A short-lived victory?

Stephen Green links to a story at The Blaze by Sara Gonzales in which the CEO of Carrier admits that Carrier plans to automate their Indiana plant.

CEO of Carrier’s parent company United Technologies, Greg Hayes, confirmed to CNBC this week that it would ultimately mean fewer jobs available at the facility.

“We’re going to…automate to drive the cost down so that we can continue to be competitive,” Hayes said.

“Is it as cheap as moving to Mexico with lower cost labor? No. But we will make that plant competitive just because we’ll make the capital investments there. But what that ultimately means is there will be fewer jobs.”

In lieu of moving to Mexico, Carrier decided to stay in the United States and save 800 out of 1,400 jobs at the plant, in the short-term future. Carrier would not comment on how many of the 800 remaining jobs would be replaced by automation, or when that would happen.

Read more here.

Is the Carrier deal crony capitalism?

It sounds to me like Sarah Palin has some reservations about the Carrier deal. She writes at Young Conservatives,

I am ecstatic for Carrier employees! Their bosses just decided to keep shop onshore. What a relief for hundreds of workers. Merry Christmas Indiana!

We don’t yet know terms of the public/private deal that was cut to make the company stay, but let’s hope every business is equally incentivized to keep Americans working in America.

Foundational to our exceptional nation’s sacred private property rights, a business must have freedom to locate where it wishes. In a free market, if a business makes a mistake (including a marketing mistake that perhaps Carrier executives made), threatening to move elsewhere claiming efficiency’s sake, then the market’s invisible hand punishes. Thankfully, that same hand rewards, based on good business decisions.

But this time-tested truth assumes we’re operating on a level playing field.

When government steps in arbitrarily with individual subsidies, favoring one business over others, it sets inconsistent, unfair, illogical precedent. Meanwhile, the invisible hand that best orchestrates a free people’s free enterprise system gets amputated. Then, special interests creep in and manipulate markets. Republicans oppose this, remember? Instead, we support competition on a level playing field, remember? Because we know special interest crony capitalism is one big fail.

Politicians picking and choosing recipients of corporate welfare is railed against by fiscal conservatives, for it’s a hallmark of corruption. And socialism. The Obama Administration dealt in it in spades. Recall Solyndra, Stimulus boondoggles, and all their other taxpayer-subsidized anchors on our economy. A $20 trillion debt-ridden country can’t afford this sinfully stupid practice, so vigilantly guard against its continuance, or we’re doomed.

Reaganites learned it is POLICY change that changes economic trajectory. Reagan’s successes were built on establishing a fiscal framework that invigorated our entire economy, revitalized growth and investment while decreasing spending, tax rates, over-reaching regulations, unemployment, and favoritism via individual subsidies. We need Reaganites in the new Administration.

However well meaning, burdensome federal government imposition is never the solution. Never. Not in our homes, not in our schools, not in churches, not in businesses.

Gotta’ have faith the Trump team knows all this. And I’ll be the first to acknowledge concerns over a deal cut by leveraging taxpayer interests to make a manufacturer stay put are unfounded – once terms are made public.

But know that fundamentally, political intrusion using a stick or carrot to bribe or force one individual business to do what politicians insist, versus establishing policy incentivizing our ENTIRE ethical economic engine to roar back to life, isn’t the answer. Cajole only chosen ones on Main St or Wall St and watch lines stretch from Washington to Alaska full of businesses threatening to bail unless taxpayers pony up. The lines strangle competition and really, really, dispiritingly screw with workers’ lives. It’s beyond unacceptable, so let’s anticipate equal incentivizes and positive reform all across the field – to make the economy great again.

Trump critic Williamson criticizes Carrier deal

At National Review Kevin Williamson looks unfavorably at Trump's Carrier deal.

relieving someone of an ordinary expense incurred in the normal course of affairs — as opposed to changing general tax law — is a gift. This is true both as a matter of law and of our ordinary experience. If I am, for example, a car dealer trying to win influence with a politician, and I sell him a new car at $50,000 under the price that I charge other customers, then I have paid him a $50,000 bribe. People go to jail for that. You’ll recall that part of the Barack Obama–Tony Rezko scandal was the accusation that Rezko had arranged for the promising young politician to buy a house at $300,000 under its asking price. Rezko didn’t give Obama $300,000 in this scenario — he just saw to it that Obama didn’t have to spend that $300,000. That is why bribery laws generally specify “any pecuniary benefit” rather than a duffel bag full of cash.

For Carrier’s accountant, any pecuniary benefit will do. So far as the bottom line is concerned, a $7 million tax credit is the same as a $7 million check or $7 million in Apple stock or $7 million in gold. It’s all +$7 million on the line where you want it.

The ethical question is more complicated than the pop-cons let on, too. Our government runs deficits, which means that a federal tax credit of $1 million given to Smith is $1 million in taxes that eventually will have to be paid — by Jones, and Wilson, and Humperdink — with interest. Carrier is a division of United Technologies (the Otis elevator and Pratt & Whitney engines people), which is first and foremost a government contractor, a firm that derives at least a quarter of its revenue from government contracts, and 10 percent of it from Pentagon contracts alone. It is a company that has competitors — competitors who employ Americans and pay taxes, just as Carrier does. These firms and their employees are put at an economic disadvantage by the subsidies paid to Carrier thanks to Trump and Pence. That means that some of these companies probably will be less profitable, and that they will not hire people they otherwise would have hired. But you’ll see no Trump press conference celebrating that. This is a case of Frédéric Bastiat’s problem of the seen vs. the unseen. The benefits are easy to see, all those sympathetic workers in Indiana. The costs are born by sympathetic workers, too, around the country, and by their families and by their neighbors. But those are widely dispersed, so they are harder to see and do not hit with the same dramatic impact.

But the math is the math is the math. Trump and Pence are trying to sell you a free lunch, the same way the Keynesians and their magical spending multiplier do when they promise that government stimulus programs (Trump is pushing one of those, too) will somehow magically pay for themselves.

There is no magical revenue fairy. And, as a budgetary matter, targeted tax benefits are identical to spending, both for the government and for the beneficiary. This is not a question of ethics but a question of accounting. Somebody always has to pay the bill, eventually. It probably won’t be the pop-con on the radio telling you that we can make money by giving it away, so long as we give it away to the right sort of people: Solyndra bad, Carrier good.

Read more here.

Carrier to keep most of its jobs in the US.

The Carrier plant in Indianapolis. The company had previously announced plans to move 2,000 factory jobs from Indiana to Mexico. Credit Joshua Lott for The New York Times
Nelson Schwartz reports in the New York Times,

From the earliest days of his campaign, Donald J. Trump made keeping manufacturing jobs in the United States his signature economic issue, and the decision by Carrier, the big air-conditioner company, to move 2,000 of them from Indiana to Mexico was a tailor-made talking point for him on the stump.

On Thursday, Mr. Trump and Mike Pence, Indiana’s governor and the vice-president elect, plan to appear at Carrier’s Indianapolis plant to announce they’ve struck a deal with the company to keep a majority of the jobs in the state, according to officials with the transition team as well as Carrier.

Read more here.