Democracy Soup

Making sense out of the world of politics

Economy needs political help, but not from politics

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Jobs are supposed to be the biggest priority in the United States. Our unemployment rates are astounding, now in the 4th calendar year. When politics mixes directly with business, the results are more tragically amusing than effective.

President Barack Obama had an opportunity to correct two major wrongs in our economy: fix infrastructure and put people back to work. The bridge collapse in Minneapolis in 2008, the electrical damage from an ice storm in Kentucky in 2009. These were signs that infrastructure should have been a national priority.

The United States have tried to rebuild Vietnam, Iraq, Afghanistan, Panama, Grenada, Bosnia, and countless other countries in the last 40 years, and of course, Germany, France, Japan, Italy, and England earlier in the 20th century. But no one is trying rebuild the United States, not even China.

As we now know, Obama pitched a weaker stimulus than we needed, and watched as the GOP filled in 1/3 of the total with unneeded tax cuts. Then, Republicans crowed about the do-nothing stimulus.

So now, the president is on his knees to the business world: the Chamber of Commerce that has worked so hard against him; the big business community that has sat on record profits without opening the idea of new jobs; Wall Street for which he saved them from the punishment they deserved, and yet was treated shabbily in return.

Companies that would rather keep the money then employ Americans – that would be unpatriotic if a) they were people (well, the Supreme Court says they are people) and b) they were beholden to American interests, but they’re not.

So if President Obama gives them whatever they want, and they’ve had it pretty good, will they open up and help Americans get back to work? From what we’ve seen of this relationship, no matter how well they are treated, the American worker will always be their least concern.

European countries have close neighbors, so you would think that this would create a frenzy of companies competing to find the lowest common denominator to build a factory.

Somehow, in Europe, this isn’t a problem since, well, they tend to be adults about such things.

Not so for the United States. These states, that are “united,” fight among each other to lower the costs of factories that stick around long enough to get the benefits and then leave for even greener pastures.

“Buy American” is a slogan that patriotic people can gather around, but when it comes to cars, to borrow from John Edwards, there are two Americas.

There is the America where American companies make cars in America. And there is the America where foreign companies make cars in America. Chrysler’s Super Bowl commercial reminded people of Detroit, still the auto capital. But foreign companies remind us in their commercials that their cars are made in America by American workers.

The parts for both categories of automobiles are made in China, South Korea, Japan, and Mexico. A lot of both types of cars come from Canada, eh.

A lot of the foreign companies come to the Southern U.S. because they lower the common denominator. There are fewer unions, and being a “right to work” state is almost the unofficial motto.

Even in good times, there aren’t enough good jobs in the United States. When states have to compete for those few jobs, wages suffer. And surprise, surprise, Americans find it more difficult to buy those products. Who learned that lesson well? Henry Ford, from Detroit.

When states compete for those few jobs, they usually take the high road, at least in public. But if the new trend matches what Wisconsin and New Jersey are doing, this country is in more serious trouble than we thought.

Illinois had the “audacity” to raise its state income tax from 3% to 5% and raised business taxes to cover some deep budget woes. Now, the state has high sales tax (Chicago is still #1) and high property tax, but a low state income tax.

Now, my personal feeling was that the state should have left the tax at 3% up to $100,000, 4% up to $250,000, and 5% after that. Michael Jordan and the Chicago TV newscasters would have had to pay more, but they can afford it.

Wisconsin and New Jersey reacted by actively begging Illinois-based companies to come to their state. Never mind that their states aren’t that different from Illinois, and that New Jersey is still not a better destination, their efforts got loud.

New Jersey is taking its taxpayer money and running radio ads in Illinois, touting the advantages of setting up business in New Jersey.

You could read something into the fact that Illinois has a Democratic governor while Wisconsin and New Jersey have brand new Republican governors.

Southern governors are much worse at actively picking off jobs from the North and West, but they at least keep it classy on the surface.

Before Ronald Reagan came along and said government was part of the problem, there was a vibrant middle class in this country. Before Reagan came along, business treated their workers, their American workers, with more respect. Before Reagan, there were plenty of jobs in all different sectors, and this was a country that made things.

Many of the pundits spent a lot of newsprint, TV time, and online pages trying to tell you the legacy of Ronald Wilson Reagan. All those things that were here before Reagan are gone, and haven’t come back in the 22 years since Reagan left office to collect a big payoff from Japan. This isn’t the complete legacy of Reagan, but economically, this is a lot of where we are today, and why.

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Written by democracysoup

February 11, 2011 at 7:47 am

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