It’s good that about 1,000 Carrier Corp. workers will not be losing their jobs. But there is a whiff of Putinism in the combination of bribery and menace that may have affected Carrier’s decision — the bribery of tax breaks, the menace of potential lost defense contracts for Carrier’s parent company, United Technologies.
If this were to become the U.S. government’s standard method of operation, the results would be Russian, too: dwindling investment, slowing economic growth, fewer jobs.
On the same day that Donald Trump took a victory lap through the Carrier plant in Indiana, The Post published a coincidentally relevant article about Russia’s “fixer-in-chief,” Vladimir Putin.
The article, by Post correspondent David Filipov, describes how government-controlled television continually features Russia’s president interrogating or berating factory directors and petty officials.
“If prices have spiked, or salaries are low, or costs have gone way over budget, then Putin lays into the unfortunate bureaucrat — ‘What’s wrong with your head?’ ‘Are you crazy?’ ‘What are you saying?’— as the cameras roll and the Russian president’s quarry stammers and squirms,” the article explains. Putin has “positioned himself as the one person in the country to whom citizens can turn at a time when faith in government institutions is low.”
The persona of “fixer-in-chief” — the phrase comes from Putin biographer and Brookings Institution expert Fiona Hill — may work politically for Putin, though any public opinion poll should be taken with several grains of salt in a country where honest criticism can get you jailed or shot.
It may be appealing as a model to America’s president-elect, too.
The problem is that it doesn’t work. Russia’s economy is shrinking, year by year, and no matter how many factory directors Putin humiliates, it won’t start growing again without structural and political reform.
The U.S. economy has challenges, including the loss of manufacturing jobs and the insecurity many workers experience. But it is far healthier than Russia’s, with steady economic growth, low unemployment and a far, far higher standard of living.
A key reason is that the U.S. economy is governed by laws, not by the whims of the nation’s rulers. Companies such as Carrier, as well as foreign investors with their $3 trillion in the United States, want predictability. They want to know that if they earn a profit, it will be taxed at the same rate as the profit earned by their competitor down the street. They want to know they will not have to slip stock to the governor’s son in return for police protection. When the government itself is a customer, they want it to buy the best product at the best price, not from the company that provides political favors.
Of course, even the United States is not pure. Local economic development agencies woo companies with competing tax breaks. Though taxpayers as a whole lose out, no state feels safe disarming unilaterally.
Congressional Republicans last year nearly succeeded in defunding the Export-Import Bank, which arranges government-backed financing for U.S. exporters, because they objected to this form of “crony capitalism.”
It will be interesting to see how those same conservatives respond if the Carrier intervention becomes a model for Trump’s rule. The Ex-Im Bank at least applies standards to every loan applicant. By contrast, what will determine where Trump swoops in, given that hundreds of executives are deciding every day on whether and where to invest? Will it be friendship and enmity? Will it depend on which company is in a battleground state? Or which generates the most headlines?
In the long run, Americans are best served by policies that promote growth and trade at home and abroad. Five percent of the world’s population lives here, but we generate nearly one-quarter of the world’s economy. It’s good for us when companies invest in Mexico, and Mexicans become wealthier, and buy more American products.
True, that is cold comfort to U.S. workers who lose their jobs to foreign competition or, as is more common, to robots and other technological advances. If Trump wants conservative solutions to help them, he could abolish a lot of the failed government retraining programs and redirect the funds into vouchers or tax credits for workers who want to complete college or retrain themselves. He could support apprenticeship programs. He could make sure that workers can carry their health and retirement support with them when they change jobs, rather than being dependent on one company. (That’s where Obamacare helps, but never mind that for now.) He would invest (as he has promised) in infrastructure, but also in the nation’s great public universities and other research institutions.
Eventually, that would allow him to take victory laps in countless factories — because the benefits of his policies would have spread across the land without czarist vagary or caprice.
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