President-elect Donald Trump spent his Thanksgiving negotiating with Carrier, an air conditioning manufacturer that planned to move about 2,000 jobs from Indiana to Mexico. As we learned a week later, Trump’s negotiations were something of a success: in exchange for about $7 million in special tax breaks — plus the assurance that its valuable federal defense contracts would not evaporate — Carrier agreed to keep not quite half those jobs in America.
Since the deal was confirmed, Trump and his team have shouted its positives from the rooftops. A “thousand Hoosiers have certainty in their jobs and in their futures going into this Christmas season because of the leadership of Donald Trump,” Vice President-elect Mike Pence bragged to NBC’s Chuck Todd on Sunday, while Trump himself gave a typically adjective-laden speech layering all sides of the deal, once accomplished, with one superlative after another.
It’s true that there are good things about this arrangement. I too am happy for the hundreds of Indianans who won’t go into Christmas freshly unemployed, and I understand the perspective of those free marketers who hail any tax cut as a win.
But the problem is this isn’t just a tax cut, nor is it just a way to save some American jobs. There’s a lot more going on here, and former Alaska Gov. Sarah Palin — not regularly my political compatriot — is right to call it “crony capitalism.” (Her willingness to speak up is particularly praiseworthy given reports that she is, or perhaps was, under serious consideration for a Trump cabinet post.)
When the government intervenes in the market on behalf of a single business, Palin wrote in an op-ed late last week, “the invisible hand that best orchestrates a free people’s free enterprise system gets amputated.”
“Then,” she continued, “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.”
Palin’s prediction of special interest activity is already coming true. In fact, already since the Carrier deal, we’re already see indications of how Trump’s “day-by-day” plan to remaster the American economy will proceed.
For example, Mark Fields, the CEO of Ford Motor Company — which even before Carrier was sort of subject to Trump’s wheeling and dealing — responded to the news of the Carrier deal by indicating Ford would be open to similar negotiations with the Trump White House. “We will be very clear in the things we’d like to see,” Fields said, listing tax reforms, a relaxation of federal regulations, and free-trade arrangements as some likely demands.
Now, again, these are not bad things; I too like unfettered trade, lower taxes, and fewer regulations.
But you can see the problem with getting them this way, right? Trump has invited every unscrupulous business in the country to all but blackmail the federal government. He has in essence announced that all you have to do to get special treatment that will not be equally afforded to your competitors — especially smaller, family-owned businesses that would never think of moving overseas — is to ring up the feds and say you’re considering a move.
Trump has indicated D.C. has a fresh offering of special favors for sale, and companies absolutely will go shopping.
And this could well get worse: Once actually in office and thus able to dispense federal monies, I would be zero percent surprised if Trump began offering outright subsidies (infusions of federal cash — bribes, basically) to corporations threatening to bolt.
Given his well-established love of eminent domain, it’s not difficult to imagine he might even use land redistribution to prevent outsourcing. Imagine, for instance, if a company says, “Hey, we’re leaving unless the government will use eminent domain to get us this piece of land we want for our new factory because we can only be profitable with that one plot.” Well, the president-elect has already established that he’s literally willing to steal old ladies’ houses, so his answer to that demand would likely be an eager “yes.” It’s exactly the type of crony capitalist deal Trump tried to make for his own business.
In a tweetstorm Sunday, Trump said he plans to levy a 35 percent tax on companies that outsource to make it economically infeasible. “THE UNITED STATES IS OPEN FOR BUSINESS,” he concluded, but in fact the opposite is true. Trump’s vision of himself as economic puppet-master is blatantly authoritarian and arguably even fascist, complete with state favoritism and a massive tax hike. His cronyism encourages business to corruptly manipulate government and government to corruptly manipulate business — and in the end, I suspect, the main thing that will be open is the taxpayer’s wallet.