You knew this was coming, right? Remember Trump's defense of his business practices by saying a businessman's first duty is making money for his family and his company? Carrier believes that too. And, truth be told, you go out of business if you don't make a profit.
Part of the $7 million Trump/Pence/Indiana tax incentive deal was Carrier's promise to spend $16 million on their Indiana facility. Sounds good. Carrier is putting down major roots in Indiana. But not in terms of jobs. Most of that is going toward automation because that's the only way the company can stay in business.
"We're going to...automate to drive the cost down so that we can continue to be competitive," he said on an interview on CNBC earlier this week. "Is it as cheap as moving to Mexico with lower cost labor? No. But we will make that plant competitive just because we'll make the capital investments there. But what that ultimately means is there will be fewer jobs."As with farming, because of automation U.S. manufacturer production is booming even though jobs have declined. Production is up 150% in the last 40 years.
All together, U.S. factories are actually producing more products today than they did in the post-World War II era, according to the Federal Reserve's reading on manufacturing output. Output at U.S. factories is up 150% in last 40 years. But U.S. manufacturing jobs have plunged by more than 30% in that same period. And automation is a big reason why.That also means both food and manufactured products are a lot cheaper than they would be if production required lots of human labor. So, it's a big win for the U.S. standard of living.
This post is dedicated to my friend MaxRedline who has long warned about the law of unintended consequences in most feel good labor schemes.
H/T John Fund