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Trump convinnces Carrier to stay

Wednesday, November 30, 2016 5:58
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No doubt about it, this is great news for Carrier employees and the local community.

On Thursday, Mr. Trump and Mike Pence, Indiana’s governor and the vice president-elect, plan to appear at Carrier’s Indianapolis factory to announce a deal with the company to keep roughly 1,000 jobs in the state, according to officials with the transition team as well as Carrier.

Mr. Trump will be hard-pressed to alter the economic forces that have hammered the Rust Belt for decades, but forcing Carrier and its parent company, United Technologies, to reverse course is a powerful tactical strike that will hearten his followers even before he takes office.

“I’m ready for him to come,” said Robin Maynard, a 24-year veteran of Carrier who builds high-efficiency furnaces and earns almost $24 an hour. “Now I can put my daughter through college without having to look for another job.”

I hate to be a cynic but I am compelled to heed the admonition of Frédéric Bastiat and consider the unseen along with the seen.

The article is basically silent on the terms of the deal. Was it a tax break? A massive no-bid government contract? A threat? All of these have downsides.

If it was a tax break or a no-bid contract it puts Carrier at an advantage over competitors who didn’t threaten to leave and, if the advantage created by the government is great enough, saving these thousand jobs may cost several thousand elsewhere. If it was a threat, it leaves Carrier in a weakened state that may result in the loss of the business completely.

It is extremely difficult for the government to make deals like these that have no unseen cost.

There isn’t a regular on this site who failed to understand that Obama’s bail-out of General Motors was not necessarily good for America even though it was an unvarnished good for GM, the UAW and local communities near GM operations. We recognized that when government manipulates the market, both the seen and the unseen must be considered in order to judge the costs and benefits of the action. This situation is no different.

Again, this is great news for the employees of Carrier and the benefits of the deal will definitely be seen. If the deal turns out to result in the lost of, say, 2,000 jobs elsewhere, that pain will be left largely unseen.

More here.


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