President Elect Trump ran on anti-tech platform designed to get US jobs back that have been sent overseas. Although our tax and trade policies have hurt developed country workers, especially in the US, the vast majority of job losses are because of technology, not outsourcing.
Trump’s talked about putting tarrifs and fining companies that outsource. He’s “succeeded” in getting a few companies to stay. But these companies are staying grudgingly, and demanding massive tax breaks to do so. Trump is using the power of the presidency to influence markets and potentially pick winners and losers. He’s sending the message that you have to play ball, or risk losing government contracts or being made uncompetitive.
Trump’s policies are going to make US companies think twice about outsourcing and moving factories. But they won’t go back to hiring US workers like they did in the 70s and 80s. An example in the West Virginia coal industry:
Business owners are going to go all in on technology. Look at Elon Musk’s $5B Tesla Gigafactory. It’s doubling world lithium ion battery production by ~2020. And it’ll have ~6000 employees. The batteries are made in the US, but with some human specialist supervisors, not by 100,000 hard working Americans like car factories of old. Trump’s “protectionist” policies will push business owners to emulate companies like Tesla and put tech in their companies even faster, killing of jobs at a faster rate than ever before.
As Greg Hayes, CEO of United Technologies, Carrier’s parent company put it, they’re going to use the $16m in tax breaks that Trump gave them to automate away jobs:
“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.”
To be clear, automation isn’t all Trump’s fault. It will happen no matter who is president. But he’s clearly accelerating the change. The tech is here. Now owners have the incentive to invest right now, not more slowly over time.
Business owners will borrow money at our super low interest rates or use the record $1.64 trillion in cash on their balance sheets to move employee compensation, a recurring expense, and magically turn it into a depreciable investment, killing jobs faster than ever.
Our politicians (and those in the rest of the world) world pander to populism that makes people feel good, but are at best short sighted. Trump might be pursing this path because he’s a tech luddite who doesn’t even email, or at worst cynically, calculatingly taking advantage of people to gain power. He’s telling them what they want to hear, knowing that these jobs that peaked in the 70s-80s aren’t coming back and AI will accelerate job losses, no matter any government policy that’s currently on the table.