The Patriot Post® · Trump's Carrier Coup and a Lesson From JFK
Kennedy took on U.S. Steel and won. But economic nationalism can lead to abuse of power.
What happened with the Carrier air conditioner company and its decision to keep its Indiana factory open is a very good thing. A thousand Americans who would have lost jobs will keep them. The New York Post captured reaction when it quoted the Facebook post of an employee named Paul Roell: “Thank you, Donald Trump, for saving my job.”
The exact contours of the deal are not entirely clear, but Carrier, in its announcement, said the decision was possible “because the incoming Trump-Pence administration has emphasized to us its commitment to support the business community and create an improved, more competitive U.S. business climate.”
The New York Times semi-complimented Mr. Trump by calling him, in a news report, “a different kind of Republican, willing to take on big business, at least in individual cases.”
Also encouraging is what Mr. Trump himself told the Times last week about his recent phone conversation with Tim Cook, CEO of Apple: “I said ‘Tim, you know one of the things that will be a real achievement for me is when I get Apple to build a big plant in the United States.’”
This is called economic nationalism but whatever its name it suggests a Republicanism in new accord with the needs of the moment, and a conservatism that sees a shrinking manufacturing landscape and, rather than quoting Adam Smith and wringing invisible hands says, “Hey, I know — let’s start conserving something!”
It’s had me all week thinking of another moment involving government and its interplay with business. It was also a collision, one with some unexpected consequences. It’s the story of JFK and the steel companies.
It was 1961 and the new president, John F. Kennedy, had been trying to signal to big business that they could trust him, that, in the words of Arthur Schlesinger in “A Thousand Days,” “the ideological fights of the thirties” were over. His impulses were those of a moderate of his era: show budgetary constraint, keep costs and prices down, prevent inflation. On the latter, the role of the steel industry was key: in an industrial economy, increases in steel prices reverberated.
That September Kennedy asked the industry to forgo a price increase. He asked the steelworkers union for wage demands “within the limit of advances in productivity.” Early in 1962 his labor secretary, Arthur Goldberg, put together a deal. In the spring the union and the steel companies accepted it. Everyone understood the industry would not raise prices.
A few days later Roger Blough, chairman of the board of mighty U.S. Steel, asked to see the president. He handed him a four-page mimeographed statement announcing his company would raise steel prices $6 a ton. At that moment U.S. Steel was issuing its press release.
Blough later claimed to be surprised by the president’s reaction, which was angry and involved the word “double-cross.”
Here, a short detour on how Kennedy felt about businessmen. He’d never worked in the private sector and had no experience with business. His wealthy father had been a banker, then a bit of a swashbuckling investor in Hollywood studios, real estate, stocks. He made the money and when his children needed it they called “the office.” But Joe Kennedy was not a maker of things, not an industrialist producing tractors or steel, but a brilliant spotter of profit opportunities. He respected the art of the deal.
JFK, raised to be a Brahmin, not a businessman, had only the most detached knowledge of how most people lived. “He was forever asking workmen or drivers how much they were paid or how much rent they paid, how much refrigerators cost.” That’s from Richard Reeves’s book, “President Kennedy.” The only paychecks he’d ever received were from the U.S. government and turned over, untouched, to charity.
Schlesinger again: Still, Kennedy felt that the “experience [of businessmen] gave them clues to the operations of the American economy which his intellectuals, for all their facile theories, did not possess.” Well, yes!
JFK spoke to Schlesinger of a “paradox” he’d observed in his dealings with business and labor. Labor leaders individually were often mediocre and selfish, and yet they and their unions tended to take responsible positions on the great issues. Businessmen as individuals were often bright and enlightened, but collectively clueless on public policy.
Back to the meeting with Blough. It was after that meeting that Kennedy made, to his aides, one of his most famous off-the-cuff remarks: “My father always told me that all businessmen were sons-of-bitches, but I never believed it till now.” It spread throughout Washington. Asked about it in a news conference he said actually his father just meant steel men.
Soon Bethlehem Steel raised its prices. Other companies followed.
Now Kennedy was enraged. Accepting Blough’s decision would undo all his wage-price guideposts. It would also constitute a blow to the prestige of the presidency. And labor would never trust him again.
So he went to war. At a news conference the next day he called the steel companies’ actions “a wholly unjustifiable and irresponsible defiance of the public interest” by “a tiny handful of steel executives whose pursuit of private power and profit exceeds their sense of public responsibility.” He implied they were unpatriotic in a time of national peril. Reeves quotes the poet Robert Frost on hearing the news conference: “Oh didn’t he do a good one! Didn’t he show the Irish, all right?”
Kennedy ordered the Defense Department to shift its steel purchases from U.S. Steel to companies that hadn’t raised prices. The Justice Department under Attorney General Robert Kennedy launched an antitrust investigation, summoned a federal grand jury, and sent FBI agents to the homes and offices of steel executives. There were rumors of threats of IRS investigations of expense accounts and hotel bills.
Bethlehem Steel was the first to back down. A week after informing the president of the price increase, Roger Blough returned to the White House to surrender.
That night, Schlesinger writes, he asked the president how the conversation had gone. “I told him that his men could keep their horses for the spring plowing,” Kennedy replied.
It was a big win for Kennedy but it was a bloody affair, and on some level he knew it. His relations with business never quite recovered. The administration’s brutality left a stain. Robert Kennedy’s ruthlessness inspired the anti-nepotism law that is said, these days, to bedevil the Trump family. A nascent, national conservative movement was embittered and emboldened: Barry Goldwater said JFK was trying to “socialize the business of the country,” and decided soon after to run against him.
The lesson, to Schlesinger? Kennedy triumphed against the odds, even though he “had … no direct authority available against the steel companies. Instead, he mobilized every fragment of quasi-authority he could find and, by a bravura public performance, converted weakness into strength.”
Well, no, not quite. JFK’s performance was bravura, but presidents shouldn’t abuse their power — and he did. They especially can’t do it to shore up their own political position, and he did that, too. But it’s also true he thought he was right on the policy and that the policy would benefit the American people.
And the American people could tell. His approval ratings, high then, stayed high. People appreciate energy in the executive when they suspect it’s being harnessed for the national good. The key is to wield it wisely and with restraint. But yes, a little muscle judiciously applied can be a unifying thing.
Reprinted by permission from peggynoonan.com.