“You boys know what makes this bird go up? Funding makes this bird go up. That’s right. No bucks, no Buck Rogers.” – Gordon Cooper and Gus Grissom, The Right Stuff (film)
Pledges for Trump
Optimism is in the air for the United States economy as we step into 2017. There’s a sense that something significant is on the horizon.
Just earlier this week, after a meeting with the incoming President, Bayer and Monsanto declared plans to allocate at least half of their agriculture research and development budget—around $8 billion—within the U.S. over the next six years. It’s projected that these efforts will generate 3,000 high-tech jobs in the country.
Additionally, companies like Wal-Mart and General Motors have also made commitments regarding jobs and investments in support of Trump. Wal-Mart announced plans to create 10,000 jobs this year, while General Motors pledged $1 billion towards investments that could generate 1,500 jobs.
Following these announcements, Trump tweeted: “Thank you to General Motors and Walmart for starting the big jobs push back into the U.S.!”
In another tweet, he added: “With all of the jobs I am bringing back into the U.S. (even before taking office), with all of the new auto plants coming back into our country … I believe the people are seeing ‘big stuff’.”
“Big Stuff”
Indeed, the notion of ‘big stuff’ is captivating. Even before he officially took office, Trump is already bringing forth new jobs, growth, and demand. What an extraordinary feat.
President Trump’s initiatives appear commendable on the surface. As everyday Americans, we can resonate with his motives. Yet, do his efforts to revive jobs in the U.S. hold up under scrutiny? Our curiosity drove us to dig deeper.
When examining Bayer and Monsanto, we found their announcement is not merely an act of goodwill. In reality, the two corporations are anticipating regulatory clearance for their $66 billion merger from Trump’s forthcoming administration. Interestingly, the $8 billion investment they promised aligns with what they had already planned to invest.
The commitments from Wal-Mart and General Motors reveal a similar trend upon further examination. The job pledges are not exactly “new.” Reuters reports:
- “Both Wal-Mart and GM’s new U.S. job plans are part of previously announced investment strategies.”
- “Wal-Mart stated it would create 10,000 jobs, representing less than 1 percent of its U.S. workforce, this year as part of a $6.8 billion capital spending plan introduced in October.”
- “General Motors indicated it would invest an additional $1 billion in its U.S. facilities, shifting some production from Mexico—an initiative expected to create or preserve 1,500 jobs. As of December 2015, the company employed 97,000 American workers.”
The Right Stuff
Bayer, Monsanto, Wal-Mart, and General Motors understand the dynamics of their industries and, more crucially, the interplay of politics and business. Their pledges generate promising headlines and allow Trump to proudly present all the ‘big stuff’ occurring.
Here at Economic Prism, we certainly support the idea of ‘big stuff’—whatever that may entail. The adage suggests to “go big or go home.” However, we are left questioning if Trump’s ‘big stuff’ truly embodies the right philosophy.
Larry Summers, former Treasury Secretary and a respected voice in economic discussions, expressed skepticism. During a recent gathering of elites in Davos, Switzerland, he warned that Trump’s policies could ultimately harm his supporters. But what does he really know?
In the grand scheme, the expansive credit creation by the Federal Reserve led to the significant trade imbalance we currently face, accelerating globalization and job outsourcing.
Efforts to reverse this trend without addressing the underlying issues related to fiat currency are likely doomed to fail. This represents the wrong direction; in contrast, sound monetary policies combined with disciplined governance represent the way forward.
Regrettably, it may take severe economic turmoil for society to reconsider such old-fashioned ideals.
Sincerely,
MN Gordon
for Economic Prism