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Terry Traub Despite its many flaws, the U.S. is still the planet's most open minded place to do business. However, the flight of factories and other businesses to other countries cannot be explained merely by the higher cost of labor. The New York Times reported recently that Stanley Works, renowned toolmaker, is proposing to move its nominal headquarters offshore to Bermuda in order to save $30 million a year in taxes. In typical old-line Democratic fashion, the NYT focuses on the trepidations of the remaining workers in New Britain, Conn. We'll eventually be let go, they moan; Stanley will build new factories in Mexico and China where costs are much lower. They're right, of course; as long as Stanley keeps its profits out of the U.S., it can build new factories! What a sad state of affairs; a company tries to lower its costs and maximize profits. Isn't capitalism terrible? Well, I'm being a bit sarcastic, but consider the alternatives; Stanley is fighting for survival against large rivals with a much lower cost basis. The workers complain that their union rates of $10-20/hour can't compete with overseas rates. While these rates are not like the ridiculous and undeserved auto and steel pay scales (two low quality, underperforming sectors which are essentially a form of corporate and blue collar make-work welfare), it is objectionable that companies must pay corporate income tax when their employees all pay personal income tax already. It is a form of double taxation and has helped fuel the exodus of most industries to tax free havens such as Singapore and the export zones of Mexico, China, and Taiwan. The most disturbing fact is that a large swath of people on the left and center of American politics see nothing wrong with taxing corporations; it's a way to fund new public works without making the taxpayers feel the pain directly. People who make, say, $30,000 a year are too stupid and ill informed to realize that they might be earning more money if their employers had more money. More importantly, their jobs might be more secure if their employers had one less reason to relocate offshore. GW Bush's family is mocked by people on the left for having made their fortune in the oil business. As though something's rotten about that. The left generally likes the Clintons despite their sleaziness; it's somehow more respectable to be lawyers and career politicians than successful capitalists. In China, a factory owner basically hires a bunch of people and goes for it. He only has to worry about toeing the Communist political line. They have little political freedom but they do recognize the value of jobs.
In the U.S. a factory owner has to deal with: |
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