Wrong to re­ward (or pun­ish) Car­rier

The Denver Post - - OPINION -

Over the past four years, In­di­ana has been ground zero of eco­nomic glob­al­iza­tion, as the world­wide flow of cap­i­tal and jobs al­tered the fate of Hoosier man­u­fac­tur­ing work­ers and their fam­i­lies. We are re­fer­ring, of course, to the $1.3 bil­lion that Subaru, a Ja­panese car­maker, has in­vested since 2012 in its Lafayette, Ind., plant, en­abling the cre­ation of 1,400 jobs. Thanks to Subaru’s ex­pan­sion, the first Amer­i­can-built Im­preza com­pact sedans rolled off the gi­ant fac­tory’s as­sem­bly line Nov. 1 — just a week be­fore vot­ers went to the polls and elected Don­ald Trump to the pres­i­dency.

See what we did there? Trump made it to the White House partly on the strength of his prom­ise to re­verse the al­legedly un­wise free-trade deals that were en­abling Amer­i­can com­pa­nies to shift pro­duc­tion abroad. Car­rier’s planned move of its fac­tory from In­di­ana to Mex­ico was Ex­hibit A in his case against the North Amer­i­can Free Trade Agree­ment. He vowed that he would make the com­pany change its mind, pos­si­bly through im­pos­ing a spe­cial tax or by cut­ting its par­ent com­pany’s fed­eral de­fense con­tracts. Sure enough, Car­rier has an­nounced that it will keep half of its 2,000 work­ers in In­di­anapo- lis, in re­turn for $700,000 per year in state tax breaks. Trump trav­eled to the state Thurs­day to cel­e­brate.

Happy as we are for the fam­i­lies whose liveli­hoods may have been pre­served, no one should fool them­selves into be­liev­ing that this is some sort of sus­tain­able par­a­digm for restor­ing the Amer­i­can man­u­fac­tur­ing base.

If you im­pose po­lit­i­cal con­trols on cap­i­tal, whether by ad hoc arm-twist­ing, as Trump did in the Car­rier case, the re­sult will be less in­vest­ment, not more — as job cre­ators re­frain from putting their funds at risk in the United States.

They might go in­stead to coun­tries such as Ja­pan, whose peo­ple are not, ap­par­ently, com­plain­ing that In­di­ana just “stole” 1,400 of “their” jobs. Subaru’s ex­pan­sion rep­re­sents just a small por­tion of the $1 tril­lion that for­eign­ers had in­vested in U.S. man­u­fac­tur­ing as of 2014, ac­cord­ing to the Or­ga­ni­za­tion for In­ter­na­tional In­vest­ment. That fig­ure grew by $125 bil­lion in 2014 alone. Job-cre­at­ing cap­i­tal flows to the United States re­flect con­fi­dence in Amer­i­can pros­per­ity, prop­erty rights and rule of law. Pre­serv­ing and en­hanc­ing those com­pet­i­tive ad­van­tages, not se­lec­tive pres­sure on politically un­pop­u­lar busi­ness de­ci­sions, is how gov­ern­ment can best as­sure growth and eco­nomic op­por­tu­nity.

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