Posted on 10/27/2010 5:01:22 AM PDT by expat_panama
With campaign season comes predictable charges that Candidate X favors "tax breaks for corporations that ship US jobs overseas." It's a bogus claim.
With unemployment still stubbornly high, Americans are rightly worried about the economy. And politicians of both parties -- from President Obama on down -- have seized on US multinational companies as a convenient scapegoat.
The charge sounds logical: Under the US corporate tax code, US-based companies aren't taxed on profits that their affiliates abroad earn until those profits are returned here. Supposedly, this "tax break" gives firms an incentive to create jobs overseas rather than at home, so any candidate who doesn't want to impose higher taxes on those foreign operations is guilty of "shipping jobs overseas."
In fact, American companies have quite valid reasons beyond any tax advantage to establish overseas affiliates: That's how they reach foreign customers with US-branded goods and services.
Those affiliates allow US companies to sell services that can only be delivered where the customer lives (such as fast food and retail) or to customize their products, such as automobiles, to better reflect the taste of customers in foreign markets.
In 2008, US companies sold more than $6 trillion worth of goods and services through overseas affiliates -- three times what US companies exported from America. And, no, those affiliates aren't mainly "export platforms," set up to ship goods back to the United States: Almost 90 percent of what they produce abroad is sold abroad.
It's not about access to "cheap labor," either: More than three-quarters of outward US manufacturing investment goes to other rich, developed economies like Canada and the European Union. That's where they find the wealthy customers, skilled workers, open markets, efficient infrastructure and political stability to operate profitably.
(Excerpt) Read more at nypost.com ...
That ain't gonna change.
Well, that's an important point. A large part of our population is only able to handle low-skill work. But we don't need them -- so what happens to them?
There is a huge shortage of workers -— highly skilled ones -— in the U.S. It is somewhat filled by H1B program, but that is a drop in the bucket.
Well, we wouldn't have such a shortage if these highly skilled jobs actually paid well. And why don't they pay well? In part, because H1B's undercut the salary that would otherwise be offered.
Technical work is difficult, requires a constant effort to stay informed on the latest advances, and carries a real fear of age discrimination. It's tough to convince people to go into these fields. Better pay would help, but if we import cheaper labor, then the pay doesn't rise appropriately.
There are a great many 50+ engineers walking around looking for work. But people talk about a shortage of highly skilled workers. This isn't about skills; this is about money. We don't want to pay for highly skilled workers.
Of course it does; by acknowledging the phenomenon, I'm not giving blanket absolution to the affected community. The "fault" can take many forms: state labor laws, local taxes, federal environmental regulation, etc. And, of course, our very own labor pool has negotiated itself out of many an opportunity through their "organized" efforts.
Did you check the contents to see where they were made? My bet is you’ll find Malaysia, Korea and maybe even India stamped on all kinds of stuff ~ and Sony may well have hired a Korean firm in Mexico to pack it. There are even Chinese companies with setups in Mexico.
The question of which purchases are a value to each consumer is a matter of individual choice based upon competing considerations (e.g.- Do I really need this? What are the alternatives? What is the quality of the item and how long will it last?). If more goods were produced by Americans in America, they would almost certainly cost more - but they'd likely be of better quality and we'd have more producers as well as (employed) consumers to buy them, and more domestic revenue in place of debt.
It is not an "either-or" proposition, though. There are many things that it simply makes sense to produce abroad (including China), and for a variety of economic reasons not limited to lower labor costs - supply chain management and natural resource location, for example. My point is that we are losing out on domestic production opportunities not for good business reasons but for essentially political ones.
There is also a moral issue involved in supporting Chinese state industries that use slave labor and force workers to function in truly awful working conditions, while polluting their environment along the way. I believe the decision to buy Chinese goods ought to be a personal one, and not one dictated by government, period. But I also think it would be a good thing if more Americans knew the hidden "costs" associated with their desire for cheap consumer goods.
Are you talking about actual manufacturing in terms of units or tons, are you talking about value added by manufacturing, or are you talking about direct employment in manufacturing?
Lots of ways to evaluate it and describe it, but if you want to demonstrate it to us you'll have to also compare our domestic manufacturing against world manufacturing in reference to the same factors.
We all know we've had massive industrial productivity gains over the last 20 years ~ and that has hurt employment, but not units or tons shipped, or value added.
The real problem isn't employment levels, it's UNEMPLOYMENT levels ~ mechanization, automation, computerization and robotics guarantee the number of unemployed people is going to skyrocket. and that doesn't have a darned thing to do with what the funny little foreign guys are up to.
This is exactly the discussion I’ve been trying to have with people as well. Same issue is what caused the “family farm” to struggle in the 80’s hard to compete with automated GPS controlled machines working on thousands of acres when your using manual machines on hundreds of acres.
The basis of patent timing was original based on the premise that it took approximately 17 years to train an apprentice and therefore the apprentice would be one of the first after the initial inventor to be able to utilize a new technology-giving the inventor productivity advantages over competitors during that time period, but no over the new apprentice beyond that period.
This is why inflation is such a double hazard - we should through technology be seeing production deflation by definition through efficiency. Instead we not only see a maintenance in price, but an increase.
iirc it was a year or two ago that Rush made an announcement that UPS was exporting all their delivery driver jobs to Mexico. What was really funny was all the calls from protectionists not getting the joke and expressing outrage.
What’s to look up? The point is that any sane company would avoid higher taxes.
So, lots of unemployment, while food and other stuff goes up in price. Bad situation for the underclass, and probably the middle class. Sadly, a lot of people will demand more socialism as the solution.
I'm not really sure what the solution is. But I think we have a problem.
lol, I missed that!
Something else that's funny is how our anti-business brethren on these threads say that American companies operating overseas it's bad for the US, and when foreign companies move to the US it's still bad for America.
Go figure.
Not all IT related hardware manufacturers are gone - this is a continual story that I hear, but I work with electronics in my job every day. We have plenty of chip and component manufacturers still in the states (TI, Intel, ATC, etc) as well as assembly houses. Many are competitive with overseas shops because of the amount of automation involved. Intel, Jabil, Teledyne, Plexus, Flextronics, Sanmina-SCI, the list goes on and on. A lot of the stuff is driven by regulation more than anything else - raw boards requiring plating processes are difficult to maintain, but even there Electrotek, Calumet, etc are still in operation and doing fine.
Our biggest issue to growth in most industries is over-regulation, taxes, and unrealistic expectations on compensation and what REAL work entails.
That's missing the point because sanity's not the issue here, it's emotion.
Sure, we all know that taxes are costs that cut profits --but protectionists want taxes (especially import taxes) and when entrepreneurs flee they're not considered sane, they're called traitors.
Lots of headquarters are here, but the physical plant is tiny and manufacturing and assembly volume are at the booutique level. When the Army or the DoD requires a half-million units of something, there's nobody on this side of the Yellow Sea that is in a position to deliver it.
I also work in the industry, and I see what goes to the warfighters. It ain't made in California.
This is what the Democrats tell me when I don't want to pay their taxes too.
Hmmm, hadn’t looked at it that way but it’s the same experience here. Seems that it boils down to an immature attitude, that some want us paying higher taxes to spread the wealth around and when we balk they flip out like spoiled kids in a toy store being told ‘no’.
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