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Posted on 02/07/2016 8:54:16 PM PST by jfd1776
How would you react to the following news stories?
Former Shoppers Fined $5,000 for No Longer Frequenting Nearby Mall
Residents of Anytown, USA were surprised to receive invoices in the mail from their local county government Friday. The county identified people who used to shop in the local mall but, due to reports of muggings, rapes, and vehicle theft at the mall, switched to shopping at other, safer malls, or just doing it online. The thousand dollar a year fine was based on the estimated amount of revenue the mall says it lost due to their departure. Professional economists, when asked about the new approach, called it Creative and Visionary.
Former Theatergoers Arrested for Switching from Cinema Attendance to DVD Purchases and Cable Watching
The local movieplex, having raised its price by fifty cents a year for the past four years, persuaded the city council of Anytown, USA to punish the residents who used to attend the cinema but no longer do. The new $500/year Economic Avoidance Penalty is designed to dissuade people from the unhealthy choice to stay home. This new trend, usually blamed on the steep prices of tickets and drinks, costs the community important resources, by depressing the employment of ushers and cashiers, and by reducing critical sales tax revenue. Economists, when notified of this new charge for non-attendance at the cinema, laughing hysterically, unanimously said Ha Ha, that’s a good one, before being notified that it was for real, and then correcting their comments to call it Creative and Visionary.
Fiction or Non-Fiction?
As you can certainly tell, these are not real news stories, at least not yet. The United States doesn’t fine a person for failing to go to the movies because it’s become too expensive, or for sensibly making the decision to stop shopping in a once-safe neighborhood or mall that has become a severe crime zone.
But the United States IS on that path. If you used to receive health insurance from your employer, but you lost that job, or the employer could no longer offer you the benefit, the U.S. government will now fine you for failing to buy your own health insurance, so you must buy incredibly overpriced insurance on your own from the government to avoid the fine. In many states, if you used to be a member of a union, but you choose to drop the union without dropping the job, they fine you – often the same amount as the union dues had been – as a penalty for having the nerve to quit the union. There seem to be more such approaches every year.
The American economy has always been capitalist, at least at its core, if not in every detail. The right of contract is enshrined in our legal system and our culture; if we want to do business with someone, we do; if not, we don’t. But recent generations, and in particular, recent years, have begun to reverse that freedom. Today, if the government favors a purchase, a membership, or a vendor, the Leviathan will consider finding some way to force the transaction to occur against your will.
That’s not American. Not in the least. But it’s how more and more people in politics think these days.
Corporate Inversion and the January Jobs Report
One of the biggest stories of recent years has been the loss of American corporate headquarters to foreign countries, especially as American firms merge with foreign ones, often locating the new joint headquarters (for tax purposes at least) in Ireland, Switzerland, or other more business-friendly locales.
Many in America’s chattering class – from business reporters to politicians – take every such opportunity to make the case that these transformations – known as “corporate inversions†– are somehow a terribly unpatriotic move, and the companies should never be allowed to do it… though they never seem to identify the reasons for this flight to be unpatriotic.
So, the Leviathan in Washington has dreamed up penalties, and built them into the tax code… and they want more, ever more. Politicians speak of banning the practice entirely – “once a US company, always a US company†– much like the islamic belief that all land that was once part of the caliphate must forever be considered part of the caliphate, even if it’s been centuries and centuries since the muslims controlled a place.
They can’t build a physical wall around the country to keep people in, as the East Germans did with Berlin, so they’ll build walls into the tax code to accomplish the same result, where corporations are concerned.
But what they accomplish instead is a very different result than the one intended: they just add to the reasons WHY a company might want to leave in the first place, on top of so many already present in the marketplace, and add reasons to do so sooner rather than later!
The January Jobs Report, issued by the Department of Labor on Friday, February 5 – nicknamed #NowHiringBusboys, was chock full of examples worth analyzing.
