Don't Gloat, America
It is undeniably true that California's business unfriendliness leads--if that's the word--the nation as a whole. My post last night on our state's evolving cap-and-trade fiasco spurred some comments advocating construction of a statewide fence or some other means of quarantining our economic illiteracy.
It's too late.
Intel CEO Paul Otellini, speaking at last month's Aspen Forum, summed up America's manufacturing competitiveness thusly:
"I can tell you definitively that it costs $1 billion more per factory for me to build, equip, and operate a semiconductor manufacturing facility in the United States," Otellini said.
The rub: Ninety percent of that additional cost of a $4 billion factory is not labor but the cost to comply with taxes and regulations that other nations don't impose.
"If our tax rate approached that of the rest of the world, corporations would have an incentive to invest here," Otellini said. But instead, it's the second highest in the industrialized world, making the United States a less attractive place to invest--and create jobs--than places in Europe and Asia that are "clamoring" for Intel's business.
Add in the uncertainties about the next move with ObamaCare, energy policy and environmental regulation, and it's an easy first step to take your red Sharpie and draw a big X over the United States on your map of possible locations for that factory you need to open in 2012.
I'm looking at a report from a major accounting firm describing the economics of corporate relocation in our global economy. Switzerland will levy a 10-12 percent income tax for your corporate headquarters, but will reduce this to 4-9 percent if you bring manufacturing into the country. Singapore offers an even better deal: a corporate income tax rate below 5 percent in exchange for building a local manufacturing operation. In contrast, America's federal corporate income tax rate is 35 percent, and just try building and opening a new factory in a predictable period of time.
A century or so ago officials in the United Kingdom also acted as if they were the only economic game in town.
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May '10
Re: Don't Gloat, America
Obama and the Democrats have made this worse, but let's face it: Most of this happened --or at least was allowed to continue -- on the Republicans' watch.
I have heard the (probably true) argument that after 9/11, President Bush didn't want to pick any fights that would compromise his war policy. But he tried to reform Social Security, and that surely was a riskier effort than moving to reform corporate tax and regulatory policy.
Do the Republicans intend to do anything about this, or are we simply doomed to continued industrial decline and chronic un- and under-employment?
I know a LOT of people who have moved, or are moving, to Australia.
Re: Don't Gloat, America
Daniel, I agree that this slow-motion disaster has a bipartisan aspect. We know that most Republicans are ideologically inclined to favor competitive tax policies, but it's difficult to squeeze the argument into an effective soundbite. In contrast, it's all too easy to bang the class warfare drum by claiming that a lower corporate income tax amounts to a giveaway to corporate fat-cats, rather than an essential reform aimed at attracting and retaining high wage domestic jobs.
Jun '10
Re: Don't Gloat, America
Organized private-sector labor should be a partner in reducing corporate tax rates to keep jobs on-shore and to bloat those corporate treasuries for some easy pickings. Its hard to understand how it is in priviate-sector unions's interest to ally with the dependency class against the producer class. The executives and management will do just fine commuting business-class to the manufacturing facilities overseas, it is the person on the factory floor that loses out.
May '10
Re: Don't Gloat, America
That is why you don't just simply vote Republican, you vote Conservative everytime, no mater what the so called experts tell you.
Re: Don't Gloat, America
Pilgrim, many thanks for comment-of-the-week as far as I am concerned. Why, indeed, would labor organizations not want robust domestic growth setting the stage for structurally higher wages?
Speaking as an entrepreneur, I would love to expand my company right here at home. Instead, my government's punitive policies require me to become a bazillion mile frequent-flyer, providing good jobs to the citizens of another country.
May '10
Re: Don't Gloat, America
The key to selling corporate tax cuts is to de-symbolize them and remind voters that a corporation is just a group of individual taxpayers. Democrats talk about corporations as objects. Republicans need to talk about them as people.
Jul '10
Re: Don't Gloat, America
George Savage: Don't Gloat, America
In Michigan, we're not gloating, we're jealous. I mean, where does California get off being the "North American Greece?"
We have two peninsulas whose residents cordially detest each other. Do you?
You have entitlement problems? Try dealing with the UAW.
Oakland is to Detroit as the Medicare Prescription Drug benefit is to Obamacare.
Climes, vineyards, and olive groves aren't the end-all, be-all.
Re: Don't Gloat, America
I feel better . . . and terrible, both at the same time.
Jul '10
Re: Don't Gloat, America
As I said elsewhere; I'm not going to gloat.
I'm sitting here worried about the invasion of the voters who will flee after destroying California and then proceed to turn the place they arrive in into the same kind of basket case.
Who was it that said, "They are like locusts, destroying every place they land."?