Because market freedoms create an environment for economic growth, thriving businesses and job creation, many people confuse “pro-market policies” with “pro-business” favors.
But they aren’t the same thing, and President-elect Trump hurts his own agenda when he conflates the two. He did so at the Indiana Carrier plant Thursday, when he announced a deal to keep some Mexico-bound Carrier jobs in Indiana.
The deal is bad policy because it is loaded with at least $7 million in corporate welfare. It’s bad politics because it rhetorically demolishes the crucial distinction between free-market policy on one hand, which benefits all businesses and thus the whole economy, and corporatism on the other, which benefits the big and well-connected.
Trump is fortunate that his vice president-elect, Mike Pence, also happens to be Indiana’s governor. Carrier is lucky, too. Pence extended a $7 million tax break to the manufacturer this week. This is a subsidy. It is what Republicans spent the past eight years blasting as corporate welfare and crony capitalism.
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When you pick a winner, you automatically pick a thousand losers: smaller companies who lack Carrier’s clout, less-connected companies not close to Pence and so on. The economy loses because corporate welfare means politicians rather than markets are deciding the allocation of money and resources. It’s the opposite of free market economics.
There is also moral and political cost. Every corporation big enough to throw around some weight can threaten to leave the country and expect to get some government goodies to placate them. Trump explicitly welcomed other big companies to “negotiate good deals with the different states and all of that.” This corrupts both business and government.
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What Trump promised Carrier is a cocktail of reg and tax reform spiked with a shot of corporate welfare >> https://t.co/f61j5ZohNr
— Tim Carney (@TPCarney) December 2, 2016
The Wall Street Journal's editorial board denounces Trump's Carrier deal as a "shakedown." https://t.co/bp2LeB2IFf
— Matt Pearce (@mattdpearce) December 2, 2016
It got little mention over the past couple days, but Trump has financial investments in Carrier’s parent company https://t.co/bKx3ltrTDi
— Sam Stein (@samsteinhp) December 2, 2016
It’s no different than paying terroists ransom for hostages. Big corporations that have clout can hop on the “I’m leaving or else” train and get some bennies too at the taxpayer’s expense.
How Trumpsters can think this is a great deal for American I do not understand.
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