Monday, September 19, 2011

Avoiding Egg on a Poacher's Face


We all think we know what it means.

But in terms of economic survival, do American voters really want our politicians to take it seriously? We like to put up our country against any of the world's emerging powerhouses and assume we're still tops, but do we really understand the stakes?

For example, can the state where you live compete with China for jobs?

After all, states rights has become a popular rallying cry among conservatives these days. Yet we tend to forget there is still strength in unity.

As in, "united" states.

Poaching as a State's Right

Although Governor Rick Perry currently serves as the Tenth Amendment's highest-profile cheerleader, and Texas spends millions every year poaching companies and jobs from other states, Perry and the Lone Star State aren't the only flagrant traitors to America's economic unity. Just about every state has a department devoted to wooing employers from other states, and most American cities have at least one person paid to compete for corporate relocations, even from other cities in the same state.

Now, they don't call it "poaching," like I do. Maybe because when Texans do it, it's more akin to "rustling," like they used to do with cattle.

Meanwhile, economic incentives paid with taxpayer dollars are used like candy to appease wanderlust businesses, or persuade local companies to stay instead of mosey off to another city or state offering better incentives.

It's become a big game to see how loyal companies are to their hometowns, or how desperate those hometowns are for new employers. By now, we know that we're all robbing Peter to pay Paul for these corporate Chinese fire drills, but who's really winning?

Probably not the United States, but the Chinese. And every other emerging market across the globe, most of which has the wherewithal to undercut the best deal America's healthiest municipality or state can possibly offer.

After all, nobody in America can live on $1 a day, and even the the most belligerent anti-environmentalist won't risk their health working in a dangerous facility with cancer-causing chemicals open to the elements. But plenty of workers in countries with lax or non-existent environmental laws will. And capitalism - which for better and worse, seeks the lowest common denominator for higher profits - will inevitably trickle down where obstructions to profit are the weakest.

If that wasn't true, the United States wouldn't be hemorrhaging jobs to Third World - excuse me, Majority World - countries every year.

Is it Rustling When Unions Have Already Milked the Herd?

This is partly what prompted Jennifer Granholm, a two-term governor of Michigan, to write her book, A Governor’s Story: The Fight for Jobs and America’s Economic Future. Granholm, a Democrat, is quoted by the New York Times as advocating for a more comprehensive front at the federal level for protecting jobs in the United States.

Granted, a Democratic governor from Michigan won't have enough credibility to voice this opinion loud enough for Republicans in right-to-work states like Texas to listen. After all, one big thorn in Michigan's side has been the unreasonable might of labor unions. The state's crumbling Big Three made plenty of mistakes on the corporate side, but hard-line unions prevented fundamental changes to pay structures that could have actually saved their jobs.

If they'd been producing cars of a quality Americans would buy.

Part of the problem has been that unionized labor became convinced of its invincibility, even as it allowed their own manufacturing standards to plummet. Americans might have been willing to pay obscenely unreasonable prices for the Big Three's products if they'd actually been well-built to start with. But even as Detroit's design studios got hacked by bean-counters, union wages failed to match worker craftsmanship.

Not all American manufacturing has been held hostage to union labor and blind corporate governance. So Michigan's tale of woe represents a worst-case scenario in terms of jobs lost to overseas competition. Still, isn't Granholm's point about interstate jobs-poaching a valid one?

To the extent that state laws and taxation make running a business more expensive in one part of the country than another, each state needs to mind its costs and expectations if it wants to remain competitive with other states. But by viewing the battle for jobs within an American-centric perspective, might we be losing the war?

Globalization, Jobs, and Some Protectionism

Just because Perry has been able to attract new jobs to Texas, does that mean he can extrapolate his success into attracting new jobs to the United States?

Perhaps. Like many other governors, Perry has taken junkets across the world to try and attract foreign investment in Texas. But how effective is this buckshot approach? If governors from a dozen states woo the same officials from Shanghai, can those economic pitches stand up to the incentives countries like Vietnam, Russia, and Kenya can provide? Countries where China is establishing ever-stronger footholds, and where an ambivalence towards the old must-be-in-America business model appears to be gaining steam.

After all, post-industrial America is the new Europe, with a standard of living that is only obtainable in places like Russia through graft and corruption. And still practically unheard of in Vietnam, Kenya, and many spots across the Majority World.

So... what does all this mean in terms of America's upcoming election?

Just that in America's competition for jobs, the stakes between the states may prove to be punitive when considering that the job market isn't just an American playing field. Instead of making Dallas more appealing to a corporate relocation from San Diego, we need to be working on solidifying America's ranking as a viable global economic competitor.

If that means higher import tariffs, lower or more flexible corporate tax structures, and other changes in international trade policies, then let's talk about it. We need political candidates to debate these issues, which means we need political candidates who know enough about our world to be eligible stewards of America's place in it.

And in that regard, poachers hold little credibility with hunters.

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