Donald Trump

When Trump (or Obama) Threatens CEOs, It's the Little Guy Who Loses

Political finger-wags at the boardroom is a good sign that the lowly taxpayer is about to take it in the shorts.

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||| Eric Vance/ZUMA Press/Newscom
Eric Vance/ZUMA Press/Newscom

As Eric Boehm wrote here last night, President Donald Trump is none too pleased that GM is shuttering five U.S. manufacturing plants and eliminating 14,000 jobs.

"They better damn well open a new plant there very quickly," the president barked to The Wall Street Journal yesterday. "I told them, 'You're playing around with the wrong person.'" At the White House, Trump depicted to reporters his conversation with GM CEO Mary Barra like so: "This country's done a lot for General Motors, you better get back in there soon….They say the Chevy Cruze is not selling well. I say, well then get a car that is selling well, and put it back in…. They better put something else in."

If this Trumpian rhetoric sounds familiar, that's because it is. In the president-elect's very first press conference, he vowed hyperbolically that, "there will be a major border tax on these companies that are leaving and getting away with murder." There was, it turns out, no targeted border tax on companies that do homicide, but instead a broad tax on all individual consumers (and businesses) who do shopping.

There is a lesson here, one that transcends politician or party, though it increasingly needs to be re-learned by all elected officials and those who affirmatively vote them into office: When pols threaten CEOs, it's the lowly taxpayer who's about to take it in the shorts.

Anti-corporate bluster makes for good copy, particularly in a #hottake media environment where historical memory is the exception, not the rule. For instance, in that very same January 2017 press conference, Trump made the now-even-more-laughable boast that, "the word is now out, that when you want to move your plant to Mexico or some other place, and you want to fire all of your workers from Michigan and Ohio and all these places that I won—for good reason—it's not going to happen that way anymore." Whoops!

And it's not just Team Red getting purple-faced at GM this week. Here's Sen. Sherrod Brown (D-Ohio): "This country has been good to GM with the rescue of the auto industry less than a decade ago. They've been immensely profitable, [and] President Trump just gave them a huge tax cut. They're taking those dollars and building in Mexico, and they should be held accountable for this."

Note the Trump/Brown yin-yang of we did you favors and where's your gratitude? This is the central policy fail hiding in plain sight. Those political favors cost money, whether in subsidies, loans, targeted tax breaks (which mean the rest of us have to pay more to the state), eminent domain atrocities, or whatever else. And the larger the largesse, the more that the key customer for these incumbent behemoths becomes government, not consumers.

Manufacturers that lose focus on making products that individual buyers desire are manufacturers that (deservedly) go out of business. Just because politicians have for many decades now treated automakers like public utilities doesn't mean that they are. There is no guaranteed customer base or revenue stream.

Trump's predecessor was no stranger to taxpayer-soaking disguised as boardroom bullying.

"I intend to hold these banks fully accountable for the assistance they receive," a stern-sounding Barack Obama said to rapturous applause in a February 2009 address to a joint session of Congress about the financial crisis. "This time, CEOs won't be able to use taxpayer money to pad their paychecks, or buy fancy drapes, or disappear on a private jet. Those days are over…. I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can't pay its workers or the family that has saved and still can't get a mortgage. That's what this is about. It's not about helping banks; it's about helping people."

Just one week later, the administration announced another $30 billion in bailout money (on top of the $133 billion to date) for the disgraced insurance giant AIG.

In mid-April of that year, in the face of criticism over bailout fairness that would give rise in part to both the Tea Party and Occupy Wall Street, Obama was reduced to a type of voodoo economics in which helping banks is about helping people: "One of my most frequent questions in the letters that I get from constituents is, 'Where's my bailout?' And I understand the sentiment: It makes sense intuitively, and morally it makes sense. But the truth is that a dollar of capital in a bank can actually result in $8 or $10 of loans to families and businesses. So that's a multiplier effect that can ultimately lead to a faster pace of economic growth. That's why we have to fix the banks."

The Democratic Party has moved significantly to the economic left since 2009.

