This week, Donald Trump has been trumpeting an announcement by Carrier, which makes furnaces and air conditioners, that the company will be keeping about 800 jobs in the United States instead of moving them to Mexico.
This is obviously great news for the 800 American workers whose jobs will be saved, and it has already generated a lot of positive publicity for Donald Trump. But the announcement also illustrates an inherent problem with Trump’s approach to economic policymaking: As he focuses on small-scale, headline-grabbing deals, he’s neglecting the larger policy questions that will ultimately determine the success of his economic agenda.
Over and over again on the campaign trail, Trump vowed to take office as the dealmaking president. “This country is being drained of its jobs and its money because we have stupid people making bad deals,” Trump said at a campaign rally in June.
Trump has vowed to be smart and make good deals. The Carrier announcement — along with Trump’s similar announcement about a Ford plant a couple of weeks ago — are presumably the first of many deals our dealmaker in chief expects to make on behalf of the American people.
But a series of Carrier-like deals doesn’t add up to a viable economic agenda. For one thing, these deals are way too small. There are 150 million workers in the United States, and the US economy needs to create about 200,000 jobs a month just to keep up with population growth. Trump would have to negotiate dozens of Carrier-sized deals every week to have a serious impact on job growth — and so far he’s announced only two deals in three weeks.
The larger issue, though, is that governing through a series of deals creates serious perverse incentives. If Trump starts giving corporate welfare to companies that promise not to move jobs to Mexico, we’ll see a flood of companies threatening to move to Mexico in hopes of getting a handout. Taxpayers would wind up paying to save a lot of jobs that weren’t actually in danger in the first place.
Conversely, if Trump tries to punish companies that move jobs overseas — for example, by denying them federal contracts — companies will start looking for ways to hide the fact that they’re moving jobs overseas. An overly aggressive campaign could also put US businesses at a competitive disadvantage against foreign multinationals that are free to locate their factories in low-wage countries, resulting in US companies losing market share and eventually going bankrupt.
What Trump needs is a policy — a consistent set of rules for how the government will treat companies employing US workers. Maybe that means manufacturing tax breaks or higher tariffs or interest rate cuts or stronger “buy American” provisions for US procurement. Or maybe none of these are good ideas and Trump should accept that there’s no good way to prevent some jobs from going overseas. But only by focusing on an overall strategy, rather than obsessing over the decisions of particular companies, can you make intelligent decisions about an economy as large as the United States.
The problem is that this runs directly counter to Trump’s ethos as a dealmaker. Trump thinks the way you get things done is by sitting down with key decision makers and hashing out a bargain. That works fine when you’re trying to build a hotel because there are few enough parties involved that you can sit down with all of them. But Donald Trump is trying to influence the decisions of millions of employers across the US economy. And you can only do that with good policies, not good deals.
But over the past 18 months, Trump has made it clear that he has no interest in the details of policy. In April, his campaign set up an Alexandria-based team to advise him on policy, but by August most of its staff had quit, with several staffers telling the Washington Post they never got paychecks they had been promised. Trump has been skipping the daily intelligence briefings that a president-elect normally receives in the weeks before taking office.
Instead, he’s been organizing post-election rallies in swing states. “He likes the instant gratification and adulation that the cheering crowds provide,” the New York Times reported last month. That focus on instant gratification might allow Trump to make more small-scale, Carrier-style deals. But it’s not going to serve him well as he tries to improve the overall economy.