Donald Trump saves 800 factory jobs, but more to go to Mexico

Did Donald Trump just save 1,000 factory jobs in Indiana?
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According to Donald Trump, over 800 jobs will stay in Indiana following negotiations with the President Elect. However, over 1,300 American jobs will still go to Mexico, meaning only about 40% of the total number in question will be saved, and possibly only for the short term. And, in his grandiose style, the President Elect also inflated the numbers by 200 at a press conference, claiming that over 1,000 jobs would remain in the U.S.

Carrier, a noteworthy player in the heating and cooling industry, had announced back in February of 2016 that it was pulling up stakes in Indiana, and setting up shop in Monterrey, Mexico. Trump supporters are ecstatic, and point to this small but measurable success as proof of the President Elect’s business acumen, while his critics feel this is a dangerous precedent for a U.S. President to establish.

Details of the deal are still sketchy, but apparently the company was offered 7 million dollars in financial incentives from the state of Indiana, currently governed by Vice President Elect Mike Pence, over the next 10 years, and probably a low corporate tax rate, to keep these manufacturing jobs in the United States. As part of his business development plan, Donald Trump has proposed a general 15% tax on businesses, substantially lower than the current 35% tax rate.

In addition, Trump has threatened to levee high import tariffs for American companies manufacturing their products abroad at the expense of American jobs at home. According to Trump, under his administration, it will be easy for companies to move from state to state within the U.S., competing for the most favorable business opportunities, but very difficult to leave the country.

Regarding the Carrier deal, it’s interesting to note that the company would have saved an estimated $65 million per year by moving its operation to Mexico. Critics and pundits, including former Clinton Secretary of Labor Robert Reich, point out that Carrier’s parent company, United Technologies (UTC) currently holds government contracts worth billions of dollars. This leads to speculation that these contracts are potent leverage for the President Elect, especially since the Trump administration is expected to invest in a massive military build-up worth billions more to the private sector, and may have influenced the negotiations.

The advantages of this turn of events for American workers are obvious, albeit small. Though 800 jobs are better than nothing, President Obama’s bailout of the automobile industry saved over 1 million jobs. But critics are concerned that this sets a precedent for one to one negotiations between the President Elect and individual companies, like Carrier. Such a strategy would be unwieldy when implemented over and over again, thousands of times, in order to make a lasting impact on the nation’s economy, and it would establish a stake for the President in the success of specific companies, apart form their competitors, raising ethical concerns. This might lead to additional measures, essentially favoritism, in order to help these specific companies perform well down the road, which may be unfair to their competition, and may not be in the best interests of the economy as a whole.



Photo: By Marc Nozell (Flickr) CC BY 2.0 , via Wikimedia Commons



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