On interfering with the free market
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.