Ad Hoc Capitalism
I've blogged about this previously, but Larry Summers makes a more complete and troubling case about the potential impact of the pressure exerted on Carrier to keep jobs in Indiana. Think about it this way: some workers in Indiana (we don't yet know for sure how many) get to keep their jobs. People who buy the products produced in that factory pay more than they would if the products were produced cheaper in Mexico. How is this fundamentally different from taxing all of us to provide education and/or relocation assistance to the workers who would have lost their jobs? Now Carrier is exposed to lower cost producers outside the US, who could take market share away and cause the workers in Indiana to lose their jobs anyway. Of course, we could impose tariffs on those producers, which would make Carrier competitive again. Then other countries might impose tariffs on American goods, making us less competitive in markets outside the US... A vicious pattern that does no one good. Either we are a market economy based on known rules or we risk devolving into crony capitalism like Russia or China. Forget the cheerleaders lauding Trump's action. This was a bad decision.
Also see:
The Carrier Deal and the Peso.
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