The holidays came early this year for workers at a Carrier furnace plant in Indiana, who learned on Tuesday that 800 of their jobs would not be moving to Mexico after all.
Their good fortune is also an early triumph for the incoming Trump administration. President-elect Donald Trump had promised during the campaign to stop the offshoring of American manufacturing jobs, and true to that pledge, he and Vice President-elect Mike Pence, who is governor of Indiana, cut a deal with Carrier, a division of United Technologies, to keep the jobs in the state.For the people whose jobs were at stake, the details of the deal are secondary. If they had become unemployed, most of them would not have found new jobs that pay anywhere near the $20 to $25 an hour that veteran line workers earn at the Carrier plant.
For everyone else, however, the details do matter, both in themselves and for what they say about how a Trump administration will do business with big business.
For starters, the populist appeal of the deal far outweighs its practical effect.
Carrier still intends to send 1,300 jobs to Mexico (Mr. Trump said Thursday that more than 1,100 jobs will be saved, but that includes 300 positions that never were scheduled to leave the country).
Over all, factory employment in Indiana is down by more than 20 percent since 2000; nationwide, it is down by nearly 30 percent.
Stopping the outsourcing of jobs is a worthy goal, but it does not address the underlying trends in technology and public policy that are behind the demise of blue-collar jobs.
It would be naïve to believe that United Technologies — which had estimated it would save $65 million a year by moving the Carrier jobs to Mexico — would give in to Mr. Trump without an expectation of something in return.
The State of Indiana has reportedly offered the company $7 million in tax breaks over 10 years to keep the jobs in the state. In addition, Mr. Trump is expected to ease up on his campaign pledge to slap a 35 percent tariff on Carrier air-conditioners imported from Mexico, a nice concession, given that Carrier will still be outsourcing more jobs than it is retaining in the deal.
The most significant benefits could well come in the form of corporate tax cuts (and, inevitably, tax loopholes for specific industries) along with regulatory rollbacks, which Mr. Trump has promised, without supplying details.
Can there be much doubt that this deal will ultimately save United Technologies more than it would have saved by moving the Carrier jobs to Mexico?
Mr. Trump campaigned against crony capitalism, but one-on-one deals like this are at best inefficient and at worst riddled with just that kind of corruption.
As a result, the Carrier deal on its own doesn't offer a template that can be scaled up to protect millions of workers whose futures are threatened by offshoring or technological change.
But there may be ways to get closer to that goal. Senator Bernie Sanders has proposed denying future federal contracts to businesses that plan to move more than 50 jobs out of the United States. This approach would most likely face legal obstacles under international trade agreements, but Mr. Trump has already vowed to rewrite those pacts.
An advantage of this tactic is that the burden of keeping jobs in America would become a cost of doing business for large companies, rather than a taxpayer expense.
The Carrier deal stands as an interesting argument against longstanding Republican economic orthodoxy. In making the deal, Mr. Trump and Mr. Pence have embraced the idea that the government does indeed have a role to play in the free market. They intervened, and as a result, 800 people will keep their jobs. If they applied the same interventionist approach to other labor issues — raising the minimum wage and expanding overtime pay come to mind — millions of working people might actually stand a chance.
This editorial appeared on December 1, 2016.
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December 4, 201
Addendum. By now, you may have read that reliable Right wing voices like the American Enterprise Institute and Sarah Palin have been howling at Mike Pence's remark at the Carrier plant, "The free market has been sorting it out and America's been losing." The always articulate Trump echoed, "Every time, Every time."
Palin called this deal crony capitalism.
Long live the free markets! Not. Pence, of course, was an anti- bailout guy, fighting President Obama when he saved 2 million jobs.
Now, what will the GOP do?
An aside, here is the Carrier letter outlining the situation about jobs moving to Mexico to the employees who will lose their jobs. This letter was sent on the day of Trump's visit. And yes, Trump owns Carrier stock. And yes, the union representing the Carrier workers was shut out from the negotiations.
