Well, I have always not been a fan of tax cuts for manufacturing businesses, or any other type. I noticed tht both Bush and Kerry have mentioned using tax cuts as an incentive to stimulate ALL business, and I think all it does is detract from the income of the towns/cities/nation while still making demands on that town/city/nation's infrastructure. We're all seen what happens to towns were a large chunk of the land-base isn't taxed, and the town literally doesn't have enough money to run trash collection services.

I read this in the paper this morning,



It is true. Even taxless, running manufacturing here is going to be more costly. I think there needs to be a ocncious effort to either focus on developing now businesses that are more dependant on U.S. location (service, medical, etc) or we need to come up with some other way to make business more desirable in U.S. without it just being about the bottom line. I have no doubt that given the bottom line, fiscally, almost every single business will tak eit hook, line, and sinker, and then move on to where the grass is greener. We should have learned that from car and clothing companies already.


Or perhaps the only way to affect it is consumer demand? I don't know. There are definately some problems with free trade that perhaps don't need to be addresses directly through free trade policy, but do need to be considered in national plans for business building intiatives.

-Dolce

Dolce, here's some homework for you. Look up the following terms: "comparative advantage" , "tax havens" and "double taxation".

In short, manufacturing jobs leaving the U.S. is NOT a problem; it's a blessing in disguise. For every manufacturing job leaving this country, there is a better job created.

Also, personally, I'm a big fan of removing corporate taxation in order to eliminate the double taxation and lure the companies that left the U.S. because of punitively high tax rates back in.

http://www.heritage.org/research/features/index/

I will get back to you on this. But I do want to point out that I agree that focussing on manufcturing jobs is a bad idea. Why would want to push for more of them when we could just move onto better industries that are more productive for the individuals engaged in them and for the ocuntry, is beyond me. That's why a mentioned non-transitory industries such as service, medical, research, and higher technological fields.

The rest will have to wait for comment until tonight.

-Dolce

I'm all for developing new industries, but I would rather the government not be involved in the process. When the government starts playing favorites, it usually has a negative impact on the economy as a whole.

Most U.S. companies are leaving because of low labor costs, high taxes are just an excuse... In some cases double taxation is a problem, and I agree it needs to be fixed, but it won't stop companies from going overseas...

Regarding the Ricardo's 'Theory of comparative advantage', I understand the logic perfectly and agree with it, but it also states 'in a perfect world', meaning no barriers to movement of capital and labor, which clearly limit the theory to a certain extent...

PS: I'll come back to my argument about comparative advantage and its problems in today's world more fully tonight... I have to leave now... So, hold your thoughts, Krem... :wink:

High taxes are not "just an excuse". Companies DO move away from taxation. Case in point: the majority of the top U.S. financial institutions are incorporated in Delaware, the state with the lowest corporate taxation in the Union.

In any case, double taxation alone is enough to justify removing corporate taxation in my mind.

The thing about that is that the country with the least barriers will benefit the most from free trade. Look at Hong Kong. They have virtually no barriers to trade and that has allowed their economy to boom despite virtual absence of natural resources and, until 1997, having bad relationship with its closest neighbor.

I know the "fair trade" initiative is popular in some liberal and conservative circles; I fear it is simply a misguided attempt at fixing a problem that doesn't even exist.

Krem dont buy into the job machine hype, 1600 manuf jobs in a town like that are NOT coming back somewhere else. You cant compare working at a Wal-Mart to having a decent manuf job with benes. The Tax rates being ridiculous for so long have driven many companies out.

2000 Jobs lost at IBM do not = 2000 jobs at Target,Wal Mart and Starbucks, no offense

We definitely do not want to encourage more people being hired into healthcare I believe those costs are high enough without additional overhead.

I'm talking about overall schisms, not temporary job losses.

