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Friday, December 9, 2016

Was Carrier a Bad Deal?


Was Carrier a Bad Deal?

A way too long cranky opinion

For Cranky Opinion Saturday

The following is the opinion of a cranky old man with little knowledge on the topic opined.  Opposing opinions are welcome, but they are wrong, and please, as always, no name calling, and that means you, you big stupid head.

The Carrier Deal to save 1100 jobs has been lambasted in the media as a bad deal for America by Liberals and some Conservatives, including Sara Palin.  This is either bad reporting, disingenuous reporting or just stupid people reporting.

The deal is said to have been made after giving Carrier 6 million dollars in tax incentives and 1 million in job training grants over 10 years.  The report I read is not clear if it is total over ten years or each year.  I will assume it is each year.

It is a good deal even if Sara Palin, who previously has been universally regarded by the media as a total air head idiot, says it is not.  Here is the way this C- student majoring in economics 55 years ago, sees the deal.

For seven million government dollars a year, 1100 jobs have been saved and not sent to Mexico.  With family members that probably translates into at least 3300 people spared the indignities of unemployment, missed mortgage payments, and going on Medicaid, welfare and food stamps for at least 4-6 months.   It probably means several people will not get depressed and blow their brains out.  Oh yes, that does happen, it is one of the social expenses of unemployment…suicide and alcoholism.

It is just a nice thing for 3300 people.

In addition to being a nice thing, 1100 people earning about $50,000 a year will get to pay about 15% in income tax or about $7,500,000 a year.  Additionally, there is the multiplier factor which existed in economics 55 years ago, and probably still exists today.  This means the $35,000 a year after taxes of these 1100 people gets spent in the community and puts more taxable income in the pockets of non-Carrier workers and these non-Carrier workers spend their extra income and so on and so on…a multiplier effect of let’s say another $3,000,000 in taxes collected…I don’t know if that’s what it would be, I was just a C- student remember. 

Anyway, I’m saying that for a cost to the government of $7,000,000 the government will receive back $10,500,000 in taxes and save the financial and social costs inherent from the effects of unemployment.   

So, this bad deal is bringing in an extra $3,500,000 dollars to the government, saving costs of unemployment, welfare, food stamps and the medical/social costs associated with unemployment such as depression, alcoholism, suicide and crime.  It also just makes many people in the whole country feel good.

Nice thing, feel good, decreased costs, better mental health, less crime and $3,500,000 a year extra in tax revenue.  Sounds like a good deal to me, or you can side with that liberal poster child for a conservative lame brain, Sara Palin.

Who do you believe, a C- student, or Sara Palin?

Of course, there are those that will say “Now every business will blackmail the Government and threaten to leave unless they are given the same breaks.”

That is the cry of a doomsday loser.  I say we will cross that bridge when we come to it.  Hell, these companies are leaving anyway, we just need for it to make sense for them to stay.
The new administration has a simple goal.  Make America great (or even greater) again.

I think it is good to have goals that make the country stronger and safer.  Those that offer nothing but reasons why such goals are impossible are fatalists.  I say there is nothing wrong with setting goals and then working toward them.

I am reminded of when Rudolph Giuliani became Mayor of New York City.  The city was racing downhill.  It was in debt, it was a cesspool, Times Square was not safe.  Prostitutes waited at the end of the Holland Tunnel for Jersey Johns.  You could not drive through any borough without having some bum wash your windshield at every stop light…you gave them a quarter or they peed on your car.  Homeless were begging and sleeping on the streets.  Crime was rampant.

Rudy promised to clean the mess up.  Experts pontificated every day on why it was an impossible goal.  The ACLU threatened to sue the city for every effort he promised to use to clean up the mess.  Whatever Rudy proposed, there were experts to explain why his proposals couldn't work.

A wise man once told me that the secret to many peoples success is they are too stupid to know why their dreams are impossible, so they go out and make their dreams come true.

Rudy ignored the experts.  He told the ACLU to go ahead and sue.  Within six months, the homeless were forced off the streets and taken to shelters.  Bums, beggars and windshield cleaners disappeared, crime was down, Times Square became a major tourist attraction, in fact the city was flooded with tourists from around the world.  The city flourished and the increase in revenue to the city paid off the debt and avoided bankruptcy.  He even cleaned up the disgusting graffiti from the subways and the subways no longer smelled like urinals.  I saw all this happen in New York City.  The ACLU saw all this and shut the heck up.  One man with vision and determination and a set of balls made the city great again.

It could happen on a larger scale.  It may not, but it might.

I for one am hoping for the best, because there is nothing else to root for.

The preceding was the opinion of a cranky old man and a C- student.  It is not necessarily the opinion of management…Mrs. Cranky.

25 comments:

  1. Absolutely true. Although not an economics major - or trained in any way in that art - I nevertheless am pretty good at math and had done some figures myself and come to much the same conclusion as you.

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  2. I liked Econ and got Bs.
    You're thinking is valid, both on the economic level and Sara Palin.

