The Carrier Affair

In February of 2016, Carrier announced it would close 2 Indiana plants and move move 2100 jobs to Mexico. Here’s the story as covered by Fox News.

 

If we believe what we are being told now (which is a tall order in itself), Donald Trump and Indiana Gov. Mike Pence swung into action and the following is the net result:

 

The State of Indiana will give Carrier $7 million in tax breaks over 10 years. The company will also receive other benefits that have not been specified as explicitly.

Carrier will invest $16 million to keep its operations in the state. Or, if you factor in the tax break provided by the state of Indiana, “Carrier will invest only $9 million to keep its operations in the state.”)

 

Instead of closing plants in Indianapolis and Huntington, Carrier is closing one plant in Huntington, IN, which will shift 700 jobs to Mexico. Apparently, Trump couldn’t “save” those jobs.

 

And, Carrier will move 600 other jobs to Mexico. Apparently, Trump couldn’t “save” those jobs either. Here is the link to The Hill story detailing the newly agreed-upon deal between the State of Indiana and Carrier.

 

So, of the 2100 jobs that were going to Mexico as of February, 1300 are going to Mexico, and only 800 jobs are staying at the plant in Indianapolis. Carrier gets to move the majority of the jobs it was going to move to Mexico.

 

And there is this: since the $7 million in tax breaks are being provided by the state of Indiana, and not the United States federal government, one wonders why Indiana Gov. Mike Pence didn’t swoop in, prevent the closure of the Indianapolis plant and provide the $7 million in tax breaks sometime between February and November. He certainly has had that power.

 

The answer to that question is very simple: Before he became the Vice President-Elect, Pence could not say, “Hey United Technologies, parent company of Carrier, nice federal Department of Defense contracts you have there. It would be a shame if something happened to them.”

 

But, now that Pence is slated to move to a federal government role in January, he could bring pressure to bear on United Technologies re: the company’s federal DOD contracts.

 

To summarize, Carrier is still closing one of two plants, and moving more jobs to Mexico than it will keep in the United States – and it’s getting an unexpected gift of $7 million in tax breaks over the next 10 years from the state of Indiana.

 

If this is what Donald Trump means by saying that there will be “consequences” for companies that threaten to move jobs overseas, I can only imagine that many companies will follow United Technologies/Carrier’s example.

 

They will announce that they are going to close plants and move jobs to other countries, so that Donald Trump will grab the governor of the relevant state and throw money at the companies so that they won’t close plants and move jobs to other countries. Because of course, Trump will have nothing more important to do when he becomes President than to meddle in state business, when he should be focusing on federal US business. So much for all that Republican claptrap about allowing the free market to work without government interference. This is a clear example of government interfering directly with the free market.

 

Is this different than paying ransom to a kidnapper?

 

No, not much.

 

  2 comments for “The Carrier Affair

  1. Bob Johnson
    December 2, 2016 at 8:02 am

    Kidnaping is a lot different than a business deal it is not the direct jobs it is the
    The supplers and the contractors being hired for diffent things that are not interanaly done

    • Broken Laughter
      December 5, 2016 at 5:40 am

      Thank you for your comment.

      My reference to kidnapping is an analogy.

      Giving a huge tax break to a company so that the company will take an action — in this case, not move a certain number of jobs out of the country and close a plant, is comparable to/analogous to paying money to a kidnapper so that the kidnapper will take an action — return the person he has kidnapped.

      That’s how the analogy works.

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