STAFF NEWS & ANALYSIS
Mercantilism’s Rise: Its Consequences for Your Freedom & Prosperity
By Grayson Schultze - April 27, 2016

It became clear that the best way to stay competitive and protect the business for long-term is to move production from our facility in Indianapolis to Monterey, Mexico. – Carrier Air Conditioning spokesperson

Back in February, workers at a Carrier air conditioner manufacturing plant in Indianapolis filmed a company spokesman informing employees that 1,400 jobs would be moved to Mexico. The speaker could barely finish his speech in front of this irate crowd, full of hisses, loud, sarcastic responses to his remarks, and profane verbal confrontations.

The irate crowd soon was not limited to Indianapolis. Courtesy of YouTube – and certifying the ideas of Gustav Le Bon, the lunacy of the crowd went viral, extending nationwide.

Predictably, within a few days Republican presidential candidate Donald Trump put his own word in, promising that as U.S. President, if Carrier tried to sell their air conditioning units manufactured in Mexico to the U.S., he would “tax the hell out of them.”

Not to be outdone, Bernie Sanders on the Democratic side backed the union for the Indianapolis workers. Failed trade policies, he claimed, must be rewritten so American jobs are not the country’s number one export.

On April 19th, it was Sanders, not Trump, who received the endorsement of the United Steelworkers union that represents the 1,400 workers.

Hillary Clinton as well is on the campaign trail speaking on manufacturing and global trade policies.

The political current extends beyond populism. The dangerous economic theory touted by leading candidates is nothing short of mercantilism.

Yes, mercantilism as in the centuries old idea that in its heyday of the 17th and 18th centuries in Europe involved subsidies and monopolistic privileges to groups favored by the state.

That sounds a lot like the U.S. today. And if the leading candidates have their way, mercantilist policies will be amplified in the coming years.

The way that Clinton, Sanders, and Trump see it, there is no independence from the state. Instead, companies should genuflect to their master.

In an era when technology is beginning to render nation-states irrelevant, politicians clamor for the normalcy of when the nation-state was in charge. Meaning them in charge.

This has dire implications.

Limiting international trade means fewer options for consumers, and inefficient domestic manufacturers propped up by the state and paid for by taxpayers.

Ultimately this means rising costs and a lower standard of living. And this is the best case scenario. At worst, trade wars often lead to economic sanctions, which further empowers the state and harms individuals and companies within the respective states.

Conclusion:

Age-old ideas die hard. Such is the case for mercantilism, an age-old idea in the midst of the latest round of global technological advancement.

This is especially the case when echoed by candidates for the highest office in the land. This fact, coupled with a pliable public with no economic understanding.

The American crowd’s frustration should not be with Carrier. They should take up their case with the U.S. government that has implemented regulation after regulation and tax after tax to provide strong enough disincentives for this company to relocate jobs overseas.

Free markets work to better everyone’s lives. Not to provide jobs.

Posted in STAFF NEWS & ANALYSIS
  • Bruce C.

    I have to admit I’m not crazy about what Trump has said about Carrier and how he would deal with businesses wanting to relocate “overseas”, but I’m going to speculate about what I think he (but only he and not Sanders or Clinton) would actually do. First of all I think he would actually contact the business executives of the company and try to understand their problem. (Notice I said THEIR problem.) If in fact taxes and regulations are their gripe then he (I would hope) would try to address that. He might make some sort of a deal with them to let him try. I know that sounds crazy but that’s how different I think he might be. I actually don’t think he is a mercantilist. I think he is more of a deal maker and realist and understands that deals can be win-win, and in which “America” is one of the winners. That’s different than mercantilism in which the power of government is used to grant favors and protection at the expense of the rest of the country. And, as I’ve said before, if he has a political, popular mandate I think he could actually do a lot. I still would like to give him a chance. Not so with the other candidates.

  • Vorant

    Expecting “American companies” to protect American jobs isn’t mercantilism, it’s called patriotism. Granted government over-regulation of business (big and small) is a problem, but so is unfettered corporatism and globalism.

