But to reverse free market forces does nothing but lower the standard of living for both countries. It displays a complete lack of fundamental economic undersatanding, specifically the Law of Comparative Advantage.
Yet. the boorish act is being viewed in Trumpland as something heroic.
This is the Drudge headline:
Whatsmore, the deal was done on the backs of Indiana taxpayers.
Sean Colarossi makes clear what really went down:
The president-elect is likely to claim that his great dealmaking skills are responsible for making the agreement happen, but what he won’t say is that United Technologies – Carrier’s parent company – was basically bribed with taxpayer dollars to keep a few hundred jobs in Indiana – and it had nothing to do with Trump himself...
According to CNBC, “There were new incentives on offer from the state of Indiana, where Pence is governor, that helped clear a path for the agreement.”
In other words, Pence served up a massive, taxpayer-funded handout to the company in order to score a short-term PR win. Trump will claim victory on Thursday when, really, it was a state-funded handout that convinced Carrier to keep some of its employees in the state.A bully is about to enter the White House, who appears willing to go to great degrees and trample over free markets for a photo op.
-RW
Why are you against tax breaks, Wenzel? Isn't taxation theft?
ReplyDeleteI really want to know how Carrier or any other manufacturer moving can accurately be described as "free market forces" when the whole economic structure cannot be described as free market? Or are we merely free market because we have a stock market and a choice between 4 brands at the store? I'd say we have maybe a 50 to 60% free market structure.
ReplyDeleteI agree.
DeleteRe: AJO,
Delete─ I really want to know how Carrier or any other manufacturer moving can accurately be described as "free market forces" when the whole economic structure cannot be described as free market? ─
Because they're making the decision to move to Mexico on their own, after a cost/benefit analysis. They're still free to do so.
Instead, today they are likely staying in Indiana - at least part of the business - only because they were bullied or bribed by El Trumpo.
Yet, Trump is a "bully". Is this some kind of shocker? Isn't Hideous Hillary also a "bully"? How about Obama, Bush Jr., Bill Clinton, Bush Sr., etc. etc.? If there has ever been a president who wasn't a "bully", I'd like to know who that might be.
ReplyDeleteAnt to Matt@Sccidentalism.org's point, if the company left Indiana, they'd get no tax from the company, so if they cut a break to keep the company, that's actually a bit capitalistic (leaving aside the question of the initial violation of the NAP from the original tax). Companies cut deals with each other all the time to keep business with them when a competitor offers a better deal.
ReplyDeleteWe need more of this type of competition in government. It's one reason federalism is somewhat better than centralizing all power in Washington.
Re: Unknown,
Delete─ if the company left Indiana, they'd get no tax from the company, so if they cut a break to keep the company, that's actually a bit capitalistic ─
It's actually quite *Fascistic*, U. The state gets to play winners and losers with someone else's money.
─ We need more of this type of competition in government. ─
What "we" need, U, is no government intervention and not these backroom deals that serve to get great headlines but do nothing for Carrier's customers or share holders.
Letting people or companies keep more of their money as an incentive to stay in a state is not fascism.
DeleteYou have no idea what will be better for Carrier's customers or shareholders. They made the decision to stay, so unless some as yet undisclosed threat was used, presumably this decision is best for the customers and shareholders.
There shouldn't be government interference in business, but there is, and pretending that every movement toward liberty has to be all-or-nothing means it will always be nothing.
Re: Unknown,
Delete─ Letting people or companies keep more of their money as an incentive to stay in a state is not fascism. ─
"More of their money" means a tax rate reduction just like Robert is saying. Using taxpayer money to BRIBE companies to stay IS Fascism.
─ You have no idea what will be better for Carrier's customers or shareholders. ─
Carrier DID, and they had decided to move the operation to Monterrey. Trump DOES NOT KNOW, either.
─ They made the decision to stay, so unless some as yet undisclosed threat was used, presumably this decision is best for the customers and shareholders. ─
Of course heeding a threat brings a net benefit but that does not mean the decision was voluntary.
─ There shouldn't be government interference in business, but there is, and pretending that every movement toward liberty has to be all-or-nothing means it will always be nothing. ─
That's not the case here, U. Of course a little more freedom is better but bribing a company to keep its operation within a state or threatening it is NOT the same as inching towards freedom. Both those things are, instead, the disgusting acts of an authoritarian regime interested in public relations and not liberty.
Without an equivalent cut of spending somewhere in the budget, either some other party(s) will get a tax increase for that amount or it will borrowed from the public. Overall there’s no tax cut, just state manipulation of an industry for someone’s political gain.
DeleteYour wrong. The Law of comparative advantage assumes that both countries have the same rules and regulations. If we value workers safety, for example, more than they do in Mexico it would be unfair to an American company to bring in the same product from Mexico that was made without the same regulations protecting employees. Its not just safety. There must be a tariff or duty to account for differences. Another example is pollution. Why should an American steel company have to directly compete with a Chinese steel company when we put pollution restrictions on them while there are little or none on the Chinese company. Again, the law of comparative advantage worked great when there were no country specific regulations like in the 1800's but it doesn't work now without an adjustment.
ReplyDeleteRe: Unknown,
Delete─ Your [sic] wrong. ─
You're irony-impaired.
Moving on...
─ The Law of comparative advantage assumes that both countries have the same rules and regulations. ─
Laws don't assume. Only people assume. Anyway, your assumption is incorrect. The Law of Comparative Advantage works whether the regulations are the same or not.
─ If we value workers safety, for example [...] ─
I don't value it. Each worker should value his or her own. I value my own safety, because it's mine.
─ more than they do in Mexico [...] ─
Mexican companies have safety policies just like any other company. You're assuming they don't because you're a bigot.
─ Another example is pollution. Why should an American steel company have to directly compete with a Chinese steel company when we put pollution restrictions on them [...] ─
Because it's my money and I don't care about the American steel company enough to subsidize its problems. Am I being too "selfish"? Not patriotic enough? I don't give a rat's behind about any of that, either.
─ Again, the law of comparative advantage worked great when there were no country specific regulations like in the 1800's ─
The Law of Comparative Advantage works all the time. That's why it is a LAW.
Your wrong. The Law of comparative advantage assumes that both countries have the same rules and regulations. If we value workers safety, for example, more than they do in Mexico it would be unfair to an American company to bring in the same product from Mexico that was made without the same regulations protecting employees. Its not just safety. There must be a tariff or duty to account for differences. Another example is pollution. Why should an American steel company have to directly compete with a Chinese steel company when we put pollution restrictions on them while there are little or none on the Chinese company. Again, the law of comparative advantage worked great when there were no country specific regulations like in the 1800's but it doesn't work now without an adjustment.
ReplyDelete