50 years ago half the country was employed by manufacturers; now the numbers are closer to 20%. 100 years ago half the country was employed in agriculture; now the number is 2%. Does that mean that we have less jobs available now? Of course not. It means that Americans were able to move to BETTER jobs, while outsourcing crap work to the third world.

From U.S. corporations point of view, low taxes are only mentioned in this debate ad-absurdum, companies leave (abroad!!!, that's what I meant originally) because for given productivity output labor costs are lot less... In manufacturing and agricultural sector (or any businesses that don't require sophisticated know-how), the labor costs reasons for leaving are the most important...



If you look at it domestically, as in your example with financial institutions, taxes might play minor role, where businesses decide to be located, but more importantly it is the legal and regulatory environment that encourages them to choose Delaware...

Oh, krem...

don't hold it against me not going into my elaboration regarding comparitive advantage, as I promised before, I'm way too distraught to think clearly with the way Yankees are playing... :evil: :evil: :evil:

Minor role?

How is it minor when you decide whether to fork over 10% of your income to a local government or not?

Companies incorporate in other parts of the world to avoid taxation all the time, unless regulation does not allow them to. Tyco is incorporated somewhere in the Caribbean. Certainly not because of lower labor cost there.

But like I said, double taxation is the most important argument against corporate taxation. Things like attractiveness for corporations and lower prices for the consumers are just gravy.

Tyco still has to pay federal taxes on its business income from its U.S. based businesses... It saves money though on local business taxes, when incorporated abroad (Bermuda, I think) and its income generated abroad is not taxed either, if I'm not mistaken (lot of it depends on bilateral agreements between countries to prevent double taxation...)

Tyco's not paying local and state corporate taxes on income generated in the U.S. when located abroad... That's a loophole that's need to be closed.

So does that mean as we move towards better jobs that can't be outsourced that we should still try to use the same archain "tax break" incentives to get them to stay here too?

One could just as easily say the government will pick up all citizens health care caverage, therefor easing the financial burden of companies that choose to stay in the U.S. There's more than one way to reward companies for investing in good jobs in any country they choose that aren't just about short-term high yield growth.

Hong Kong will eventually bust too. Giving out freebies to businesses that use your country's resources gets them fat and lazy. The minute the country is strapped and turns towards all those international businesses for support, they'll ditch it and go to the next needy country.

That is not to say that businesses don't help a country grow, it is only to say that all countries should anticipate that they are stepping stone in big business desire to feed its own pocket books, and all countries should use that to the most of their advantage. One of the ways of doing this is getting a little bit of money through taxing businesses, so that it can be invested in other aspects of country development.

You could look at businesses like a mutual exchange of goods. If countries don't milk businesses for a little support, than they'll just end up being cheated in the exchange.

-Dolce

That proves my point: companies move in order to benefit from lower taxation.

Go Sox!

-Dolce

Well, don't do it for my sake, I've heard the argument back and forth countless times and already picked my side ;-)

Anyway, the Yankees just scored twice, so there!

You just love to make me feel miserable.... I didn't deserve this???

I didn't deserve it last year.

Oh well, what do you expect rooting for Red Sox??? :wink: (I know those words will come back to haunt me in about an hour... )

Tax breaks that target a specific industry are a bad idea for the overall economy, but politicians do it nevertheless in order to gain votes from a specific demographic. It usually happens on a local level, but sometimes even federal government does that. (Can you say Farm Aid?)

It's not the "government" that picks up the tab; it's the people that do. Don't forget, dolce, the government is spending your money, and it always does a bad job of it.

What freebies does Hong Kong give out?

What HK does is create a safe and free environment for people and businesses to work together, without government intervention.

That's the surest way to make a business pack up and leave. The government should not in the business of investing, period. Private interests are much better at it.

What are you talking about it? If you make the businesses give more money to the government, those businesses will in turn charge their customers more to recoup the loss. Guess who gets screwed in the end - THE PEOPLE.

Kremster
I cant go into the detail that I'd like.