Hilary Clinton's pitch about insufficiently patriotic companies in 2016 was positively Trumpesque, minus some of the rhetorical flourishes: "I want companies to know, if they walk out on America, they're going to pay a price. And if they ship jobs overseas, we're going to make them give back the tax breaks they receive here at home."

Note again the favors/punishment duality. Who do we hate? Tech companies! When do we give them whatever they want? Now!

In an ideal world, government gives companies and industries zero subsidies, loans, targeted exemptions, forcible property transfers, or other products of coercion. Instead, it creates a level playing field and uses the resultant savings in money and time to make the costs of both government and consumption cheaper. The world that we actually live in, alas, looks largely as I predicted when President Trump first announced his marvelous new trade war:

As Ilya Somin has noted over at The Volokh Conspiracy, Trump has dramatically shifted Republican public opinion on trade. And some high-up GOP types have been all too happy to change their spots: Never forget that then-Republican Party Chair Reince Priebus drew applause from the stage of the Republican National Convention for crowing that "Donald Trump wants to bring jobs back from overseas and hold companies who want to send them abroad accountable." With Democrats already tacking hard toward a Bernie Sanders-like approach on economic policy, tariff-reduction may be following deficit-reduction out the exit door of two-party politics.

UPDATE: The presidential tweets have arrived:

NEXT: Rapper Meek Mill Is Attempting a 1-Million-Person Jail Break

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  1. So the bully pulpit is now not allowed?

    What if Trump nationalizes Facebook, and twitter, and permanently bans all GM executives. Is that OK?

    A little bluster is just fine when Emperor Hussein is yelling at the healthcare industry, but not Trump, not cars, not now?

    1. Maybe you didn’t RTFA far enough to see similar complaints about Obama.

      1. TDS works both ways. Sometimes it prevents you from also seeing criticism of Obama and Hillary, as in this article.

        1. Let’s cut Trump fans some slack. They may be beginning to recognize, in flickering fashion, that Pres. Trump is not going to rework economic fundamentals to enable unskilled, uneducated, rural white males to prosper (let alone to improve their situation at the expense of the elites in the cities and suburbs they so bitterly resent). This cognitive dissonance likely is traumatic for the poor, inept, inadequate Trump supporters.

  2. You didn’t build that.

    1. Ugh.

      Obama.

      Not gone enough.

  3. We are now looking at cutting all @GM subsidies

    Damn, if that’s what he does when a corporation pisses him off, then someone needs to tell him that they all think he’s dumb and has tiny hands.

    1. We are now looking at cutting all @GM subsidies

      I mean, sure… it’s a start.

    2. Can someone tell him all the farmers think that too?

    3. I hope every corporation pisses him off so bad.

  4. If they’re not going to pick winners and losers for me, then why do I bother even voting for government?

  5. FWIW, they also closed the Oshawa plant in Ontario.

    That company should have died a natural death.

  6. This is a good opportunity for Tesla to get another great deal on a GM plant or two. Worked out well for the one they bought in Fremont.

    1. More likely Tesla is about to go down the tubes.

  7. Why the panic attack? GM’s not closing any plants or laying off any workers, they’re just negotiating for a fat subsidy stack. Donald knows this, he’s the world’s foremost expert on negotiating with OPM. I’m sure he admires and respects GM for their tough negotiating, he can’t be mad at GM for trying to get the best deal they can. It’s exactly what he’d do if he were running GM (except he’d be much, much better at it of course.) So just chill out and watch what happens, you’re getting free tickets to a live performance of The Art Of The Deal. Just remember that they’re all actors here, none of this is real.

    1. ^ This analysis probably makes the most sense of all.

    2. Now that’s a take on things!

      Bombardier in Quebec pulls shit like this.

    3. all the world’s a stage.

  8. More false equivalence from “Reason” and “Trump Derangement”-denier Matt Welch. Sorry, but “both sides” have not initiated a highly risky and possibly ruinous trade war with China. You don’t have to make sure to get “equal” digs in at Democrats while the Republicans still control the House, Senate, and executive.

