Category Archives: jobs

“We pay a lot to feed the civil servants”

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That’s what Zhou Dewen, Zhejiang Private Investment Enterprise Association Director, a business lobbying group in the People’s Republic of China has said.  He, like business representatives anywhere—including here in the US—is right to be concerned.  That concern is compounded by President Donald Trump’s tax proposal.

Now, Chinese officials and executives worry that the tax proposal Mr Trump announced last week will set back China’s global competitiveness and spur companies to invest in America instead of China.

Which is one of the points of Trump’s proposal that, among other things, seeks to drastically lower our usurious business tax rates.

Trump’s proposal also is a much more intelligent, much more moral, response to American companies moving overseas than the iron curtain that ex-President Barack Obama (D) and his Treasury Secretary Jack Lew (D) tried to erect with their punishing (in every sense) taxes that they tried to impose on companies in order to trap them here.  If we’ve got one of the lowest tax rates going, it no longer would make business sense to relocate out of the US.  And, such a decision would be that of the companies’ owners; it would not be driven by Government watchdogs.

Speaking of relocating businesses for tax-based reasons,

Chinese windshield maker Fuyao Glass opened a $600 million factory last October near Dayton, Ohio, and plans other facilities in Illinois and Michigan, creating 4,500 jobs. CEO Cao Dewang caused a stir in December when he told a reporter the decision was driven by tax differences: “Overall taxation for manufacturers in China is 35% higher than that in the US.”

The PRC government is getting involved, too.

In anticipation of the US tax move, the State Council, China’s cabinet, said earlier this month the government will reduce corporate taxes by over $55 billion to “improve business conditions.” The Communist Party’s newspaper, People’s Daily, warned on Friday that the new US plan could trigger a “tax war” if countries start competing to offer the lowest rates.

Such a race to the lowest tax rates would benefit the folks of all nations involved.  Pop Quiz: which type of economy will prosper the most from such a contest?

“We pay a lot to feed the civil servants.”  Don’t we all.

Shrinking the Federal Government

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…is more than just reducing spending; although that’s a major component of the necessary shrinkage.  Shrinking also must include reducing the physical size of the government, reducing its payroll.  To that end, the moves by President Donald Trump and OMB Director Mick Mulvaney will prove valuable if Congress will cooperate.

The hiring freeze of the last 11 weeks was an important first step, but it produced no actual shrinkage.  Its value consisted in halting the growth in payroll and in demonstrating over the last 11 weeks the lack of need of additional hiring.  In this latter regard, it’s much like the government shutdown of 2013, during which many Departments and Agencies were forced to furlough many of their employees—and still functioned.  The EPA, for instance, furloughed nearly 95% of its employees and ran just fine.  Treasury, Labor, and Interior furloughed over 80% each and those Departments did just as well as before.

Now the broad-based hiring freeze is about to be lifted, but all Departments and Agencies are being required to form plans to do targeted reductions in their work forces in expectation of seeing actually reduced budgets, with effect FY2019, which begins in October 2018.

This is all on the right track.  Now, it’s certainly true that the hiring freeze didn’t reduce the number of folks actually working these last several weeks, as I noted above.  It’s also true that the agencies during the government “shutdown” were on emergency manning and only so for roughly the same number of weeks.  But domestic matters should be handled, in the very large main, by the States.  The Federal government should be involved in domestic matters, in the very large main, only in emergencies.  Thus, the Departments and Agencies, in the very large main, don’t need employee complements much larger (but some larger) than emergency levels.

There are a couple of exceptions to these planned reductions.  Budget increases coupled with commensurate hiring increases will be proposed for Defense and Veterans Affairs.  The VA’s planned increases are from the best of intentions—the nearby backlog of veterans’ claims has exceeded 100,000, and so more bodies added to the payroll would seem to be needed in order to reduce this additional VA wait list fiasco, for instance—but the VA’s long-term, broad, and resolutely uncorrected failure to perform, too often with lethal results, mandates a different outcome.

Eliminating the VA and using its budget for veterans’ vouchers would be entirely consistent with shrinking the government’s payroll, even if spending associated with the VA would not shrink.  But in this case, at least the spending could be known to be going to the purpose for which it was passed originally—our veterans’ well-being, both now and, since the VA manages our military cemeteries, post mortem.

Veteranos Administratio delende est.

Robot Employment Acts

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That’s what Andy Puzder, the ex-CEO of CKE Restaurants, calls minimum wage laws.

In a survey released last month, the publication Nation’s Restaurant News asked 319 restaurant operators to name their biggest challenge for 2017. Nearly a quarter of them, 24%, said rising minimum wages.

And so we get:

McDonald’s said last November that it would install self-order kiosks in all 14,000 of its US restaurants. Wendy’s announced in February it would add kiosks at about 1,000 locations to “appeal to younger customers and reduce labor costs.”

The trend toward automation is particularly pronounced in areas where the local minimum wage is high. Eatsa, a 21st-century version of the automat, now lists seven locations in four cities, each of which will be subject to a $15 minimum wage within the next 36 months.