Let us just say that if Dell puts 4000 high paying customer service jobs (tech support) in Bangalore and closes is tech support center in Austin.

Those jobs are not coming back (see below)
Those people are out of work with no where to go
Those people can no longer afford the product the mothership sells
hence a self defeating policy

Now Dells competitiros will be forced to make simialr actions to match Dells cost structure......

Service jobs are crap jobs it is a fallacy that they pay higher, does a Bank teller make more money than a car-assembly line worker, No. Does any retail job have any specialized skill? Does solving a problem over the phone or looking up if a check or if an order shipped has cleared require any in depth training? do you see where I am going....

On this principle we could outsource every office worker in the US to Bangalore right now and put 50M people out of work because companies can do it cheaper there, this will not create jobs, or stimulate new type of jobs, you will be competing with someone whose COL (cost of living) is $5 a month good luck! once this is done the jobs will not come back. We have automated attendants not a live operator, we have email and MS Office not a "secretary" or admin person type your own memo.

In the above example the 50M people would now no longer need the services of their former companies since now they have no spending power. This is a an extremely overlooked point in most of these ivory tower global-equalization essays.

Clinton and many other idiots talk about new job creation, but 95% of the new jobs are entry-level or retail not jobs with high earning potential.

This is not temporary and it is not an anomaly, manuf jobs are real jobs service jobs are not necessarily better.

So what proposals do you have to rectify the situation? I assume by your post you are not for unrestricted free trade, etc? Then do you think such things as taxation exemption is really going to keep people here? Eliminate minimum wage?

5 cents a soccer ball?

I agree with your post about entry level jobs, screwing up the statistics of job growth rates, and also the spiraling affect of less jobs = less consumers, etc. But I also am not sure how to approach "jobs." Like Krem, I do think there can be replacement/exchange in job structure that can be productive. An example. I used to be frustrated that tolled highways were eliminating pretty decent paying toll worker positions in favor of ez-pass, etc. Then I realized how many new technology jobs had been opened up by the push to produce the ez=pass technology. That's a very simple example, so I don't care to critique it on an individual basis as much as to address the larger structures of industry transition.

what do you propose is a decent balance of local and global industry exchange? How do we start aiming towards it?

-Dolce

First of all, a customer service job is not a high-paying job by any means.

Second, those jobs can come back, believe it or not. Dell, the very company you used as an examle, moved a call center back into the U.S. because of the customer backlash over bad quality of service.,

Third, you're operating under an assumption that the only jobs people get after being laid off are lower-paying jobs. Not necessarily true. People improve their skills and get better jobs too.

Also, a young person who sees what goes with the manufacturing jobs right now, will not train to be a factory worker; he or she will train to become someone in demand. That's how the free market works.

How do you reconcile your "race to the bottom" rhetoric with the fact that the outsourcing to other countries has been going on for close to 60 years now, yet Americans are richer than ever?

Classic!!! Dolce, you're becoming a neoliberal. What next, a Republican party membership?

This reminds of a story. An American businessman was invited to oversee the construction of a dam in China and make some suggestions. When he saw that the workers were using shovels to do their job, he mentioned that using a earth-moving machine would be much more effective. The government official told him "yeah, but think of all the jobs that are going to be lost". The businessmna replied: "I was under impression that you are trying to build a dam. If it's jobs you want to create, take away their shovels and give them spoons".

Also, I am forced to post this.



And yes, remove the minimum wage.

why are you so mean to me Kremmy when I'm trying to be explorative of spaces I'm less secure in my knowledge of? I was asking questions. You called me a Republican??? I'm not going to talk to you anymore.

except for this post. :wink:

...Or, give them a good education and encourage them to enter the fields were they get to design better earth-moving machines.

Don't make me dig up the compare/contrast research i had to do last year about Youngstown and Akron Ohio. All you need to know is that the city that is re-cooperating better from manufacturing industry job loss is the town that had more active city officials and not less active ones.

-Dolce