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Wednesday, December 7, 2016

Opinion on the Carrier deal


Well, you have to admit it, Trump is actually going out and doing things.

WaPo - opinion on the Carrier deal. And this is the bit that's interesting:

Now comes Donald Trump — in the public mind, a successful businessman — who as the new president, suddenly declares that the new norm is no longer acceptable, and he intends to do whatever he can to shame and punish companies that abandon their workers. It’s one thing for a company to sustain a few days of bad headlines in the local newspaper when it decides to close a facility. It’s quite another when the president of the United States is not only willing, but from a political point eager, to make a federal case out of it. Suddenly, maximizing shareholder value no longer provides the political and social inoculation that it used to.

[...]

He knows that he and his new commerce secretary will have to engage in a few more bouts of well-publicized arm twisting before the message finally sinks in in the C-Suite. He may even have to make an example of a runaway company by sending in the tax auditors or the OSHA inspectors or cancelling a big government contract. It won’t matter that, two years later, these highly publicized retaliations are thrown out by a federal judge somewhere. Most companies won’t want to risk such threats to their “brands.” They will find a way to conform to the new norm, somewhat comforted by the fact that their American competitors have been forced to do the same.

Just as much as changes in the law, this is how norms of business behavior are changed.

Economists study changes at the margin, and if Trump can save the marginal job, then that should work out well for employment.

And with employment already at the supposed "full employment rate", that'll mean wage increases for the working class, and if that starts passing through into inflation, then Yellen can raise interest rates.

Which will then throw those same people out of work, but whatever.

Of course he's bribing companies to keep jobs in the US, but the US government has been giving free money to corporations for decades anyways. May as well make part of the kick tied to jobs, right?

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