Carrier-And Why It Still Matters

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Image Credit: Tasos Katopodis/Getty Images

Donald Trump made headlines a couple of weeks ago on the left and right after brokering a deal with U. S. company Carrier, a manufacturer of air-conditioning units. After working through the executive powers of his VP and current Governor of Indiana, Mike Pence, (as well as likely leveraging the power of his future office in the White House), Trump tweeted that “It was a big day on Thursday for Indiana and the great workers of that wonderful state.”

That Thursday was a big day, but it remains to be seen whether the workers of Indiana are going to benefit.

Republicans have been decrying for years the massive issues and the ramose evils of government bailouts, (sometimes known by the more colorful name of Economic Fascism). When President Barack Obama supported the Auto Bailout and the Bank Bailouts, many Republicans refused to cooperate, calling it a sham of oversized government.

However, now with their own party firmly in power, Republican politicians and voters are growing calm in the boiling water as the tenants and ethics they pushed so loudly during Obama are destroyed by the rampaging elephant that is Donald Trump.

Donald Trump’s policies should not come as a shock to those who watched him carefully during the primaries and the general. He has a staunch ‘America First’ agenda and isn’t afraid to push it with whatever government power he has handy. While his desire to preserve American interests over foreign ones is commendable (that is his job as president), the methods he uses cause not only lasting shame to hypocritical Republicans, they cause the exact opposite of what he claims: America First.

But what is wrong with the deal that he used to secure 800-1000 jobs in Indiana? Why shouldn’t he use government power to fight corporate businesses sending jobs overseas? There are numerous reasons.

First, some facts. Carrier is owned by United Technologies, a massive corporation that does business internationally and with the Federal Government. Carrier had operated in Indiana for years before it decided prior to the election that it was going to move jobs down to Mexico to save costs. It turned down a 7 million check offered by the governor of Indiana (Mike Pence) because it was going to lose approximately 65 million dollars if it kept jobs there. 7 million wouldn’t cut it. After the election, Pence offered the same deal to them, and after Donald negotiated, Carrier took it and agreed not to send either 800 or 1,000 jobs down to Mexico (sources vary).

What was so wrong? Let us take a closer look.

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Photo Credit: Mike Segar/Reuters

The 7 million stands out very clearly, especially since it will be in $700,000 installments over the course of ten years through Indiana. It doesn’t even begin to recoup the 65 million that Carrier lost. There has to be another reason they would agree to lose such an egregiously large amount of money. The answer surfaces in the executive branch’s ability to negotiate deals for the military. While Pence was Governor of Indiana, he did not have enough leverage to make Carrier deal, but with Donald Trump potentially able to sever 6.7 billion in federal contracts with Carrier’s parent company United Technologies, negative 58 million looks like small potatoes.

To be sure, none of this is a known deal, but considering the circumstances, more than likely.

The next problem to skewer Trump’s dealings with carrier is that it does nothing to stymie the downward trend that has left America short 5 million manufacturing jobs since 2000. Trump’s deal- United Technologies contracts aside- is little more than corporate welfare. It suffers from the same pitfall of social welfare: it stifles the bleeding but prevents the cure; meanwhile, the patient slowly fades. 1000 jobs might be saved with this deal, but jobs will still leak away while America remains one of the highest corporate tax and regulation countries.

Next, it is not the government’s job to play favorites here. The government does not get to decide what private company the public’s tax dollars ought to benefit. This is regardless of whether it will save jobs. Anything other than total abstinence of government from private corporate finances (other than contracts), will artificially preserve horrible companies and stifle economic growth. The Soviet Union is a perfect example of this policy in action, where everything was operated on government dime, nobody had common luxury, and nothing they made was competitive on the global sphere. This is textbook crony capitalism.

On another point, Carrier raised the prices on its items shortly after the deal took place, putting the rest of America, who used their product, in a financially tighter place. This was natural, as they needed to recover the cost of continued American operation. However, this puts Carrier in a tougher position as it competes for sales. It is running behind its competitors because of Donald Trump’s personal decision to step in. If Carrier lags too far behind on the market, its ties to United Technologies aren’t going to save it, and that is far more than 1,000 jobs lost.

America needs a president who will look after her interests first, but so far, Donald Trump’s actions have not indicated that he will do this for her. He still has time to change his position, but with the Carrier Deal’s permeation of cronyism, economic shortsight, and potential contract threatening, he is already adding to the problem he is going to need to fix.

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