On one side, you have people cheering and congratulating the incoming administration for saving 1,000 jobs by keeping them in the U.S. using tax break incentives.
On another side, you have people saying that whatever deal was made with Carrier raises concerns about what the role of government ought to be with the economy. Should the President be in a position to pick winners and losers, to act as a central economic planner?
Still, others go further and say this is an example of crony capitalism at best and at worst is the very definition of socialism. So says George Will:
“So far Donald Trump’s style is personal, not to say visceral. And ad hoc. And what that adds up to is a kind of use of presidential power absolutely unconstrained by law and statute and all those other niceties.
“The problem is when you have, in the Carrier case, political power used to bring pressure upon a privately owned institution that has fiduciary duty to maximize shareholder value and drive them off with political pressure with making economic decisions about economic assets, you are, in effect, at the end of the day, getting the federal government involved in capital allocation. There is a name for that. It’s called socialism.”
I think we have to be careful about these sorts of things. The federal government should not be in a position to control the economy. I know this is just one company. The President should be in the business of making deals with certain companies.
I’m all in favor of tax breaks. But not tax breaks to some and not others. And the tax breaks need to be offset with spending cuts. If Carrier was offered $7 million in tax breaks over 10 years – which isn’t much actually – and no other businesses were offered the same deal, that would be crony capitalism.
And this isn’t the job of the President – or the Governor – anyway.
Congress and state legislatures should work to change the tax codes if they want businesses to stay in the U.S. My guess is that politicians – local and federal – might like the idea of keeping jobs in the U.S., but not enough to raise taxes substantially on the middle class or cut spending substantially.