Tag Archives: Labor Unions

Environmentalists and protectionists block economic growth in Puerto Rico

Puerto Rico Map
Puerto Rico Map

Here’s a story from Mary Anastasia O’Grady at the Wall Street Journal. She interviewed Puerto Rican Gov. Luis Fortuño and learned about his plan to boost the island’s economic growth.

Excerpt:

If [Luis Fortuño’s] plan to boost the island’s competitiveness by switching electricity generation from oil to natural gas is to succeed, he’s going to need relief from the pernicious 1920 Jones Act. It prohibits any ship not made in the U.S. from carrying cargo between U.S. ports. There are no liquefied-natural-gas (LNG) tankers made in the U.S. Unless Puerto Rico gets a Jones Act exemption, it cannot take advantage of the U.S. natural gas bonanza to make itself more competitive.

The Jones Act is good if you are a union shipbuilder who doesn’t like competition, or a member of Congress who takes political contributions from the maritime lobby. But it’s bad if you are a low-income Puerto Rican who needs a job. And there are plenty of those.

Puerto Ricans are American citizens but they are significantly poorer than the rest of the country. Per capita income on the island in 2010 was roughly $16,300 compared to just over $47,000 for the nation as a whole.

Life on the island is also expensive, in part because of the high price of electricity, 68% of which is produced using imported oil. The governor’s office says that the price of electricity here went up 100% from 2001 to 2011.

[…][B]ringing down high energy costs remains a fundamental challenge, and one that is exacerbated by new costly federal regulations on emissions that would require the installation of scrubbers on oil-fired electricity plants. To meet those regulations affordably, Mr. Fortuño wants to convert the island’s oil-fired plants to cheaper, cleaner natural gas. To that end, he proposes a pipeline from the southern LNG terminal at Punta Guayanilla across the island to San Juan. The U.S. Army Corps of Engineers has assessed the proposal and said it would produce no significant environmental impact.

It sounds like a plan to help the poor and unemployed. There are only two problems. First, the Sierra Club and local environmentalists have ginned up fears about the project and promised to sue to stop construction. Second, the Jones Act is still in the way.

The governor admits that his administration could have done a better job communicating the pipeline plan to Puerto Ricans, but he also points out that “some of the same groups that have opposed the pipeline have also opposed wind-power and solar projects. They are opposing everything, including waste-to-energy” projects which he maintains are less polluting than landfills.

Mr. Fortuño says that he expects Washington to give him a carve-out for LNG tankers, but he doesn’t have it yet. He also says that a large part of the environmentalist push-back is political, suggesting to me that he ought to be more worried than he is. This kind of politics needs to preserve the status quo of the welfare state. And that implies blocking Mr. Fortuño’s development agenda no matter what it means to the poor.

I thought this article was a neat little way to see how groups of people who understand economics try to pull themselves up out of messes, and who stands in their way. It’s something to think about when you think about poverty – what will really work to lift people out of poverty? And what is the real effect of labor unions and environmentalists on economies?

What happened in Europe when they embraced Democrat policies?

Here’s a story from the radically-leftist New York Times.

Excerpt:

Francesca Esposito, 29 and exquisitely educated, helped win millions of euros in false disability and other lawsuits for her employer, a major Italian state agency. But one day last fall she quit, fed up with how surreal and ultimately sad it is to be young in Italy today.

It galled her that even with her competence and fluency in five languages, it was nearly impossible to land a paying job. Working as an unpaid trainee lawyer was bad enough, she thought, but doing it at Italy’s social security administration seemed too much. She not only worked for free on behalf of the nation’s elderly, who have generally crowded out the young for jobs, but her efforts there did not even apply to her own pension.

[…]The outrage of the young has erupted, sometimes violently, on the streets of Greece and Italy in recent weeks, as students and more radical anarchists protest not only specific austerity measures in flattened economies but a rising reality in Southern Europe: People like Ms. Esposito feel increasingly shut out of their own futures. Experts warn of volatility in state finances and the broader society as the most highly educated generation in the history of the Mediterranean hits one of its worst job markets.

