“Crony capitalism” is the new buzzphrase, now that Donald Trump is cutting deals to keep jobs in the United States. When previous presidents cut deals to allow companies to build new factories in Mexico and overseas while shutting down factories here, no one called it crony capitalism, even though it was; we called those deals “trade agreements” and “treaties”—or simply “NAFTA,” “GATT,” and “Most-Favored Nation status for China.”
Let’s be blunt: There is much that is wrong with the deal that Trump and Mike Pence struck with United Technologies over Thanksgiving weekend, but the problem is not that “crony capitalism” is being used now to benefit American workers rather than multinational corporations. The fact that United Technologies employed rhetorical sleight of hand to claim that more than half of the 2,100 jobs (1,400 at a Carrier plant in Indianapolis; 700 at a United Technologies Electronic Controls plant in Huntington, 20 miles southwest of Fort Wayne) would be “saved” under the deal is a big clue, as is the fact that Trump and Pence let United Technologies get away with that sleight of hand. The company claimed that 1,100 jobs would be saved, but, as the Wall Street Journal reported, “The deal would cover 800 Carrier workers from the Indianapolis furnace plant and an additional 300 research and headquarters positions that weren’t slated to go to Mexico” (emphasis mine). The plant in Huntington will still be closed, and 600 jobs will be lost at the Carrier plant.
The loss of those 600 jobs in Indianapolis (pop. 853,173) will be a far lesser blow to the local economy than the loss of the 700 jobs in Huntington (pop. 17,391) will be. Throughout the presidential campaign, the Carrier situation has been a potent symbol, but in the long run, efforts to save and revive American manufacturing will have to focus on saving—and creating—smaller numbers of jobs at a greater number of factories in communities big and small across the U.S.
The biggest problem with the Carrier deal is that it cannot be replicated in a way that will significantly affect the number of manufacturing jobs in the United States. It isn’t quite a one-off; there may be other situations in which a similar deal might be struck. Even so, large manufacturing conglomerates like United Technologies do not account for the majority of manufacturing jobs in this country; small factories with 100 employees or fewer do.
Saving those jobs, and creating others, cannot be done on a piecemeal basis, by offering packages of incentives (as was the case with Carrier); that will require a comprehensive overhaul of the tax and regulatory code with a deliberate focus on forgotten communities such as Huntington, and even smaller communities with even smaller factories. But until Trump is inaugurated, things like this Carrier deal are all that he can do. Any broader tax and regulatory reform would be the work of Congress. But since many of those who have raised the cry of “crony capitalism” have been perfectly content with the truly crony capitalist Republican majority in the House of Representatives (where tax and regulatory reform bills originate), even after his inauguration President Trump may find that he has his work cut out for him.