For Donald Trump and Mike Pence, the news from Carrier looks like a slam-dunk: A company that was going to move 1,000 jobs to Mexico agreed to keep the factories open in Indiana after the president-elect and vice president-elect applied a little pressure. Indiana workers are cheering. Trump is basking in triumph. He promised in the campaign to apply his deal-making skills to stop U.S. manufacturing jobs’ exodus. Now he can claim some success even before being sworn in.
But after the celebrating should come some discomfort. Trump’s aggressive rhetoric suggests he sees nothing wrong with pushing corporate chieftains around in the name of making America great again.
Trump would do well to remember: He was elected president, not factory boss.
What makes capitalism strong are the forces of the market left to work their own magic. No free market is totally free, but the basics really matter: Decisions are made based on things like supply and demand, knowing information is open and rule of law secure.
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Still, politics laps at the edge all the time. Trump knows this better than anyone from his years seeking government permits and approvals in real estate and casinos. When government intrudes in service of the common good – regulating a product to ensure consumer safety, for example – that’s normal in a healthy society and is enhanced by nonstop political debate.
But what happens when the market gets thrown out of kilter because of political influence? When decisions are made not on the basis of market forces but something else? When a political boss puts his thumb on the scales? When a president does?
You don’t have to look far beyond America’s borders to see the disaster that can occur when wealth and power become too cozy, when an overbearing state begins to dictate business decisions. It drives the free-market mechanism into a ditch. Has everyone forgotten Gosplan, the Soviet Union’s central planning agency? Those brilliant thinkers tried to put their thumb on every scale, and it worked for a while — until it no longer worked at all. The point is not just historical; in many nations today, state-owned or state-controlled enterprises are little more than extensions of the political leadership. They are balky, coddled, inefficient behemoths, and usually piggy banks for rulers.
Do we want our president to be cajoling factory executives one by one? Such behavior seems to expose the president to risks, too. When do special favors and incentives to a company - or the pursuit of them - become something more sinister? Aside from warping market decisions, they could ensnare Trump or his administration in scandal. Just consider the ruckus over the Obama administration’s attempts to encourage clean energy – what Republicans dubbed the Solyndra “scandal” – to envision what might happen if the president starts actively intervening in corporate decisions. The already overworked K Street lobbyists and our money-saturated political system will gleefully wade into a new swamp.
How would Trump have reacted if President Obama had called him with a request to make a corporate real estate decision against what his business spreadsheets dictated? Would he have been happy about it?
Soon, perhaps once he takes office, Trump may grasp that this is not how to change the world. He might save Carrier’s jobs for now, but the big forces that are shifting manufacturing jobs abroad – and have been for decades – will not be slowed by his intervention. Those forces can be changed, if at all, by economic policy – not by presidential jawboning.
David E. Hoffman is a contributing edtitor to the Washington Post.