The moral of the Trump/Carrier deal is clear: if you’re useful to Trump, he might be willing to throw other workers overboard to help you
Donald Trump is getting lots of mileage out of the alleged deal that has been struck to keep a Carrier plant from moving to Mexico from Indiana. If any of the reporting about the deal is correct, however, Trump clearly sold out the working class that he claims his deal helped.
First, let’s be clear—if it’s true that 1,000 jobs are kept in the U.S. and these workers are not laid off, that’s great for them and any relief and gratitude they feel about this deal is justified. Losing a job is terrifying, particularly in a country where policy titled towards the already-rich keeps good jobs scarce and makes losing a job so economically devastating.
But, let’s also be equally clear that even if this was somehow a good deal from a public policy perspective, it’s an entirely not-scalable approach to solving the challenges of globalization. A world in which your job depends on whether or not you’re useful as a public relations prop for the President is not a recipe for broad-based security.
And, the deal is a policymaking disaster. The precedent it sets is horrendous. A company announced a plant would move. A president and vice-president-elect offered them a deal that included tax breaks to stay. Why wouldn’t every employer in the country now not publicly announce they’re moving unless they get some government largesse? One reason why they might not is that deal making includes using sticks as well as carrots: are we sure that Trump and Pence didn’t threaten retaliation via cut-off federal contracts or an IRS audit if Carrier left? Carrier is a major Pentagon contractor, so that’s plausible. As soon as Presidents start negotiating and making policy company-by-company in backrooms, this is a logical potential worry.
Further, the other broad outlines of the deal are that Trump and Pence agreed to stop pushing for a tariff against imports from Mexico (which would have hurt Carrier had they moved to Mexico and tried to export back to the United States) and promised to fast-track the push to cut corporate taxes and regulations. If Carrier was negotiating on behalf of the entire U.S. corporate class, well, I’d say that they fleeced Donald Trump, but that would presume he was actually sincere in trying to side with workers versus this corporate class. He wasn’t. Instead, the corporate-friendly agenda he is actually sincere about (huge tax cuts for corporations and deregulation) will deliver hundreds of billions to corporate owners and managers, but would strip regulatory protections from millions of workers and lead to an increased tax burden or spending cuts that reduce incomes for millions more.
The tariff that he promised on Mexican imports during the election would have provided protection for far more workers than those still employed at Carrier. To be clear—I’m not a fan of this promised tariff. It seems to me to be fighting the last war and it’s not smart policy. But at least it could plausibly be defended as a way to protect manufacturing workers in the U.S. from low-wage competition. But, it’s now back-burnered because a CEO promised to keep 1,000 jobs in the United States? And how long will these jobs stay? And what are the guarantees that Carrier won’t send another plant abroad?
Finally, the Carrier move was announced in March. Yet the hundreds of thousands of dollars of tax incentives the state and Governor and Vice-President-elect Pence offered in this deal were not accepted until this week. Why the progress now? Well, because it became a PR stake in presidential politics.
To step back, there’s a reason why Presidents and Congress should make policy and not undertake company-by-company negotiations in back-rooms. The reason is that policy sets rules and guidelines that make for a fair economy and help the most people. So, if you think the U.S. should charge a 35 percent tariff on imports from Mexico as a policy because it would be good for the U.S. economy, then you should do that (I don’t agree with this, as I noted above). But you shouldn’t threaten a 35 percent tariff on a particular business simply because they have become a potential PR nuisance. This is the definition of crony capitalism. Today’s “deal” is soft-pedaling tariffs, pledging to accelerate the coddling of corporations through tax and regulatory changes, and giving outright cash (tax breaks) to win a PR war. What’s tomorrow’s deal? Threatening company-specific regulatory scrutiny and tax audits to firms whose executives criticize policies of Trump?
Again, the lesson to American workers and companies here is clear: if you can manage to make your cause a helpful PR stunt for the Trump administration, he just might be willing to help you by giving a raw deal to other workers. But you better be the first in line and useful to Trump’s own political fortunes. In short, the Trump administration seems to have found creative new ways to make the U.S. economy even more zero-sum among the bottom 90 percent than it’s been in the past generation.