Of the 151,000 new jobs (net) allegedly created in January, 44,000 were in leisure and hospitality, an area with among the lowest potential for career growth in the economy (not zero, but the well-paid jobs in this industry, such as hotel managers and head chefs, are few and far between, compared to busboys and maids). There were 58,000 new jobs allegedly created in the retail sector. Store management can be a good career, but again, there aren’t a lot of great mid-level careers in that family of specialties if you’re aiming to reach the American Dream. The vast majority of these jobs are cashiers without much career growth potential. For most people, this sector’s positions ought to be part time jobs en route to a better career, not careers in themselves. The pain point is actually in one of the better numbers; we allegedly saw 29,000 new jobs in manufacturing. Since manufacturing is – and must be – the core of the economy, it’s this number that should have everyone terrified. January presented us with the most new manufacturing jobs in a year, and even so, 29,000 is a paltry sum for such a key sector of an economy. Our economy is still stuck in a ten year tailspin that began with Nancy Pelosi’s takeover of the House of Representatives in 2006. Despite the great gains the GOP has made in most states since then, and even though she only controlled the House for four years, that and the ongoing eight-year mismanagement under Barack Obama’s White House has left our economy in a shambles.
A decent economy would generate 400,000-plus net new jobs every month, with a good percentage in manufacturing. Manufacturing isn’t just important because we like to see US-made goods on the store shelves; it’s important because manufacturing – more than any other single sector – creates truly broad career opportunity for everyone.
A lawyer or accountant might prosper just as much in an environment of imported goods as in an environment of domestic-made goods. One can go to college, get that CPA or law license, and be almost assured of a decent career and a middle class life.
But only manufacturing provides opportunities for virtually everyone to rise in numerous directions. Only in manufacturing can a person start out with only a high school diploma, as an assembler on the line or an inside sales rep in a call center, and find a path on which to rise beyond his or her station.
From the plant floor or the customer service department, one can get company-paid training, sometimes even company-paid college, to become a mechanical engineer, a marketing rep, a designer, a graphic artist, a chemical engineer. From the plant floor or the customer service department of a manufacturer, a young person can rise, without a prior degree, to be transportation manager, sales manager, engineering manager, quality manager… From the plant floor or the customer service department, a person can stay and climb the ladder, and become a vice president or CEO, or he can strike out on his own as an entrepreneur. But all this only happens if he gets that necessary first start. That factory has to be there, in order for that career ladder to have a first step. And every time that factory succumbs to economic pressures, to move a line, or many lines, or the whole plant to a foreign country, those opportunities disappear and surface overseas.
What has happened in America in recent generations?
The payroll tax and other corporate taxes have made America a fundamentally costly place to do business, even before considering our income taxes, which are, cumulatively, the highest in the world, with an effective tax rate of about 38%. The regulatory environment, having mushroomed in recent decades, is a millstone around the neck of every company. A guitar maker must fear buying hardwood, or Fish and Wildlife could shut him down. A snack maker must hire labs to determine the calorie and fat counts to populate an ever more complex FDA-mandated label. A proud manufacturer of a US product must hire expensive attorneys to guide him on his markings, because just saying “Made in USA†– even when true! – can get you an expensive lawsuit from some state attorney general or a class action filer, because of the restrictions enforced by the Federal Trade Commission. The labor market is ever-more skewed against the employer, with Obama appointees filling the courts and the various “labor boards.†After years of public opinion finally recognizing the need for fairness in labor relations, the jackboot of government has stomped on the scale to return the unfair advantage to Big Labor. So the result is that manufacturing flees the country, moving abroad at a depressing clip. And many of those that don’t flee aren’t here because they don’t even get started. Without getting your start on a production floor, you can’t launch out on your own; one needs the experience to learn how. So businesses never get started in the first place.
Populist politicians and jabberers blame duty-free programs like NAFTA – as if the difference between a 4% tariff and a 0% tariff is substantial enough to make companies relocate abroad.
They blame our high salary costs, as if the difference in salary alone would suffice to drive a company to pull up stakes and rebuild in a country 14 hours away by airplane, necessitating a lifetime of 2:00am conference calls and constant airfreight costs and ten week leadtimes.
No. The reason that companies move overseas is that the United States is kicking them out. Intentionally, consciously, purposefully, kicking them out.
Companies would happily stay here, despite a somewhat higher salary cost than abroad, if that were truly the only challenge. But the challenges faced by American manufacturing are entirely created by the political class: a litigious society, a regulatory state, and a tax code that punishes each employer for his very existence.
If we want to bring about a jobs renaissance – and yes, we must! – then the only way is to engage in a standard conservative program of regulatory reduction, corporate tax cuts, and legal system reforms.
We need to stop kicking companies out, and then trying to fine them for understandably fleeing an inhospitable environment.
