Mr. Trump is not yet inaugurated, and he is already achieving notable policy success.  This week’s decision by Carrier to keep 1000 jobs in Indiana rather than moving to Mexico is seen as a vindication against Mr. Obama’s “hand’s off” approach to job loss from globalization. In reality, Mr. Trump is repeating the same mistakes as Mr. Obama.

Of course its a great victory for the 1000 workers, and I rejoice that the pain that their community felt is assuaged.  Likely none of the readers (or the authors here) have a clue as to the depth of the emotional pain that those workers and that town have gone through since the initial announcement last February.  As I often say in class when we discuss the benefits of free trade and free flow of capital, while its undoubtedly true that we all benefit (especially over the longer term), its of little solace to the worker in Indiana who just had the one factory in their town close up shop that they can buy some cheap Chinese goods at Walmart.  It’s precisely this difficult short term reality that makes presidential leadership on trade so crucial. And Mr. Trump is getting a C- in this initial phase.

Why not an F?  Because he has hit at one of the real reasons for the loss of manufacturing, and is pledging to go full force against it once in office–they abysmal corporate tax policy and oppressive “all cost and no benefit” regulatory regime of the current administration.  If he had continued in this direction only, I would have given him an A+. Mr. Trump should have consistently said, “I’m going to make the corporate tax policy and business environment so good, that companies from around the world are going to be clawing to get in. When I’m done, America is going to be so great our immigration problem will be foreign employers crossing the Rio Grande to start up their new high-paying manufacturing jobs!”  Yes, I could imagine Mr. Trump with that kind of campaign rhetoric.

But the actual approach is not just to make the business environment positive.  Mr. Trump also wields the velvet glove with the clenched fist underneath.  He threatened punitive import duties on Carrier’s furnaces from Mexico, and there was the implicit threat of the parent company’s (ITT) broader government and export-related business prospects (which affect far more workers than just the furnace line).  As the WSJ said this morning:

A mercantilist Trump trade policy that jeopardized those exports would throw far more Americans out of work than the relatively low-paying jobs he’s preserved for now in Indianapolis. Mr. Trump’s Carrier squeeze might even cost more U.S. jobs if it makes CEOs more reluctant to build plants in the U.S. because it would be politically difficult to close them.

And Indiana threw in some special tax incentives for Carrier.  This is just Mr. Trump’s Crony Capitalist industrial policy.  Mr. Obama did this for his favored green energy companies, and now Mr. Trump is doing it for his political advantage.  But special tax breaks for Carrier means that some other business (or individual) in Indiana is going to have to pick up the tab.  The benefits to Carrier are seen, the costs to the broader population are unseen.  Are we surprised that we get Cronyism and Industrial management whoever we elect?

EDIT UPDATE:  I read a couple more things after posting this, and this quote is worth noting to amplify the argument above:

“Companies are not going to leave the United States anymore without consequences. Not gonna happen,” Trump said in Indianapolis Thursday.

This kind of rhetoric is going to have significant negative effects on business decisions to build new facilities.  This says that if they come to America and need to leave in the future, that they will be financially penalized.  At the margin, this will reduce the amount of domestic investment in the U.S. and result in less jobs.  Which firms will see this most?  Precisely the type firms that will bring political repercussions–in a Trump administration, this will be manufacturing jobs.  So his very rhetoric in support of an industry will harm it.  He can help in the short run, but at long run costs (at which time he will conveniently be out of office).  Mr. Trump is singing the the famous Eagles song, “you can check out anytime you like, but you can never leave!”  This is all the more reason why a Republican congress needs to stand up to the imperial presidency.