Free Markets, Free People
Honest to goodness, if this doesn’t blow your mind, I don’t know what will.
Yet the Boeing case has a scarier aspect missed by conservatives: Why is Boeing, one of our few real global champions in beefing up exports, moving work on the Dreamliner from a high-skill work force ($28 an hour on average) to a much lower-wage work force ($14 an hour starting wage)? Nothing could be a bigger threat to the economic security of this country.
We should be aghast that Boeing is sending a big fat market signal that it wants a less-skilled, lower-quality work force. This country is in a debt crisis because we buy abroad much more than we sell. Alas, because of this trade deficit, foreign creditors have the country in their clutches. That’s not because of our labor costs—in that respect, we can undersell most of our high-wage, unionized rivals like Germany. It’s because we have too many poorly educated and low-skilled workers that are simply unable to compete.
We depend on Boeing to out-compete Airbus, its European rival. But when major firms move South, it is usually a harbinger of quality decline.
Wow … really? So all those F-35s being built in Ft. Worth, and all those C-130s and F-22 Raptors being built in Marietta, GA, not to mention the myriad of car manufacturing plants, specialty steel plants, hi-tech industries, etc. all have seen ‘quality declines’ because they’re located in the South?
Good grief, my guess is this guy hasn’t been out of Chicago since 1970? You’ve got to love the correlation he tries to draw between “high-skill” and $28 bucks an hour with “low-skill” and $14 bucks an hour. Yeah, that works, doesn’t it? It’s a bit like saying a guy who opens and closes a blast furnace door at $28 bucks an hour is a “high-skilled” worker. Doesn’t correlate at all does it? But that was an actual wage for an actual job at a steel plant before it went out of business because it was uncompetitive, thanks to unions, years ago.
If you haven’t figured it out yet, the guy writing this is a labor union lawyer and he thinks everyone who reads the Wall Street Journal is an idiot.
Here’s his one and only example of why he thinks he’s got this all figured out. As he says, he “represented the workers” in the first plant. He’s speaking of Outboard Marine Corp:
In the 1990s the company went from the high wage union North to the low wage South and was bankrupt by 2000. There are reasons workers in the North get $28 an hour while down in the South they get $14 or even $10. Adam Smith could explain it: "productivity," "skill level," "quality."
Of course the reason it went bankrupt might have absolutely nothing to do with any of that. It might be because the corporation was uncompetitive well before the move and the move was a last ditch effort to save itself. But we don’t know, and this yahoo decides it is “productivity”, “skill level” and “quality” which were the problem. Of course BMW’s plant in SC doesn’t suffer from any of those problems does it? In fact one of the reasons the Germans are making their cars there is because of the productivity they achieve there. Same with all the car plants across the south to include those opened fairly recently by Honda, Kia, Hyundai, BMW, and Mercedes – in Tuscaloosa, Alabama for heaven sake. The reason they’re in the South is they get more “productivity”, “skill” and “quality” for the wage than they do in the North.
But to admit that would be to admit that perhaps the problem is unions, not Southerners.
However, our clueless lawyer isn’t done:
Here is yet another American firm seeking to ruin its reputation for quality. Why? To save $14 an hour! Seriously: Is that going to help sell the Dreamliner? In terms of the finished product, the labor cost is minuscule: $14 in hourly wage, at most. It’s incredible that conservatives claim such small differences in labor cost would be life or death to Boeing. It’s not labor cost but labor skill that is life or death to the survival of Boeing, never mind pilots and passengers.
If the history of runaway shops proves anything, it’s that many go "South" in more than one sense of the word. If that sounds unfair to the South, it is union busting that has inflicted the real unfairness in the region: income inequality and inferior schools.
Yessiree – those airplanes they’ve been building in Marietta GA and Ft. Worth TX have just been falling out of the sky because of all that income inequality and those inferior schools. What, no “redneck”, “hillbilly” or “barely in shoes” included? No NASCAR jokes? Remarks about family trees that don’t fork? Dueling banjoes? He missed his chance, didn’t he?
Of course the reason Boeing is opening a plant in SC has nothing to do with wages per se. His point is correct as far as it goes. The plant is opening so Boeing and its customers aren’t held hostage to the work stoppages that are normal fare in the union plant in Washington. And it is hard to blame them for doing that, isn’t it?