We can prosper again in America, but it won’t happen with anti-inversion bills or public shaming. We just need to cease the incessant socialist practice of beating up the goose that lays the golden eggs, and then complaining when it finally dies and stops laying them.
Copyright 2016 John F. Di Leo
John F. Di Leo is a Chicago-based Customs broker and writer, who has worked in international commerce since childhood and American manufacturing for twenty years. He has seen the Leviathan’s attack on the factory sector first hand, and regularly writes about the fight in Illinois Review.
Permission is hereby granted to forward freely, provided it is uncut, and the IR URL and byline are included. Follow John F. Di Leo on Facebook or LinkedIn, or on Twitter at #johnfdileo.
FTA
The reason that companies move overseas is that the United States is kicking them out. Intentionally, consciously, purposefully, kicking them out.
Companies would happily stay here, despite a somewhat higher salary cost than abroad, if that were truly the only challenge. But the challenges faced by American manufacturing are entirely created by the political class: a litigious society, a regulatory state, and a tax code that punishes each employer for his very existence.
If we want to bring about a jobs renaissance – and yes, we must! – then the only way is to engage in a standard conservative program of regulatory reduction, corporate tax cuts, and legal system reforms.
We need to stop kicking companies out, and then trying to fine them for understandably fleeing an inhospitable environment.
Spot on.
100%
Great article.
This is the new “NORMAL”
We have a low birthrate, it is low enough that our population would be declining if it were not for immigration. Our transportation secretary says that he is building bus lines, light rail lines, high speed rail lines, bike paths and apartment buildings for the immigrants.
And then we go and give projects to foreigners. Something is wrong.
Were these guys American. Im curious. If not, why would our government give foreign nationals money to compete with Americans.
The LA Times came out with a story 2/5/2016 about a Los Angeles based developer, Advanced Development and Investment Inc. (ADI).
http://www.latimes.com/local/lanow/la-me-ln-housing-indictment-20160205-story.html
They defrauded the government of millions of dollars building low income housing. They obtained loans of $62 million for low income housing projects in Chinatown, Hollywood, Glendale, Echo Park, Lincoln Heights, South Los Angeles and elsewhere. They overstated the costs of construction and were indicted in 2014. They built 50 affordable housing projects across Southern California.
Salim Karimi was ADIs president and co-owner.
Ajit Mithaiwala is ADIs founder and Karimi s father-in-law.
Ulhas Jain is ADI s chief financial officer.
Mekala Ganapathy ran the companys compliance department.
Karimi was arrested and released in India and the three others are thought to be in India. Karimi has been charged with felony counts of conspiracy, wire fraud, aggravated identity theft, tax evasion and making false statements to a federal financial institution.
The High Speed Rail Authority said they are starting to build in Madera because the immigrants need high density apartments to live.
All the high speed rail contracts are going to international corporations. The trains themselves are being built in other countries. Our busses are built in other countries.
The high speed rail contract to Las Vegas went to a communist government, China. They will own the land and the train.
The U-6 unemployment rate, which includes those who are discouraged from seeking work along with those who are involuntarily working part-time stood at 9.9% in December. Our labor participation rate is at 62.6 percent. 94.1 million Americans over the age of 16 either dont work or arent looking for work.
Of the 151,000 jobs added in the January, retail trade added 58,000 jobs, while employment in food services and drinking places, aka waiters and bartenders, rose by 47,000 in January.
The Bundy Ranch standoff was because Harry Reid s son was representing a Chinese company that wanted to build a solar plant. They wanted to relocate the desert tortoises to the BLM property the Bundys used.
The Hammond Ranch in Oregon standoff was because the Clintons were representing the Russians in buying up all the Uranium mines in the U.S.
The Chicago Stock Exchange is being sold to the Chinese.
Chinas Zoomlion Heavy Industry Science & Technology Co confirmed on Wednesday an unsolicited takeover bid for Terex Corp, the US crane and construction machinery maker.
General Electric selling appliance business to Chinese Haier Group, biggest appliance maker in China
Each year, companies are allowed to import 65,000 new hires from foreign countries, plus another 20,000 who have received a degree from an American university to compete with American graduates for jobs.
Korea Aerospace Industries (KAI) has revealed the prototype that will form the basis of Lockheed Martin s bid for the US Air Force s T-X next generation trainer competition. Based on the T-50 family of trainer/light fighter aircraft, the company s “T-X demonstrator aircraftâ€
General Motors says it will sell in the United States next year a vehicle made in China, becoming the first major US automaker to do so.