  9. Maybe the problem is not enough government meddling in the auto industry. Trump’s a supposed marketer–he should figure out how to make GM brands as desirable as the foreigner ones. I think it’s too late for Chevy in the sedan market. Nobody wants that. Maybe if they changed their logo. By itself, as a matter of looks, the Cruze hatchback is one I might actually be caught dead in.

    1. That yellow bowtie is ugly as fuck.

      1. Well and succinctly put.

    2. Your pal Obama is responsible for these slow selling cars Tony. And giving them our mo eh so they could open more p,ants in China.

  10. “I told them, ‘You’re playing around with the wrong person.'” At the White House, Trump depicted to reporters his conversation with GM CEO Mary Barra like so: “This country’s done a lot for General Motors, you better get back in there soon….They say the Chevy Cruze is not selling well. I say, well then get a car that is selling well, and put it back in…. They better put something else in.”

    I couldn’t help thinking of this classic movie scene when I read Drumpf’s rant & rave.

    https://youtu.be/j4SRsGn14PI

    1. Swing and a miss! Of course, the moment you said ‘Drumpf’, I knew whatever else you threw out there would be weak and moronic.

  11. President Donald Trump is none too pleased that GM is shuttering five U.S. manufacturing plants and eliminating 14,000 jobs.
    “They better damn well open a new plant there very quickly,” the president barked to The Wall Street Journal yesterday. “I told them, ‘You’re playing around with the wrong person.'” At the White House, Trump depicted to reporters his conversation with GM CEO Mary Barra like so: “This country’s done a lot for General Motors, you better get back in there soon….They say the Chevy Cruze is not selling well. I say, well then get a car that is selling well, and put it back in…. They better put something else in.”

    What the fuck is the problem here? The US government paid billions upon billions to keep G(overnment) M(otors) factories open. A retarded expenditure? Yes. But that’s not Trumps fault.

    He’s just insisting they keep up their end of the bargain, but somehow Welch thinks this is bad and gives some very mealy-mouthed excuses why.

    1. He’s mad because it hurts him politically.

      Libertarians defending presidents dictating to private companies about how to run their business. Almost makes you want to put an (R) after your name. You can get away with all kinds of shit.

      1. Tomy you dumb cunt. Your fellow faggot friend, Obama, gave away billions of dollars to GM, just they could make cars no one buys and open plants in China.

        Good job voting for that commie you fucking chickenhawk child predator.

  12. I have no small amount of schadenfreude, seeing Reason beg for a mere $200,000 from its base of fatass 350 pound alt-right bald Trumpista toads. These white trash losers calling Reason “leftist” are a joke. Reason should have stuck with the cosmopolitans.

    1. You’re no OBL, but a nice effort. B+

  13. Sure, the government shouldn’t be subsidizing businesses.

    But I don’t view the subsidies and quid pro quos being demanded here as all the same. On the one hand, there are broad-based market interventions that are designed to achieve specific policy goals. On the other, you have the obnoxious “picking winners and losers” kind of activity. I think it is reasonable, when you’re placing the thumb of government on the market, to want to ensure that tax subsidies and federally-funded bailouts produce the kinds of results you want them to produce. In contrast, when individual companies respond in undesired ways due to an incoherent sent of contradictory policies and market developments you yourself spurred, it’s not helpful to yell about the optics, like a company should just eat $1 billion so you don’t have to admit that you and your cable news economic team goofed.

  14. I have no small amount of schadenfreude, seeing Reason beg for a mere $200,000 from its base of fatass 350 pound alt-right bald Trumpista toads. These white trash losers calling Reason “leftist” are a joke. Reason should have stuck with the cosmopolitans. [Nelson laugh!]

    1. Yeah faggot, you said that already.

      And for the record, I’m reasonably trim and have an enviable head of thick lush hair.

  15. “Political finger-wags at the boardroom is a good sign that the lowly taxpayer is about to take it in the shorts.”

    Cause it never ever happens out of sight of the public.

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