Of course pig-headed ignorance about an area like this simply has to be seen to be believed and he proves himself as the poster boy for that. If abject and unqualified ignorance is bliss, this is one happy, happy labor lawyer.
Wow … 2011 and you find something like this in the Wall Street Journal. Who said their editors don’t have a wicked sense of humor?
Give ‘em enough rope …
[HT: J.E. Dyer]
James Pethokoukis provides the reasons. As you’ll note, economically, they’re not rocket science, but they certainly are something that the left seems to want to ignore in focusing its solutions to the debt problem on getting tax increases included.
One – the economy will not tolerate a tax increase at this time. It is simply not in the shape in which it can shrug a tax increase off. And it certainly won’t matter if the tax is only on “the rich”. As someone once asked, “ever get a job from a poor man?” The increase in revenues generated by taxing the rich (or anyone for that matter) will not offset the loss it will generate in hiring or expansion of business. Pethokoukis points out that the economy is in incredibly fragile shape at the moment. Thus:
…[T]he economic recovery is sputtering with stall speed fast approaching. Now would be a terrible time to penalize investors and business, both big and small, with new taxes.
Common sense 101.
Two – Tax revenue isn’t our problem when it comes to debt. Spending is the problem. Yet as I pointed out Saturday, the solution the left seems to prefer involves nothing but tax revenue increases or tax increases. What they’re less inclined to do is focus on the spending problem and make appropriate spending cuts. “Greek heroin” is the reason. Take a look at this:
By 2021, the the CBO says, the annual budget deficit would be 7.5 percent of GDP and by 2035 a truly monstrous 15.5 percent. Throughout this period, tax revenue would be 18.4 percent, right around the historical average. But spending would be 25.9 percent in 2021, 33.9 percent in 2035 vs. an average of roughly 21 percent. It’s spending that’s way out of whack, not revenue.
That means that if the so-called “Bush tax cuts” (they’re just the current tax rates) are left in place, that’s where we find ourselves in 2035. As Pethokoukis proves, it isn’t tax revenue that’s the problem. Unless you believe that it’s the government’s money in the first place and they have every right to determine how much you get to keep.
Let’s go with that. Let’s see what happens if the left gets its way:
But let’s say all the Bush tax cuts were left to expire, as was AMT relief. Assuming no economic fallout, according to the CBO, revenue would be 23.2 percent of GDP by 2035. Three problems here: a) even with all those tax increases, the annual budget deficit would still be nearly an unsustainable 10.7 percent of GDP in 2035; b) the U.S. tax code has never generated that level of revenue and almost certainly can’t without a value-added tax; and c) there would be tremendous economic fallout. Axing all the Bush tax cuts would chop three percentage points off GDP growth, according to Goldman Sachs, certainly sending America back into recession. Tax revenue would again plummet.
Spending, not tax revenue, is the obvious problem.
Common sense 101.
Three – boosting economic growth is the fastest way to increasing tax revenues. However there’s one problem to that as far as an intrusive government is concerned. It has to get out of the way.
Pethokoukis and I part ways a bit here as he endorses a consumption tax vs. an income tax and further endorses raising the revenue percentage of government’s part of the GDP to 19%. Can’t go there with him even if Rep. Paul Ryan’s plan is similar. I’m not so much against a consumption tax (it at least taxes what you consume thereby not penalizing you for what you save, nor do you get double taxed assuming the income tax goes away) but I am against such an increase in the tax percentage. I think very aggressive cuts in government spending plus fairly massive deregulation (and the obvious cuts in compliance spending by businesses that would save) would yield a fast recovering and growing economy. Granting an increase in the historic percentage of GDP that government has taken opens a door of precedence I don’t want opened. It is time government lived within its means and understood that that economic growth takes precedence over government growth – every time.
It is spending – uncontrolled and wasteful spending – that is our problem. Not tax revenue. Government must be cut and cut fairly severely. That’s something the heroin addicts don’t want to hear. So they spin out solutions which always end up in one place – “the problem is revenue, we need more revenue”.
No. They don’t.
And the GOP, if it is to have any credibility with voters come 2012, had best not cave on this point.
Again, Common Sense 101.