Robot_Arm:
Trump promised to bring jobs back to the U.S. Carrier is moving about 1,000 jobs to Mexico. Trump considers this a victory.
Trump said he’d punish companies that moved jobs to other countries. Carrier is getting $7 million dollars in tax breaks.
The media (which hates Trump, right) is reporting this as 1,000 jobs saved, not 1,000 lost.
And that 7 million will certainly help offset the cost of thecoming automation that will eliminate those “saved” jobs.
But even though the jobs aren’t going to Mexico … Many of the approximately 800 jobs will likely be lost to automation, reports The New York Times. In an interview with CNBC’s Jim Kramer, Greg Hayes, CEO of Carrier’s parent company United Technologies, was blunt. “We’re going to make up [the] $16 million investment in that factory in Indianapolis to automate, to drive the cost down so that we can continue to be competitive. Now is it as cheap as moving to Mexico with lower cost of labor? No. But we will make that plant competitive just because we’ll make the capital investments there,” Hayes said. “But what that ultimately means is there will be fewer jobs.”
Translucent_Daydream:
I think that the whole tax break so the business will show up in state A versus state B puts an unfair advantage across the whole of the US.
When I was living in Texas, they gave Exxon a huge tax break to relocate to Spring. The construction was great, but they largely brought in the people that worked there from other places from what the news reported. I guess they are spending their paychecks locally, which is a bonus, but what happens after 10 years? I used to do commercial life safety systems when this was going down and I spoke with someone that was doing work there. They told me that the were likely to relocate after 10 years to South Dakota from what they were telling him (he was a sprinkler guy doing the fire sprinklers at the new construction there.)
It seems to me that these places that get the tax breaks are somewhat economically disadvantaged anyway, so its not like the tax breaks are really helping getting the tax burden off of the locals that live there since the new infrastructure is going to need to be maintained by the municipality…
But I’m not an economist and I’m frequently not the smartest guy in the room, so I dunno. My average guy math doesn’t seem to add up though.
Tax competition between countries is a race to the bottom. Tax competition between states within a country is cannibalism.
I don’t think so. There’s no reason they couldn’t have negotiated a Chapter 11 and remained in business, like any other business. They would have jettisoned their union contracts, however.
What Obama accomplished was to step in with a pre-packaged bankruptcy which involved the unions getting about 80% (IIRC) of the shares in the new companies in exchange for their concessions on benefit packages and the like.