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Open For Business
President elect (almost, EC hasn’t voted yet) Trump went on a Twitter rant this weekend. High on the praise of Carrier only losing half the jobs it had in Indiana, The Donald took to his iPhone to warn American businesses that a firm cannot move manufacturing outside the U.S. without “retribution or consequences.” Here’s a picture of the tweetstorm.
The rant starts and ends well. Trump proclaims that taxes and regulations will be reduced resulting in the nation being open for business. The problem, of course, is that the president does not have the constitutional authority to carry out either his threats or his promises. He can do much in the way of reducing the regulatory burden through executive orders which rein in the executive agencies, but where taxation is concerned he must seek the cooperation of Congress. The state of that relationship is still rather unclear at this point. I wonder if he realizes his limitations in this area.
Cartoonist Scott Adams explains such pronouncements as being part of “The New CEO’s First Moves.” With Ford, Carrier, and to some extent this Twitter rant, Trump is taking hold of something that is “visible, memorable, newsworthy, true to his brand, and easy to change.” He is essentially signaling strength and ability to accomplish — creating a psychological effect of confidence in his ability to do good things. The thing is not the thing, as Adams explains:
Political writers will interpret this situation as routine credit-grabbing and exaggerated claims. But business writers will recognize Trump’s strategy as what I will call the “new CEO Move.” Smart CEOs try to create visible victories within days of taking the job, to set the tone. It’s all about the psychology.
If you are looking at Trump’s claims of success with Ford and Carrier in terms of technical accuracy and impact on the economy, you will be underwhelmed. But if you view it through a business filter and understand that psychology is the point of the exercise, you’re seeing one of the best new CEO moves you will ever see.
This is less about the jobs saved or the economic outcomes but more about the optics. Trump gets things done. If he says he is for you then you are on the winning team. If he stands against you, prepare to lose. I work with a guy like this (and have for over 20 years) who is a great ally and a terrible enemy — even down to the small things like making a fresh pot of coffee if you take the last cup.
Not everyone is so pleased with the Carrier move, and I doubt those same people will take well this open threat to businesses. Writing in the G-File this weekend Jonah Goldberg said:
As a political act, it is very, very easy to exaggerate the economic importance of the Carrier intervention. It’s less than a thousand jobs. Save for the workers and families directly involved, it’s all symbolism.
And while the politics of this are great for the incoming Trump administration, they are absolutely terrible for free-market conservatives. The former president of AEI and a veteran of the Reagan administration, Christopher DeMuth, used to argue that perhaps the most important thing Ronald Reagan did was fire the air traffic controllers. In isolation, it was not that big a deal. But the message it sent was hugely important at a time when Eurosclerosis was spreading in America. Reagan let it be known that the public-sector unions no longer had the whip hand and the government couldn’t be extorted.
Trump’s Carrier intervention may just send an equally loud, but nearly opposite signal: that the White House is going to pick winners and losers, that it can be rolled, that industrial policy is back, that Trump cares more about seeming like a savior than sticking to clear and universal rules, and that there is now no major political party in America that rejects crony capitalism as a matter of principle. After all, don’t expect the GOP to recycle the language it used for the bailouts, Cash for Clunkers, Solyndra, etc., when it comes to Carrier. The RNC belongs to Trump.
The editors of National Review (also not fans of Trump or his ideas) were equally critical of the Carrier deal.
We are not very enthusiastic about government-run economic-development programs that rely on industry-specific — or firm-specific — tax breaks, grants, or other concessions. In the long run (and generally in the short run, too), these programs are almost always corrupt in themselves and a source of corruption in others, with the benefits going mainly to politically influential and well-connected companies, whether that means Solyndra during the Obama administration or Carrier in the Trump administration…
The Trump administration will no doubt get political juice out of the Carrier deal, whose symbolism will be particularly welcome in the Rust Belt that just delivered Trump the presidency. In the long run, though, corporatism is no substitute for a healthy overall economy and a subsequently strong labor market, which we hope the Trump White House and Congress will encourage with a new policy direction beginning in January.
The one thing everyone seems to agree on is that this is all symbolism, all show. The question we must answer as conservatives is whether it symbolized good or bad policy. These things will surely gain Trump popularity, which from his populist standpoint might just be the primary goal, but what cost will the nation pay?
With both Carrier and the Tweets we see the carrot and the stick. Trump lacks the authority to fully deliver on either, but the message he is sending is loud and clear. Obey, and you will be rewarded; disobey, and you will be punished. This is undoubtedly a very familiar business tactic, but I have difficulty accepting it as the right way to run a government. As citizens we are not in the employ of our elected leaders. I fear that Trump is headed down a path in which he reverses the Reaganism, “We are a nation that has a government—not the other way around.”
