Carrier just announced

I think everyone is missing the bigger point. Trump wants government to be more active in helping manufacturing jobs. He does not think tech or green energy should be similarly favored as practiced by Obama. I don't believe Trump criticized Obama for wanting to help people, but that his priorities were misaligned with the working class. I believe Trump would be willing to do favors for all Mnfg companies if he could. I don't know why Deez is upset about this - Trump wasn't a dyed in wool conservative in the first place. He hasn't betrayed anyone. If Tex2000 is arguing that Trump isn't favoring certain industries, then that isn't accurate either.
 
mchammer said:
If Tex2000 is arguing that Trump isn't favoring certain industries, then that isn't accurate either.
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I'm not arguing that at all.

Right now, in Indiana the local market favors manufacturing due to the benefits those jobs have for the middle-class and what a strong middle-class means for a healthy macro-economy. That, however, is completely a function of market demand. Those benefits are such that it's a differentiated value proposition from other industries, and one that gives companies in manufacturing negotiating power in deals.

And it is a massive mistake to equate tax incentives to things like loan guarantees, grants, SOEs, and bailouts. It's a superficial understanding of what economics, and especially finance and business is really about. Most importantly, despite the "they're all the same" claims, tax incentives affect companies' capital structure and cost of capital completely differently than bailouts/grants/loan guarantees. An owner/CEO/CFO will manage their company differently with one over the other. Companies seeking tax incentives do so for different reasons then a bailout or a grant and the government awards these for different reasons. They are not all effectively the same.

Whatever Pentagon business discussed is, IMHO, completely fair game. Defense contracting is not a free market. Defense contracting is almost a pure monopsony with one major consumer. Consumer preferences drive pricing and demand. In this monopsony, Minority and Women Owed Business Enterprises, M/WOBEs, are already favored for contracts. And if the consumer (the Pentagon) prefers companies that keep worked in the US, than so be it.
 
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mchammer said:
I don't know why Deez is upset about this - Trump wasn't a dyed in wool conservative in the first place.
Click to expand...

I'm not upset about this deal in particular. It's not going to ruin the economy by itself. It's too small. What bothers me is that it could become a trend or a slippery slope. Furthermore, it bothers me that the political Right is rejecting traditional conservative economics and becoming apologists for the kinds of policies we used to criticize. Yes, I did see this coming with a Trump presidency. The ideology is becoming homeless or at least less welcome in what used to be its home.
 
SH
Did Pence offer ANYTHING any other gov or mayor could not have offered? For instance could Cuomo of NY offer Carrier the same or even more? NY is advertising on msm they are open to offering incentives to businesses willing to relocate to NY
If so ( and it is) Trump being PE has ZERO to do with any state etc making an offer to keep or bring Carrier or anyone to their state. Right?

When did Renox announce they were leaving? Do you know for a fact no one from Pence's office contacted them?
 
mchammer said:
I think everyone is missing the bigger point. Trump wants government to be more active in helping manufacturing jobs. He does not think tech or green energy should be similarly favored as practiced by Obama.
Click to expand...

Missing the point......really? Winners: traditional manufacturers, losers: green and new technology manufacturers. Who picks them?

The irony of this Carrier deal is that it is a product of the Cllinton's embrace of what used to be in vogue republican policies emphasizing free trade. As we move away from Nafta type free trade agreements towards negotiated bilateral agreements, it will be interesting to see the regulatory structures that will erected to maintain the new "fair" playing field.
 
Horn6721 said:
SH
Did Pence offer ANYTHING any other gov or mayor could not have offered? For instance could Cuomo of NY offer Carrier the same or even more? NY is advertising on msm they are open to offering incentives to businesses willing to relocate to NY
If so ( and it is) Trump being PE has ZERO to do with any state etc making an offer to keep or bring Carrier or anyone to their state. Right?

When did Renox announce they were leaving? Do you know for a fact no one from Pence's office contacted them?
Click to expand...
I was thinking the same thing regarding the state of NY offering tax breaks for new companies over a 10 year period. Difference is, liberal action good, conservative action bad.

States and cities have been offering these types of deals for a long time. Having a POTUS who actually does look out after blue collar workers will be a boon for the Republican Party and the US economy.
 
djimaplon said:
The irony of this Carrier deal is that it is a product of the Cllinton's embrace of what used to be in vogue republican policies emphasizing free trade. As we move away from Nafta type free trade agreements towards negotiated bilateral agreements, it will be interesting to see the regulatory structures that will erected to maintain the new "fair" playing field.
Click to expand...
This goes to the laissez-faire corner solution I talked about earlier. The probability of that occurring before the technological disruption of the past 30 years was much lower. It's the classic Ricardo and comparative advantage example.

