Trump’s Carrier deal is government busyness, not the government’s business
The strange thing about bailouts, such as the one Donald Trump and Mike Pence just organized for the Carrier air-conditioner company, is that they are detested in theory but relatively popular in practice, at least when they are put together by your guy. When Barack Obama boasted of having saved GM, he wasn’t scoffed at as a meddling know-nothing who used other people’s money to save incompetent corporate managers and rapacious union goons from their own stupidity and excesses — he was considered a friend of the working man, or at least a well-intentioned would-be friend.
The automaker bailouts were never generally popular. A small majority of Americans disapproved of them, but that majority was lopsided: Sixty-three percent of Democrats approved of the bailouts, while 73 percent of Republicans opposed them. Political tribalism is strong here: The Trump-Pence Carrier handout is supported by 40 percent of Democrats, 54 percent of independents, and a remarkable 87 percent of Republicans, according to a Politico poll.
Carrier, it is worth noting, is not a bankrupt, struggling dinosaur manufacturer like GM: It turned a handsome profit of $4 billion last year.
United Technologies, a large manufacturing conglomerate that owns Carrier along with Otis elevators and Pratt & Whitney engines, operates a few facilities in Mike Pence’s home state of Indiana. While the presidential campaign was under way, it announced that it was going to relocate one of those facilities, a furnace plant, to Mexico, along with the jobs associated with it. A second facility was to be relocated as well, affecting a total of about 2,000 jobs. That this was happening in his vice-presidential nominee’s backyard was embarrassing for Trump.
Trump likes to talk tough about trade and outsourcing, but his actual strategy with Carrier was the usual political approach: showering the firm with other people’s money. In exchange for at least $7 million in tax incentives, Carrier will . . . do almost everything it was planning to do anyway: It will close Indiana facilities, and it will move manufacturing and manufacturing jobs to Mexico. The fig leaf is 800 jobs that will be “saved” in Indiana, a figure that includes at least 300 positions that never were scheduled for offshoring to begin with. Carrier will be using those tax incentives to improve the automation in its U.S. facilities, i.e., to replace Indiana workers with robots instead of Mexicans.
United Technologies, like General Electric and Lockheed Martin, is deeply enmeshed in government. It derives at least 25 percent of its revenue from government contracts, 10 percent of it from the Department of Defense alone. It is not a company that can afford to have an enemy in the White House or the Pentagon. Which is to say that Trump, who prides himself on his negotiating skills, entered the negotiation with a very strong hand. Spending a few million dollars a year on more expensive labor in Indiana is chump change compared with the $5.6 billion in aircraft engines and components United sold to the federal government last year.
Set aside, for the moment, the fact that using those federal contracts as leverage is kinda sorta technically illegal. It is difficult to imagine that a mere matter of law would prevent Trump from playing that card, and knowledgeable players such as former Indiana lieutenant governor John Mutz, who sits on the board of the Indiana Economic Development Corporation, are frank about the larger financial stakes for United, as indeed is the firm’s CEO, who told Jim Cramer that the possibility of losing its government contracts weighed on his decision to give Trump a win in Indiana, however symbolic. In fact, Mutz’s organization had put together a similar proposal and was rejected by the company. Trump’s deal was substantially the same, but it was coming from the president-elect.
So, why didn’t Trump get more?
The answer is probably straightforward: He didn’t need more. Trump began his public life as a creature of the tabloid press in New York and is now a creature of social media. He was an incompetent casino operator and hotelier, but he understands publicity and has a genuine gift for it — without that, he’d just be another Fifth Avenue doofus who inherited a $200 million real-estate portfolio from his dad. There will be a day or two of headlines with the words “Trump,” “deal,” “Indiana,” and “jobs,” and that suits Trump. The emptiness of the deal will be documented and lamented by the 0.4 percent of Americans who follow these things closely.
The Carrier bailout is awful, of course. It is a case of two politicians’ using public funds to bribe a business into doing things that benefit them personally and politically while creating no real long-term economic value. Pence, who dropped his free-market principles like the world’s hottest potato once he got within sniffing distance of presidential power, can burnish his populist credentials at the taxpayers’ expense, and Trump can get ready to flit on to the next publicity stunt.
But the emerging “Superman” politics here are truly poisonous. One of the genre conventions of superhero stories is the compression of all the world’s drama into the immediate presence of the hero — only his actions and intentions are relevant. People may be dying all over the world, but Superman saves Lois Lane. (Comic-book movies have lately subverted that convention by focusing on the collateral damage done by superheroes to the cities in which they live.) What that means in the context of our contemporary presidential politics is that no one takes any note of the fact that Carrier is not the only HVAC company in the United States or the only industrial concern in Indiana. Carrier has competitors that employ Americans, pay taxes, and produce real economic value, and they have been put at a relative disadvantage by the political favoritism extended to Carrier. What about them? They’re not on the stage, so they do not matter.
What is important to understand here is that this is not part of an economic-development agenda: It is theater. It is an adolescent fantasy of political power, and wherever Superman happens to land is where the action is. Nothing else is relevant. It does not matter that there is no broader logic at work: Small displays of efficacy can work to create an illusion of general efficacy. It is busyness as business.
This is, by his own account, Trump’s conception of the purpose of the presidency: to go from situation to situation and “make deals.” But a long-term economic program for the United States — one that accounts for, e.g., that big automation investment in Indiana and what it means for the future of the American work force — is not a deal to be made. Preventing a single symbolically important act of offshoring is a fundamentally different thing from understanding the underlying economic forces that make that offshoring attractive — as the Germans will tell you, it isn’t just about low wages — and governing in a way that puts those forces to work in Americans’ interests.
Trump’s big idea so far is spending $7 million of other people’s money to delay an embarrassing headline. Some deal. Some deal-maker.