11/30/16

Proof of the Trumpian genius!

Liz Peek, of FauxNews Opinion, is gushing over the Carrier 'deal.' She offers it up as proof of Trump's genius, in Making America Great Again!

Carrier deal is proof that Trump is already making America great again

Get a grip, Liz.

This is proof of nothing, other than Trumpian backroom dealing. This 'deal' is in Indiana. Isn't that Pence's home state? Does anyone else smell a backroom political quid pro quo? Let's see how Cyrus II and his henchmen do in other states.

'Incentives' = 'subsidies' of one kind or another. Where are those coming from? Out of the taxpayers' pockets.

Here is a reasonably decent article on pros and cons of 'incentives.'

Incentives for Business Attraction and Retention

The academic literature is divided on the appropriateness of incentives. However, most research tends to show that these divisions are based largely on differences in theoretical perspective, the research method, and the time perspective (short term vs. long term). Studies appear to agree on three key points:


  1. With few exceptions, incentives will not effectively influence firm location decisions.


  2. The truly important factors in business location decisions are transportation considerations, labor quality, and markets


  3. The best way for government to influence firm location is to create and sustain quality communities.

Update12.01.2016: Hold on there, Batman! Hundreds could still lose their jobs!

And another update: How Donald Trump got Carrier to stay

That one is pretty good.

But experts say the state incentives are more likely window dressing.
Most research indicates that economic development incentives rarely change a firm's behavior, according to Nathan Jensen, a professor at the University of Texas. "They are a subsidy to a company with little value to society. Our research shows that offering incentives is a great way for politicians to take credit, or minimize blame, for company decisions."

That's right in keeping with the ICMA article, above.

So Carrier comes out with $7 million in 'incentives' over ten years, contrasted against the $65 million the company claims it would have saved each year by moving to Mexico.

So, as they say ... "Where's the beef?"

How about here:

It's not yet clear how much of the company's decision was based on concerns about maintaining the significant amount of business it does with the government.

Carrier parent United Technologies (UTX) is a major defense contractor, with $5.6 billion in revenue from federal government contracts, or 10% of its total revenue. The government also pays for $1.5 billion of its research and development costs.

So Trump and Pence look good; Carrier hangs on to those billions in contracts and the gummint paying its R&D costs ... and the taxpayers get soaked $7 million. Well, it's over ten years, so what the hey.