don't allow free trade in doctors and lawyers."

We absolutely should. Not going to happen, but we should.

readering said...

The term jaw-boning goes back at least to Herbert Hoover, trying to get companies not to reduce wages in the Depression.

Alex said...

Well he did write "The Art of the Deal". I still haven't read it, but I probably should.

Alex said...

Trump is going to throw whatever red meat to the white working class voters who put him in office to make sure he maintains momentum for 2018/2020. Even if it's against economic sense or absolutist free trade. Milton Friedman would be very upset.

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hstad said...

Bernstein - "....no one should confuse what Trump is doing here with sustainable economic policy.” Oh, expert, you mean those wonderful economic results over the past 20 years which produced no noticeable income increases for the middle class? Truly astounding how stupidity rules the elites.

“The difference between genius and stupidity is that genius has its limits.” – Albert Einstein

Sydney said...

@Alexander- some medicine is free-trade. There are radiologist services based overseas that read x-rays, MRIs, CT scans, etc. Now that diagnostic imaging is digital, they can send it over the internet and get cheaper readings. Some fear telemedicine will do the same for other branches of medicine.

SukieTawdry said...

In exchange for keeping the factory running in Indianapolis, Mr. Trump and Mr. Pence are expected to reiterate their campaign pledges to be friendlier to businesses by easing regulations and overhauling the corporate tax code, according to a spokeswoman for Mr. Trump.

Yes, taxes and regulations loom large in these decisions. But the biggest factor is usually the cost of labor (and Carrier is a union shop). There's not much Trump or any other president can do about that other than slap tariffs on products made where labor is cheap.

Anglelyne said...

me: it's just false, empirically and historically, to say that "the lack of competition imposed by protectionism always results in lowered quality and ends up making a people poorer".

bagoh20: I know. Sometimes it even leads to a worldwide depression.

Glib answer, and stupid.

But you're welcome to go on record insisting that, historically, every nation that went from poverty to wealth did so by eschewing protectionism, subsidies, and industrial policy, and embracing free trade.

Anglelyne said...

bagoh20: The folly of protectionism in the modern time is that even if we restrict our own access to products, that won't stop foreign workers from making them, especially with modern communications and manufacturing that allows copying of technology to be fast and easy. Our international competitors will copy our products at will and sell them to the world at costs we can't compete with, and we will be the only ones who can't buy them cheap.

And by "historically", I mean the post-WWII period to the present.

People have always copied products. (The 19th-century protectionist U.S. filched and copied every piece of free-trading Britain's manufacturing mojo it could get its hands on.) But if protectionism "never worked", a lot of currently First World, very recently (as in post-war 20th-century recently) poor countries, wouldn't be First World right now.

Anglelyne said...

bagoh20: In addition, without the trade agreements to use as leverage, your proprietary protections can be ignored even more than now.

Lol. "Even more than they are now". Lol^2

"Leverage" is another word for "getting trade agreements that benefit you". Which boils down to threats of..wait for it...protectionism. Too bad the "free" traders have been insisting on pissing away all that "leverage" for a while now.

AReasonableMan said...

Anglelyne said...
People have always copied products. (The 19th-century protectionist U.S. filched and copied every piece of free-trading Britain's manufacturing mojo it could get its hands on.)


The point is not that intellectual property can be protected forever, it can't be. But you can slow and stifle your competition or you can just give it all away. I have a friend who worked in a mid-size pharmaceutical company. The company was largely family owned for a long time and did reasonably well. It was taken over in a semi-hostile takeover. Ultimately all the drug making functions of the firm were transferred to India. My friend's last job was to travel to India to teach them how to do perform drug manufacturing tasks that they had repeatedly failed to get to work, despite prior transfer of detailed protocols and endless Skype sessions. The mastery of making things is tricky, you can understand a task intellectually and have detailed protocols but without the appropriate expertise things often just don't work properly. The US gave away much of this unique skill set without getting much of anything in return except a few pieces of silver for a few bankers and factory owners.

dragyourbone said...

Wait, didn't Carrier receive money for staying?

Bad Lieutenant said...

MaxedOutMama said...
There were screams of wrathful agony on Democratic Underground.

He appears to have accomplished something before even taking office, and this will certainly make for a happier holiday season for many in the location.

Nor is keeping 1000 jobs at a factory only saving 1000 jobs. Generally the figure is 3-6 adjunct jobs for each actual manufacturing job - jobs in local services (retail, restaurant, education), jobs in support services, transportation, etc.

The point is that he tried, and politicians haven't BEEN trying, and maybe other politicians will sit up and take notice.

11/30/16, 7:50 AM



You know what? Economics be damned. That's five thousand families saved. That's 5,000 nieces and nephews who's Christmas will happen. That's five thousand sons who can go to college and get better jobs than their dads. That's 5,000 daughters who won't become crack whores.

That's five thousand families and their social networks full of voters who are all going to have pictures of President Trump on the wall in their living room like they used to have of FDR.

Keep telling me what a stupid shitty evil moron Donald Trump is. Go on, I like it. Tell me how he doesn't know what he's doing.

But you know what? That's President Trump to you. The funny thing it isn't even President Trump yet.

bgates said...

You know what? Economics be damned. That's five thousand families saved. That's 5,000 nieces and nephews whose Christmas will happen. That's five thousand sons who can go to college and get better jobs than their dads. That's 5,000 daughters who won't become crack whores.

Obama could have tried to do that. But he would have been criticized.

Rusty said...

"The mastery of making things is tricky,"
Yes. Yes it is. Which is why it is beyond the grasp of many.
One of my Drs sons is getting an advanced degree in "Sustainability". We both agreed that he will be a waiter for a long time.