1990 Example: Cost of producing 1 unit of Software and Shoes and Air Cond
Software Shoes Air Cond
US: $10.00 $12.00 $11.00
Mexico: $9.00 $7.00 $8.25

In this example 26 years ago it would have cost the US $33 to produce 1 unit of software, 1 pair of shoes, and 1 AC unit. Conversely it would have cost Mexico only $25.25 to produce the same. It has an absolute cost advantage. Before trade, it would cost US and Mexico $58.25 total to produce 2 units of software, 2 pairs of shoes, and 2 AC units. However, the US has a comparative advantage in producing 1 unit of software, that is 5/6 the cost of a pair of shoes versus Mexico's 9/8ths.

Under trade in 1990, even though they have an absolute advantage in software, shoes, and AC units Mexico would specialize in shoes. For $17 they would produce 2.125 shoes. US has a comparative advantage in software and would produce 2.2 unites of software for $22. Both would still produce 1 unit each AC units since they have equivalent comparative costs ~9/10th of shoes for the US and ~9/10th of software for Mexico. So instead of spending in total $58.25 for 2 units of software, 2 pairs of shoes, 2 AC units, under trade, they're spending $58.25 for 2.2 units of software, 2.125 pairs of shoes, and 2 AC units. This is why NAFTA made sense in the 1980s and 1990s.

Here's the problem in 2016.

2016 Example: Cost of producing 1 unit of Software and Shoes and Air Cond

Software Shoes Air Cond
US: $10.00 $12.00 $11.00
Mexico: $9.00 $7.00 $8.00

Technology has now given Mexico a comparative advantage in ACs. If there was not trade, it would cost $33 and $25 respectively for US and Mexico to produce 1 unit of each good or $58 for 2 units of software, 2 pairs of shoes, and 2 AC units. Under trade in 2016, the US would produce 2.2 units of software and only 0.73 units of AC for a cost of $33. Mexico now produces 2.125 pairs of shoes but now produces 1.38 AC units for $25. In other words, for $58, US and Mexico now produce 6.43 units under trade in 2016.

You can see where this is heading. At the rate of technological disruption, eventually the US would only produce software...a corner solution. While that is economically efficient, it is not sustainable for a diverse country like the US.
 
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djimaplon said:
Don't ask me. ask mchammer. I just drew the obvious conclusion from his post. I am not one claiming to think I know what Trump thinks.
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Trump is helping an industry that got hurt from prior trade deals. By the way, reducing state support by cutting subsidies is not picking a loser - it means less support.
 
Let's do the math here. Carrier will keep 1/3 of 2100 jobs in Indiana for $7,000,000 in tax breaks over 10 years.

$7,000,000 / 10 years = $700,000/year
2,100 / 3 = 700 jobs
$700,000 / 700 = $1,000 per year per employed person

Would unemployment benefits, lost payroll tax and lost sales tax from employees not spending as much money exceed $1,000 per employee? My guess is an overwhelming yes.
How many other companies in the community would be hurt by the lost jobs at Carrier?

This was a simple business decision between two entities. The difference is that we now have a POTUS that would rather have people working than sucking teet off the government.
 
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Fields said that Ford plans to lobby the new president to soften U.S. and state fuel-economy rules. They hurt profits by forcing automakers to build more electric cars and hybrids than are warranted by customer demand, he said.

“In 2008, there were 12 electrified vehicles offered in the U.S. market and it represented 2.3 percent of the industry,” Fields said in the interview. “Fast forward to 2016, there’s 55 models, and year to date it’s 2.8 percent.”
Now Trump has tweeted about Rexnord moving to Mexico. He may not save this move ( Rexnord is really screwing the worker on the way out) and he won't be able to save them all
BUT he is trying. What is the actual current POTUS doing?

Now this
"Ford Motor Co. was a target of Donald Trump’s criticism on the campaign trail for building cars in Mexico, and now that Trump will be president, Ford said it’s willing to work with him to keep jobs in the U.S. -- provided Trump puts the right policies in place, according to the automaker’s chief executive officer.
https://www.bloomberg.com/news/arti...ing-deals-with-trump-on-keeping-jobs-ceo-says




It may end up that Ford wants more than Trump is willing to do but at least there will be dialogue and likely compromises discussed. What is the actual POTUS doing? Where is he playing golf today?



an aside This from link was interesting:
"Fields said that Ford plans to lobby the new president to soften U.S. and state fuel-economy rules. They hurt profits by forcing automakers to build more electric cars and hybrids than are warranted by customer demand, he said.

“In 2008, there were 12 electrified vehicles offered in the U.S. market and it represented 2.3 percent of the industry,” Fields said in the interview. “Fast forward to 2016, there’s 55 models, and year to date it’s 2.8 percent.”
 
For all the infrastructure deals that Trump wants to initiate, should the federal government require purchasing American made products?
 
Horn6721 said:
dj
Interesting question.
How do you see the two related?
Click to expand...

In a recent interview the CEO of the parent company of Carrier said "I was born at night, but it wasn't last night," Hayes told "Mad Money" host Jim Cramer on Monday. "I also know that about 10 percent of our revenue comes from the U.S. government."
 
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