Mr. Trump made a deal with Carrier to keep jobs from moving out of the country. Is it a good deal or bad? There certainly are a lot of valid arguments on both sides of the question. From the comfort of my reclining office chair, I see a danger in making such deals.
First, a tax break is not a tax break. Corporations don’t pay taxes. Consumers that buy products pay whatever the taxes may be. Next, keeping jobs in America is desirable, but the question arises as to what the cost would be. Higher wages and material cost equal higher product cost. Corporations really don’t care so long as they can maintain a desired margin of profit and consumers still buy their products.
The reason that illegal immigration is so high is simply cheap labor. By lowering labor cost, profits are easier to make. When you raise cost, the consumer suffers, inflation runs amok and everything is basically left at status quo - companies making profits.
The reason that we have a negative trade balance is that other countries have cheaper cost. And, that’s why so much of what we buy is not make in America. By keeping jobs in America, can it be that foreign goods will be more in demand? Add tariffs to reduce the imbalance and the consumers lose.
Trade balance is a tricky and sticky wicket. Yes, most anyone wants to keep jobs and make “made in America” mean something again.
But does that justify $15 an hour for flipping burgers? You won’t be able to afford to buy a hamburger.
Business wants to cut cost. Government needs to cut cost first.
Lower taxes means benefit to consumers.
PMO
©2016
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