Tag Archives: Outsourcing

News

Do conservative policies or liberal policies cause outsourcing? The case of California

Leave a comment

Here’s an interesting article about a new paper published by the centrist Manhattan Institute about California, a state that is controlled from top to bottom by Democrats. Have the liberal economic policies of the Democrats caused a decrease or an increase in outsourcing?

Let’s see:

For decades after World War II, California was a destination for Americans in search of a better life. In many people’s minds, it was the state with more jobs, more space, more sunlight, and more opportunity. They voted with their feet, and California grew spectacularly (its population increased by 137 percent between 1960 and 2010). However, this golden age of migration into the state is over. For the past two decades, California has been sending more people to other American states than it receives from them. Since 1990, the state has lost nearly 3.4 million residents through this migration.

This study describes the great ongoing California exodus, using data from the Census, the Internal Revenue Service, the state’s Department of Finance, the Bureau of Labor Statistics, the Federal Housing Finance Agency, and other sources. We map in detail where in California the migrants come from, and where they go when they leave the state. We then analyze the data to determine the likely causes of California’s decline and the lessons that its decline holds for other states.

The data show a pattern of movement over the past decade from California mainly to states in the western and southern U.S.: Texas, Nevada, and Arizona, in that order, are the top magnet states. Oregon, Washington, Colorado, Idaho, and Utah follow. Rounding out the top ten are two southern states: Georgia and South Carolina.

A finer-grained regional analysis reveals that the main current of migration out of California in the past decade has flowed eastward across the Colorado River, reversing the storied passages of the Dust Bowl era. Southern California had about 55 percent of the state’s population in 2000 but accounted for about 65 percent of the net out-migration in the decade that followed. More than 70 percent of the state’s net migration to Texas came from California’s south.

What has caused California’s transformation from a “pull in” to a “push out” state? The data have revealed several crucial drivers. One is chronic economic adversity (in most years, California unemployment is above the national average). Another is density: the Los Angeles and Orange County region now has a population density of 6,999.3 per square mile—well ahead of New York or Chicago. Dense coastal areas are a source of internal migration, as people seek more space in California’s interior, as well as migration to other states. A third factor is state and local governments’ constant fiscal instability, which sends at least two discouraging messages to businesses and individuals. One is that they cannot count on state and local governments to provide essential services—much less, tax breaks or other incentives. Second, chronically out-of-balance budgets can be seen as tax hikes waiting to happen.

The data also reveal the motives that drive individuals and businesses to leave California. One of these, of course, is work. States with low unemployment rates, such as Texas, are drawing people from California, whose rate is above the national average. Taxation also appears to be a factor, especially as it contributes to the business climate and, in turn, jobs. Most of the destination states favored by Californians have lower taxes. States that have gained the most at California’s expense are rated as having better business climates. The data suggest that many cost drivers—taxes, regulations, the high price of housing and commercial real estate, costly electricity, union power, and high labor costs—are prompting businesses to locate outside California, thus helping to drive the exodus.

Population change, along with the migration patterns that shape it, are important indicators of fiscal and political health. Migration choices reveal an important truth: some states understand how to get richer, while others seem to have lost the touch. California is a state in the latter group, but it can be put back on track. All it takes is the political will.

Also, California is absolutely dominated by corrupt public sector labor unions and teacher unions, who regularly interfere in elections to make sure that economic policy is very, very liberal.

What’s true of California is becoming true of the United States as a whole, under our socialist President Barack Obama. The more that Obama enacts left-wing economic policies that threaten job creators and investors with higher taxes and more burdensome regulations and wasteful spending and massive deficits, the more they will leave for other countries or expand to other countries. It turns out that the “greedy” businessmen and investors who advocate for lower taxes and less burdensome regulation are the real champions of low unemployment, economic growth and prosperity.

News

Outsourcing billions of taxpayer dollars through stimulus spending

Leave a comment

A lot of talk about outsourcing in the news these days. CNS News explains who has the real record of outsourcing.

Excerpt:

The Obama administration allowed millions of dollars in federal stimulus funds to go to foreign companies, despite recent statements by President Barack Obama that he opposes “shipping jobs overseas.”

[…]Obama’s 2009 economic stimulus spending law–the $787 billion American Recovery and Reivnestment Act–gave millions of federal dollars to foreign companies or funded domestic companies that built factories in foreign countries or bought foreign products.

For example, there is the North Carolina LED manufacturer Cree Inc. Cree was awarded $39 million through a stimulus-funded tax credit program in January 2010. However, half of the company’s employees are in China and the company opened a manufacturing plant in Huizhou City, China in November 2009, according to an article in the industry publication LEDs Magazine.

[…]Another example of stimulus outsourcing is Japanese wind energy firm Eurus Energy, whose U.S. subsidiary, Eurus Energy America, received $91 million in stimulus funds to build a wind farm in Texas, according to a 2010 report from American University. That wind farm reportedly was built with wind turbines manufactured by another Japanese company – Mitsubishi.

“Eurus Energy America, the U.S. subsidiary of a Japanese firm, received $91 million in stimulus money for its Bull Creek wind farm in Texas. The farm consists of 180 Mitsubishi turbines,” the American University report said.

Eurus told American University that the wind farm was actually built by British firm RES Americas and is now being run by EnXco, an American subsidiary of the French energy firm EDF Energies Nouvelles.

