On in­ter­fer­ing with the free market

The Denver Post - - OPINION - By David E. Hoff­man

For Don­ald Trump and Mike Pence, the news from Car­rier looks like a slam-dunk: A com­pany that was go­ing to move 1,000 jobs to Mex­ico has agreed to keep the fac­to­ries and jobs open in In­di­ana af­ter the pres­i­dent-elect and vice pres­i­dent-elect ap­plied a lit­tle pres­sure.

But af­ter the cel­e­brat­ing should come some dis­com­fort. Trump’s ag­gres­sive rhetoric sug­gests he sees noth­ing wrong with push­ing cor­po­rate chief­tains around in the name of mak­ing Amer­ica great again.

Trump would do well to re­mem­ber: He was elected pres­i­dent, not fac­tory boss.

What makes cap­i­tal­ism strong are the forces of the market left to work their own magic. No free market is ever to­tally free, but the ba­sics mat­ter a lot: De­ci­sions are made on the ba­sis of things like sup­ply and de­mand, know­ing that in­for­ma­tion is open and rule of law se­cure.

But what hap­pens when the market gets thrown out of kil­ter be­cause of po­lit­i­cal in­flu­ence? When de­ci­sions are made not on the ba­sis of market forces but some­thing else? When a po­lit­i­cal boss puts his thumb on the scales? When a pres­i­dent does?

You don’t have to look far be­yond Amer­ica’s bor­ders to see the dis­as­ter that can oc­cur when wealth and power be­come too cozy, when an over­bear­ing state be­gins to dic­tate busi­ness de­ci­sions. It drives the free-market mech­a­nism into a ditch. Has ev­ery­one al­ready for­got­ten Gos­plan, the cen­tral plan­ning agency of the Soviet Union? The point is not just a his­tor­i­cal one; in many na­tions to­day, state-owned or state-con­trolled en­ter­prises are lit­tle more than ex­ten­sions of the po­lit­i­cal lead­er­ship. They are balky, cod­dled, in­ef­fi­cient be­he­moths, and usu­ally piggy banks for the rulers.

Do we want the pres­i­dent of the United States to be ca­jol­ing fac­tory ex­ec­u­tives one by one? Such be­hav­ior seems to ex­pose the pres­i­dent to risks, too. When do spe­cial fa­vors and in­cen­tives to a com­pany — or the pur­suit of them — be­come some­thing more sin­is­ter? Aside from warp­ing market de­ci­sions, they could en­snare Trump or his ad­min­is­tra­tion in scan­dal.

The al­ready over­worked K Street lob­by­ists and our money-sat­u­rated po­lit­i­cal sys­tem will glee­fully wade into a new swamp.

Soon, per­haps once he takes of­fice, Trump may grasp that this is not how to change the world. He might save Car­rier’s jobs for now, but the big forces that are shift­ing man­u­fac­tur­ing jobs abroad — and have been for decades — will not be slowed by his in­ter­ven­tion. Those forces can be changed, if at all, by eco­nomic pol­icy — not by pres­i­den­tial jaw­bon­ing.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.