Carrier economics

December 6, 2016 · Posted in Business and industry, Delmarva items, National politics, Politics, State of Conservatism · Comments Off 

I’m really not a great fan of tax breaks and such to attract or maintain companies, but I’m realistic enough to understand that most states and regions use these as one of the weapons in their arsenal to attract new companies. (Case in point: last year Governor Hogan proposed a ten-year tax break for companies relocating to certain parts of Maryland, but the proposal went nowhere.) So it was with Carrier Corporation, which was supposed to abandon the state of Indiana for Mexico but brought that move to a screeching halt at the behest of President-elect Trump and his running mate, Indiana Governor Mike Pence.

One thing that has been brought out in the general conversation over Carrier’s change of heart was the Trump proposal to punish companies that move overseas. He’s proposing a 35 percent tariff on such firms, so under his idea had Carrier moved its operations to Mexico they would have had a 35% surcharge on their product.

But the incoming President is also advocating for a series of proposals to make America more business-friendly, such as cutting regulations and lowering the corporate income tax from roughly 35 to 40 percent down to about 15 percent. (These are ballpark figures, but that’s okay since Trump only sees these as starting points for negotiation anyway.)

The reason I bring this up is to make the case that all the carrots should be utilized before a stick is ever brought out. It’s patently obvious that America doesn’t make things like it used to, but the factors of why are most important. Just off the top of my head, here are some possible reasons:

  • Overseas labor costs are far cheaper.
  • There are fewer labor and environmental regulations to deal with.
  • China is a larger market overall and is growing in its consumerism.
  • The tax structure overseas is more beneficial.

However, even if all these things are true, it boggles my mind that it’s possible to profit by creating a product halfway around the world and shipping it back here on a slow boat when the most affluent consumers are still in the good old U. S. of A.

And then you have certain advantages we can exploit for ourselves: a first-class transportation system, a ready-made skilled workforce, and sufficient, reliable energy that’s inexpensive. Unfortunately, previous administrations were reluctant to allow companies to use these advantages, so they departed for greener pastures. In the case of labor-intensive products such as clothing, it’s not likely they will be coming back.

But at the same time we are looking to make things in America, it’s worth pointing out that these things that we can make use more and more automation to create. I’ll jump across the pond for this example, but a reason cited for the demise of the long-running Land Rover Defender model (a 67-year run) was that:

Five hundred workers build the car by hand – there are fewer than 10 robots on the whole line; step across to the Range Rover line on the other side of the Lode Lane, Solihull factory and you’ll find 328 robots.

If you assume that each robot takes the place of a single employee (which is probably generous to the employees) that means about 1/3 the manpower built the Range Rover compared to the Defender. The same is true in Detroit and Japan. To a manufacturer, there’s a lot of appeal to automation: it doesn’t take smoke breaks or mental health days, won’t come back from its lunch break drunk or stoned, and won’t go on strike for ever-increasing health care benefits or wages. The quality of work is very consistent, too, and once set up there’s no such thing as training a new hire.

For decades, though, workers have used machines to assist them in creating products – even the assembly line itself was a vast machine that automated the process of moving the frame of the car along as its component parts were added. Plastic products aren’t really created by hand, but by machines that extrude the parts for them – an offshoot of the process is 3D printing. When you come right down to it, the Carrier plant is one where premade components such as a motor, fan, cooling unit, outside shell, and electronics are assembled to create a larger product, which is where the value is added in this case. There’s not a huge amount of skill needed to put these things together – the skill comes from the design of these units to keep up with the demands of regulation, consumer preferences, and profitability. (Apparently the luckless Land Rover Defender stopped keeping up with these demands.)

But no amount of physical skill can overcome the capricious nature of government whim, and this is where Trump’s idea becomes somewhat impractical. Let’s say in three years Carrier decides it has to move production to Mexico, so it becomes subject to the 35% tax. A unit that cost $10,000 will now have to run at $13,500.

On the other hand, Carrier’s competitor Fujitsu, which is headquartered in Japan, may have a price for a similar unit of $11,000 because they have to ship it over. (For the sake of argument, I’ll assume their products are made overseas.) Thanks to Trump’s proposal, they can raise their price to $12,500 – making more profit for their foreign owners yet still undercutting their competition. Similarly, if Trump decides to go full-bore protectionist and slap tariffs on imported items, there’s no doubt everyone else will do the same thing and that will kill our export market.

I understand the frustration Americans have when they perceive China and others are beating us economically because they are cheating. Truthfully, they could be absolutely correct – in the case of China, I put nothing past Communist scum. But the solution is to make China less attractive by making ourselves more attractive, not trying to punish people. If Trump wants his 35% penalty, that should be the absolute last resort once all other efforts have been made to make our nation as business-friendly as possible. Unfortunately, I think The Donald is too vindictive for his own good.

Someone will pay for all these Carrier incentives, and I suspect these far smaller businesses will be the ones who suffer for the sins of others around the world.

Odds and ends number 83

Subtitled, the post-election edition.

I have a number of items I collected over the last few weeks that I figured I would end up getting to after the election. Well, the election is over so now I can clean out the e-mail box with this handy feature.

Despite Donald Trump’s stated defense of Planned Parenthood (coupled with his vow to defund it) and shaky position on abortion, the head of the pro-life group Created Equal was pleased with the election results and their efforts in securing them.

“Now, we must hold our new president-elect accountable for his promises to defund Planned Parenthood, pass a 20-week ban, and nominate a Constitutionalist to the U.S. Supreme Court,” said Created Equal’s Mark Harrington.

Defunding Planned Parenthood will be a battle since Congress controls the purse strings and a Republican majority couldn’t get the job done in this edition of Congress. And as a reminder: they are funded through September 30, 2017 – the end of the federal fiscal year. Passing a 20-week ban and getting a pro-life SCOTUS justice will also be difficult with 48 Democrat Senators, although eight of them may want to keep in mind that Trump won their state and they are up for re-election two years hence. (In 2018 Democrats face the same minefield Republicans did this time: 23 of 33 Senate seats at stake are held by Democrats, along with two “independents” who caucus with the Democrats.) But I suspect the pro-life side will be disappointed with a President Trump; however, I never thought he would be President either so he may shock us all.

Another group angling for a payoff is my old friends at the American Alliance for Manufacturing, who are begging:

President-elect Trump and Congress must come together on much needed investment that will put Americans to work building and repairing our nation’s crumbling infrastructure. Stronger trade enforcement to address China’s massive overcapacity and a crackdown on countries trying to circumvent U.S. trade laws can boost manufacturing jobs.

Factory workers were more than a prop in this election. Now’s the time to deliver for them.