[…]The daughter of a fireman and a high school teacher, Ms. Esposito was the first in her family to graduate from college and the first to study foreign languages. She has an Italian law degree and a master’s from Germany and was an intern at the European Court of Justice in Luxembourg. It has not helped.[…]Even before the economic crisis hit, Southern Europe was not an easy place to forge a career. Low growth and a corrosive lack of meritocracy have long posed challenges to finding a job in Italy, Greece, Spain and Portugal. Today, with the added sting of austerity, more people are left fighting over fewer opportunities. It is a zero-sum game that inevitably pits younger workers struggling to enter the labor market against older ones already occupying precious slots.

As a result, a deep malaise has set in among young people. Some take to the streets in protest; others emigrate to Northern Europe or beyond in an epic brain drain of college graduates. But many more suffer in silence, living in their childhood bedrooms well into adulthood because they cannot afford to move out.

“They call us the lost generation,” said Coral Herrera Gómez, 33, who has a Ph.D. in humanities but still lives with her parents in Madrid because she cannot find steady work. “I’m not young,” she added over coffee recently, “but I’m not an adult with a job, either.”

[…]Indeed, experts warn of a looming demographic disaster in Southern Europe, which has among the lowest birth rates in the Western world. With pensioners living longer and young people entering the work force later — and paying less in taxes because their salaries are so low — it is only a matter of time before state coffers run dry.

“What we have is a Ponzi scheme,” said Laurence J. Kotlikoff, an economist at Boston University and an expert in fiscal policy.

He said that pay-as-you-go social security and health care were a looming fiscal disaster in Southern Europe and beyond. “If these fertility rates continue through time, you won’t have Italians, Spanish, Greeks, Portuguese or Russians,” he said. “I imagine the Chinese will just move into Southern Europe.”

The problem goes far beyond youth unemployment, which is at 40 percent in Spain and 28 percent in Italy.

[…]“This is the best-educated generation in Spanish history, and they are entering a job market in which they are underutilized,” said Ignacio Fernández Toxo, the leader of the Comisiones Obreras, one of Spain’s two largest labor unions. “It is a tragedy for the country.”

Yet many young people in Southern Europe see labor union leaders like Mr. Fernández, and the left-wing parties with which they have been historically close, as part of the problem. They are seen as exacerbating a two-tier labor market by protecting a caste of tenured older workers rather than helping younger workers enter the market.

For Dr. Kotlikoff, the solution is simple: “We have to change the labor laws. Not gradually, but quickly.”

Yet in Greece, Italy, Portugal and Spain, any change in national contracts involves complex negotiations among governments, labor unions and businesses — a delicate dance in which each faction fights furiously for its interests.

The left think that education creates jobs. But education by leftists creates ignorance and resentment. Capitalism, corporations, property rights, the rule of law, and tax cuts create jobs. The unions that control left-wing parties like the Democrats are the ones to blame for blocking labor law reform that would create economic growth.

It’s sad, but not too sad, because you have to remember that the young generation is mentally challenged, and they overwhelmingly turn out to vote for more and more socialism – higher taxes, global warming alarmism, and bigger social programs. They just don’t know what the effects will be of their voting until they reach their 30s.

Young people are economically ignorant, but at the same time incredibly arrogant in their ignorance. They want to be cool and trendy, and to vote the way they were taught to vote by the media and Hollywood celebrities. They want to vote for the Peter Pan economics that their teachers and professors taught them – using the red marking pen as a whip to scourge them into submission.

Consider this editorial in Investors Business Daily.

Excerpt:

Heading into the new year, there’s plenty of optimism about the stock market rising, corporate profits recovering and companies hiring. There’s just one problem on that last jobs item: Many will be overseas.

On those rare occasions when it’s not demonizing businesses as bastions of corporate greed, the White House and all its supporting players spend their time pondering why U.S. businesses, with mountains of cash, won’t use at least some of it to hire workers. A mere 900,000 jobs were created in 2010, while U.S. companies sat on $1.1 trillion in cash.

