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In Carrier Deal, Trump Is Taking Credit for Some Blatant Crony Capitalism
By Joshua Holland at the Nation
https://www.thenation.com/article/in-carrier-deal-trump-is-taking-credit-for-some-blatant-crony-capitalism/
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CNN reports that United Technologies gets about 10 percent of its annual revenues from federal contracts, and that the government also pays for nearly $1.5 billion of the companys annual research and development spending. That figure represents 23 times as much money as the company would save in labor costs by moving its Indiana facilities to Mexico. United Technologies shelled out around $18 million for lobbying in 2015 and 2016, according to Open Secrets, making it the 33rd biggest spender on Capitol Hill. So much for draining the swamp.
Carrier is also highly profitable theres no reason to believe it needs either government subsidies or cheap Mexican labor to get by. David Dayen reported for Salon that Carrier produced a significant chunk of total profits for its parent company
Of $7.6 billion in earnings in 2015, $2.9 billion came from the Climate, Controls & Security division, where Carrier resides. Profits from this division have expanded steadily in recent years, which is not what youd expect from a unit desperate to cut labor costs.
Finally, while any jobs that stay in Indiana are vitally important to the people who work them, they represent only a fraction of United Technologies larger plans to move jobs from high-cost locations to countries that offer cheap labor and minimal regulations. According to The Street, United Technologies plan to move its Indiana plants to Mexico was just one of the many cost-cutting measures announced last December as part of a multi-year, $1.5 billion dollar restructuring plan that would move manufacturing locations around the world to countries like Mexico and Poland.
So viewed in the context of the multinationals larger scheme, Trumps big deal is little more than a bit of political theater. But it sends a loud and clear message to other companies as University of Michigan economist Justin Wolfers noted, every savvy CEO will now threaten to ship jobs to Mexico, and demand a payment to stay. Great economic policy.
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Response to applegrove (Original post)
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spanone
(135,637 posts)question everything
(47,271 posts)They are getting state tax benefits that Pence could have done it on our own. Why do they need Trump for that? Besides the photo op (and the MSNBC "BREAKING NEWS" to.... cover Trump rally, of course