Sunday, December 4, 2016


President-Elect Trump has thumbed his nose at the conservative wing of the Republican Party with his announced the $8m subsidy bribe to Carrier to stop them moving 1,000 jobs from Indiana to Mexico ... plus a gentle leaning on reminding the company just how many defence industry contracts they currently hold ... wot God givith, God can taketh away.

A certain irony in that for years the Republicans have blasted the Democrats over subsidies given to promote wind-farming and solar energy production ... presumably those industries didn't create jobs. 

I am against subsidies simply because they promote inefficiency and stifle innovation ... short term gain for long term pain.  New Zealand is a far better place from having moved on from the 'glory' days where the State picked winners (and losers) using taxpayer money to keep players that should have long gone to wall afloat.     Having said that I accept there will always be exceptions to the rule in order to retain a strategic industry like Tiwai Point or the Marsden Fund established to facilitate fundamental research on a contestable basis.   

But there is a limit as to how far government (any government) can go in subsidising failure.    At some point the 'House of Cards' will come tumbling down as it did in New Zealand in 1984.    I see America under Trump as much more insular and inward looking ... sure, the US economy has huge resilience but, for it be able to compete with the world, it has to be efficient and if it isn't the world will go looking elsewhere ... that is the danger of institutionalised subsidies ... there is less an  imperative for innovation and efficiency and, at some point, the government funding will run out.

You couple that with the US National debt and their inability to balance the budget and Trump's short term gain may be very short indeed.


Gerald said...

Anonymous said...

Thanks for that Gerald. I see that was written before Trumps intervention. Mother Theresa is facing huge pressure from the motor Industry to reveal her deal with Nissen that kept investment in the's still secret. Been reading Mr Little's new book "Climbing Mt Roskill" he was talked out of calling it "Poll dancing for beginners".

Lord Egbut

Anonymous said...

Trump has just released a series of tweets dictating policy. 35% tax hike on goods from any company that moves offshore and wants to import back.. This is music to the ears of Alabama rednecks.....but to anyone in business it is a suicide note.

It is almost as if he is shit scared of the job and has realised he will not be his own man and is trying to make himself unelectable by the college. No one can be this stupid.

Lord Egbut

Gerald said...

Bit of a paper tiger that 35percent tax.
Fist it wont be retrospective.
Second most companies have all ready moved component manufacture elsewhere.
US car industry should rename themselves chassis and door manufacturers and car assembly.

Noel said...

From memory when Global Trade got into full gear the worlds sea freighter fleet increased substantially . It was no longer shifting fully built up units between countries but component parts for the many manufacturers around the world.
How's US Customs going to sort out the taxable from the non taxable?

Anonymous said...

Precisely Noel. Take the EU. Ford Fiesta, engines made in Wales, transmission made in Spain, wiring Harness made in Italy, the left door panel nad right door panel made by different factories in different countries etc etc ad infinitum then all assembled in Belgium. My wife drives a FORD assembled in in Belgium and I drive a Jeep GC assembled in Austria using Mercedes driving gear.

Rolls Royce (cars) is a German Company building cars in England from imported parts.

Drumph is talking nonsence. Roosevelt once said "America's business is business" so it will be corporate America who calls the shots.

Lord Egbut

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