The View From 1776
Sunday, September 14, 2008
Taxes, Unions, and Regulations Matter
To picture what Senator Obama’s economic policies hold in store for the United States look at the destructive impact of those policies in individual states.
The New England States and New York once were the industrial heartland of the United States. After the Civil War, industrial growth moved westward into Ohio, Michigan, Illinois, and neighboring states. Even as recently as the end of World War II, New York City was the greatest manufacturing city in the world.
No longer. What happened?
To some extent the demise of these centers, especially a crowded New York City, reflects changes in technology and transportation. Trucking on the interstate highway system surged in the 1950s and the rise of air freight shifted lots of freight traffic from railroads. More cost-effective single-story, spread-out manufacturing plants along interstate highways replaced the multi-story plants in major cities that had to be within walking or subway and bus ride distances from workers.
The real killer, however, was the accelerating acceptance of liberal-progressive theories about state-planning and welfare programs designed to implement income redistribution required by socialism’s conception of social justice. Those theories brought with them much higher taxes, expanded regulation of businesses, and militant labor unions demanding higher wages and benefits.
New York City, once also the greatest ocean port in the world, saw ocean traffic increasingly transferred to Baltimore and other ports. By general consensus, New York’s militant and crime-ridden International Longshoremen’s union was the principal motive force.
Other businesses began to flee to friendlier economic climates in the Southeast and the Southwest.
For statistics comparing Illinois, Ohio, and Michigan with Texas, Florida, and Arizona, read If You Like Michigan’s Economy, You’ll Love Obama’s, by Phil Gramm and Mike Solon.
On the international stage, what has happened in state-to-state competition for jobs has made the United States vulnerable to competition from foreign suppliers, in whose countries the largest growth of jobs and living standards is occurring.
Senator Obama’s proposed higher taxes on businesses, especially on small businesses organized as Subchapter S corporations, will put the brakes on job creation in the United States. His support for expanded environmental regulations based on bogus theories about man-made global warming, along with laws designed to reinvigorate labor unions, will be additional millstones weighing down business.
If you doubt the mortal economic wound from the proposed resurgence of unionism, just review what has happened to the original domestic automobile industry. Non-unionized foreign producers can ship parts halfway around the world and have them assembled here in the United States at costs significantly below those of heavily-unionized GM, Ford, and Chrysler. Toyota shortly will displace GM as the largest auto manufacturer in the world.
Senator Obama proposes to favor special those special interests, as well as tort lawyers, and to expand the welfare state for the short-term benefit of buying votes in the presidential election, heedless of the cost to future generations of workers in the United States.