How Political Ideology Kills Off Jobs

Discussion in 'Economics' started by bone, Aug 23, 2011.

  1. bone

    bone ET Sponsor

    From the New York Times

    August 22, 2011

    How Democrats Hurt Jobs


    The airplane’s aft section arrived early Monday morning. That’s what they’d been waiting for at the final assembly plant in North Charleston, S.C. They already had the wings, the nose, the tail — all the other major sections of Boeing’s new 787 Dreamliner. With the arrival of the aft, the 5,000 nonunion workers in the plant can finally begin to assemble their first aircraft — a plane three years behind schedule and critical to Boeing’s future.

    The Dreamliner is important to America’s future, too. As companies have moved manufacturing offshore, Boeing has remained steadfast in maintaining a large manufacturing presence in America. It is America’s biggest exporter of manufactured products. Indeed, despite the delays, Boeing still has 827 Dreamliners on order, worth a staggering $162 billion.

    Boeing’s aircraft assembly has long been done by its unionized labor force in Puget Sound, Wash. Most of the new Dreamliners will be built in Puget Sound as well. But with the plane so far behind schedule, Boeing decided to spend $750 million to open the South Carolina facility. Between the two plants, the company hopes to build 10 Dreamliners a month.

    That’s the plan, at least. The Obama administration, however, has a different plan. In April, the National Labor Relations Board filed a complaint against Boeing, accusing it of opening the South Carolina plant to retaliate against the union, which has a history of striking at contract time. The N.L.R.B.’s proposed solution, believe it or not, is to move all the Dreamliner production back to Puget Sound, leaving those 5,000 workers in South Carolina twiddling their thumbs.

    Seriously, when has a government agency ever tried to dictate where a company makes its products? I can’t ever remember it happening. Neither can Boeing, which is fighting the complaint. J. Michael Luttig, Boeing’s general counsel, has described the action as “unprecedented.” He has also said that it was a disservice to a country that is “in desperate need of economic growth and the concomitant job creation.” He’s right.

    That’s also why I’ve become mildly obsessed with the Boeing affair. Nothing matters more right now than job creation. Last week, President Obama barnstormed the Midwest, promising a jobs package in September and blaming Republicans for blocking job-creation efforts. Republicans, of course, have blamed the administration, complaining that regulatory overkill is keeping companies from creating jobs.

    They’re both right. Republicans won’t pass anything that might stimulate job growth because they are so ideologically opposed to federal spending. But the Democrats have blind spots, too. No, the Environmental Protection Agency shouldn’t be rolling back its rules, as the Republican presidential candidates seem to want. But a fair-minded person would have to acknowledge that the N.L.R.B.’s action is exactly the kind of overreach that should embarrass Democrats who claim to care about job creation. It’s paralyzing, is what it is.

    The law, to be sure, forbids a company from retaliating against a union. But the word “retaliation” suggests direct payback — a company shutting down a factory after a strike, for instance. Boeing did nothing like that. It not only hasn’t laid off a single worker in Washington State, it has added around 3,000 new ones. Seven out of every 10 Dreamliners will be assembled in Puget Sound.

    Before expanding to South Carolina, Boeing asked the union for a moratorium on strikes — precisely because it needed to get the airplane into the hands of impatient customers. The union said it would agree only if Boeing promised never to manufacture anywhere but Puget Sound. Boeing refused — as any company would.

    It is a mind-boggling stretch to describe Boeing’s strategy as “retaliation.” Companies have often moved to right-to-work states to avoid strikes; it is part of the calculus every big manufacturer makes. The South Carolina facility is a hedge against the possibility that Boeing’s union work force will shut down production of the Dreamliner. And it’s a perfectly legitimate hedge, at least under the rules that the business thought it was operating under.

    That is what is so jarring about this case — and not just for Boeing. Without any warning, the rules have changed. Uncertainty has replaced certainty. Other companies have to start wondering what other rules could soon change. It becomes a reason to hold back on hiring.