The signs are there that Trump may be their kind of President: we know he’s more hawkish on trade, and he’s planning on making it possible for up to $1 trillion in private-sector infrastructure investment over the next decade. But it takes two (or more) to tango on trade, so progress on that front may be slow. And the union-backed AAM may not be happy with the infrastructure plan if it doesn’t feature union-friendly rules and prevailing wage regulations. (Maybe this is a good time to repeal the Davis-Bacon Act? I doubt Congress has the guts to.)

But if you thought AAM wanted a tougher stance on trade, this diatribe came from Kevin Kearns, head of the U.S. Business & Industry Council:

Trump’s antagonists (on trade) are Wall Street institutions, multinational corporations, major business organizations, academic economists, editorial boards, business journalists, opinion writers, bloggers, and the generally knowledge-free mainstream media. All are opposed to Trump because they are wedded to a false, outdated “free trade” dogma, which has decimated the working and middle classes.

On Capitol Hill, a minority of Democrats and majority of Republicans are partial to the same free-trade theories. Speaker Paul Ryan admitted as much in his remarks on the election victory, noting that Trump alone had recognized the dire plight of average Americans.

I found it interesting that the LifeZette site has as its editor-in-chief Trump ally (and radio talk show host) Laura Ingraham. But this was the real payoff of the Kearns piece for me:

Trump must impose a Value-Added Tax of 18-20 percent applicable at the border to all imports. Over 150 of our trading partners use such taxes to make American exports pricier in their home markets. We should reciprocate.

So anything we import becomes 18 to 20 percent more expensive? Yeah, that will end well.

Another item in the election hopper was some attempted reform from another guy who I’ve oftentimes cited on my website, Rick Weiland. A “trifecta of reform” his group successfully put on the South Dakota ballot went 1-for-3 the other night. Measures for redistricting reform and non-partisan elections failed, but South Dakota voters narrowly passed a sweeping campaign finance reform package the state’s Attorney General said “may be challenged in court on constitutional grounds.”

Personally, I would have been fine with the two that failed in a broad sense – as a Maryland resident, I know all about partisan gerrymandering and would be interested to see how non-partisan elections pan out. (The duopoly would have a fit, I’m sure.) But this campaign finance reform was a bad idea from the get-go, and it tips the Democrats’ hand on how they would attack the Citizens United decision. One controversial facet of this new law would be a $9 per registered voter annual appropriation to pay for this public financing - such a law in Maryland would be a required annual $35 million appropriation from our General Fund. (The fund Larry Hogan used in his successful 2014 campaign was built with voluntary donations via a checkoff on income tax forms; a checkoff that was dormant for several years but was restored last year.)

And instead of “democracy credits” as this amendment proposed, a better idea would be one I believe Ohio still uses: a tax deduction of up to $50 for political donations. But I’m sure soon a South Dakota court (and maybe beyond) will be ruling on this one.

I also received some free post-election advice from the creators of iVoterGuide, which is an offshoot of a small Christian group called the Heritage Alliance (not to be confused with the Heritage Foundation.)

Pray specifically for the appointment of Godly people as our newly elected President selects his Cabinet and closest advisors.  Pray that the Administration, Senate and House will work together to honor life and liberty as set out in our constitution by our founding fathers.  Pray for ALL elected officials to humble themselves and seek God’s will for our nation.  We need to repent, individually and as a nation, and turn from policies contrary to God’s word.

Pray for unity and peace.  Our country is deeply divided. Christians must truly start loving our neighbors as ourselves so that there can be a spiritual awakening.  Now is not a time to gloat but to turn our hearts continually toward God so we can be examples of His love and work toward reconciliation and unity.  Pray for all nations, as a new stage is being set both nationally and internationally.

I think I can handle that. Oddly enough, this was also a subject of our Bible study prayer group Wednesday – maybe one or more of them is on this e-mail list, too. As for iVoterGuide, what they need is a larger state-level base as Maryland and Delaware aren’t among the handful of states they cover (it’s mostly federal.)

As iVoterGuide‘s executive director Debbie Wuthnow concludes, “we ask you pray about how God wants you to be involved in retaining the freedoms He has so graciously granted us.” I suspect I’m going in the right direction here but one never knows what doors open up.

I was originally going to add some energy-related items to this mix, but I think I will hold them until later this week for a reason which will become apparent. There’s one other subset of items I’m going to have fun with tomorrow – I would consider them odds but not ends. And so it goes.

Earning my presidential vote: trade and job creation

I am finally approaching the halfway point in this quest, and pocketbook issues have considerable importance. This section is the first of two consecutive segments dealing with the economic end of government. Trade and job creation, to me, are the areas of government which most directly affect your income. (The next section, taxation, is the other end of the pocketbook equation.)

As I have noted throughout, you can work your way through the series by starting here and working forward as issues gain in weighting my decision.

In five bullet points or less, our next President should:

  • Revisit the Trans-Pacific Partnership (and other deals) to see if they can be salvaged as a good deal for the United States – which provides the majority of the GDP in each deal and should have the most favorable terms while maintaining our sovereignty. Otherwise, I believe in free trade that is fair, so we should work to isolate countries who don’t play by the rules.
  • Get government out of the way! According to the Competitive Enterprise Institute, regulations cost business $1.885 trillion in 2015. That has to stop.
  • Rather than knuckle under to the knuckleheads who think we should have a “living wage,” the federal minimum wage should be abolished entirely. States are free to continue the lunacy and watch their businesses suffer the consequences when minimum wages get too high for the market.
  • Be an advocate and cheerleader for the right-to-work movement.
  • Invest in necessary federal infrastructure, particularly highways – the “post roads” of the modern era. Not only does this benefit job creation but it would assist in getting goods from place to place more quickly.

So where do my contenders stand? Let’s find out how many of the nine points they will receive.

Castle: Opposed to TPP as “the worst of our free-trade agreements.” Should freely trade with all nations but formal agreements cost us sovereignty. (Facebook)

Hedges: Opposes Republican policy of giving away our jobs through free trade.

Supports “appropriate employment at a living wage available to all citizens who are able to work.”

“The importing of goods from and the offshoring of services to other nations are the primary causes of lost jobs and impoverished communities in America. We favor free trade only on a reciprocal basis among equals. We will impose balancing tariffs on all goods imported from countries whose wage scales, labor benefits, and environmental protections are not similar to our own. No nation which fails to protect the civil rights of its citizens may be accorded ‘most favored nation.’” (party platform)

As a party they also support right-to-work states and would index Congressional pay to the minimum wage.

