[n-tres-ted]

All of those economic issues work their way through the market system on a decision by decision. The bottom line is that Americans cannot be better off when investment capital is being spent to build production plants overseas rather than here. Efficiency in production is important, and labor costs are an important element. But a burdensome tax system unfavorable to the investment of capital is presently the major element that determines the building of plants overseas. That is reflected by a study performed about five years ago and presented to the Chairman of the Committee on Ways and Means at the time showing a dramatic move of new investment capital to the U. S. under the Fair Tax. Take a look at this paper on the subject:

http://www.fairtax.org/pdfs/manufacturing.pdf

[Rockitz]

Unfortunately, the time constant associated with enacting each of those decisions is typically not treated appropriately in theoretical economic analyses. Now that infrastructure has been established overseas I suspect that a racheting down of wage rates in this country is inevitable along with a reduction in the standard of living. The subject tax proposal will serve to speed that process to the dismay of the unions and the workers they represent. Protected high technology and defense workers withstanding, this will be a very painful process for the average American worker that unknowingly has been the benefactor of current tax policy through the inflated wage rates it has produced. The proposal will most certainly have a globalizing effect on our economy that will reduce the mean standard of living of unskilled wage earners.