Is Rick Santorum playing his own game of crony capitalism when he proposes a huge (zero) corporate tax break to manufacturing industries that he wouldn’t give others? Besides being out of step with the basic conservative/libertarian business principle of a level playing field, it seems an almost Luddite thing to do in and of itself. Modern countries like the USA thrive on innovation and technological advancement, not looking back to recapture a supposedly halcyon industrial age receding in the rear view mirror.
When asked by Obama whether Apple manufacturing jobs were ever going to return to this country, Steve Jobs told him bluntly they never would. Of course Jobs was right – unless our manufacturing workers want to reduce their pay level to that of Thailand or Malaysia. That’s not going to happen except in a horrific depression. Jobs also allegedly warned Obama he would be a one-term president unless he became more business friendly. Santorum should take heed of that and drop the idea of propping up one sector of the economy and not another. That’s the Democrat’s game – picking winners and losers – and only enhances the meme that the former senator is actually a big government guy. Dropping corporate taxes is a great idea – but only if it’s the same for everyone.
All the tax breaks in the world aren’t going to bring consumer electronics back. The infrastructure is gone. I recently went through the process of trying to get NRTL (think UL) approval for an electronic device. Because of OSHA laws, the “factory” has to be inspected four times a year. This is fine if you have a factory that makes nothing but ACME model xyz123 gizmos all day long, but make no sense when talking about contract manufacturing of circuit boards.
Here’s the thing. The American circuit board makers weren’t interested. The didn’t want to screw with being inspected. The Chinese were. It’s actually easier to get a subassembly made for a gizmo to conform to OSHA requirements made in China than in the US.
I’ll believe that the government-regulatory complex wants manufacturing jobs back in the US when they stop throwing roadblock in the way. The cost issue is only one small issue. The regulatory issue is a much bigger issue that nobody has a clue how to approach. And if you suggest that OSHA regs are a problem, people who like things the way they are accuse you of being anti-safety. This kind of demagoguery will insure that the US will return to an agricultural economy that can’t support all the ornaments that these same people insist on hanging on the tree.
And the EPA is worse. Much worse. At least OSHA has an ostensibly sensible mission.
Amazingly, I disagree with Simon here.
We may not be able to lure all manufacturing jobs back with a friendly tax policy but let’s give it a try, shall we? These are g ood jobs.
Note that America, from the feds to State governments to local governments have a long history of using tax cuts and tax policy to encourage businesses.
Finally, let’s just drop the hysterical naivete in comparing Solyndra with Santorum’s tax policy. Solyndra is a case of outright grants to Obama donors. Santorum’s suggestions are actual tax policy designed to target specific, proven industries. Even a screenwriter should be able to tell the difference.
And create a manufacturing bubble? NO THANK YOU.
When government incentivizes investment in one industry over another through wildly unbalanced tax breaks, it results in too many resources being used in that industry and not enough in others. THAT results in higher inefficiency and higher unemployment, because the industry isn’t being run according to what the market equilibriums would otherwise dictate.
This whole government-knows-best approach is flat-out wrong. The idea that Rick Santorum is the genius who can tell us exactly which industries should thrive and which should not, and that he’s going to save us by pushing way too much investment into manufacturing, is flat-out scary. It is soft central planning.
I don’t understand how so many people who loved 9-9-9 are now ignoring the addition of another complication in the tax code. Simplify the code; simplify the regulations. Wouldn’t the elimination of taxes on manufacturing cause us a lot of problems with international trading partners? This proposal doesn’t seem well thought out.
no worries there. Our international trading partners are already doing precisely this to us.
Why should the USA always be the country taking it in the economic shorts?
Actually, there have been multiple studies published by reputable folks out on the web indicating that by about 2015, off-shoring will cease to be as cost-effective. Whoever the President is by then, it is possible that he (no credible female candidate is running as of this writing) will be able to take credit for it, unless it’s Obama, since he is likely (in a second term) to make further, punitive changes to the business climate here that will leave that trend stillborn. Google “Boston Consulting Group” and insourcing to find the articles about one such report. Santorum’s idea is wrong by half: corporate incoming taxes are double or triple taxation anyways, and should be completely eliminated; that would bring both manufacturing and services that off-shored back to the USA.