Published in General
The problem you will find is that nations and societies only exist based upon a default assumption of in group preference. Everything works better when this is enforced via informal norming processes. When informal norming prcoesses break down, formal norming processes fill the vacuum.
This has always been the conservative dilemma which exposes the paradox or auto immune difficency in buckley-ite conservativism.
So, as @Tommeyer pointed out in another thread – it all depends on what the next steps are. If this is a stop-gap measure to buy credibility with his voters while he seeks to deregulate and lower the corporate tax burden across the board then it’s a price worth paying in the short term. Of course, it will require an equally strong symbolic rebuke of Corporatism somewhere down the road or every manufacturer seeking a sweetheart tax break will simply threaten to move their shops to another country. We’ve seen this playbook before – Sports Teams. Every time they want a new stadium or a better deal from their city they threaten to leave, and almost every time they get their cronyism tax breaks and stadium funding. I’m worried about exporting this to the federal level where the real money is.
Call me skeptical of this particular theory – based on his twitter rant this weekend, and his over 30-year public history – the one thing Trump believes in is economic protectionism. This is the direction he wants to take the country and the Republican Party – and based on the backbone congress has shown other Republican Presidents, I don’t expect them to put up much of a fight.
What the economic logic of Trump leads to is the sclerotic stagflation of the 1970’s. The problem is that it takes a while to get there. If businesses cannot make economic decisions to decide where to best locate their production – then they cease production altogether. Trying to change economic reality through force only delays the inevitable and makes things worse in the end.
Expound please. I have trouble deciphering much of what comes from Trump and can’t really define the in group now. With Obama it was pretty easy.
I’m not sure I understand what this means.
The conservative position, in my understanding at least, is to make the environment for business to stay better through reduced taxation and regulatory burden — something Trump clearly states here. But, and this is a big but, Trump throws in the “or else!” That’s not conservative in the least. I don’t know how we reconcile the two.
You don’t. This is simply the Reagan Democrats flexing their muscles. Neither party really represented them, until Trump. The Democrats used to – but they abandoned them in their post-modern lurch towards identity politics and European style Social Democracy. The core of the Republican party – Buckley style fusionist conservatism – believes in free markets and finds the industrial policy preferences of the Reagan Democrats to be anathema. Reagan, and Clinton after him, managed to keep everyone happy with massive growth – growth cures all economic wounds. The last 16 years have ended that.
I don’t think Classical Liberals of the Buckley variety and Reagan Democrats are a natural fit in economic terms – there may be no squaring that circle. If Trump can use his credibility with his base to buy time to return us to robust growth things may chug along for a while. Don’t kid yourself – this is going to happen again and again.
I don’t believe in the growth fairy. We’ve got to have some real cuts in government. That starts by rediscovering and returning to ideas about what government ought to do rather than people making arguments about what they believe (often from blatant self interest) should do.
Sorry, I meant in terms of reconciling the Reagan Democrats with the Buckley Classical Liberals.
As far as the size and scope of government we are in complete agreement – although growth does forestall disaster it requires you to get your house in order when times are good. Even Keynes recognized that.
We’re long past the era where the growth fairy could save us. Economic growth is mission critical, but the debt that we’re run up will require reducing the size and scope of government so that it stops running up the bill. You don’t get perpetual robust economic growth.
We’ll find out soon enough what the new administration believes. If they lead off with a big spending bill and couple it with a tax cut bill, they’re basically just replicating the Keynesian play book.
Ben Shapiro calls it “the economic totalitarian impulse fused with the power of the federal executive branch, all under the rubric of nationalism and the false flag of conservatism” and “the erection of a Big, Beautiful Wall to keep American businesses in – a sort of economic Berlin Wall.” Very strong criticism.
Trump, as all presidents, has several audiences to take into account. This will play well with his base, as will the wailing and gnashing of teeth of precisely the people doing so now. It isn’t a long-term solution, and if he doesn’t know that or his cabinet can’t convince him of that, this will be a Lon and rocky four years.
It’s like Trump is grabbing the arm of American business and trying to throw it to the ground.
Which begs the question (again) to what end? What does he hope to accomplish? Is Adams right that he’s just manufacturing psychological effect, or is this really how he intends to govern?
It’s absurd to think that there isn’t and hasn’t been massive government intervention in a myriad of ways in the ‘free market’ and those ‘interventions’ have facilitated and caused a manufacturing exodus from our shores, as well as other economic drags.
I grant that executive branch coercion on a retail basis is not generally helpful, but this isn’t something that should set off alarms. I see it as a shot across the bow and a negotiating tactic as well as a smart political move. On the latter point Trump is masterfully manipulating the other side into making unpopular arguments (hat tip Democrats) The flag burning issue is another example.
