On Thanksgiving, while most Americans were drinking beer and watching football, Donald Trump was hard at work keeping jobs in America!!
When word came out that the company Carrier would in fact keep its operations in Indiana, rather than outsourcing, naturally the Trump forces claimed victory. But Justin Wolfers on Twitter was horrified:
Every savvy CEO will now threaten to ship jobs to Mexico, and demand a payment to stay. Great economic policy. https://t.co/t2WAJOgh8F
— Justin Wolfers (@JustinWolfers) November 30, 2016
Notice he got 6,400+ retweets. Obviously, lots of Trump critics agreed with Wolfers’ assessment.
Then along comes Tyler Cowen, who had this to say about the affair in Bloomberg:
When an American company “moves jobs to Mexico,” it doesn’t disassemble a factory and load all of the parts onto border-crossing trucks. That might be relatively easy to stop. Instead, the company closes or limits some U.S. production while expanding or initiating new production south of the border. Given that reality, how is government supposed to respond?
Perhaps most importantly, a policy limiting the ability of American companies to move funds outside of the U.S. would create a dangerous new set of government powers. Imagine giving an administration the potential to rule whether a given transfer of funds would endanger job creation or job maintenance in the United States. That’s not exactly an objective standard, and so every capital transfer decision would be subject to the arbitrary diktats of politicians and bureaucrats. It’s not hard to imagine a Trump administration using such regulations to reward supportive businesses and to punish opponents. Even in the absence of explicit favoritism, companies wouldn’t know the rules of the game in advance, and they would be reluctant to speak out in ways that anger the powers that be.
Another good argument, right?
Now notice something interesting. If you hate Trump, and especially if you’re an economist, I bet you nodded your head at *both* Wolfers’ critique and Cowen’s.
And yet, they are saying opposite things. They can’t both be right. (Wolfers is saying Trump just opened up a new subsidy for domestic manufacturers, such that they’ll even *fake* that they want to outsource. Cowen is saying Trump just opened up a new method of oppressing domestic manufacturers.) If you thought they both showed different reasons that Trump’s behavior is dumb, then you suffer from confirmation bias.
P.S. I think Trump’s behavior vis-a-vis Carrier is dumb. But I at least have enough introspection to realize that Wolfers and Cowen can’t simultaneously be right.