Hoefling: “Politicians constantly talk about ‘jobs, jobs, jobs,’ even though they don’t have any jobs to offer that aren’t government jobs, or jobs that are subsidized by the taxpayers, and by debt shoved off on our grandchildren. As if we don’t already have more than enough of those kinds of jobs, right?

Here’s another thing: while working for a paycheck is certainly an honorable thing, it is not the American ideal. The ideal is for YOU to OWN your own piece of this country.

My goal, should I become the governor, is not to offer jobs to my fellow Iowans, or to use your money to bribe some company to provide you with a job. My goal is to secure your rights, and to then create an economic environment of FREEDOM, low taxes, reasonable, minimal regulation, and OWNERSHIP, an environment that will quite naturally lead to productivity and prosperity for all.

And, of course, the bonus is, companies will line up to do business in a state like that. You know it’s true.

‘Jobs, jobs, jobs’?

NO!

OWN, OWN, OWN!” (as Iowa gubernatorial candidate, 2014)

Johnson: Reduce the administrative burden. Level the playing field. Incentivize job growth.

As governors, both Gary Johnson and Bill Weld supported policies that incentivized job growth. In 2012, Gov. Johnson was praised as having the best “job creation” record of all presidential candidates. And Weld transformed Massachusetts from having the highest to the lowest unemployment rate of any industrialized state in less than 8 years.

Yet, Johnson has said that, “As Governor, I didn’t create a single job.” His point, of course, being that government doesn’t “create” jobs. Entrepreneurs, businesses, and economic prosperity are the building blocks for job growth.

Governors Johnson and Weld believe that we must allow a regulatory and tax environment that incentivizes fairness. Not one that picks winners and losers. The purpose of government regulation is to protect citizens from bad actors and the harm they might do to health, safety, and property. But regulation should not be used to manipulate the economy, to manage private lives and businesses, or to place unnecessary burdens on those who make our economy work.

Today, the reason so much corruption and power thrive in Washington, D.C., is that powerful corporate interests actually benefit from over-regulation. After all, they have the resources to comply with onerous laws. But for the average American, entrepreneur, or small businessperson, they don’t have teams of high-priced attorneys to help them navigate the bureaucracy.

We simply need to apply common sense to regulatory policy. Let’s get rid of the unnecessary laws and taxes that siphon the resources businesses use to create the jobs we need.

Governors Gary Johnson and Bill Weld helped create the conditions for job growth in their states. In the White House, they will create the conditions for massive job growth across the entire country. (campaign website)

McMullin: American businesses export more than $2.2 trillion per year of goods and services. The demand for American exports supported 11.5 million jobs, an increase of more than 50 percent over the past 20 years. On average, these jobs pay 18 percent more than jobs that are unrelated to exports. For all these reasons, Evan believes that trade is an engine of prosperity and that well-designed trade agreements can help our economy grow even more.

At the same time, we can do more to help American workers adjust and thrive in the 21st century. Since 2000, the U.S. economy has lost 5 million manufacturing jobs, although more than 12 million Americans still work at factories. The main driver of this trend is advanced technology, especially advances in robotics and computing. Today, U.S. automakers produce just as many cars as they did 20 years ago, yet the auto industry employs 300,000 fewer workers, a reduction of almost 25 percent.

Therefore, Evan believes that one of the most important ways to help American workers is to make education more affordable while supporting the growth of technical schools, online education, and work-based training programs. It is essential to support these alternatives to the typical full-time four-year degree program, which may not be a good fit for older students who need to work and support their families while studying. While U.S. factories have cut millions of jobs for those with a high school education or less, hiring of college graduates remains stable, while hiring of those with graduate degrees continues to demonstrate strong growth.

Around the globe—even in China—manufacturing employment is shrinking rapidly as factories rely more and more on advanced technology. Thus, using tariffs to raise the cost of Chinese imports won’t bring those jobs back to the United States. In fact, it will kill American jobs, because China and others will block U.S. exports, which now support more than 11 million jobs.

In addition, raising the cost of imports will force hard-pressed American families to pay hundreds or thousands of dollars more each year for basic necessities, from clothing to pots and pans and diapers.

Evan supports the Trans-Pacific Partnership (TPP), a trade agreement recently signed by 12 countries, including Japan, Australia, and Vietnam. The TPP will eliminate tariffs for all the countries that sign, but it will not go into effect until ratified by Congress, which must vote ‘yes’ or ‘no’ without making any changes to the agreement.

One of the biggest advantages of the TPP is that reducing tariffs to zero favors American companies. Right now, America has low tariffs, not far above zero. In contrast, other countries’ tariffs will plunge when the TPP goes into effect, opening up their markets to U.S. exports. TPP is still a good deal for those countries, because it gives them better access to the biggest market in the world (ours) and the third biggest (Japan).

TPP also helps create a level playing field between U.S. workers and their counterparts overseas. If foreign companies lower their costs by mistreating workers and polluting the environment, then its puts American companies at an unfair disadvantage. However, TPP has the strongest protections for labor and the environment of any major trade deal.

Finally, TPP is important for national security reasons. Our allies in Asia are watching to see whether the U.S. still has the ability to set the rules of the road, or whether their security depends on submitting to China. That is why the secretary of defense has said, “TPP is as important to me as another aircraft carrier.” If the U.S. abandons TPP, China is likely to intensify its campaign of intimidation in the South China Sea. Thus, support for TPP is a win-win proposition; it enhances our security and reinforces the growth of job-creating American export industries.

Americans are ready to work hard to provide for their families, but fewer and fewer are capable of finding the good jobs necessary to support a middle-class standard of living and help them to pursue their dreams. If we accept the slow growth of the Obama years this won’t change. Only if the economy begins to grow faster—at a rate of more than 3 percent year instead of less than 2—will good jobs become more widely available.

Right now, there are three major roadblocks standing in the way of a stronger economy: a tax code that rewards special interests while hurting small businesses, excessive regulations that cost businesses almost $2 trillion per year, and runaway entitlement spending that multiplies the national debt.

Evan McMullin will dismantle these roadblocks. (Editor’s note: see my next part, taxation, for point 1).

Federal regulations play an essential role in making sure that Americans have clean air, clean water, and safe food. Yet the blizzard of intrusive regulations issued by the Obama administration have gone far beyond what is necessary to protect our health and the natural environment. Instead, these regulations serve as an invisible tax that raises the cost of doing business and prevents firms from creating jobs. As president, Evan McMullin would direct federal agencies to identify a clear problem that needs to be fixed before resorting to further regulation. If an agency believes regulation is necessary, it would still have to prove that the benefits of a proposed regulation are greater than its costs. The same test would also be applied to existing regulations, which would be lifted if they were not achieving their goals.

