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Trump-Carrier Deal Speaks Volumes

by John on 12/06/2016

Takeaways:

  • Carrier deal show sports media bias
  • Carrier deal shows most people are not ideological purists.
  • My own impure purity
  • Liberal and conservative research opposes Trump carrier deal

trump-carrierThe Trump-Carrier deal brought loads of responses on my social media pages.

One friend posted: Trump tax incentives costing IN taxpayers was the solution.

Another friend replied: Yes.. it cost Indiana $7 million in one time tax breaks to generate $64 million in saved jobs over the next five years that will produce revenues to all of the local people and businesses.  Lousy investment, huh?

And there is the argument.

There is enough evidence from the left and the right to agree with the first statement.  Giving a sweetheart deal to one company does not help everyone.

This National Review article – on the right – says the deal is economically unsound since these deals rarely spur widespread economic growth and the state government usually gets back only 20% of its investment.  Even liberal research agrees with the National Review on states giving sweetheart deals to keep companies.

These deals, it seems, based on these arguments against the deal:

  • Appear to be a form of political bribery since Carrier has other defense deals with the US government
  • Really will hurt the Indiana economy and not the overall US economy because other companies will want the same sweetheart deals that might not be given since the Trump-Pence spotlight might not be on them
  • Seem to hurt other companies that must compete with the chosen company; giving the government the role of picking winners
  • Contradict the notion of a free market where creative destruction can lead to companies to innovate.

But it’s hard to disagree with the second response.

  • We are keeping jobs.
  • Economic activity with millions of dollars can’t hurt the region.
  • A think tank that offers more libertarian ideas agrees, saying the move is a good idea since Trump is also offering to reduce regulations for all companies in the future.
  • And recent polls show the public is wildly popular about the Carrier deal just like the second response here.

Where do I stand?

I see both sides but I tend to lean toward the first argument — now.  The big reason I am non-committal is we need a long-term economic policy.  Another reason is Trump is still President-elect; let’s wait.

For instance, I’d feel more comfortable with this deal if we have real tax reform.  However, if tax reform is done correctly, wiping out the majority of tax giveaways, then we will know the real tax rate.  Right now, too many corporations and special interests have sweetheart deals that tend to hurt tax revenues, create an uneven playing field, and discourages job growth and innovation.

In addition to tax reform, we need a more comprehensive policy concerning trade and companies that need to expand overseas.  And that could get messy based on Trump’s meandering foreign policy tweets.

Sure, saving those US jobs and keeping them here makes sense.  Let’s give Carrier a chance to keep and expand those jobs while hopefully spurring competition for other jobs.  If anything this deal puts major pressure on corporate executives.  They now have to deal with a President who is apparently looking out for the worker — and not the shareholder.  This radically changes the CEO and boardroom mentalities.  It might just put a charge of innovation into US manufacturing.

However, we also can’t ignore the economic realities that countries like Mexico are beginning to train skilled labor that costs a lot less and would help the bottom line of many US companies.  Many of these US companies are competing against China.  Making this deal – in the long run – might hurt the competitiveness of US companies.  It’s hard to argue the math when other countries can produce cheaper products that we, even here in the US, want.  Mexico can become the next China. Plus, we need an ally on our border, not a combatant.

Where our political elites from both parties have failed – thanks to catering to political special interests — is ignoring the fallout from offshoring and trade deals that hurt the manufacturing workers by not offering economic support and retraining.

What’s my bias?  I have a travel show online and I desperately need free trade agreements so people will travel the world and use our discount travel engine.  I can’t ignore some issues harmful to me if Trump pushes some of his free trade and tariff ideas from the campaign.  Travel to and from Asia is going to be big; a military or trade war with China is not helpful.  Plus, I don’t want Trump getting in bed with the big tech and communications companies that will try to reverse net neutrality; I need my show to reach people around the world on the web without making our costs soar.

However, I still like to think I think like a real journalist and analyst looking at the ideas for the majority if not the whole – and the US as well as the world economy.  And if you sit and take the time to listen both arguments make sense.

Still, it is hard for too many of us to reach across and find both sides of the issue.

When I look at all the arguments, though good, they lack a recognition of other ideas.

Why is that?

  • First, we are political beings first. Politics, like sports, is in our DNA.  We have a sports mentality to root for our side against the other.  Some Trump critics have accurately pointed out that if Barack Obama had intervened the way Trump did he would have been labeled by the same Trump supporters as an interventionist and someone who is ruining the free market. And conversely, Trump detractors, who are most likely Democrats, seem a little out of place not rooting for keeping jobs.  The media plays to this bias.  I call it the sports bias.  They feed the fan, not the citizen looking for answers and solutions.
  • Second, we end up rooting for an individual rather than ideas because we can’t figure out what people really stand for. Trump-Carrier story shows how labeling people is difficult.  What is a true conservative or a true liberal? We don’t really know in this new economic age.  The reason is the economy is upside down compared to what we had in the 1960s through the 1990s.  In addition, both political parties started playing to each others bases.  There’s a reason why parts of the Democratic Party are in bed with Wall Street and many Republicans have garnered the vote of blue-collar workers. And it was odd that many of the things Trump was saying were echoed by Bernie Sanders.
  • Third, the debate on my pages also shows what Jonathan Haidt talked about in The Righteous Mind. Conservatives tend to be louder and more passionate.  As my social media responses show, my more liberal and moderate friends are not as fired up.

Where are you?

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