In an NPR discussion about the deal struck by President-elect Trump with Carrier to keep a plant in Indiana, he says,
There’s plenty of talk that the reason Carrier went along with the deal was because they were afraid their parent company would lose a lot of defense contracts. So this now creates the specter of a president always being willing to punish or reward companies depending on whether or not they give him a good press release.
Why would progressives be inclined to agree with Cowen?
1. They hate Mr. Trump.
2. They do not agree that keeping this plant in Indiana served a compelling and long-standing public purpose. They might even understand that we have an economy in which free trade ultimately is what serves the public purpose.
3. They do not like the idea of businesses being offered carrots and sticks to do things to allow a president to score points with a constituency (“give him a good press release.”)
4. They do not like the idea of policy made in an ad hoc manner between the president and an individual firm, as opposed to policy that is embedded in legislation that affects all firms.
The trap here is that because of (1) progressives might start to reflect on (2) – (4).
Consider, for example, the Obama Administration’s mandate for contraception coverage in health insurance. This forced some businesses, such as Hobby Lobby, to offer contraception coverage when they did not want to do so. How did this differ from what Mr. Trump did to Carrier?
1. Progressives do not hate Obama. However, on reflection they would realize that this cannot be a defense of the contraception mandate.
2. Progressives believe that contraception coverage is important. However, if you took a vote, I bet that more people would prioritize “keeping jobs in America” than having contraception coverage in health insurance. It seems to me that the “compelling and long-standing public purpose” argument would be a stretch.
3. The contraception mandate certainly allowed the Democrats to score points with a constituency that they consider important. It was an important issue for feminists. So I do not think that you can find the difference between the contraception mandate and the Carrier deal here.
That leaves only (4). The contraception mandate was given to all health insurance providers under the Obama Administration’s interpretation of the Affordable Care Act. It represents the rule of law (ish) and not a one-off transaction. Even there, Donald Evans makes the counterpoint (in the same NPR discussion) that
I don’t think it’s a bad thing for the president to send the strong message to the workers of America that he’s going to create the environment for them to do well right here and – and send that same message to the corporations of America.
Mr. Evans seems to me to be saying that Mr. Trump will put generic policies in place that will pursue the goal of keeping plants in America. One can argue that the goal of this deal was not to set a precedent for one-off deals but instead to signal a forthcoming change in policies that will be administered under the rule of law.
As a libertarian, I do not believe that “keeping plants in America” should be a goal for public policy. I believe instead in patterns of sustainable specialization and trade, which includes making efficient use of labor and other resources from other countries. I also believe that contraception coverage is something that should be negotiated between individual households and health insurance providers. Maybe if progressives fall into the trap set by Tyler Cowen, a few of them will start to see where I am coming from in my point of view.
Wouldn’t a better comparison be Solyndra, instead of the contraception requirement? Solyndra was also press-release-driven malinvestment by government. I don’t see much difference between Trump and Obama on this.
Tax credits, with the maximum at the limit of paying 0$ in taxes for the future life of the company, are more “small gov’t” libertarian (small – l) than tax subsidies, with a maximum upper limit only limited by politics. 10 mil, 100 mil, 10 bln, 500 bln.
Gov’t giving away “free” money is actually using OPM – other people’s money. Tax credits are not taking the firms’ own money.
The Bush bailout for Big, Irresponsible banks was worse, and worse for the economy, and worse for rule of law. Obama’s Big Bailout for auto companies was even worse.
I’m pretty sure all of #1-4 apply to Tyler, tho perhaps “hate Mr. Trump” is … the trump.
I expect political expediency and situational virtue signaling of convenience. I expect the party out of power to argue for principles-based constraints on the party in power. I expect the party in power to argue for justifications to expand discretion, in the name of different principles. I expect advocates for both parties to switch positions within weeks of a power swap.
So it’s no trap, because partisans don’t operate at that level of generality. My guy’s discretion is good because of my good reasons, but your guy’s discretion is bad because of your bad reasons.
At this point one wonders about that whole ‘libertarians as mistresses’ point, which is when the progressives discover that (temporary) ‘strange new respect’ for experts articulating anti-discretion arguments on prominent media platforms.
I hope Trump spends a lot of time on these as they are so much less disastrous than other things he could be doing.
I agree with the first commentator that Solyndra is the fitting analog, not that all Americans should be treated equally in insurance.
Conventional economic analysis is not adequate in a situation in which reserve currency status combined with pure fiat money allows runaway credit expansion to drive consumption of masses of imported goods, with attendant negative effects on local employment. Arnold, I hope you will expand your analysis.
When Trump won, my sister in law exclaimed non-ironically and full of horror: Now birth control won’t be free anymore! This (rather silly) issue holds incredible symbolic value to a portion of the electorate. The sort thing you can afford to care about only in an incredibly affluent society.
The rule of law means that no one is above the law, not even a king. Equality under the law means that the law applies equally to all. At best you meant, rule of statute (regulation) as popular lawmaking has become the norm and a statute is properly enacted legislation, regulations being more arbitrary and subject to the whim of the agencies.
https://www.youtube.com/watch?v=T9gTjvcK8to&ab_channel=ayabaya
Well, it is this hard on both conservatives and libertarians as well. But the reality is the WWC overwhelming supported Republicans because Trump was the candidate and not Romney 2012. (This is one of the reason why we might not see Ryans Medicare program as well.) So this ‘protectism’ is bringing the old school McKinley Republicans! Tyler can have fun pushing on liberals, but this is conservative reality the next four years.
1) All Presidents do this and Carrier is nothing compared to Obama Auto Bailout. And because these are Indiana (w/Pence governor) the state can give away the tax credits. So we will see if this long term policy not. Carrier was a big public relations action here.
2) I don’t think all Progressives agreed with Hobby Lobby. I emotionally hated the decision but it was right decision.
3) While we can all agree that the economic decline of the rust belt is all together a not bad thing, please explain to me how you can install the right culture into the young kids. It takes time and money to install culture. JD Vance is right but without private investment the but is families and schools need to teach these kids work hard to the FUCK OUT is the right message?
4) Again the most interesting aspect in modern America is it the rural WWC whites that have the least economic opportunity in this nation. So kids in West Virgina have less of a future than kids in Compton CA. I am not sure how plays out as both the left and right nostalgic remember these communities as they were in 1965 and this is still the largest voting block i the US. And realize they carried Trump and expect results.
Except for your last paragraph, I agree with you. Regarding Tyler, apparently he hates Trump and that’s why he’ll never go beyond Trump’s nonsense ideas, in particular to compare them with similar nonsense ideas promoted by Obama and other progressives. I know you have great respect for Tyler, but I don’t have any.
Now going back to the central issue of why any politician would like to keep plants in America, you gave a good answer long ago when you reviewed Nisbet’s The Quest for Community and relied on a quote from Ross Douthat’s introduction to Nisbet’s book.
I don’t get Tyler or anyone else’s indignation about the federal government using federal contracts as leverage to get some sort of concession. Wait, you mean there might be some shady quid pro quos or political arm-twisting going on in the awarding of federal contracts? Shocking! This must surely portend the end of the Republic.
“a few of them will start to see where I am coming from in my point of view.”
In the slim chance that they do, I would bet $10 that they’ll forget about it when their guy/gal is in office next time around.