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.
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.