Wednesday, November 30, 2016

Carrier Capitalism

According to very reliable press reports United Technologies, the parent corporation of Carrier, has promised the incoming Trump Administration to remain in Indiana instead of moving its heating equipment parts facility to Mexico. From a political standpoint this represents a "YUGE" victory for Donald Trump. Simply put, he promised to save the approximately 1000 jobs and he delivered.

In exchange for staying United Technologies relied on the promise of fundamental tax reform being offered by President-elect Trump and a modest amount of tax incentives offered up by Indiana Governor and Vice-President-elect Mike Pence. This act will certainly put Congress under the gun to act on his proposal. What is left unsaid is the fact that United Technologies does about $6 billion worth of business with the Department of Defense. It certainly wasn't worth it for them to get off on the wrong foot with the new administration.

What is troubling about the whole transaction is the direct involvement of the incoming administration to get involved in what is essentially a private decision. Is this a one-off event or will we see a line-up of corporations announcing moves to Mexico in order to extract concessions? What we have here is the President-elect acting as a governor. Governor's do this all of the time for the benefit of the corporate sector at the expense of the taxpayer. "Crony capitalism" if you will.

My guess is that it won't be the first time and we will see President-elect Trump with his gazillionaire cabinet acting as a Jacksonian tribune of the people. But make no mistake, politically it was brilliant. 

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