HVAC manufacturing company Carrier says it has reached a deal with President-elect Donald Trump and Vice President-elect Mike Pence to keep around 1,000 factory jobs in Indiana. The company, owned by defense contractor United Technologies, announced in February that it would close two plants, which would leave around 1,400 people out of work. The new deal would save some, but not all, of these jobs.
One of Trump’s major selling points to the American public was his promise to keep companies from exporting jobs (specifically, mining and manufacturing) to other countries. These manufacturing jobs were slated for a move to Mexico, which was a specific campaign talking point.
So, pats on the back all around? Not so fast. Let’s take a closer look.
How did Trump get Carrier to stay? They are on the record as wanting to see a cut in corporate tax rates, especially as it applies to revenues earned overseas. According to CNBC, the key word is inducements. Which means the company gets what it wants, and the rich get richer.
The truth is, manufacturing jobs are disappearing, and it’s only partially due to cheaper labor costs abroad. The fact is that technology is making many of those jobs obsolete. And economist Jared Bernstein warns:
“…No one should confuse what Trump is doing here with sustainable economic policy.”
And more alarmingly, this could set a dangerous precedent of corporate control of U.S. economic policy. If a company wants better taxes and more government subsidies, all they need to do is threaten to ship jobs to another country. A professor of economics at the University of Michigan agrees:
Every savvy CEO will now threaten to ship jobs to Mexico, and demand a payment to stay. Great economic policy. https://t.co/t2WAJOgh8F
— Justin Wolfers (@JustinWolfers) November 30, 2016
By the way, Carrier’s parent company United Technologies makes about $5.6 billion in annual revenue from U.S. government contracts. They also pay for nearly $1.5 billion of the company’s annual research and development budget.
Who’s controlling who, Mr. Business Professional?
Watch CNN’s coverage of the story here:
Featured Image: Screenshot Via YouTube Video.