If the United States can’t get its national debt under control, the government will eventually have to impose harsh taxes or pursue other policies that would drive the economy into a deep recession, destroying millions of jobs. The number one cause of runaway debt—now more than $19 trillion—is the cost of entitlements. Our country needs Social Security and Medicare to ensure the health of senior citizens and prevent them from falling into poverty. We also need Medicaid to provide health care to the needy. Yet these programs are so inefficient, wasteful, and susceptible to fraud that their costs are out of control. The result is that the government must borrow vast sums to keep the programs going. The Obama administration has already added $9 trillion to the debt, almost as much as every previous administration combined.

With a smarter tax code, streamlined regulations, and entitlement reform, the U.S. economy can begin to grow again at the rates it did in the 1980s and 1990s.

Evan McMullin believes that America should be the best place in the world for innovation, entrepreneurship and opportunity. We must reform a system that too often benefits the politically connected and the corporate elite, while leaving too many Americans without good jobs. By running for president, Evan McMullin is giving voters the opportunity to get the economy moving again instead of doubling down on the status quo. (campaign website)

**********

I wish Darrell Castle had been more specific and forthcoming on his economic policy. I’m sort of stuck here – on the one hand, the fealty to the Constitution he advocates would mean he would properly address most of my issues, but there are always the provisos and conditions to watch out for. I consider this a wasted opportunity for him. 3 points.

Jim Hedges has somewhat of a right idea on free trade, but the rub comes in dictating what policies other nations may have – particularly when we are so overregulated. Moreover, his stance on jobs at a “living wage” is troubling, and suggests he may not be as strongly in favor of the right-to-work platform plank. I can only give him 1.5 points.

I suspect Tom Hoefling is speaking of entrepreneurship, which is indeed sorely lacking in this country. Even better, it is a philosophy that is scalable to a national level, although the details could really be fleshed out more. He has the same problem as Castle insofar as the specifics aren’t being put out there and easily available. I give him more credit since he addressed the more important aspect of job creation. 4 points.

Gary Johnson gets it insofar as the philosophy goes, and he makes an extremely salient point regarding how the regulatory climate stifles competition. Big corporations become big donors, and then they move into the realm of lobbying for regulations designed to keep small players from gaining market share. But the question is how much will he do to promote “fairness” vs. to promote “opportunity.” There is a subtle but important difference, because fairness implies equality of outcome and that isn’t the way a free market works. Maybe I’m being picky with the term, but generally these campaign issue statements are thought through to make a certain point. 5.5 points.

Evan McMullin is much more sold on TPP than I am, particularly because China is not a party to it. One has to ask what we are giving up if other nations are suddenly going to reduce their tariffs to our level. I don’t think not having access to economies in Chile, Brunei, and several other signatories will break us.

And there’s the idea of justifying regulations – well, any idiot will tell you that of course the government agency that writes and enforces regulations will say they are justified. This needs to be determined independently of the government because job one for a bureaucrat is preserving his job, not solving problems. It’s also telling to me that Evan really didn’t discuss these educational alternatives in workforce training in his general education segment. Here he seems to want more government involvement, not less.

Note that I moved the taxation part of job creation to the next installment, but left the part about entitlements in because he also makes those same points there. I’ll discuss that subject in due course. Anyhow, Evan doesn’t do that well in this category with his political-speak. 2.5 points.

As I noted above, it’s certain my next part is taxation.

Showing their colors

On several occasions, since my brief dalliance with a company and website called American Certified - which, alas, is no longer in business – I have cited a group I first ran across around that timeframe called the Alliance for American Manufacturing (AAM.) I have also pointed out that their perspective comes from their backing, as it is a conglomeration mainly composed of unionized steel manufacturers – so I always assumed they were more in line with the Democratic Party than the Republicans, which traditionally have been more in favor of free trade rather than protectionism.

So I had an e-mail in my back pocket that I was going to mention in a piece like this. Originally it laid out AAM’s plans for both conventions, but I received an updated version of their plans for the Democratic convention confirming that’s where the effort would be.

Here was their slate for the GOP in Cleveland:

AAM is hosting the Keep it Made in America tent, a space located just outside the Quicken Loans arena where we are chatting with convention-goers about ways to grow American manufacturing jobs. We also are speaking at a number of state delegation breakfasts, sharing with local, state and national lawmakers the issues that we think must be on their policy agendas.

AAM president Scott Paul added in a blog post last week:

(T)rade and the atrophy of middle-income factory jobs are dominating the national political discussion. Trump talks about it constantly. But he’s not alone, and this is the first time in the post-World War II era that we’ve seen both party candidates take the issue so seriously.

It’s better late than never. Before you write off Trump’s bellicose “45 percent tariff” rhetoric as low-brow protectionism - or find the change of heart on the Trans-Pacific Partnership that Hillary Clinton experienced on the trail a little too politically convenient - keep in in mind that a lot of our fellow Americans agree with this sentiment. They certainly do here in Ohio.

The logic behind free trade, though, is that nations benefit when value is maximized and it may be possible to add more value to a product in another location than it is in America. Yet the AAM argues – correctly to an extent – that nations like China take advantage of the rules by not dealing fairly through a policy of subsidizing industries and currency manipulation.

On the other hand, though, AAM will certainly be pulling out all the stops for the Democrats in Philadelphia, including what they describe as a “scene-setting Town Hall meeting”:

The Alliance for American Manufacturing (AAM) is hosting a conversation about why these issues matter for our economy, our children’s future and our politics today.

Recent focus group and polling data show these topics are driving voters’ decisions on which candidate to select. Both Hilary Clinton and Donald Trump have been aggressive in defining their plans for trade and manufacturing.

Confirmed Speakers Include:

  • Gene Sperling, key economic adviser to Hillary Clinton
  • Leo Gerard, president of the United Steelworkers
  • Rep. John Garamendi (D-CA 3rd District)
  • Mark Mellman, award-winning pollster for Democratic leaders
  • Scott Paul, president of the Alliance for American Manufacturing
  • Mike Langford, president of the Utility Workers Union of America
  • Tom Conway, international vice president of the United Steelworkers

This to me represents less of an exchange of information as it would be an echo chamber.

Protectionism and punishing corporations that choose to offshore manufacturing is one possible answer, of course. But the thing I always think about when this conversation comes up is the East German Trabant automobile that was hopelessly stuck decades behind the times when Germany finally reunited in 1990. Because it had a protected market, what incentive did Trabant have for improvement?

