RE: OK, so you want to know how an Obama supporter thinks
Decisions about moving or locating business facilities are made based generally upon four factors:
1. Labor
2. Capital
3. Market
4. Risk
We're going to lose the labor battle when the job is sewing Nikes together. That's okay, that's probably not a battle we want to win. When the process gets more complex, so that a more skilled and sophisticated worker is required, we should win a lot of those battles. Unfortunately, our education system has declined to the point that we don't win those either.
We lose the capital battle because our tax code is not nearly as friendly to investors as many of the competing countries. The Europeans have learned that socialism doesn't work without jobs, and jobs don't exist without factories, and factories come where they get the friendliest tax treatment. As a result they generally have lower corporate income tax, capital gains tax, and dividend taxes than we do. They also generally use a consumption/VAT/sales tax to generate a significant portion of their tax revenues, and that form of tax is much friendlier to export sales than is our current tax system.
The US is a big enough market that we usually win in the market area. When the relevant market is global rather than this country, we generally lose because of tax considerations. Market factors explain why many foreign auto makers have built assembly plants here to assemble cars for the US market, but not for export. NAFTA has given Mexico and Canada pretty much equal access to the US market, and has been blamed for huge job losses, but I'm of the opinion that actual job losses due to NAFTA have been small (when you take out the jobs were NAFTA wasn't a factor), and that actual job gains due to NAFTA have outweighed the losses.
There are several generally acknowledged risk areas--market risk, currency risk, country risk, litigation risk, regulatory risk, political risk. Our economy is generally as healthy as anyone's, so we do okay on market risk. The current dollar decline is causing us to lose some currency risk battles--getting the federal budget into balance and reducing our dependence on imported oil would both help us in this area. Country risk has always been a strong area for us, although some of our recent infrastructure failures (Twin Cities bridge, New Orelans levees) might introduce an element of doubt here). We lose big on litigation risk because of our jackpot tort ltigation system. Tort reform would help here. We also lose big on regulatory risk becuase of our command-and-control regulatory system, exemplified by OSHA and EPA. Going to more market-based incentives in this area would make us more competitive (and IMO would also do a better job of cleaning up the environment and improving worker safety). Political risk has always been sort of a slam-dunk victory for the US. But if things start happening like penalizing companies that reorganize overseas to escape US taxes, that could turn around in a hurry.
Too much of the heat about job loss has been focused on NAFTA and overseas sweat shops. If we really want to address the problem, we should instead be focusing light on the factors outlined above. Addressing these issues will let us gain jobs that we want, jobs that add value and thus can pay accordingly. I really don't think most of us want us to add a bunch of jobs sewing together Nikes.
|