AP Photo Fourth Estate Trump’s Short-Term Carrier Win The history of presidential jawboning suggests the victory lap won’t last.

Jack Shafer is Politico’s senior media writer.

Somehow or other, President-elect Donald Trump has jawboned United Technologies, Carrier Corp.’s parent corporation, into keeping 1,000 of the 2,000 factory jobs that were scheduled to leave Indiana for Mexico. Relying on state of Indiana economic incentives and the newly expanded sound of his voice, Trump notched a quick political win that astonished even his opponents.

We don’t yet know what really happened; despite his sudden declaration of victory on Twitter, reporting from Indiana suggests the state had been working on a deal with the company for quite a while, and it’s possible the parent company just caved to avoid jeopardizing its much bigger federal contracting business. But the announcement was a marketing victory for Trump, and it’s fair to assume it will embolden Trump to apply his moral and political suasion on other fleeing companies—and, if the historical pattern repeats itself, perhaps on wages and prices, import restrictions, interest rates, strikers, antitrust deliberations, and commodity prices by juggling government stockpiles. Trump could reimagine his presidency as economic czarship through whom all major economic decisions must pass.


These are awesome powers, and it worries a lot of people that he’s using them before he’s even been elected. Presidents, after all, aren’t supposed to intervene directly in individual lives, or individual companies. But he’s far from the only president to wield the tool. And if history is any guide, he can’t count on winning so much after this opening skirmish. In 1952, Harry Truman nationalized the steel industry in the name of fighting inflation, but the Supreme Court said no way. In 1961, when the steel industry raised prices, John F. Kennedy, fearful of inflation, bullied it back with a threat to sell off steel stockpiles, as Al Kamen wrote in 2010 in a mini-history of jawboning. Lyndon Johnson, equally menaced by inflation, shook the jawbone at impending airline and railroad strikes. “We will have jawboning,” said Richard Nixon, who swung the bone so hard in 1971 that his economic intervention stopped being about persuasion and took on the force of law as he established a wage and price freeze across the board. Barack Obama has jawboned, too, but not directly on the economy: He applied the pressure of his office on BP, insisting that it pay damages after the Gulf of Mexico oil blowout. It did.

This kind of straight pressure on businesses works mostly as a political strategy, making the president look potent and effective. But measured on the ground, the successes are paltry. A 1972 journal article by economist Joseph Mayer found that Kennedy and Johnson’s jawboning “had no discernible effect whatever on halting or bringing down the cost of living. In fact, during those years, the CPI rose faster than at any other time since the Korean War.” Nixon’s wage and price controls made inflation worse; in their economic history The Commanding Heights, Daniel Yergin and Joseph Stanislaw recounted: “Ranchers stopped shipping their cattle to the market, farmers drowned their chickens, and consumers emptied the shelves of supermarkets.”

Viewed as a political rather than economic move, jawboning has much to recommend it. By jawboning, the president can appear to be picking the side of the working man he promised so much to during the campaign. Even if he doesn’t win the battle, he reframes the terms of the debate. He invariably puts corporations in a bad light for pursuing policies that maximize their bottom lines—ironically, not unlike entrepreneur Trump, who decided to produce his line of ties abroad. Sometimes, if it works, it becomes the media event of a president’s dreams.

Using his power this way can, however, trap a president in a paradox. The United States welcomes and encourages foreign investors to build factories here, and they have: BMW, BASF, Toyota, Honda, Nissan, Airbus, Rolls-Royce, Siemens, Daimler, Michelin, Bridgestone, foreign textile companies, the list goes on and on. Where is the corresponding logic that says a U.S.-based corporation should not act similarly and take manufacturing to places more conducive to profit? One unintended consequence of Trump-style jawboning is that corporations might think twice before deepening investment here because they don’t want to feel locked down. The president can’t repeal the laws of economics; he can only mess with them in the margin.

As jawboning successes go, keeping 1,000 jobs in the United States is not significant unless all you think about is its symbolic value, a point made in the New York Times piece Tuesday that has liberal economist Jared Bernstein noting that our economy produces an average of 181,000 jobs a month.

“The administration must not suppose that quarterway measures—jawboning, voluntary guidelines, inflation alerts, levitation, incantation or massive public prayer” will work, as economist John Kenneth Galbraith put it in the 1970s. The president-elect should enjoy his minor Carrier victory while the cheering still resounds. He won’t be hearing much more of it in the future.

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Music to read Shafer by: “Jawbone,” by The Band. Send hot tracks via email to [email protected]. My email alerts were outsourced years ago, my Twitter feed employs thousands of Americans, and my RSS feed is tied up in an antitrust dispute.