Unfortunately, a short-sighted government-centered approach that saw manufacturers as cash cows for big government and favored the big guys over leaner, hungrier start-ups through regulation too burdensome for smaller competitors to withstand has done as much (or more) to curtail American manufacturing as our trade policies have. While I certainly don’t believe many of our larger trade agreements were tailored to suit our interests enough, for the most part it’s the complexity of the deals and how they worked out exceptions for certain industries and players that is the issue. If we simply said “we won’t tariff your stuff if you don’t tariff ours” and both sides stuck to it, eventually the market would find its own level. America should be able to use the advantages of a predictable legal system, well-educated workforce, abundant sources of energy, and outstanding transportation network, but they are negated by the policies in place that I describe above.

The generation of my grandparents won World War II by being able to produce within our borders much of the material and equipment needed to keep a two-front fighting force going. Can anyone honestly say we could do that today? I don’t wish us to be on a war footing, but I’m convinced America can be a place that makes things again. It’s a simple matter of policy over protectionism, and adopting a hands-off approach at the federal level (yes, there’s that limited government idea of mine again) would be the best course of action. I just don’t think AAM would be willing to listen to that argument.

The case against Trump (part 1)

If you haven’t figured it out by now, I’m one of those Republicans who occupies the #NeverTrump camp.

Before I go any further, let me explain some basic math to you: 0+0 = 0. My not voting for Trump does not add one to Hillary Clinton’s column because I’m not voting for her, either. By the theory some on the Trump bandwagon are using to criticize #NeverTrump, my not voting for Hillary should add one to his total. But it won’t. I will vote for someone who I feel is the most qualified on the ballot, rather than the lesser of two searing-hot evils.

This election was supposed to be the repudiation of the Obama big-government, strongly executive agenda. Unfortunately, unless the GOP comes to its senses next week, frees the delegates, and comes up with a good conservative candidate, they will sink like the Titanic in November.

But I don’t come by my distaste for Trump lightly. While he has some redeeming qualities that could conceivably come into play on the slim chance he’s elected, there is the sense in my mind that he takes the ideal of limited government and wrests it from the domain of the GOP, leaving both major parties as two sides of the same worthless coin.

It’s likely you recall that I based my original endorsement (of Bobby Jindal, who is backing Trump but has been quiet about it) on the field’s positions on ten items, with a sliding scale of importance assigned to each:

  • Education
  • Second Amendment
  • Energy
  • Social Issues
  • Trade and job creation
  • Taxation
  • Immigration
  • Foreign Policy
  • Entitlements
  • Role of Government

So I went back and reminded myself. To avoid this being overly long, I’m doing the first five in this part with part 2 hosting the second half.

On education, Trump claims to be for local control and against Common Core, which is an orthodox Republican view. But even though he would “cut it way, way, way down” he doesn’t support the complete elimination of the Department of Education. He does have a good point in reversing the trend toward the government being a student loan lender, pushing it back to the banks and other lending institutions where it traditionally rested.

The problem with his approach is that it doesn’t go far enough. Other candidates vowed to finish the job Ronald Reagan vowed to start by eliminating the Department of Education. To me, the federal government has no place on education – states and localities should set standards and run their school systems as they see fit. But any attempt to wean local school districts off the crack of federal funding will be met with howls of protest and Trump fails to impress me as someone who will follow through with these promises. After all, Trump did say education was one of the top three functions of government. “The government can lead it, but it should be privately done.” I’m confused, too.

Trump seems to be a Second Amendment guy as he did get the NRA endorsement. But the chairman of Gun Owners of America was not as quick to praise The Donald based on his past statements. And again, the idea is not just to enforce the laws on the books but get rid of some of the most egregious, let alone get to ”shall not be infringed.” But wouldn’t someone who is on the no-fly list in error be having their rights infringed? This observer asks the question.

And then we have the subject of energy. Now Trump went to North Dakota – a major oil producing state – and promoted his “America First” energy plan. In it, he promised “Any regulation that is outdated, unnecessary, bad for workers, or contrary to the national interest will be scrapped.” But when he was in Iowa campaigning a few months earlier he threw his support behind a wasteful ethanol subsidy and carveout. So which is it? And would he allow Sarah Palin to sunset the Department of Energy?

On to social issues: Trump says he is pro-life and would defund Planned Parenthood, but how will he restore a “culture of life”? We don’t have that specific. Nor will be stand against the troubling idea of leaving people free to use the bathroom they feel like using – this despite claiming gay marriage should be left to the states – or is it the “law of the land“? (By that same token, so is abortion as it was based on a SCOTUS decision, too.)

So do you get the idea so far that I trust him about as far as I can throw him based on mixed messages and inconsistent policies? Once again, the idea here in the upcoming term was to reverse the tide of bigger, more intrusive government – but I don’t detect the same sort of impetus from Trump that I received from the candidates I favored. And to me, what would make America great again is for us to return to being good – at least in terms of re-adopting the Judeo-Christian values we’ve gotten away from after ousting God from the public square. I don’t see “Two Corinthians” but three marriages Trump as being a spiritual leader in the manner of a Reagan or George W. Bush, even insofar as being decent human beings.

And lastly for this evening, I’d like to talk about Trump on trade and job creation. Since history isn’t taught well, we tend to believe the Great Depression was the end result of the 1929 stock market crash. But there’s a convincing argument made that rural America took the biggest hit thanks to the effects of the Smoot-Hawley tariff of 1930. Granted, the world is a lot different and more interconnected now, but American farmers produce a lot of exports (as do chicken growers locally, as the products in demand overseas complement nicely with what we consume here.) Certainly a renegotiation of our current and proposed trade pacts is in order, but would Trump walk away from the table or just angle for any deal? And would he be against Trade Promotion Authority like he was as a candidate when he’s the president negotiating the pact? I doubt it.

And given the amount of union rank-and-file backing he seems to have, it’s no wonder he hasn’t come out more strongly for right-to-work laws, barely mentioning it during the campaign.

To many, Trump’s views on these subjects are on the outside of the range that’s acceptable to the standard GOP. And are they to the right of Hillary Clinton? For the most part, yes – but that assumes that he’s a man of his word and his business dealings suggest otherwise.

So in part 2 I will discuss the more important five issues on my scaling system, and this is where Trump really begins to sound like Hillary.

Leadership on trade?

June 8, 2016 · Posted in Business and industry, Campaign 2016 - President, National politics, Politics · Comments Off 

I have a sneaking hunch that my friend Rick Manning of Americans for Limited Government (ALG) and Donald Trump may not see eye to eye on what constitutes “limited” government should Trump be elected, but one thing ALG is encouraging Trump to pursue is a more America-centric policy on trade.

On Monday ALG released a letter they sent to Trump thanking him for “giving voice to the reality that the deals negotiated by our leaders are anything but free trade or good for America.”

