(VIDEO) Mike Pence on why Carrier isn’t crony capitalism – (It is, but it is not a black and white situation)

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Tax breaks are better than tax incentives but they can still be be crony capitalism if other firms don’t get the same tax breaks and then are put at a competitive disadvantage. That the future president intervened in the marketplace like he did is also of serious concern. However it appears that Carrier is mostly just keeping its own money (tax breaks) and is seeking relief from some of the very heavy regulatory rules that the Department of Energy handed down under Obama.Trump pledged to roll back this burden. There’s nothing wrong with rolling back the deluge of regs (that often benefit other industries and firms) that have hurt the economy (and Carrier) over the past few years and have chased companies out of the country.

But Trump should not be intervening on a personal level and the deal appears to include (it could still change) $ 2 million in subsidies paid directly to the company. This money comes from Indiana taxpayers. This is not OK. That is absolutely crony capitalism.

The relief Carrier received, (which apears reasonable to us) which kept jobs in the USA, should be done for every similar firm through established legal procedures for any competitors of Carrier’s that are in Indiana (which is where the tax breaks come from). However the subsidies are just bad and should be eliminated.

Presidents (and presidents-elect) inserting themselves into deals like this is potentially very dangerous. Tax breaks are not the worst kind of crony capitalism. Regulatory liberalization is absolutely a valid policy pursuit. But subsidies, and again subsidies are paid by you and me, shouldn’t be on the table.

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