What are Liberal's position on higher corporate taxes causing business to move overseas?

Discussion in 'Budget & Taxes' started by kazenatsu, Feb 22, 2018.

  1. Reiver

    Reiver Well-Known Member

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    Any unlevel playing field is against the developing world (as shown by the World Bank, which has proved sub-Saharan countries are actually made worse by trade). The US competes through higher productivity and through creativity. Of course it would do better at that if it didn't have such spectacularly high levels of inequalities.
     
  2. OldManOnFire

    OldManOnFire Well-Known Member

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    Why do you feel compelled to have American companies compete with companies around the world? In some instances this might happen but generally speaking all the jobs associated with this type of manufacturing offshore are going to be lower skilled and lower paying. Just go to any US retail store, and select any product you wish, of which 99% of them are produced offshore, then go ahead and set up a US company to produce that exact item...same quality and same price. Share with us your business model so we know how rich you are going to become?

    Even if you decide to build iPhones with $1000 value, when you break down the manufacturing processes to their lowest single process, like one person inserting one part onto an assembly, this worker will be low skilled and low paid. A company will decide where each of these manufacturing processes will be accomplished based on myriad requirements.

    Lastly, you ignore the entire concept of business, people called entrepreneurials; If there is demand for a product or service, someone will fill that demand...a business. But the business model must make sense! Competing with third-world labor to build yo-yos is not the direction the USA should be taking!
     
  3. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Which wouldn't be an issue if there were better jobs for everyone in the developed world. (But we know that's not the case)

    And I don't know about low paying. There were plenty of factory workers in Detroit earning what would be regarded as very good money now. Enough to buy a big middle class house, two cars, and cover their family with health insurance. I know not all of that was really sustainable, with the Rust Belt unions demanding ever more, but at least part of it had to be.
    And then of course there are the managerial positions and higher paying engineering jobs that inevitably come with any factory.

    Here's a quick article I was able to find about how much these factory workers were getting paid: https://www.cbsnews.com/news/autoworkers-making-70-an-hour-not-really/
    Short synopsis: Basically they were being paid about $60,000 a year plus another $10,000 in benefits. The wages for the lowest level workers was about $27 per hour, but overtime rates made up a significant part of the overall salary average.

    Here's an article about annual pay at one factory ranging between $70,000 and $80,000 (including overtime)
    quote from the article:
    http://money.cnn.com/2012/02/27/smallbusiness/youth_manufacturing_jobs/index.htm

    Of course, you can take a good paying job in America and make it into a low paying job in some other Third World country.
     
    Last edited: Apr 2, 2018
  4. Reiver

    Reiver Well-Known Member

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    You start with a pretense. Of course there can be. The structural limitations of the US do not reflect the behavour of foreign countries. All can benefit from trade and it doesn't require any of the tosspotted tariffs that you have supported.

    You continue to show a habit of portraying fib as fact.
     
    Last edited: Apr 2, 2018
  5. OldManOnFire

    OldManOnFire Well-Known Member

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    There are plenty of workers in the USA who are earning far more than they are worth...many times created and protected by unions. When we break down automobile assembly into single steps it does not require rocket scientists to perform! Yes some jobs require higher skills but maybe it's only 10%. The other 90% are lower skilled and should be lower paying.

    And here's some proof for you about over-paid workers. When someone loses their job, they should be able to find another comparable job within a reasonable amount of time. If they were over-paid this greatly complicates seeking a new job.

    Why do you think the USA has a hard time competing in the global marketplace? Why does the USA have trade deficits? Just perhaps one of the reasons is forced higher pay for lower skilled jobs...
     
  6. Reiver

    Reiver Well-Known Member

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    This makes no sense at all. First, US Unions aren't powerful compared to European ones (and there is little, or zero, protection for low skilled labour). Second, the US trade deficit represents a macroeconomic phenomenon: i.e. low savings rate.
     