Manning cited two examples of poor trade practice in his letter, with the first singling out the struggles one American shoe maker endures in competing with Nike:

The average Vietnamese worker makes $150 a month, virtual slave wages.  But the average Vietnamese textile worker who makes shoes earns even less, in fact, about 30 percent less down to $100 a month according to Vietnamonline.com. While this is good for Nike, which doesn’t actually make any of its hundred dollar plus tennis shoes here in America, it is bad for their competitor, New Balance, which employs 900 Americans in Massachusetts and Maine making footwear.

Let me step in for a minute (pun intended.) I happen to prefer New Balance shoes for a simple reason: it is far easier for me to find their shoes in the wide width I need because I wear 4E wide shoes for my duck feet. New Balance seems to have their finger on the pulse of the American market better than Nike, which outsources their production to the cheapest possible outposts. (It shows in their quality, too. I’ve been disappointed in the couple pairs of Nikes I’ve owned.) But Nike has a far bigger market share thanks to the power of marketing, if not necessarily the quality of their shoes.

Manning goes on to cite a second imbalance he’s hoping Trump may address:

Another egregious example of American policy being out of whack is the area of agricultural subsidies and trade.  A specific example is the much maligned U.S. sugar policy, which is in place to offset massive sugar subsidization by producers like Brazil, Thailand and India.  These countries’ subsidies and trade-distorting policies have wrecked the world sugar market and could drive the U.S. industry out of business.

Over the years Life Savers, Dum-Dums and other candy products have seen their production relocated to Canada or Mexico – not because of labor costs but the cost of sugar. Since the ingredient is the major proportion of the product, it only makes sense to find the cheapest alternative. Manning cites one proposal to address this:

However, there is a solution for someone with a hard-nosed desire to get the best deal for the American people and end agriculture subsidies.  U.S. Rep. Ted Yoho (R-Fla.) has introduced legislation that would end the U.S. sugar program when the U.S. gets other nations to do the same through the World Trade Organization.  Yoho’s approach, making the end of our sugar policy contingent upon our competitors eliminating their subsidies, too, gives the President a powerful tool to use as a cudgel over world-wide agricultural competitor’s heads, because Congress would have already done its work.

The ALG letter also goes on to talk about ending Chinese currency manipulation, which is a familiar complaint from manufacturing groups as well. But Manning is adamant about manufacturing’s place in the American economy. “Rebuilding a robust domestic manufacturing sector is important to restoring America’s economic leadership in the world, and in doing so, providing hope to our nation that tomorrow will once again be better than today,” concluded Manning. And he’s right.

But trade is only one part of the equation. We have to encourage more businesses to create jobs by not making it mandatory they give 35 cents of every dollar back in taxes. While Trump addressed this in his tax plan by cutting corporate rates to 15 percent, he has several provisos such as a “one-time deemed repatriation of corporate cash,” and ending deferral on corporate income earned abroad. Bear in mind as well Trump admitted that his tax plan as presented is his “optimal plan,” but subject to negotiation – so the rate may be higher, the “one-time” repatriation may become annual, and it may be tied to other non-productive policies such as a minimum wage hike. Regulations are another issue which Trump is vague about, telling CNBC he wanted to scrap “a slew” of them, but not being specific.

Trump, however, is also talking about our own currency manipulation, questioning the wisdom of a strong dollar. Having a weaker dollar would tend to be protectionist policy, making imports more expensive but allowing our products to be more competitive elsewhere. By the same token, it would encourage international visitors while making American trips abroad more expensive. But it also could enhance inflation.

If Trump wins the election, it’s truly anyone’s guess what effect he will have on the economy. He could be the boost we need to get back to 4-5% annual growth we haven’t seen since the Clinton-Gingrich tech boom era of the 1990s or he could make us long for actual growth instead of depression. It’s truly anyone’s guess, and one piece of the puzzle will be how the market reacts to Trump’s more protectionist policies.

2016 dossier: Trade and job creation

The fifth portion of my look at the GOP field looks at trade and job creation. Those that have the best ideas will qualify for nine points. This category has the potential to be very hit or miss, however. So allow me to set some of the guidelines I am looking for.

When I speak about trade, my goal is that of having free trade that is fair for all parties. With the criticism that’s been leveled at the Trans-Pacific Partnership, for example, I don’t necessarily consider it fair trade. I’m also leery of fast-track authority, although I may well feel better about it with a conservative in charge.

As for job creation, I’m looking for specific ideas which don’t involve lowering taxes because that will fall under taxation, which is a later segment in my dossier series. But taking a meat axe to regulation would be fine, as would creating the conditions under which a workforce can thrive. It will be somewhat tough to score this segment, so the more information made available the better it is for a candidate.

Bobby Jindal gets it, and is not afraid to let people know about it. The formula must work because he is a job-producing governor.

For Bobby, it begins with the power of energy, but it doesn’t stop there. Free trade is fine if we have a good negotiator on our side, but right now we don’t so there’s no need for a Trans-Pacific Partnership yet. And the minimum wage is a smokescreen when we should be looking for more. My only concern is that he is still open to an increase when the idea should be one of the market determining the wage. But that’s a minor blemish on an otherwise solid category for Jindal.

Total score for Jindal – 8.4 of 9.

There is also great promise with Ted Cruz. If he can do those things he ran for Senate on we would be in fine shape. Removing regulations on energy and spreading the truth on the minimum wage bolster a sound agenda. Yes, he flipped on Obamatrade but he came to his senses in time – and trade is one of his specialties. He seems to be an intelligent, passionate advocate for the working man.

Total score for Cruz – 8.1 of 9.

There’s a lot to like about Rick Perry on the subject of job creation – his state created a lot of them during Rick’s tenure. While he had the energy boom to thank for much of it, his principles of low taxes and predictable regulations would hold the nation in good stead.

But I hesitate a little bit from giving him a higher score because just as he quickly backpedaled from being a supporter of trade promotion authority to an opponent simply based on Barack Obama’s lack of negotiating skills and secrecy, he has walked back his complete (and correct) opposition to any federal minimum wage to just not wanting a hike.

He will be in the top tier of this category, though, as he sounds most of the right notes. Now if he could just stay in the race…

Total score for Perry – 7.2 of 9.

In Congress, Rand Paul has sponsored legislation to give Congress move oversight on regulations and worked against additional trade promotion authority and the Trans-Pacific Partnership. And he would rather lift all the boats than increase the minimum wage.

