Friday, December 2, 2016

Trump's 'Art of the Bribe'

Carrier's modern factory in Mexico is LEED certified.
About 1,000 workers at Carrier Air Conditioning in Indiana are tickled to death today with Donald Trump's deal to keep their jobs in the U.S. Another 1,000, whose jobs will go to Mexico, aren't so happy. And a lot of Trump voters are saying, "We told you so."

What they told us and what is happening with this unfortunate precedent are different breeds of cat. Trump arm-twisting will cost Indiana another $7 million to keep Carrier and will embolden other U.S. manufacturers to go palms up every time there is a financial challenge that could possibly result in moving a factory to Mexico (which is understandably pissed at this deal).

President Obama and presidential candidate Bernie Sanders also keyed in on Carrier's decision to move South, but neither offered the farm to save a cow. Trump's Art of the Deal--which likely included some heavy-handed threats to Carrier's parent company, dealing with federal contracts--isn't as pretty or as slick as you might think. In fact, it is being tightly examined and intensely criticized by people inside.

A website, goodjobsfirst.org (here), gives us this info: "In recent years, state and local governments have been awarding giant economic development subsidy packages to corporations more frequently than ever before. The packages frequently reach nine and even ten figures, and the cost per job averages $456,000 and often exceeds $1 million." That, in short, is paying ransom--handsomely--for jobs.

Goodjobsfirst researcher Philip Mattera says, “These subsidy awards are getting out of control. Huge packages that used to be reserved for ‘trophy’ projects creating large numbers of jobs are now being given away more routinely.” In a review of 240 huge deals, goodjobsfirst.com found state and local costs of $75 million or more each, cumulatively more than $64 billion.

You often hear local officials in this area crowing about how much money they spent or tax breaks they granted to land a large employer. That employer is bound to stay in the area for a while, but certainly not for the long haul and often the employer leaves after a few years and finding a better deal elsewhere. I have covered dozens of those announcements over the years and they often, in a circus atmosphere, attract governors, senators and congressmen to give their blessings, along with an oversized--in every way--government check to the re-locating company.

A goodjobsfirst exec says that some of the deals involve few jobs. “Some are instances of job blackmail, in which a company threatens to move and gets paid to stay put. Others involve interstate job piracy, in which a company gets subsidies to move existing jobs across a state border, sometimes within the same metropolitan area,” says Greg LeRoy.

Who is getting tyhe deals (Alcoa in New York got $5.6 billion at the top end)? Try this: oil giants such asExxon Mobil, Royal Dutch Shell, Boeing, Airbus, Citigroup, Goldman Sachs, Walt Disney, ESPN, Sears, Cabela's, General Electric, Dow, Ex Chemical, Amazon, Apple, Intel and Samsung. That's cloud level. Below it are thousands of other companies with their hands out and localities willing to pay the bribes. "Art of the Deal"? Hardly. More "Art of the Bribe."

(Photo: carrier.com).


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