Long-Term Implications of Trump's Carrier Deal

Although they might not like to admit it, the media is having a field day covering the post-election world now that Trump has won. Every minor move he makes drives tons of traffic and increases the readership of the media outlets. With so much coverage it is interesting to read different perspectives of the moves he makes.

As Trump looks to make due on his promise to keep factory jobs in America, he's set up some sort of vague arrangement with Carrier (owned by United Technologies Corporation). The lack of details and the presentation make it look more like a political ploy and less like an actual victory. Trump worked out a deal that would give Carrier $7 million in tax incentives over a decade and the company would thus invest $16 million in keeping the company in state. Arguments have been made as to the merit of this deal in terms of the quantity of jobs saved or the stress on the defect, however, an article from the Washington Post delivers a deeper perspective.

Lawrence Summers, of the Washington Post, outlines why "Trump's Carrier deal could permanently damage American capitalism." Instead of focusing on the numbers involved in the deal, his piece poses questions about the deal's impact on the overall economic system. He discusses how these government deals might distort the free market by straying away from the rule and law based system. As we've discussed in class, the overall production function in America, comprised of the legal system and technology among other factors, is what drives our high standard of living. It will be interesting to see if these deals-based policies harm us in the long run, especially with economies around the world catching up.




https://www.washingtonpost.com/news/wonk/wp/2016/12/02/why-trumps-carrier-deal-is-bad-for-america/?utm_term=.600546527a18