Last week, President Obama went so far as to meet with 20 CEOs for several hours over this, “asking the attendees to dialogue with him on a shared agenda focused on moving our economy forward,” according to a White House statement.

We don’t have any inside lines as to what was said, but news is trickling out the Obama administration is starting to think about doing something big to end the jobs drought in the U.S.

The something big would be to lower the U.S. corporate tax, which at 35%, stands as the second-highest in the developed world. President Obama only told NPR that he discussed “simplifying the system, hopefully lowering rates, broadening the base.”

If so, and if there are no accompanying sleights of hand to extract cash from businesses some other way, as some reports have it, it’s good news. Nothing inhibits the creation of U.S. jobs quite like high corporate taxes and their accompanying regulatory regime.

The fact is, companies sitting on cash aren’t doing nothing. They’re hiring overseas, creating 1.4 million jobs in 2010 alone, according to the Competitive Enterprise Institute.

That’s not because they prefer foreigners to Americans, but because the bad business climate here pushes them to do so.

The rest of the world is a vastly different place from Obama’s U.S., which is characterized by high taxes and protectionist set-asides for politically connected unions that shut out free trade.

In places like Indonesia, Singapore, Taiwan, India and Thailand, nobody demonizes business or blasts trade. Instead great efforts are made by the state and the private sector to draw in foreign investment by becoming more competitive than their rivals.

U.S. multinationals go to these places not because labor is cheap but because these policies also create boomtowns with lots of customers. Incredibly enough, sometimes overseas profits and jobs provide a lifeline for troubled U.S. companies back home. Take GM — today, its Brazil and Korea operations help keep it afloat.

Growth in the 8% to 9% range is typical in Asia.

The young are so busy swallowing slogans and persisting in a taxpayer-funded extended childhood in the schools that they cannot come up for air for a second to understand how the economy really works. All they do is get their worldview from Comedy Central and Michael Moore movies. And when reality asserts itself, they throw rocks through windows to protest as their entitlements are taken away. A generation of barbarians, raised by unionized taxpayer-funded socialist educators who know nothing about life outside of their sheltered ivory tower.

eading into the new year, there’s plenty of optimism about the stock market rising, corporate profits recovering and companies hiring. There’s just one problem on that last jobs item: Many will be overseas.On those rare occasions when it’s not demonizing businesses as bastions of corporate greed, the White House and all its supporting players spend their time pondering why U.S. businesses, with mountains of cash, won’t use at least some of it to hire workers. A mere 900,000 jobs were created in 2010, while U.S. companies sat on $1.1 trillion in cash. 

What causes rich Democrats to lay off Americans and ship jobs overseas?

First off, I spotted this American Spectator story by Robert Stacy McCain on The Other McCain.

Excerpt:

California Democrat Rep. Jane Harman’s family business is laying off American workers – including engineering employees in California – and shifting jobs overseas.

A letter from the human resources director of one Harman company, obtained exclusively by The American Spectator, describes a “permanent” layoff of dozens of California workers that went into effect last week.

[…]Harman is the third-richest member of Congress, and her net worth increased last year $40 million, according to a study of Federal Election Commission records conducted by The Hill newspaper. Her husband, Sidney Harman, founded Harman International Industries, which was valued in 2007 at about $8 billion.

[…]By May 2009, the company had already slashed its U.S. workforce by 900 and expected to make more than a thousand more layoffs by mid-2010, according to a Saturday Evening Post article that noted: “[W]hile shutting down U.S. facilities, Harman was simultaneously opening factories in China and India, as well as massive multimedia outlets in Dubai and New Delhi.”

She’s a rich Democrat… and she is shipping American jobs overseas? Why???

Well, California is an anti-business state and it’s run by socialist Democrats who hate businesses and capitalism. (H/T ECM)

But what about other countries? Why do they ship jobs overseas?

