Trump's Carrier Deal Is Bad, But May Be The Best We Can Hope For

About: ProShares Inflation Expectations ETF (RINF)
by: Modeled Behavior

By Adam Ozimek

Donald Trump's use of cajoling, bribing, and who-knows-what to get Carrier to keep 700 workers in Indiana is bad public policy. But if we're honest with ourselves, it represents a best case scenario for a Trump presidency.

A president trying to negotiate with and manipulate a single company is really the worst kind of crony capitalism. It's so obviously and unequivocally bad that even Sarah Palin is calling Trump out on it. Let that sink in for a minute...

But let's be real, it could be so so so much worse. In fact, while some have complained that 700 jobs is a minuscule number compared to the millions of jobs that are destroyed and created each month, that is probably the best part about it. So far, it's a bad sign but not a big deal.

It's really a paradox of Trumpism. Usually good economic policy means a clear and consistent rule of law that applies evenly to all companies. But Trump's policies are so bad that the best case scenario is he applies them to only a handful of companies in a form of governing by reality show.

Far worse would be for him to try to generalize his attempts to manipulate these companies into some kind of law. For a preview of how that would look, consider his recent tweets (of course):

The U.S. is going to substantially reduce taxes and regulations on businesses, but any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. ......without retribution or consequence, is WRONG! There will be a tax on our soon to be strong border of 35% for these companies ...

This is, to put it mildly, one of the worst policy suggestions I've heard from an elected official in the U.S. It combines crony capitalism, a tariff and puzzlingly puts American companies at a disadvantage compared to foreign firms. This is what the Carrier deal writ large looks like. Compared to this, the one by one negotiation sideshow would be a huge relief.

The Carrier deal has a high ratio of media attention to actually-doing-anything, which makes it a pretty good way to distract Trump. Maybe Congress should give him $1 billion a year to fly around the country, showering on companies which promise to do things he wants them to do so he can bask in the applause and media attention without affecting 99.999% of firms, markets and workers. This would be kind of like giving a destructive child a ball to play with so that he leaves the fine China alone.

Overall, the Carrier deal is terrible policy. But given that the labor market is healing and the economy is heading in the right direction, the best we can hope from four years of Donald Trump is that he does nothing. Zero. Zilch. The Carrier deal is as close to this as we can reasonably hope for.