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Sunday, May 15, 2011

No Escaping Economic Consequences

The principles that govern economics apply to virtually every aspect of human life.  The immutable laws of supply and demand determine costs, even when it is inexpedient for Congress and occupants of the White House.  In unfettered markets when supply exceeds demand, prices fall, and vice versa.  When government agents arbitrarily assign price supports to commodities, purchasers consume less of that product and alternative choices become more attractive.  Minimum wage laws force employers to hire fewer workers and eliminate badly needed entry level jobs for people who are trying to enter the workforce.

General Motors executives found that it was economically unfeasible to pay United Auto Workers $80 an hour in wages and benefits to paint vehicles; they invested in plant infrastructure and acquired robots to paint for them.  The robots produced a superior quality product, did not need sick days, had no childcare emergencies, and required no expensive pensions or Cadillac health plans for retirees.

When the quality of General Motors' products declined and became less desirable than those of other motor vehicle manufacturers, the buying public voted with their feet and dollars and GM's house of cards crashed.  The legacy of paying $80 an hour while Saturn was paying $35 an hour for the same labor is that GM would not even exist if the current administration had not confiscated the company from its owners, given it to the UAW, and foisted the burden of subsidizing that economically non-viable entity onto taxpayers.  It is distressing that so few people realize that many in this country cannot afford new GM cars because they only earn a fraction of the compensation packages paid to UAW employees.  The relatively poor are subsidizing the well-off.

O-buma and company are attempting a similar end run and are maneuvering to confiscate Boeing from its owners.  They realize that it is simply beyond their ken to operate a business for profit.  Therefore, they are desperate to have competent capitalists succeed in business so that they can take the financial products of that labor and use it to purchase votes from their permanent entitlement constituencies.  The standard method for Theftocrats to acquire  businesses or industries is through oppressive regulation that prevents companies from pursuing strategies that improve their competitiveness.  The other favorite tactic is confiscatory taxation that leaves owners unable to invest in infrastructure needed to stay abreast in their areas of expertise. 

Those who operate such enterprises are denied vital business strategies and have their profits robbed from them while still bearing the burden of making a living.  To paraphrase Abraham Lincoln, it is the same old serpent; you work, and I'll eat.  In his op-ed piece in the Wall Street Journal, Boeing Company President and CEO Jim McNerney offers his side of the story. 

Deep into the recent recession, Boeing decided to invest more than $1 billion in a new factory in South Carolina. Surging global demand for our innovative, new 787 Dreamliner exceeded what we could build on one production line and we needed to open another.

This was good news for Boeing and for the economy. The new jetliner assembly plant would be the first one built in the U.S. in 40 years. It would create new American jobs at a time when most employers are hunkered down. It would expand the domestic footprint of the nation's leading exporter and make it more competitive against emerging plane makers from China, Russia and elsewhere. And it would bring hope to a state burdened by double-digit unemployment—with the construction phase alone estimated to create more than 9,000 total jobs. 

National Labor Relations Board (NLRB) believes it was a mistake and that our actions were unlawful. It claims we improperly transferred existing work, and that our decision reflected "animus" and constituted "retaliation" against union-represented employees in Washington state. Its remedy: Reverse course, Boeing, and build the assembly line where we tell you to build it.

This, despite the fact that the plant has already been built, 1000 workers have been hired and are being trained, and production is scheduled to begin in July.

Important to our case is the basic fact that no existing work is being transferred to South Carolina, and not a single union member in Washington has been adversely affected by this decision. In fact, we've since added more than 2,000 union jobs there, and the hiring continues. The 787 production line in Everett has a planned capacity of seven airplanes per month. The line in Charleston will build three additional airplanes to reach our 10-per-month capacity plan. Production of the new U.S. Air Force aerial refueling tanker will sustain and grow union jobs in Everett, too.       

This is a blatant power play by people who are paid much more than they can command on the open market.  They hope to use government thugs to do their stealing for them and take Boeing away from its owners.

In his article in The Daily Caller, Matthew Boyle points out that the NLRB, at the behest of Acting General Counsel Lafe Solomon, has taken unprecedented legal action against The Boeing Company to prevent it from expanding productions into South Carolina, a state that assures workers the freedom not to join a union as a condition of employment.  If the NLRB prevails, it will only encourage companies to make their investments in foreign nations, moving jobs and economic growth overseas.

The NLRB and the machinists' union claim that collective bargaining and the Wagner Act doesn’t set up a system of collective bargaining.  It sets up a guaranteed outcome...labor unions can’t possibly succeed unless [the public subsidizes] their success.

The New York Times reports that Boeing said it would 'vigorously contest' the labor board’s complaint.  This claim is legally frivolous and represents a radical departure from both N.L.R.B. and Supreme Court precedent, said J. Michael Luttig, a Boeing executive vice president and its general counsel.  Boeing has every right under both federal law and its collective bargaining agreement to build additional U.S. production capacity outside of the Puget Sound region.

Little wonder that companies are reluctant to hire and expand and are outsourcing jobs to locations that offer more favorable economic climates.  The US has the highest corporate tax rates on the planet; we are the only nation to tax domestic corporations on the profits of their foreign holdings.  Could progressives actually fail to recognize that they are preventing job growth and economic recovery?  Perhaps it is simply that they find it more expedient to increase the size of the theft-welfare mommy state.

May your gods be with you.

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