    Last edited: Apr 5, 2018
  7. OldManOnFire

    OldManOnFire Well-Known Member

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    It makes sense when American labor can't even come close to competing. Yes I know there are different cost of livings around the world but it doesn't help when a US company pays a worker $30/hour to sweep floors, or to add tire lug nuts on an assembly line.

    I think it's great when unions force higher and higher wages for their members...but there are consequences for this when things are not going well...
     
  8. Reiver

    Reiver Well-Known Member

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    Not really. Germany has a history of much stronger unionisation and competes perfectly well. You compete through productivity and quality of product. If those two aspects slide, its typically the manager's fault.
     
  9. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    It depends how you define "worth".

    Isn't every worker being paid more than they're worth? Because if there was someone willing to work for less (and assuming just as qualified and same job quality) the job would go to them, correct?

    On the other hand, no one is being paid more than they're "worth", otherwise the consumer would not be buying their services, correct?

    So which is it? How do you define worth? Is it the maximum consumers are able and willing to spend, or is it the least amount of money anyone anywhere in the world is willing to work for?

    Or would you define it in terms of supply & demand? In that case the amount a worker is "worth" changes all the time, based on the supply. "Too many" workers doing something and they become worth less.
     
    Last edited: Apr 5, 2018
  10. Reiver

    Reiver Well-Known Member

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    Basic error. Productivity and wage tend to be positively related. If you reduce wage, expect lower productivity such that unit labour costs can actually increase. Firms in complex manufacturing have no incentive to minimise wage bills. Neither of course do they have any incentive to pay according to supply & demand criteria (as demonstrated by the theoretical and empirical analysis into monopsonistic labour markets)
     
  11. OldManOnFire

    OldManOnFire Well-Known Member

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    On the Golden Gate Bridge a few years ago they decided to eliminate human labor in the pay booths and go with automation. It was reported that these union workers were earning about $55K plus ample benefits at a cost of about $100K per employee per year. No offense meant to any of these workers, but they had no appreciable skills...they simply were taken care of by their union. I don't know the outcome but I'll bet anything few if any of these toll booth workers found another job paying even $35K. Two things here; First, in these cases wages were 'forced' much higher than their skills demanded, and second, once they lost their jobs to automation it's unlikely they could ever find equal employment.

    Sure an auto worker's union can provide workers with $50K jobs that are basically low-skilled work, but then people wonder why 50-80% of the content of these cars become foreign content?
     
  12. OldManOnFire

    OldManOnFire Well-Known Member

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    A worker is only worth the amount they can be compensated. If a person earns $50K, loses their job, and must find another job, but can only find jobs paying $35K, IMO their worth is $35K. They were 'lucky' to have earned $50K.

    This is not a personal issue...it's simply how much compensation should be provided for a person's knowledge and skills.

    Workers are being paid based on supply and demand. Yes we can always find a single person, in a unique situation, who will take less for a certain job. But we base the pay on hiring and sustaining workers over longer periods of time. And in most every job position, there is a pay scale, for example a job might pay between $35/hour and $40/hour, and this range accommodates new hires, unskilled trainees, higher skilled, etc.

    Supply of labor helps to determine the local job salary range but it does not effect a worker's worth. My compensation is based on what I do in my life to secure employment...
     
  13. Reiver

    Reiver Well-Known Member

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    The facts aren't difficult here. The US has low union bargaining power. It has, relative to other countries, a focus on low wage labour. If it had powerful unions? You'd actually expect higher productivity and higher wage. Unions go hand in hand with skills formation.
     
  14. OldManOnFire

    OldManOnFire Well-Known Member

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    The Bureau of Labor Statistics reports that a typical union worker made $970 a week in 2014 compared to $763 a week made by a non-union worker. Same skills and knowledge...one union and one not union. Daily in US news we don't hear anything about the worker at an Ace Hardware earning $9/hour but instead it's the auto workers or airlines, etc. who are unionized. Unions demand more compensation and benefits while no one represents the guy at Ace Hardware. Perhaps over all 150 million US workers unions are not strong, but they certainly are quite strong over union members. As the costs increase in business, which unions can certainly support, businesses are forced to seek cost savings in non-labor areas. So we have automation, outsourcing and foreign facilities, etc. Unions in the US for example could try to unionize Ace Hardware workers, and ultimately bump up their wages to $15/hour, but all of the downside risks need to be reviewed as well...
     