Yet the most interesting piece in his job creation toolbox is the Economic Freedom Zone, an idea he claims to have borrowed from the late Jack Kemp. It sounds good in theory, but my beef with it is that it is targeted to specific areas. For a guy who seems like he would be against government picking winners and losers, this seems to be an unusual move. It’s sort of like having a big-ticket business right across the border from sales-tax free Delaware, where you watch the competition take advantage of government edict.

Total score for Paul – 6.5 of 9.

Rick Santorum has a leg up on some of the competition because he devotes a portion of his economic plan to restoring manufacturing to America. It’s a proposal that includes the idea that regulations are too severe but, more importantly, speaks about the aspect of fair trade by opening up new markets if they play fair. He came out against the TPP as well as fast-track, noting he voted against NAFTA.

But a good plan is muddled by Rick’s support of a higher minimum wage. I suppose that is the difference between populist and conservative, but what he may gain in pandering to a few he would lose when their jobs went away. He’s also been promising his economic plan was a few weeks away on his website, so I’m tired of waiting.

Total score for Santorum – 6.3 of 9.

I find the trade and job creation ideas of Lindsey Graham interesting: “a clenched fist and an open hand…you choose” when it comes to trade, and backing one minimum wage increase while opposing a more recent one.

The entire reason he jumped up to this level came out of one idea of his:

The most costly and far-reaching federal regulations should be subject to sunset provisions, so that there is a built-in process to ensure that they are subject to review, cost-effectiveness analysis, and accountability.  Those regulations that cannot stand up to scrutiny or are no longer essential should be eliminated.

I have called for sunset provisions for far more than simple regulations, but just bringing up this concept separated him from the middle of the pack.

Total score for Graham – 6.0 of 9.

As someone who has worked exclusively in the private sector, Carly Fiorina knows something about job creation – although her critics point to HP’s job losses. And they may dispute her claim that regulations don’t go away because there are some exceptions that prove the rule. But she is right on the trade front and minimum wage, which are plusses.

Total score for Fiorina – 5.6 of 9.

I give credit to Chris Christie for making my job easier by creating his economic plan, which is a mixed bag of good ideas and near-misses. (Chief among them is the idea of reducing payroll taxes only for those over 62 and below 25, which would likely hurt those at the cusp of those ages.) I also find the mistrust of Barack Obama on trade good to hear, especially when Christie wants to revisit NAFTA.

But he’s squishy on minimum wage, and that holds him back somewhat.

Total score for Christie – 5.2 of 9.

Scott Walker has the tag line of “Let’s get to work” on his website, but I had to go elsewhere to find his ideas on job creation. It was noted that his record may look subpar but his state started from a better position and doesn’t get the benefit of the energy boom with the exception of being home to some of the best fracking sand available. While he used several conventional ideas that can work on a state level, such as investment in job training, he doesn’t really have a broad national plan. Presumably he would be a leader in nationalizing right-to-work, but we don’t know that – but we know he correctly thinks the minimum wage is “lame.”

Walker supports the TPP and the trade promotion authority that goes with it. To me that is “lame” and deducts from his score in the category.

Total score for Walker – 5.0 of 9.

Ben Carson brings a unique approach to this question. I’ll get the bad part out of the way first – he supports a minimum wage increase. But he came out early against Obamatrade and is interested in curtailing the regulatory state in surprising ways.

I also think he has some moral authority for his message on work, which is one I agree with. He also has a healthy skepticism about the current economic state, which will play well with his conservative base. He can serve as an example so I placed him a tick above some peers who I grade about the same.

Total score for Carson – 4.6 of 9.

Jeb Bush falls in the middle thanks to support of Obamatrade coupled with the idea of state minimum wages. But was the audience of Wall Street banking executives the right one to advocate for financial reform? I don’t think Main Street trusts Wall Street just yet, which is why Jeb lands in the middle.

Total score for Bush – 4.5 of 9.

For Mike Huckabee I see a lot of obfuscation. His populist approach is fine, with the philosophy of working for a “maximum wage” admirable. But it’s vague, and he won’t commit to saying no to an increase in the minimum because he signed one as governor.

On the trade front, though, he opposes trade promotion authority. It’s not a bad platform, just not that great in a crowded field.

Total score for Huckabee – 4.5 of 9.

The ideas of Marco Rubio trend along the same lines as Scott Walker, but without the executive action. His job creation platform refers mainly to taxation and education, with just a nod toward regulatory reform.

Meanwhile, his opposition to increasing the minimum wage is tempered by his support for “Obamatrade.” My fear is that he will fold on the minimum wage to do his cherished college financial aid reforms, since the two can go hand-in-hand.

Total score for Rubio – 4.5 of 9.

For John Kasich, it’s an interesting mix: he runs a state that privatized its Department of Development, but wants to place a steep tax increase on a particular job creator. He supported NAFTA but doesn’t want to see workers get the shaft. And his state has a minimum wage which automatically increases even though he opposed this in Washington. (Our DNC “hacktivists” claim Kasich believes it should be a state matter, which is the correct stance. I don’t link to them.) On the whole, I would like him to do better.

Total score for Kasich – 4.0 of 9.

Many of the more conventional ideas above are also in George Pataki‘s playbook, and he has done them: rolled back regulations in New York, vetoed a minimum wage increase, and has the idea of increasing manufacturing jobs. But he’s uncertain on the TPP. And a lot has changed in a decade.

With so little to go by, it’s hard to give him a high score.

Total score for Pataki – 4.0 of 9.

“I will be the greatest jobs president that God has ever created,” says Donald Trump. He continually cries that China, Mexico, and Japan are “killing us” economically. But would a 25% tariff on Chinese goods, as he’s proposed before, be the answer? Some say it would start a trade war we couldn’t win, but others think China is manipulating its currency by an even greater factor. To the good side, though, he’s not in favor of a minimum wage increase.

So far, though, Donald hasn’t fleshed out his overall jobs program. Being a businessman makes him an expert of sorts in the subject, but could he deal with a Congress that’s more obstinate than his employees?

Total score for Trump – 2.7 of 9.

Much as I’d like to know about Jim Gilmore, his recent entry in the race sort of limits his potential. Although it’s couched as job creation, his Growth Code will play more in the taxation category. So I can’t give him many points.

Total score for Gilmore – 2.0 of 9.

Next on tap is a fairly simple and straightforward subject – taxation. It will be worth ten points.

AC Week in review: June 8, 2014

June 8, 2014 · Posted in Business and industry, Education, National politics, Politics · Comments Off 

Wouldn’t you know it: I begin a series only to bump it in week 2 because of MDGOP debate coverage. So this will truly be two weeks in review, but I’m sure you really don’t mind.