And

Taking automation to the next step, Miso Robotics and the owner of CaliBurger announced in March they have developed a robotic arm, called Flippy, that can turn burgers and place them on buns. CaliBurger plans to install them over the next two years in 50 restaurants world-wide.

And so we get the Americans over whom the Progressive-Democratic Party cries such copious crocodile tears and about whom this Party pretends to care so much—our youth, our first-time job seekers, our single moms trying to augment their incomes, our two-earner families trying to augment family income, in short, the poorest and the least among us—as the ones the most and the most immediately harmed by their precious minimum wage laws.

I haven’t even gotten to the fundamentally racist nature of minimum wage laws, born as they were as a Democratic Party Depression-era naked ploy to trap black Americans on the plantation so they couldn’t compete with white unions for jobs in the American industrial heartland.  Or the plain racist nature of today’s outcomes: the disproportionate impact on black and Hispanic teenagers who are denied entry-level jobs by the same pricing mechanism, an outcome well known to these Progressive-Democrats.  But: more welfare handout voters, they hope, raised in government dependency from their childhood.

I don’t agree that the Progressive-Democrats pushing these laws don’t understand this.  They know full well the outcomes, just as they know full well what follows from those outcomes: unemployed government dependents trapped in the Progressive-Democrats’ welfare cages, and so Progressive-Democrat (they hope) voters.

Our poor are just pawns in a cynical play for political power.

Port Automation

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It’s coming to west coast ports, and the unions don’t like it.

The push over the last decade by international maritime ports to fully automate operations has sparked the ire of many US longshoremen whose high-paying jobs and way of life are at stake. The trend also sets up a battle between their unions and companies and governments who see automation as a cleaner, more efficient and more cost-friendly alternative to the current system.

Never mind that west coast ports—three in particular, Long Beach, Los Angeles, and Oakland—do 40% of the nation’s (not just the west coast’s) container traffic and so costs there have sharp impact on the nation’s economy.

Never mind that the west coast ports often are subject to expensive longshoremen union work slowdowns.

The Washington Council on International Trade this week released a report that attempted to quantify how severely the [2015] slowdown directly impacted Washington state businesses. That final price tag: $770 million.

Never mind that west coast ports often are subject to even more expensive longshoremen union strikes, including illegal strikes.

Never mind that longshoremen union strikes against west coast ports often turn violent.

The automation will reduce costs—good for the shippers and ultimately for us consumers—and increase profits—which means jobs, albeit different ones and with lags for the different jobs to develop.

And robots don’t do work slowdowns, robots don’t strike, robots don’t get violent when they don’t get their way.

A Thought on Free Trade

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…which I’ll assume for this post is structured between participant nations as fair trade, since it’s possible to have free and unfair trade, and it’s unfair trade that should be anathema.  Not all free trade is unfair; the parameters of any trade agreement, parameters that make the trade fair or unfair, are matters of mutual agreement (or perhaps not so mutual in the case of unfairness) among those participants.

Don Boudreaux triggered my thought with his piece in US News & World Report.

It’s true that trade destroys some particular jobs. … Being concentrated in a handful of industries, jobs lost to trade are easy to see. But the same trade that destroys jobs also creates jobs elsewhere in the American economy. These job gains, being spread across many industries, are difficult to see. But they are real.

In fact there is a net gain in jobs, albeit it’s a small net.  Being diffuse, that gain doesn’t get noticed any more than do the sets of jobs themselves.

Foreigners who sell to Americans get dollars in return. And like Americans who are paid in dollars, foreigners either spend or invest their dollars. When foreigners spend their dollars, American exports rise. More jobs are created in American industries that export.

And

American jobs are created also when foreigners invest their dollars. For example, when the Canadian company Tim Hortons opens new stores in the United States, not only are American workers employed to build or refurbish these stores, Americans are also employed to staff them. Or when Koreans use dollars to buy stock in Apple or Caterpillar, these companies become better able to expand operations.

About those last two quotes.  Those outcomes also apply from the trade partner’s perspective.  Simply swap in “partner” and “partner currency” and swap out “American” and “dollars” as applicable in those two paragraphs to see the application.

Both (all—there’s no need to suppose only bilateral arrangements) sides to international trade agreements make absolute gains, just as in a domestic free market economy, all citizens participating in a freely agreed exchange make absolute gains.  Even though among those individual participants, one man has a net outflow of his money, and the other man has a net outflow of his goods he’s presenting in trade, both men have gained from their trade.

This is where the demand of some who are pleased to call themselves economists in the Trump administration go so badly wrong.  Their demand for balance in absolute terms—no import/export imbalance, no greater outflow of money than inflow—is impossible to achieve in a truly free and fair international trade environment.  Balance requires trade to be a zero-sum gain.  Free trade isn’t, though; all participants gain from free, fair trade.  Balance not only cannot be achieved, it’s undesirable.