  • buffalo lips

    Americans have become literally individuals with no voice, taxed senseless but not represented, as evidenced by dozens of bills strongly opposed by the voting public over the last two decades that were shoved down their throat (and up alternative locations). Americans taking up their case with the government establishment has proven conclusively to be an impotent gesture, arguably a ridiculous suggestion. American’s only alternative NOW is to take the issue up forcefully with the Carrier Corporation. It is only through CARRIER’s INFLUENCE on Congressmen (i.e., campaign donations to Congressmen, courtesy of the SCOTUS “Citizens United” decision) that will bring about change. If Carrier and other similar corporations feel enough pressure (pain) from the consumer public and unions by withholding their consumer dollars and campaign donations, just maybe Carrier will cause change to occur in Washington, D.C. In the meantime, make the pressure relentless.

  • Praetor

    Well. If these workers are the ‘best’ in the world, “maybe, no, probably”. They should start a company that makes heating and air conditioning units, and compete against Carrier Air Conditioning Company.

    The U.S. worker says they are the best in the world, than you should be making the best produces in this world. Hand craft products will always out do robot made products, every time. Be the best or shut the heck-up.

    The U.S. worker has turned into lazy, over paid cry babies. Stop whining, stop looking for someone to save you.

    Ask the stinking union to fund the new company, and see how much their in your corner!!!

    • Hey you

      Easier said than done. It takes capital and trade experience to do the job.

      All that we know is that the USA has too many “fat” workers and little appreciation of what it takes to generate material success.
      Like is said, “will success spoil _________”?

  • Jim Kluttz

    US manufacturing was doomed the minute the Bretton Woods Conference ended in 1944 when the US dollar was made the world’s reserve currency because the resultant international demand for US dollars could only be met by selling stuff to US consumers. Soon in 1971, as government and we the people lacked the fiscal discipline to continue Bretton Woods, President Nixon compounded the problem by ending the gold standard. He and Henry Kissinger then convinced the Saudis to sell oil only for US dollars. Thus the petrodollar continued the disastous international demand for US dollars to this day.

    My conclusion is that we the people have two choices, hang on to the petrodollar/dollar reserve system as long as possible and sink slowly into third world poverty, or end that system quickly and sink into third world poverty right away.

    • Vorant

      That last sentence was bleak….. It’s no wonder Clinton is banging the gun control drum so hard, the political class upon a financial collapse, along with their banking/wall street masters will all become enemy number one. What follows will make the French revolution look like a garden party…..

  • rahrog

    The foundation of free markets, or capitalism, rests on SAVINGS. The author of this article has fallen for an infantile bait & switch game. Capitalism is a wonderful theory that requires sound money to back it up.

  • Mary

    The off-shoring of US business has been part of directed history, the response of US corps to gov’t and central bank incentives. The crazy shipping of wip back and forth half way around the world cannot possibly be economic. There is no such thing in today’s world as free trade. We all know that. Surely you’re not trying to say that rectifying the situation would be mercantilism. Of course, Trumps hammer to every nail approach is not helpful, but the sentiments of these workers point to real, gov’t created problems.

    At a time when there are lots of unemployed young people–let’s not fall for the rigged stats, please–the fascist system is off-shoring professional jobs, or bringing in third worlders with work visas here. Most of the manufacturing is gone so they had to turn somewhere. This is OK????

    We were recently audited. The IRS played musical chairs, passing our file ultimately to three people, none of whom had names that reflected being American. The final drone spoke such bad English that my accountant couldn’t understand who she was or why she was calling and nearly hung up on her. I guess the federal bureaucracy is where they are stuffing all those “migrants.”

    Recall Ross Perot and the giant sucking sound. So Trump says he wants to stop it. I don’t believe him, but that’s what should have been done a long time ago.

  • Pilgrim

    Millennials look at our economy and reject capitalism in favor of socialism. What they don’t understand is that capitalism cannot coexist with central banking. They haven’t seen capitalism in America in their lifetime, and neither have their parents or grandparents!

  • Samarami

    http://www.theanarchistalternative.info/zgb/16A012.htm

    The above linked short article underscores the problem. Bell is correct:

    “..The American crowd’s frustration should not
    be with Carrier. They should take up their case
    with the U.S. government that has implemented
    regulation after regulation and tax after tax to provide strong
    enough disincentives for this company to
    relocate jobs overseas…” Sam

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