[…]Another example of the Obama administration funding foreign companies is a $337 million loan guarantee from the Department of Energy’s green energy lending program.

That loan went to California energy firm Sempra Energy for a solar power array in Arizona. However, according to a Feb. 4, 2011  New York Times report, Sempra Energy bought its solar panels from the Chinese firm Suntech.

The project, known as Mesquite Solar 1, reportedly used 800,000 of the Chinese solar panels.

Perhaps the best-known example of Obama administration funding of foreign companies is its $500-million loan guarantee to Finnish automaker Fisker Automotive.  That loan, part of the Energy Department’s electric vehicle lending program, was made to help Fisker establish a U.S. manufacturing presence.

However, the company never established an American factory, choosing instead to shutter its U.S. operations and continue building cars in Finland.

But that’s not all.

Consider this post from Hans Bader, which further assesses Obama’s record on outsourcing.

Excerpt: (links removed)

“79 percent” of all green-jobs funding in Obama’s $800 billion stimulus package went to foreign companies, with the largest payment going to a bankrupt Australian company.  For example, the Obama Administration spent $1.6 billion on Chinese and other foreign wind power. The practical effect of those subsidies was to outsource American jobs.  ABC News reported on the subsidies for Chinese wind turbines contained in the stimulus package:

Despite all the talk of green jobs, the overwhelming majority of stimulus money spent on wind power has gone to foreign companies, according to a new report by the Investigative Reporting Workshop at the American University’s School of Communication in Washington, D.C.

Nearly $2 billion . . . has been spent on wind power. . .But the study found that nearly 80 percent of that money has gone to foreign manufacturers of wind turbines.

“Most of the jobs are going overseas,” said Russ Choma at the Investigative Reporting Workshop. He analyzed which foreign firms had accepted the most stimulus money. “According to our estimates, about 6,000 jobs have been created overseas, and maybe a couple hundred have been created in the U.S.” Even with the infusion of so much stimulus money, a recent report by American Wind Energy Association showed a drop in U.S. wind manufacturing jobs last year.

The stimulus package also showered money on left-wing community organizers and liberal lobbying groups.

Earlier, NewsMax reported on a $2 billion subsidized loan by the U.S. government to a Brazilian oil company:

Gulf Oil CEO Joe Petrowski says President Barack Obama’s weekend comments in Brazil that the United States looks forward to purchasing oil drilled for offshore by that nation “is rather puzzling,” and “hypocritical” as his administration has imposed a virtual moratorium on domestic drilling. The signal to purchase more foreign oil comes after the U.S. Export-Import Bank invested more than $2 billion with Brazil’s state-owned oil company, Petrobras, to finance exploration.

The CEO of General Electric, which has received government “green jobs” money, is a close Obama advisor.  GE has been busy outsourcing American jobs, eliminating a fifth of its U.S. workforce since 2002.  GE made $14.2 billion in profits in 2010, but paid no taxes at all, even though America’s corporate tax rates are among the highest in the world.  Indeed, GE actually received a tax benefit of $3.2 billion from the government in 2010, and received a preferential bailout at taxpayer expense.

That post goes on and on and on and on like that. Obama likes to “spread the wealth around”, remember?

What causes outsourcing? When you have the highest corporate tax rate in the world – that causes outsourcing. When you keep piling on regulations and regulations onto businesses, from Obamacare to Dodd-Frank – that causes outsourcing. When you take money collected from taxes paid by American businesses and hand it out to foreign companies owned by Democrat-allies – that causes outsourcing. When you block energy companies from developing energy here at home – that causes outsourcing.

UPDATE: I put millions in the post title, but it’s actually billions. At least $29 billion.

News

How well did tax hikes for the rich work in California?

1 Comment

Economist Art Laffer explains in Investors Business Daily.

Excerpt:

According to a new report from the Golden State’s Franchise Tax Board, the top 1% of earners paid $25.7 billion in state income taxes in 2007. Two years later, the most recent for which data are available, that figure dropped by half — to $12.3 billion.

Researchers note that the economic downturn contributed to this drop. But that’s not the only cause. A huge number of high-income taxpayers have simply left the state.

Between 1992 and 2008, California suffered a net loss of 869,000 tax filers. About 3.5 million moved into California, while 4.4 million left.

Those that left were disproportionately wealthy. The average adjusted gross income for people leaving the state over that period was $44,700. Meanwhile, the average person moving into California posted income of just $38,600.

So California lost wealthier, more productive residents. And poorer, less-productive folks took their places — some of them, at least.

Smothered under a growing thicket of taxes and regulations, the Golden State’s entrepreneurs and top earners have sought friendlier climes — taking their incomes and the taxes they pay with them.

For many people, moving out of California is equivalent to getting a big raise — because their tax rates plummet. Of the top nine states Californians are flocking to, the average top personal income tax rate is 3.44%. California’s is nearly triple that, at 10.3%.

Also, among those nine states, the corporate tax rate averages 4.59% vs. California’s 8.84%. And their combined state and local tax burden is 9%, versus California’s 11%.

Similarly, if tax rats get to be too high, people will just work harder at getting their capital out of the country. In the case of businesses, they will stop hiring people here and instead open factories and plants in other low-tax countries. It’s socialism that causes outsourcing – taxing and regulating businesses causes them to leave or expand elsewhere.