    When he was asked about the Boeing case earlier this summer, President Obama said that the N.L.R.B. is an independent agency and that his hands were tied. That may be true, though it’s worth pointing out that most of its top executives are his appointees. But when he gets back from vacation, he might do well looking at his own administration, instead of simply blaming the lack of jobs on the Republicans.

    As for the Republicans, there are plenty of regulations that would actually help create jobs — but which they won’t pass because of their own ideological blinders. I’ll be writing about that after Labor Day.
  2. In Boeing's case I believe its more to do with its poorly implemented 8 year old policies on outsourcing and de-centralization that have hobbled the company the unions attitude in the present economic climate have not helped but they are not the main contributory factor here.
  3. bone

    bone ET Sponsor

    So I take it you agree with the administration and the NLRB and the swell job they are doing ? Please explain yourself.
  4. The question is does politics lead economic thinking or economic thinking lead politics. I personally think Monetarism was born from the desire of Reagan/Thatcher. It does not have any real substance to it in my opinion.

    I am writing a blog post about that at the moment.
  5. bone

    bone ET Sponsor

    Policy Chart: Illinois Loses Most Jobs in the Nation



    In a trend that continues to worsen, more Illinoisans found themselves unemployed in the month of July.

    Illinois lost more jobs during the month of July than any other state in the nation, according to the most recent Bureau of Labor Statistics report. After losing 7,200 jobs in June, Illinois lost an additional 24,900 non-farm payroll jobs in July. The report also said Illinois’s unemployment rate climbed to 9.5 percent. This marks the third consecutive month of increases in the unemployment rate.

    Illinois started to create jobs as the national economy began to recover. But just when Illinois’s economy seemed to be turning around, lawmakers passed record tax increases in January of this year. Since then, Illinois’s employment numbers have done nothing but decline.

    Data released today by the bureau confirms this downward trajectory. When it comes to putting people back to work, Illinois is going backwards. Since January, Illinois has dropped 89,000 people from its employment rolls.

    It’s too early to know conclusively the full impact of the tax hikes on the Illinois economy. Nevertheless, Illinois’s employment numbers serve as a good reminder that public policies have dramatic consequences for the daily lives of Illinoisans. A combination of high taxes, overspending and red tape do nothing but chase away job creators and leave too many citizens without jobs. Springfield needs to act now and reverse course.
  6. It is a bit of an odd situation. If they cut taxes it will not help the situation either people will pay debt down.
  7. bone

    bone ET Sponsor

    Illinois manufacturer Modern Drop Forge to move to Indiana

    By Ray Long

    Tribune reporter

    5:45 p.m. CDT, August 23, 2011

    SPRINGFIELD -- It didn't take long Tuesday for Illinois lawmakers to start talking about how Indiana just lured away a company and its 240 jobs from Blue Island.
  8. Imo, the savvy politician converts social problems or political problems (or whatever issue they want to address) into a mathematical formula. Then sells the idea objectively based on the math. "The costs to society", etc.. Numbers can be manipulated.

    Secondly, suppose a political idea ends up with economic benefits. Win win situation. Money rules and the horse is flogged to death. Patronage jobs, mismanagement, etc.
  9. joneog


    It depends on who you cut taxes on and how. Marginal propensity to consume, marginal propensity to invest and all that.

    Cutting taxes on the upper brackets and cash-rich corporations will do little to stimulate investment if the demand isn't there. The demand won't be there until the debt and employment situation improves. The best thing to do IMO is cut marginal rates on middle and upper-middle brackets (the people that pay the bulk of income taxes relative to their incomes and were most hit by the RE collapse) and pay for it by removing loopholes and corporate welfare.
  10. President Obama said that the N.L.R.B. is an independent agency and that his hands were tied.

    I'd like to ask Obama if the same is true of Fannie and Freddie, I'd bet the answer is yes. How did we get to the point where unelected beaurocrats are running our country? We have agencies with more power than Congress. Who gave that power away?

    Sloppy laws written in Congress by lawyers who say "that's what lawyers are for - see you in court"? Prime example is Obama care.
    #10     Aug 24, 2011