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  3. To be honest, I haven't really been following the Carrier Deal. I do think we need to keep jobs in America. Not sure what the extreme is to do so, though. I work for a company that provides medical transcription services that is owned by an Indian company (formerly an America company that sold to them). They are determined to move all the work to India or Philippines though there are still "die hard" entities that want their work done in the United States by American born employees. It might be a matter of time before all these types of jobs are lost to "foreigners". I just hope I can inch forward with this for the next 8 years until I want to retire. If you would have told me 30 years go the industry would have been in the sad state of affairs it is, I would have laughed, but nowadays the truth is each report dictated by a doctor that goes to India to process and transcribe goes through multiple tiers to have the job done right and it is still less expensive than the cost here in America. And that I fear is why this particular work won't be brought back to soil.

    betty

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  4. To my knowledge, One million in job training grants over ten years means 1 million spread over ten years, so, 100,000 per year. It's like pay rises for the masses, we fight through our unions to get a pay rise of maybe 3% which is granted to us over five years, which means less than 1% per year for the five years. Governments are tricky like that.

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  5. I believe the only number in doubt is the number of jobs saved. 800 jobs saved, 500 odd still moving to Mexico and 700 still will be lost. I don't have any answer except that smoke and mirrors aren't a solution.

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  6. Pence had been working on this Carrier Deal for years, and it took more tax incentives to complete this deal, which isn't nearly as good as Trump claims, and it remains to be seen if this serves as a model for other companies to blackmail the Federal government.

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  7. Beyond my mental capabilities to understand...one can only think positive and hope for the best. It's insane to hope for anything else.

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  8. It doesn't matter what Trump does,it will be horrible to the left. It's the way of things. I think good things are about to happen and it's time. The last eight years haven't been a walk in the park for many Americans.

    Have a fabulous day. ☺

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  9. It all remains to be seen, but what we are doing isn't working, so i pray this will.

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  10. No comment, because no matter what I say will be wrong.

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  11. I couldn't agree more Cranky. I too thought of the socio/economical downside and in the long run I absolutely believe we're saving money and quite possibly lives.

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  12. Yup. I respect that he is doing what he said he would do for that part of the population that voted for him. I drive through a very blue collar area every day, and the Trump signs are still on display.

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  13. You're making sense again, Joe; I thought I had warned you about that!!

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  14. I'm in a wait and see mode since I have no other choice.

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  15. I'll believe those numbers you crunched. Makes sense to me.

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  16. ... and the very true reality is that we're using tax breaks to gain taxes and jobs all in one bundle. Were this NOT done we'd be on the hook for even more to cover unemployed benefits for the long-haul. Even if these jobs are not assured to last this will give those employed a chance to prepare for a future loss by getting training or looking for other opportunities. They get a fighting chance to prepare for the future while making a living now.

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  17. Agree. And still, the way the tax laws are now, companies that leave here can write off the cost of closing here and moving. The people who are losing their jobs (taxpayers) are going to have to subsidize getting their own pink slips. DUH! Why don't we claw back all the subsidies they've gotten, then prohibit them from getting any government contracts in the future?

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  18. I don't think we have heard all the details yet, so I'm sitting back and waiting. Like, what happens after the 10 years - will those jobs stay? I'm pretty sure that the people whose jobs were saved are ecstatic about it. I know I would be.

    I keep seeing calls for people who receive government assistance ("welfare queens") to undergo drug testing. Has anyone suggested that for the Carrier executives?

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  19. You're right on the money so to speak. I have heard that only some of those jobs will stay and the rest will go but it's still a plus for us. How can it not be. It's going to take someone to take the bull by the horns and move forward. He'll piss off a lot of people but it has to be done if we're going to make America great again. If anyone can do this it's Trump. Besides...he's a Queens boy. Close enough to this Jersey Girl to know he's got guts! Great post.

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  20. It's a bad idea. What's to stop other companies from threatening to move jobs to Mexico for tax breaks? What if companies donate money to Trump's campaign in the hopes that he'll then treat them favorably? This is also just one company and does nothing to save jobs all across the US. He can't make deals with every single company and it sets a bad precedent.

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  21. He told the workers at Carrier that he'd saved their jobs. The next day a union leader had to tell them that actually, 500 jobs will move to Mexico and 700 will be lost entirely. Apparently that leaves 800 jobs saved...better than nothing but not what was claimed.

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    Replies
    1. For the next 4 years, (or for whenever he is impeached, because call for impeachment will start before his first 2 months in the office) whatever Mr. Trump does or doesn't do will be given a negative spin...it's a shame really.

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  22. From the little bit I've read, the Carrier deal wasn't perfect, but nothing ever is. You make very valid points about all of the other good things that come from it. I don't see it as being any worse (maybe it's even better than) when government bailed out the banks and automotive industry. It just seems like maybe with Carrier it's benefiting more regular people.

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  23. THis is the comment from my brother, a retired Federal Judge appointed by Bill Clinton. As best as I know he leans right, but i don't think he supported Trump. He was Deans List at Williams College in Econ and Law Review at Harvard, so I very much respect his opinion. (Can you tell I am proud of my big bro?)

    Good post. I would give you an A in econ recall. One other aspect of the deal. I think to get the tax incentives Carrier has to upgrade its plant. Improvements costing $17,000,000. It was partly the need to make this investment that caused Carrier to consider a total new plant in Mexico. Factor this $17,000.000 into your employment figures, this will create local construction jobs and maybe even equipment mfgrs. Anyhow, it is worth trying. What is the alternative. Just give up?

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