Saturday, June 26, 2004

Trade isn’t the Problem

The Detroit Chamber of Commerce commissioned a report to determine the reasons that manufacturers have been leaving Michigan at such a rapid clip. They (correctly) came to the conclusion that free trade isn't the problem. Some of the reasons could be called problems, others are just progress.

For example, the report concludes that, "Increased manufacturing productivity plays a far greater role in job losses than offshore outsourcing." Just like the telephone switchboard operator has gone the way of the telegraph operator, so have many manufacturing jobs. Automation and higher productivity are displacing far more manufacturing workers than offshoring ever could. The report states, "Increased manufacturing productivity plays a far greater role in job losses than offshore outsourcing."

Michigan needs to be more attractive to international companies looking to invest in the United States. Another conclusion of the report is that, "Michigan needs to improve the business climate for manufacturers and increase foreign direct investment ('insourcing')." In other words, we need to make Michigan a state that companies want to invest in - a place where they can do business and make money at the same time.

Some of the report's suggestions follow:

  • Control health care costs
  • Control retirement costs
  • Reduce the federal tax burden
  • Reduce the cost of regulations and regulatory compliance
  • Accelerate the phase-out or replacement of the Single Business Tax

    In other words, less government is needed. Bureaucracy and regulation drive up those costs to business, forcing them to look elsewhere to do business.

    Unfortunately, the manufacturers also call for more government by asking for such things as increased support for manufacturing development programs and increasing state R&D initiatives. However, the recommendations in that area are pretty mild.

    The biggest change the chambers of commerce should push for is a lift on the cap of the number of charter schools in this state. They need an educated workforce, and that strong education starts in elementary school. If the poor state of education in Michigan is to be improved, much has to be done to provide choice for parents and implement true school accountability.
  • No comments:

    Post a Comment