Until our tax laws and regulations which incentivize companies from leaving are changed, which is the goal, this kind of thing is not fundamentally going to change much, so I see none of the ill effects kicking in anytime soon.
States do this all the time, and other countries do it as well.
To the NR folks I say; this isn’t TARP this isn’t a bailout of automobile companies who over-promised goodies to unions. Get some perspective.
In other words, take him seriously, but not literally.
Yes. And in other-other words, until he gets to Bush-level interference or Obama level meddling let’s not get too worried. It’s quite revealing to see how alarmed some are when so much worse has happened already, and the present environment created by those in power for the last 30 years is effectively telling US companies they should leave as they are unwanted here.
The tariffs he’s proposing exhibit far more meddling than anything Bush or Obama has done.
I think the conservative concern is that he seems to be fusing the worst styles of both parties into his own brand of meddling. I suspect that Adams is largely correct in this, that he’s preening and posturing for effect, but even that is troublesome in its own way.
The solution to bad policy is not to heap on more bad policy. If this is the currency to buy massive deregulation and corporate tax cuts then fine, if its the solution to previous bad policy then we’re in trouble.
This is the real pickle of the matter — we simple don’t and can’t know which it is until it’s too late. Some would argue that we should have faith and trust him, but that is absolutely the last thing I want to do with any politician, and even less so with one who appears to be the head of a cult of personality.
I think I understand where Trump is coming from in his thinking. Of course, one can never be sure with Trump, but I think he is speaking from his perspective and experiences living and working in the aging infrastructure and government of the old Northeast.
Governments get increasingly bureaucratic with each passing year. The governments in Boston and New York became top heavy with incompetence and useless out-of-date restrictive laws and regulations, paired with high taxes. (How the West was won: people were already running away.) Boston and New York, and many smaller cities and regions in New England, have reinvented themselves many times, and quite successfully.
Sometimes it works. I’ve seen much revitalization in New England, so I know it can happen.
I agree with this take (though I am not skeptical at this point, just waiting to see what happens next). The question will be the overall policy direction of the administration and what Congress supports. I live in a state (CT) with a political, regulatory and tax scheme hostile to business. The state is constantly doing one-off deals to keep favored big companies in state while continuing to screw everyone else. It’s absolutely the wrong way to go about it. You need consistent rules applicable to everyone, not special favoritism.
The deal itself isn’t what worries me, too much. It’s his fawning supporters who, up until a week ago, were opposed to government intervention in the free market, but now say to me “not everything is black and white.”
In a discussion with a friend of mine on this very issue, I dared him to criticize Trump. I said “Go ahead, I bet you can’t say one bad thing about Trump!” His answer: “I didn’t care for what he said on the bus…”
In the words of Threepio: “We’re doomed!”
What, precisely, is revealed, if I might ask?
Don’t answer too quickly. I need to go get a burger and I don’t want to miss anything. ;-)
In the everything is relative department, I would say the “fawning support” only looks that way against the backdrop of relentless criticism based on half-truths, hostile interpretations, and sanctimonious and hypocritical moral preening coming from his legion of critics. Legions of critics who are continually proven wrong, I might add.
In a forum where months ago, one had to type a litany of conditionals of not agreeing with everything the man has ever uttered before announcing that Trump is better than HRC (of all people) without being excoriated, I find it risible you demanding your friend utter something negative about Trump. As your erstwhile friend, I would say there’s been quite enough of that and all of us are already on record. If you want to hear negatives about Trump you need not go far. If you haven’t heard enough, thats on you buddy.
I thought the charge was generally that his supporters were protectionists and isolationists. No? Wha’d I miss?
Saying, “everything isn’t black and white” needs to be said to those who are so relentlessly absolutist in politics as the nevertrumpers. I have never seen a group of people who are so willfully ignorant of subtlety and distinctions.
It would depend on the definition of “free market” anyway. Do you believe there is a free market in operation now in the USA?
Is the answer to not having an absolute free market to make it even less free?
Are you ready now?
Okay, here goes….
It reveals (most likely anyway) a desperate need to remain in perpetual opposition, to construe in the most hostile and dare I say, paranoid, manner, because many of these folks were the same people who defended Bush for TARP an act massively in degree and scale greater in cronyism and meddling. Those who criticized TARP are either immune, since this act of Trumps is still minuscule in comparison, almost unworthy of comment. So the motivation has to be something else. A spec of vindication or something. Strange and desperate.
Beyond that, there are existential government forces in play which are working at achieving the opposite effect – that is, current policy is virtually a policy that pushes companies offshore.
So for these people to to nitpick on this is revealing.
No.