Beyond The Art Of The Individual Deal

Trump must win systemic economic reforms to trigger widespread growth

President Trump can’t simply bully large corporations to deliver prosperity for the millions who elected him.

Although the succession of recently announced deals to keep or create jobs in America is impressive — United Technologies, Fiat Chrysler and others have jumped on board — the challenge of boosting growth is too large to be accomplished by simply cajoling CEOs.

The Obama recovery delivered about 2 percent annual economic growth and 185,000 jobs a month. Mr. Trump would have to create at least 100,000 more jobs each month to bring growth up to 3 to 4 percent and substantially improve living standards for blue-collar Americans.

Generally, each deal actually creates only 1,000 to 2,000 jobs — most others were already planned. Calculating generously, he needs at least 50 new deals each month — a Herculean task.

Even if Mr. Trump found the time for so much jawboning and enlisted Secretaries-designate Steven Mnuchin at Treasury and Wilbur Ross at Commerce, the administration would quickly run out of large corporations who could afford to placate the president’s demands.

Ford did not scrap a planned $1.6 billion factory to create 700 new jobs in Michigan because it was its most cost-effective option. Virtually all of the deals announced impose lost profits and competitiveness on the businesses involved or require a government subsidy — United Technologies received hefty tax credits to keep about 1,000 jobs in Indiana.

Still others involved jobs already to be located in America. For example, GM recently announced it was adding 5,000 jobs, but many of those reflected planning decisions dating back to 2014.

In part Mr. Trump is countering foreign government practices that sway multinationals to manufacture abroad even when U.S. locations make good economic sense.

For example, Volkswagen has a major manufacturing presence in the United States. U.S. wages are competitive by German standards, and workers here are just as productive as in Europe and Germany, where the work week is only 35 hours — no trifling cost disadvantage for producing in that country.