Look what is happening in New Zealand with the new Hobbit movie. (H/T Anon)

Excerpt:

At least half a dozen countries, including Australia, are lobbying to win the right to film The Hobbit and Hollywood accountants are now doing the numbers of rival offers, the movie’s co-producer and co-writer Phillipa Boyens says.

The $US150 million Sir Peter Jackson blockbuster has been mired in an industrial dispute in recent weeks, following complaints from a group of international labour unions over poor on-set working conditions for actors.

Jackson, who strenuously denies the claims, has accused the Australian-based Media Entertainment and Arts Alliance of bullying to gain control over the production, which he says may be forced out of New Zealand.

Boyens told New Zealand’s National Radio’s Nine to Noon programme the movie was ready to begin filming in January but has now been thrown in turmoil by the actors’ boycott.

She said New Zealand Actors’ Equity seemed to believe the whole thing was a bluff.

“I am concerned over some of the statements made… by New Zealand Equity that there is still a misunderstanding on the seriousness of what is involved here and what is at stake,” she said.

“That is very real and that has put at risk the livelihood of countless thousand New Zealand industry workers,” she said.

Scotland, Ireland, Canada and Eastern European countries had entered the negotiations in a “feeding frenzy” inspired by the threat of union action.

And it’s not just left-wing anti-capitalist governments and unions that cause outsourcing and shipping jobs overseas.

It’s the uncertainty caused by massive spending, constant interventions, anti-business regulations, the appointment of radical anti-capitalists and judicial activists to positions of power.

Here’s a story from Reuters.

Excerpt:

Tough budget measures to keep its international bailout on track have helped prompt thousands of Romanian companies to relocate to neighboring Bulgaria, where lower taxes and more stable regulations offer an easier place to do business.

Bulgaria has corporate and income tax on profits of just 10 percent, compared with Romania’s 16 percent, and now also has lower value added tax after Bucharest hiked its rate as part of efforts to meet the conditions of a 20 billion euro EU/IMF bailout.

Sofia has also cut red tape and initial capital for setting up a company is now 2 levs ($1.39), compared with a previous 5,000 levs and 200 lei ($63.55) in Romania. It takes less than a week, almost half the time needed in Romania.

That may seem like small beer, but business people say the speed of the changes forced by the bailout and uncertainty over future cuts in Romania have encouraged them to move base.

Bulgarian authorities have not released precise data, but local media report up to 2,500 Romanian companies have set up there already and another two are registering daily in the border city of Ruse alone.

“Romanian legislation and taxation are changing from one day to another. So how can I have any guarantee, any certainty if I open a company here?” said 23-year-old Bogdan Popescu from Bucharest, who wants to open an online television business.

“I could as well wake up with a 40 percent income tax tomorrow (instead of 16 at present),” said Popescu, who plans to put his headquarters in Bulgaria. “The present fiscal legislation is in no way a stimulus.”

The two Balkan countries share a long border and though links can be complicated — only one bridge connects the states along a 470 kilometer (294 miles) stretch of the Danube — companies can set up a paper headquarters but still effectively run operations from Romania.

Both suffered deep and painful recession after 2008’s financial crisis, but while Romania is having to cut spending and raise taxes, Bulgaria previously ran large fiscal surpluses and has enough reserves to keep taxes low despite dwindling revenues.

Whenever government and their union supporters make life difficult for businesses, the businesses leave. Governments and unions ship jobs overseas. Governments and unions outsource jobs to other countries. Businesses just dance the the tune that governments and unions play. It’s no use complaining about big corporations and rich greedy executives. If you want a job then you promote the conditions that will attract businesses. Left-wing unions, left-wing political parties, left-wing news media and left-wing judges attack businesses, and that’s why unemployment goes higher.

And businesses know that massive government spending is going to require higher taxes or printing more money to that will devalue savings. They are not going to expand in banana republic economies like the United States until we vote a large enough number of Democrats out of all three branches of the federal government.

What I resent is when rich Democrats create the legal conditions that require companies to outsource and then complaining about outsourcing while engaging in outsourcing themselves. That’s hypocrisy.