Why Trump Couldn’t Punish Carrier for Moving Manufacturing Elsewhere

Bernie Sanders wrote an op-ed for the Washington Post today and it was pretty ignorant, to say the least. It was about Trump’s deal made with Carrier, an air conditioning and refrigeration unit company and how it just showed other corporations “how to beat Donald Trump.” Sanders wasn’t known for his deep knowledge of economics on the campaign trail and he’s still showing that perhaps he still doesn’t understand something important.

Corporations Are People, My Friend

Sanders’ criticism of Trump was that Trump offered a tax cut rather than a tax increase. Sanders exclaimed, “Just a short few months ago, Trump was pledging to force United Technologies to ‘pay a damn tax.'” No, really. It’s true. Trump did say that on the campaign trail. But the reality of it is that you can’t actually force them to pay a tax for shipping jobs overseas as punishment. First and foremost, the government is not Carrier’s parents; it can’t ground them or force them to pay for the window they broke with their allowance. Perhaps Trump didn’t realize this until later. Maybe he knew all along and just played Indiana. Either way, it doesn’t really matter since the fact still stands: You cannot punish a corporation in this way.

In 2012, Mitt Romney coined the phrase that corporations are people, pointing out that corporations aren’t merely these huge machines that run on the blood, sweat, and tears of people. Corporations have similar rights to people when it comes to where they can move to. If they feel like they don’t want part of their business in the United States, they can ship that part elsewhere. Even people aren’t taxed when they renounce their US citizenship, unless they’re “rich.” Corporations aren’t moving the entirety of their operations out of the United States. It’s more like they bought a house elsewhere.

There is a Way to Do It

I know, I just spent the last minute or two of your time trying to convince you that there’s no way to “punish” a corporation by slapping a tax on them. Well, it’s not that there isn’t as much as there isn’t a way of doing it without a way that others haven’t criticized. After all, Sanders did call Trump “the poster child of failed trade policies” on Twitter.

Though unspecified in his tweet, he probably also meant policies like the 35 percent tariff on goods imported from Mexico if it wasn’t willing to negotiate. There’s just one major problem with Sanders’ criticism: The only way, really, to “punish” a corporation for moving manufacturing out of the country is to put a tariff on the goods that it manufactures imported from that other nation. In other words, the very thing Sanders criticized is the only way to fairly punish a large corporation.

Sanders claims that Trump’s deal sets a dangerous precedent, which I’m sure will cause uncertainty in the future. However, Sanders needs to understand that he can’t have his cake and eat it, too. Trump can’t punish Carrier the way he promised on the campaign trail mainly because they’re staying. Another reason why is because he can’t single out a corporation like that. He would have to be willing to potentially start a trade war. This is a good sign that Trump really wants to negotiate with Mexico rather than just bully it around.

Sure, Trump offered Carrier a tax cut to stay. But Oregon does it left and right for Nike, which I guarantee is even bigger than Carrier. But where is Sanders’ criticism? I guess it’s only okay if he A) Doesn’t know about it or B) Agrees with the politics of the state that does it.

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2 comments

  1. I don’t know what Bernie’s version of a dangerous precedent is, but one is pretty obvious to me. In future, all an employer will have to do to get a fat tax break (or other form of corporate welfare) is to threaten to offshore some jobs, whether they really intend to or not. Note that Carrier didn’t agree to keep all their jobs here, only a thousand. They are still moving another 700 to Mexico. But the taxpayers of Indiana will still have to pay whatever the negotiated bribe turns out to be.

    Liked by 1 person

    1. Bernie’s op-ed is linked in some of the wording. Also, I tend to feel that keeping some jobs is better than none. Especially since the recent jobs report for November isn’t accurately represented when they say adding <200,000 jobs is why the unemployment rate is 4.6 percent. The situation is not actually positive if you check the recent trends for not in labor force, civilian labor force, and the labor force participation rate.

      Liked by 1 person

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