But this whole saga serves as a reminder that the president has a narrow and distorted view of what the economy is and how it can be improved, one that will be reflected in the policies his administration pursues going forward.
I hesitate to praise these chief executives too much for their onset of integrity; after all, it’s not like they’re just now discovering who Trump is. They’re fleeing because they don’t like the publicity they’re getting over their association with him, but that’s okay — if increased pressure from their customers and employees and the fear of bad PR was what it took to get them to wash their hands of the president, then pragmatism led them to the right decision.
Does this signal some kind of significant deterioration in the relationship between big business and the Trump administration? The answer is probably that while CEOs may be reluctant to be associated with Trump in a public way, their policy preferences, and those of Trump himself, haven’t changed. And the relationship between the administration and the business community has virtually no impact on what happens to the economy.
Trump’s preferences, he has made clear over and over, run to “deals,” where a couple of big shots can get in a room, hammer out an agreement and proclaim its success for the cameras. The problem is that while deals are part of the economy, they’re not how meaningful economic policy gets made.
Consider, for instance, a deal that Trump has touted repeatedly in recent weeks, in which the Taiwanese electronics manufacturer Foxconn will build a plant in Wisconsin. It promises to employ 3,000 people and says that the number could eventually rise as high as 13,000. But the state of Wisconsin promised to give Foxconn up to $3 billion in incentives for bringing the factory there. Using numbers the company has made public, one economist did the math and determined that the state will pay Foxconn $66,000 of taxpayer money per year for each job whose total compensation is $53,000. Others have estimated that it will take a quarter-century for the state to break even.
That’s a great deal for the corporation and an absolutely terrible deal for the state’s taxpayers. Furthermore, Wisconsin isn’t exactly crying out for more jobs assembling electronics. The state’s unemployment rate is a mere 3.2 percent. Which brings us to something else Trump doesn’t seem to understand: The economy, and the economic problem we face, isn’t just about jobs.
At his Tuesday news conference, Trump said, “I’ve created over a million jobs since I’m president. The country is booming. The stock market is setting records. We have the highest employment numbers we have ever had in the history of our country. We are doing record business.” Let’s set aside the ludicrous idea that Trump himself personally created a million jobs (just imagine what Republicans would have said if President Barack Obama had made that claim), or the fact that average job creation in 2017 is almost exactly what it was in 2016 (184,000 per month this year versus 187,000 per month last year), when Trump claimed the economy was a dystopian nightmare of misery and despair. What 2016 should have taught Trump is that job numbers — let alone the stock market or corporate profits — are not the problem with the American economy.
By those measures the economy was doing great in 2016, yet millions still felt that it wasn’t working for them. Without that sentiment so widely held, Trump would not have been able to win. People’s dissatisfaction is rooted in things such as slow growth in wages, skimpy benefits, the lack of job security, the lack of good-paying jobs for people with limited education, growing inequality and a safety net with too many holes in it, all of which add up to the general feeling that for too many it’s too hard to get ahead. The fact that you can get a job at Walmart for $8 an hour doesn’t alleviate that feeling.
But those problems were decades in the making and require complex policy projects to address. What Trump doesn’t realize is that you can’t just make a “deal” that will produce something like increased productivity growth.
Millions believed the simplistic notion that if they put a businessman in the White House, he could fundamentally change how the economy operates. They were wrong, because what Trump is offering them is two things, neither of which will help: theater around “deals” such as Foxconn or that Carrier plant in Indiana, and a slate of traditional Republican policies that have failed in the past and will fail again. The administration’s economic program is essentially the same as what President George W. Bush did: slash regulations on corporations so they can pollute more and mistreat their employees more, and cut taxes on the wealthy and corporations. Just as Republicans did then, they’re promising now that if we implement this program, there will be an eruption of economic growth whose benefits will trickle down to all.
Three years from now, the jobs numbers may look fine. But the chances that Trump will have meaningfully addressed the weaknesses in the economy that helped him get elected are somewhere between zilch and zero. That would have been true if corporate CEOs were willing to do photo ops with him, and it will still be true now that they aren’t.