Sara Blackwell, the Florida attorney representing the former Disney workers that were replaced by foreign workers told Breitbart News Daily that there are 1,200 Americans in New York who will suffer the same fate as the Disney workers. “Right there in New York, 1,200 Americans are training their replacements” Blackwell said.
Three of communist China s big state-owned enterprises (SOEs) are part of a bidding war underway for Starwood Hotels & Resorts Worldwide, the parent group that owns iconic high-end hotel brands Sheraton, Westin, St. Regis, and W Hotels.
Fury and fear in Ohio as IT jobs go to India: IT workers are training their replacements
China-Owned Radio Stations Are Spreading Chinese Propaganda in the US
China is surreptitiously taking over U.S. radio stations.
As a result of China s flooding the world market with cheap, state-subsidized aluminum and our president s irrational aversion to fossil fuels, a 127-year-old American industry is in danger of disappearing. This week, the two largest primary aluminum producers in the United States announced curtailment of aluminum production at key smelters across the country. Alcoa announced that it was halting smelting operations at its Intalco Works (583 employees) and Wenatchee plants (428 employees) in Washington state, its Massena West plant in New York (500 employees) and that it was curtailing alumina refining capacity at its Point Comfort facility in Texas.
Unvetted foreigners working as U.S. baggage handlers
Ex-CIA Woolsey issues stunning warning about airport security
Last year, the Walt Disney Corp. fired 250 tech workers and required them to train their foreign replacements.Southern California Edison did the same to 500 IT workers, saving $20 million annually by paying their replacements barely half of what the fired employees earned. Fired Americans have also trained their foreign replacements at Toys R Us, New York Life, Harley-Davidson, Cargill, Pfizer, Northeast Utilities and others.
We learn about the sad closing of yet another GE plant, this one located in Waukesha, Wisconsin. They manufacture huge industrial engines there which can sell for more than a million dollars. The workers at the plant were recently informed that the facility would be closing and it – along with their jobs – would be moving to Canada.
The Shanghai-listed Yantai Xinchao Industry Co. filed a security filing over the weekend announcing it would purchase Texas oil properties for 8.3 billion yuan.
NEW DELHI: Construction of the first lot of six VH 92 Super Hawk helicopters that transport the US president has begun in India.
In April 2006, a consortium involving American Bridge and Fluor won the tower contract. It was built in China to save money—a decision that carried its own costs when inspectors later found poor welding and busted bolts at key points that required fixing. Frick says the current $6.5 billion total is a rough estimate, and that it doesn t include interest or financing costs.
American aviation giant Boeing on Friday said it plans to assemble either its Chinook heavy-lift helicopters or Apache attack choppers in India even as it gears to offer the possibility of manufacturing a fighter jet aircraft in the country.
NORTH CHARLESTON, S.C. (Reuters) - Republican presidential front-runner Donald Trump bashed Boeing on Wednesday over its plans to open a new facility in China that the company s largest union says could hurt American workers.
Upon the blood, sweat, and great efforts of many, over many generations, the US built a society with one of the highest standards of living in the world, and with the highest general purchasing power. This all occurred in the context of capitalism, and involved the efforts of both entrepreneurs and hard working citizens trying to provide for their families and to achieve a better way of life. The industrial and the industrious worked together to build this.
The same US purchasing power that provided a ready marketplace for American entrepreneurs has now in large measure fueled the growth of rival economies that didn’t have the markets at home to sell to. So we became the world marketplace, and the dumping ground for products made with cheap foreign labor - often from countries that are politically opposed to us and our way of life.
The problem is that the synergism between the entrepreneur and the American workforce has been progressively eroded, and ultimately the purchasing power of the US is declining and will continue to decline. This hurts everyone, and has to be addressed. Globalism without vision, pragmatism, and a healthy dose of patriotism and national loyalty is a recipe for disaster.
As a career design contractor I had over a hundred jobs and Di Leo correctly pointed out that manufacturing is the answer to many of our ills. I returned to many places of my employment over the years and watched as employees advanced into well paying positions.
Health insurance, stocks in the company, retirement, help with college, child care and transportation were all incentives to attract new employees. I can remember when employees were paid a bonus by bringing in new employees.
But I also remember the times when jobs were lean. When I eventually got a job, I would be working with or for people on H1-B visas.
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