Yes, Crony Capitalism Is Bad Whether It’s Obama Or Trump

As expected, Republicans are over the moon about Donald Trump’s announcement, along with Carrier, that Carrier will be keeping 1,000 jobs in Indiana. They seem not to care very much about how this deal was cut. As Trumpish spokesman Gateway Pundit covered breathlessly, a lifelong Democrat and Carrier worker was pleased, so pleased: “He spoke to me. He hit a chord inside me, he was talking to the working man. He was talking to the middle class…You’re not even the actual President of the United States yet, you’re the President Elect, but you’ve done more in your first three weeks of being elected than the current administration has done in the last nine months for us!”

It’s not just random people working at Carrier who are happy. House Freedom Caucus Chairman Jim Jordan (R-OH) said, “What I know is jobs that were slated to leave here, are staying. I think that’s positive, that’s good, that’s great.”

Of course, it does matter how the deal was cut.

So, here’s how it happened.

Vice President-elect and Indiana Governor Mike Pence offered a raft of incentives (read: bribes) to keep the Carrier jobs in state. Those included tax incentives that Carrier had previously rejected as insufficient. Why? Because Trump apparently threatened Carrier’s parent company with rejection of some $6.7 billion in federal defense contracts. Here’s Politico reporting:

John Mutz, a former Indiana lieutenant governor who sits on the agency’s 12-member board, told POLITICO that Carrier turned down a previous offer from IEDC before the election. He said he thinks the choice is driven by concerns from Carrier’s parent company, United Technologies, that it could lose a portion of its roughly $6.7 billion in federal contracts.

In other words, Trump threatened a domestic company with taxpayer dollars – we’d presumably have to pay more not to use Carrier’s parent company with regard to defense – so that he could get a headline.

That’s gross.

It’s also bad policy. As Keynesian leftist Paul Krugman points out, if we were to extend the logic of Trump’s Carrier deal, Trump would just turn into Obama:

Another metric: Trump would have to do one Carrier-sized deal a week for 30 years to save as many jobs as Obama’s auto bailout

— Paul Krugman (@paulkrugman) November 30, 2016

And that won’t work. As Robert Tracinski points out at The Federalist:

Spoiler alert: he is not going to save American manufacturing jobs, because China and Mexico are not the reason those jobs are disappearing. The big truth is that American manufacturing output has steadily increased all along and is at record highs. We still produce things in this country. But American manufacturing employment has been in steep decline, because while we produce more things then ever, we produce them with more machines and fewer workers…. We want to be a country with a skilled labor force capable of performing the more productive work involved in highly automated manufacturing. Automation literally is higher productivity, and higher productivity is prosperity. Trump is not going to change these big trends, because he is not going to overturn the laws of economics.

Republicans used to understand this.

I’m old enough to remember 2009, when Barack Obama singled out another blue collar company, Caterpillar, to use as his example of bringing jobs back to America. In February 2009, Obama visited Caterpillar, which was set to cut jobs thanks to the continuing manufacturing drain that has occurred continuously over the past several decades due largely to technological gains. Obama bragged, “Yesterday, Jim, the head of Caterpillar, said that if Congress passes our plan, this company will be able to rehire some of the folks who were just laid off. And that’s a story I’m confident will be repeated at companies across the country — companies that are currently struggling to borrow money selling their products, struggling to make payroll, but could find themselves in a different position when we start implementing the plan.” Obama used Caterpillar to pitch his massive stimulus boondoggle, including spending on infrastructure.

Then, in 2013, Obama bragged that he and he alone had achieved wonders by working with Caterpillar: “Our first priority is making America a magnet for new jobs and manufacturing. After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three. Caterpillar is bringing jobs back from Japan. Ford is bringing jobs back from Mexico. And this year, Apple will start making Macs in America again…There are things we can do, right now, to accelerate this trend.” Obama then called for specific use of Department of Defense contracts to push American manufacturing.

Conservatives rightly pushed back against all of this. They said that Obama’s stimulus spending was a waste of money, that it represented the worst of crony capitalism, that jobs had indeed continued to drain overseas despite Obama’s attempt at indirect redistribution.

But change out the names, and now everything’s fine. What’s more, stop asking questions of our beloved president! Why must we always look a gift horse in the mouth? Why can’t we just enjoy Trump’s triumphs?

Well, because it’s not a triumph for America when bad policy sets bad precedent. And it’s not a triumph for conservatives when such policy is integrated into the Republican Party playbook. Stamping a big T where a big O used to be doesn’t make crappy policy decent.