President-elect Trump’s intervention in the Carrier relocation decision and what might not be a not so subtle threat to Boeing should deeply trouble anyone or any business that believes in the benefits of market forces, small government, freedom, and who opposes crony capitalism.
In the absence of more information on both incidents, there could be justifiable reasons for extending the benefit of the doubt. In the case of Carrier, and its parent United Technology, the decision not to move its plant to Mexico could have been based on an expectation of prompt action on corporate tax reform, a tax holiday, and regulatory relief. In Boeing’s case, $4 billion for a new Air Force1 fleet is certainly reason to publicly call for its cancellation, although it now turns out that the $4billion figure is bogus. However, it also could have been a warning to Boeing, which has an agreement to build aircraft in China. The president-elect’s use of words such as “consequences” and “retribution” make it harder to suspend disbelief however.
If Mr. Trump is that aggressive in attacking any company that even thinks about relocating outside the US, before his inauguration, what is he likely to do when he can bring the full force of the federal government to bear?
When President Kennedy publicly chastised the US Steel in 1961, his brother unleashed the power of the Justice Department against steel companies. And, we know how Richard Nixon engaged in a range of abuses against perceived enemies. Since Mr. Trump has given every indication that he intends to be an interventionist when it comes to US manufacturing abroad, what kind of actions is he willing to take to achieve his objective? Words have meaning and his are troubling.
Mr. Trump promised to “drain the swamp” but actions that make the federal government and executive branch more powerful and promote crony capitalism will have just the opposite effect. Corporations have a fiduciary duty to act in the best interest of their share-holders; not government officials or in this case the president-elect. In recent decades, laws and regulations have been written to benefit the favored and by extension to disadvantage competitors. A smaller and less intrusive government will only come about when crony capitalism and the Bootlegger and Baptist combinations are part of a real swamp draining.
If the business community and the organizations that represent it sit idly by while corporations are threatened and intimidated as Mr. Trump has done, they will encourage more such treatment and that will have wide ranging negative consequences. When the business community was considering whether to oppose President Clinton’s BTU tax early in 1992, a democrat strategist offered this advice: “ if you let them roll you early, they will roll you often”. The business community was unified in opposing the BTU tax and won. If President-elect Trump can roll corporations before he is inaugurated, he will roll them often afterwards. There is a choice to be made and the longer it is delayed, the harder it will be to do the right thing.
The Business Roundtable, Chamber of Commerce, National Association of Manufacturers, and others should take a firm stand against White House intervention in corporate decision making, especially where business investments are concerned. In doing this, they also should stress full support for actions that strengthen the economy and enhance global competitiveness.
The old adage of do the right thing and let the chips fall where they may is sound advice right now.