The Trump administration notched its first political victory Thursday. At a factory in Indianapolis owned by Carrier, Trump proudly announced the heating and air-conditioning company had decided to reverse its previous decision to close its Indiana-based furnace plant and move to Mexico, keeping 1,100 jobs in the United States.
According to the Trump team and various media reports, Carrier’s decision to stay directly resulted from an agreement the incoming Trump administration helped to broker between Carrier and the state of Indiana, which will reportedly provide $7 million in tax incentives to Carrier in exchange for a $16 million investment in the company’s facility in Indianapolis.
In his remarks given Thursday at the Carrier facility, Trump also alluded to the role threats of higher taxation had on keeping the company from leaving. “Companies are not going to leave the United States anymore without consequences,” Trump said. “Not gonna happen. It’s not gonna happen.”
Trump has repeatedly pledged he’ll help keep manufacturing jobs from moving to places such as Mexico by lowering corporate taxes and regulations and by imposing tariffs on goods sold by industries that choose to abandon American workers.
The Carrier deal aptly reflects Trump’s economic philosophy, which can best be described as a form of government-influenced, business-friendly deal-making — or “crony capitalism” for short.
Republicans and self-proclaimed conservative pundits have spent the better part of the past eight years attacking Democrats and President Barack Obama for their warm embrace of inserting government into every nook and cranny of our nation’s not-so-free free market. But now, the Republican president-elect is using precisely the same economic philosophy and many of the most powerful “conservative” figures seem quite pleased with the results.
For instance, Speaker of the House Paul Ryan (R-Wis.) applauded the deal. “I’m pretty happy that we’re keeping jobs in America, aren’t you?” Ryan said. “I think it’s pretty darn good that people are keeping their jobs in Indiana instead of going to Mexico.”
It’s never pleasing to see jobs leave America for greener tax and regulatory pastures, but the sort of taxpayer-funded crutches present in this deal are philosophically no different from the numerous government subsidies and regulatory schemes put into place by the current administration. If you’re a Trump supporter who hates Obamacare (and there are plenty of good reasons to do so), what’s the difference between the government providing subsidies to make health care more affordable for some people at the expense of others and the government providing subsidies to help some businesses but not others?
Before you answer that question, consider the reason conservatism has historically embraced the concept of the free market in the first place: When businesses are free to compete with one another and consumers are free to choose which businesses to purchase goods and services from, an intense competition emerges that drives prices down, the quality of life up, and promotes innovation and efficiency. If businesses fail in a free market, they do so because the consumers have deemed them unworthy of their hard-earned wages. If businesses fail in a market dominated by government-mandated crony capitalism, they do so in part because consumers have rejected them and in part because the government has chosen to invest its resources in other competitors or target its regulations at some industries over others.
It’s Obama’s crony capitalism that drove private student lenders out of the market in favor of the government, causing tuition prices to skyrocket. It’s crony capitalism that’s responsible for the massive consolidation of health insurance companies and banks over the past eight years. It’s crony capitalism that destroyed coal country and subsidized failing wind and solar companies, such as the $500 million boondoggle Solyndra.
Republicans were right to stand against these disastrous policies, and consistent conservatives would stand now against Trump’s decision to promote further government interference.
Justin Haskins (Jhaskins@heartland.org) is executive editor of The Heartland Institute.