Donald Trump’s dramatic move to save 800 jobs at Carrier has attracted praise from supporters who see the president-elect as a man of his word. It has also drawn criticism from experts who view the one-off deal as a political stunt and a dangerous precedent that doesn’t alter the underlying conditions of the economy.

To be clear: for numerous reasons, Trump’s negotiations with Carrier are troubling and do not reflect sound economic policy. Yet we know that Trump’s proclivity for deal-making will persist. His professional experience is a series of transactions that have resulted in tall buildings, private golf clubs, and casinos. And members of his incoming cabinet, as well as leading Republicans in Congress, have signaled their support for this kind of intervention to achieve concrete results for the American people.

The question is: how can Trump’s instincts be adapted to benefit the largest share of people in an open and accountable manner?

Corporate retention subsidies are doled out every day in state and local economic development; it’s the president-elect’s direct intervention, and the power of his office, that makes this transaction news. On its face, the Carrier deal is pretty typical, saving 800 jobs for an unspecified period of time using a modest state subsidy that the corporation didn’t need to be competitive. I’ve written often about how such short-term, isolated, and subsidy-driven transactions to grow jobs and the economy are inefficient and can be better deployed.

Though job subsidies, and the headlines they attract, remain difficult to resist, many metropolitan leaders across the country are shifting from a transactional to a more systemic approach to economic development – one that can deliver better results for residents over the long-term.

Larger federal reforms are certainly needed to grow more good jobs in the American economy, but here are a few ways our new ribbon-cutter-in-chief could carry out future place-based interventions in a more sustainable, scaled manner:

• Formally partner with local communities to identify good “deals.” Many local communities or regions have signature efforts to grow good jobs and connect workers and families to them. Rather than negotiate solely with companies or react top-down to project opportunities, the Trump administration could organize a formal effort to surface bottom-up efforts from communities that meet a high bar for improving people’s lives and could benefit most from federal action. For instance, a new White House Interagency Council on Community Action could focus on how existing federal resources can be better deployed to support key community solutions.
• Expand the definition of a deal to include a wider array of transformative community projects. Large firm relocation and retention deals need not be President-elect Trump’s only opportunities for photo-ops and celebratory tweets. Instead, Trump’s administration could emphasize transformational community programs and initiatives, such as large-scale neighborhood redevelopments, industry-community college training collaborations, or initiatives to scale up small- and mid-sized firms.
• Support industries, not individual firms. Every region in the country is dependent upon specialized industries to drive growth and opportunity. Some states, such as Colorado and Nevada, have programs that support the growth of such clusters, many of which span urban and rural areas. The Trump administration should work with local communities or regional industry consortia to determine how federal policies and programs can accelerate, not hinder, the growth and competitiveness of entire industries, rather than just one large anchor firm.

The wisdom of the Carrier deal aside, it’s worth acknowledging that Trump’s demonstrated commitment to results and getting things done is also what motivates mayors and other local leaders. Public policy should be geared towards producing tangible benefits for people. But in the realm of transactional deals, lessons learned by leaders across America’s metropolitan areas can help guide the next administration toward a broader, more effective effort to create greater prosperity in communities.

Redefining the Art of the Deal

Amy Liu

Brookings Institute     December 5, 2016