I begin by asking the question: can America keep making things? I found an interesting perspective on the question and added my own thoughts. But I also found that workers, STEM-based or not, should be flexible and highly-trained. (And while it doesn’t pertain directly to AC, I was pleased that one of our gubernatorial candidates has the same line of thinking.)

In order for our manufacturing economy to succeed, though, we need to have others around the world play fair. Unfortunately, not only China has been caught cheating on trade, with them and other countries threatening up to 500,000 steel jobs, but right here at home one group of American manufacturers is concerned that federal regulators unfairly have them in their crosshairs as well.

Longtime readers know as well that I’m excited about America’s ongoing energy boom, and in this case I look at how manufacturing can benefit, with a little help from regulators. And while the EPA is trying to do away with the coal industry through onerous regulations, Congress on the other hand is trying to rein in that body run amok with accountability and transparency.

I’m sure in the next couple days – since the unemployment rate is always released on a Friday, for weekend analysis – we will get spin on it, but this is another pre-launch piece I wrote last month on May’s unemployment numbers.

*********

On the first Friday of this month, analysts cheered the new low unemployment number of 6.3 percent, a low not seen in nearly six years. Moreover, the economy added 288,000 jobs – although that news was tempered by a labor force participation drop of more than 800,000 workers.

Yet out of those 288,000 jobs, just 12,000 were added in the manufacturing sector. That was “surprisingly weak,” according to Alliance for American Manufacturing (AAM) president Scott Paul. The AAM, an advocacy group backed mainly by the United Steelworkers union, contends that 5.8 million jobs could eventually be created by stopping currency manipulation by China, citing a recent Economic Policy Institute report which called the practice the “primary cause” of our trade deficit.

On a similar front, economist Chad Mowbray, who writes for the Shopfloor blog for the National Association of Manufacturers, detailed a number of “nagging challenges” for American manufacturers, leading off with the weak 0.1% first quarter GDP growth announced last week. (Editor’s note: that number has since been revised to a negative 1 percent growth.) Mowbray added that high marginal tax rates and uncertainty about health care costs could be factoring into the slow market growth.

In all these cases, policymakers in Washington are at loggerheads on how to proceed. A bill to deal with the currency manipulation was introduced last year and has bipartisan support, but mainly from Democrats. Unfortunately, that side seems to be placing more time and effort into trying to increase the minimum wage, which is a political nonstarter and is thought by many, including the nonpartisan CBO, to be a job killer. Republicans seem to be content with introducing bills to tweak around the edges on both tax reform and health care, but know there’s little chance of them advancing through the Senate, particularly six months before the midterm elections.

The situation, then, remains a challenging one. If, as some analysts have cited, the weather played a factor in slow economic growth, that excuse will dissipate in the summer sun. The question of whether the May jobs report was a mirage or portends better things is important, but there’s little doubt that if the manufacturing sector lags behind any recovery it will impede our progress going forward.

*********

It’s been a busy week, but I’ll keep monitoring the manufacturing market.

Competing views on manufacturing

As a follow up and way to revise and extend remarks on Friday’s post about the Alliance for American Manufacturing, I decided to dig a little bit more into who they are and what they are proposing. The idea of “Made in America” is a sound one, for a number of reasons, but as I pointed out the AAM seems to have many of its eggs in the protectionist basket. To some extent, they have a case: even their attempt to furnish their Washington, D.C. office with exclusively American-made goods fell a little short:

Our tour began in one of the small offices, where (AAM executive director Scott) Paul showed off a desk from Washington state. But things took a turn downhill from there, when we got to the products on the desk.

“You can’t find phones, video display terminals,” says Paul. “I mean, none of that is American-made.” Paul couldn’t find American-made computers, either, though that may change following Apple’s announcement that it plans to make some Macs in the United States.

But then I found an entire AAM-backed legislative agenda, for which they linked to this subpage on the website of Delaware’s junior Senator Chris Coons. In it, we find a number of top-down legislative proposals in the areas of skills training, exports, access to capital, and “conditions necessary for growth.” At the time of its last update, about half of these proposals hadn’t been introduced as bills, with the last introduced bill being S.1400 in July of this year – either the website is not often updated or these proposals have languished on the back burner of a do-nothing, obstructionist Senate. This to me is quite telling as most of the sponsors are Democrats, who have the majority in the body.

It should be pointed out, too, that the Alliance for American Manufacturing is the brainchild of the United Steelworkers union and a “select group of America’s leading manufacturers.” The list of this select group isn’t widely disseminated, but the AAM describes that:

Leo Gerard, the International President of the United Steelworkers, and CEOs of Steelworker-represented manufacturers understood that. These leaders launched AAM in 2007 to build on the success of the “Stand Up For Steel” coalition.

The roots of that coalition date back to the 1990s, so this fight is an old one under a relatively new name since the AAM was founded in 2007. Essentially it’s a union partnership with the closed shops under its wing; a business-labor pact in name only.

Now that you understand its roots, it becomes more clear why they prescribe their menu of solutions. The steel industry is long known as a bastion of protectionism, given the charges of foreign steel dumping a decade or so back.

So are there any other solutions out there? The competing group to AAM is the National Association of Manufacturers, a group whose board is representative of over 200 industrial leaders. Their vision is somewhat different than that of the union-backed organization, although there are elements of protectionism and top-down dictates in their plan as well. Most worrisome to me is their advocacy for immigration reform, which is needed but must be done in such a manner that law-breaking is not rewarded at the expense of those who went about it in the correct manner.

Yet NAM makes one sound point:

Because of our tax, tort, energy and regulatory policies, it is 20 percent more expensive to do business in the United States than it is in the countries that are our nine largest trading partners — and that excludes the cost of labor.

And it’s not like the problem is new, particularly here in Maryland. I mentioned Friday that Ron George is perhaps the gubernatorial candidate most attuned to the problem (David Craig has his own plan as well), although all but one of the players involved at the time had their say at an October manufacturing summit. Moreover, outgoing Governor Martin O’Malley was even forced to pay lip service to the issue.

But we have had this discussion for several years, and the prescriptions which were suggested a half-decade ago languished on the bookshelf while Maryland developed a growing reputation as a state hostile to business. It’s sort of strange that what I wrote on Friday – as a person who had never seen this report – nailed their first point about “a competitive and stable business environment.” They also talked about the need for a “balanced approach” to energy rather than the heavy emphasis on renewables, which is another pet peeve of mine. (Little did they know at the time the report was compiled – just five short years ago – that America and a portion of Maryland were sitting on an energy gold mine.)

In short, the solutions to the problem seem to be there and many fall into the conservative, pro-liberty camp. If we tell the radical environmentalists and regulators to go pound sand because we have work to do, chances are more of us would indeed have more work to do and more prosperity to spread around.

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