New York Governor Andrew Cuomo is in hot water for countering Trump’s “Make America Great Again” slogan with one of his own: “America was never that great”. I don’t know how far that’s going to get him with the majority of Americans, but it will play well with the radical Democratic Socialists on the Left. Just yesterday Bernie Sanders said America is “fundamentally immoral and wrong”. Andrew Cuomo’s brother and CNN commentator Chris Cuomo recently got himself in trouble suggesting that punching right-wingers was morally justifiable.
Economists are taking Elizabeth Warren to task over her far fetched Accountable Capitalism Act. Warren, who opposes free market capitalism, came up with the idea of having corporations have to obtain a “Federal charter” to operate. The license, in addition to the hoops they have to jump through to work in their state, would raise $1 billion in fee taxes. Warren’s so-called “charter” would require corporate directors to consider not just their stakeholders, but also their employees and communities.
Of course, this is moronic. Any well run company has to consider the well-being of their employees and communities or the free market will eliminate that company from competition. In fact, that point was made by none other than BET co-founder Robert Johnson. The Black Entertainment Television co-founder said “Most companies and most boards look at all of their stakeholders, not only their shareholders. They look at their employees, they look at the community where they reside and do business, they look at even the vendors that they do business with. So I think it’s a solution in search of a problem that’s absolutely not necessary,”
What Warren’s bill, along with the exemptions for friends of the ruling party that we have seen with previous Socialist overreaches, would create a new avenue for crony capitalism. In other words, to get an exemption for your federal charter or to guarantee you have your charter maintained, you have to stay friendly with the party in power. We saw the same thing with ACA where Obama’s biggest supporters received exemptions to various new labor rules.
Trump is implementing what Obama failed to do with his new Buy America push. Trump is planning on using an executive order to create rules to ensure that federal agencies use American made goods and services for their projects. There are questions about the legality of the executive order and sure to be legal challenges. There are also issues of increased costs to the taxpayers if the government has to buy more expensive American goods.
Obama tried and failed to pass a buy American provision in 2009 and again in 2011. He backed off of the provision in 2009 after American companies who sell overseas swayed him away from the influence of the US labor unions with fears of foreign retaliation. When Obama flopped back to supporting Buy American, the Jobs Act of 2011 was squashed by the GOP.
Our opinion? It was wrong when Obama tried it, it’s wrong now. Free trade produces lower prices for consumers and taxpayers, and competition helps American producers to be efficient. A better way to help American producers is to cut taxes and regulation so that they can compete on the high end of the global scale. But Trump is doubly wrong by doing this as an executive order rather than through Congress. Many Democrats support Buy American provisions. Labor unions love it. By going it alone, Trump will alienate conservative and free market GOP members, but I doubt he’ll receive any recognition from the left. Democrats also supported protectionist tariffs, until Trump did it. All around this is poor strategy and contrary to free market principles.