  15. Reiver

    Reiver Well-Known Member

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    You certainly expect a gain from unionisation, given the impact on bargaining power. However, I'd like you to show me that your supposed gain controls for human capital effects. You referred to a secondary source that just repeats raw data.
     
  16. OldManOnFire

    OldManOnFire Well-Known Member

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    Union bargaining power certainly provides a compensation gain...but in the grand scheme of things it can also increase the cost of business that forces automation and outsourcing, etc. all a reduction of US labor. These higher paid union employees will be left wanting should they find themselves removed from the union influence. Everything has a consequence...
     
  17. Reiver

    Reiver Well-Known Member

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    You still ignore how the US has relatively low union bargaining power, reflecting neoliberalism focused on producing 'flexible labour markets' (i.e. short term profiteering through reduced wages).
     
  18. OldManOnFire

    OldManOnFire Well-Known Member

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    There are approximately 15 million union workers in the US...about 10% of those working...yet they hold power in education, service jobs, in public jobs, and the Teamsters who are involved in trucking to cargo ships to manufacturing plants, etc....all high visibility jobs most of which are frequently politicized. This union power has collateral effects so actual union influence is probably closer to 20% of those working. But union membership is also down in recent years because they gain too much control, increase costs, and become adversaries instead of allies. Like I said, these increase in business costs and other factors have consequences...
     
  19. Reiver

    Reiver Well-Known Member

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    Small fry compared to other countries. Also, compared to those other countries, unions have less power.
     
  20. OldManOnFire

    OldManOnFire Well-Known Member

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    Makes no difference to compare with other nations? It is what it is in the US. If unions are so great then membership should increase every day but in the US union membership has greatly declined. Workers need to advocate for themselves and stop depending on others to solve their problems...
     
  21. Reiver

    Reiver Well-Known Member

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    Actually international comparison is key as, given such wide range in membership and rights, it offers superior empirical insight. It strikes me as strange that Anglo Saxon economies moan about unionization when they have relatively crippled labour movements.

    These countries also have greater reliance on low wage labour and evidence of deficient upskilling. And we're surprised that they then indulge in short term profiteering through 'race to the bottom' outsourcing?
     
  22. OldManOnFire

    OldManOnFire Well-Known Member

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    We can compare all day and none of it will change union involvement in the USA...so why go there?

    I personally have no use for a union because I want my life to be based on my personal merits and not on some union group. I understand how unions provide positive things in the workplace. I understand why 'some' people need someone else to solve their problems. I understand why most US businesses have no use for unions. It is the combination of all of these, and other issues, that determine the merits of unions in the USA.
     
  23. Reiver

    Reiver Well-Known Member

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    Because it destroys your stance?

    As I've said before, I always had a preference for union members. Then again, I've never been a short term profiteerer looking to benefit from low wages...
     
  24. OldManOnFire

    OldManOnFire Well-Known Member

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    My stance cannot be destroyed by charts or comparing to others. How stupid is it for me to compare myself to others as if it has any meaning whatsoever? Data is something we evaluate and decide how we wish to move forward...if we see others doing something differently we can consider those differences...but it does not mandate we follow suit...and we should not declare ourselves winners or losers based on this data.

    I'm a business owner and have no union workers and I'm not a short-term profiteer. I pay wages based on supply and demand of the local labor...
     
  25. Reiver

    Reiver Well-Known Member

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    You're playing pretend. The US doesn't have strong unionization and has a trade imbalance. Countries which do have strong unionization excel in manufacturing exports and do not have a trade balance. How terribly inconvenient...

    I found payment according to supply and demand irrational. It ignores productivity effects. See efficiency wage analysis!
     

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