Several things continue to happen that cause me to believe that this administration has no idea how business works. By this I mean that they believe government manipulation of business is necessary and that the free market is not reliable. One major mistake is forcing the so-called “green energy” initiative on us before it is ready or economically viable. The initiative is driven by the fraudulent concept of global warming, which presumably is caused from the use of fossil or carbon-based fuels. Rather than permit the free market to work, this President forces the adoption of alternative energy, by supporting subsidies, tax breaks, government loans, which really inhibits the development of this technology and raises the cost of energy across the board.
In a free market new technology replaces old when it becomes cost competitive which will drive demand once the public realizes it is more efficient or makes their life better. When you artificially make new technology appear to be commercial you actually slow its development. This is the case in the auto industry as the government has forced the development of the electric car at a price that is not competitive with conventional technology and still has many unresolved safety and technology issues.
The impression that America doesn’t make things anymore is a myth. The U.S. economy has grown by almost seven fold since 1947 and the manufacturing sector has grown at the same rate, however, the service sector has spurted over this period and manufacturing is a smaller portion of the overall GDP. America’s global manufacturing share has remained at 22% since 1970, more than any other nation, even with the rapid development of Japan, Korea, and China over the period.
What makes us a competitive global manufacturer is our productivity which unfortunately is offset by the corporate tax burden on our manufacturing community which is the highest in the world. The real manufacturing crisis is in jobs, our output per manufacturing worker was $35k in 1947, and today it is an astonishing $150k. Manufacturing productivity has increased 103% since the late 1980’s and is double that of all other sectors in the larger business economy. This is realized in the economy by lower prices for manufactured items which makes this sector appear to be shrinking.
Do you think this may also have anything to do with the decline of unions in the manufacturing sector over this period? You bet it does! As well as the quality push, computer technology, and plant modernization, while the government continues to add on more regulations, increased taxes, more loopholes. This is why I have a problem with Mr. Santorum who like Mr. Obama this week, says we can help manufacturing with more government “incentives” and tax breaks. We can do without that kind of help; we need the free market to work. Mr. Romney knows that and needs to inject that into the debate.
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Does this mean we can free the market to adjust itself and save taxpayers the $ 41 Billion per year in subsidies to the oil and gas industries that we've been indulging them with with our tax dollars? Wouldn't that make green lots closer to the true cost of fossil?
ReplyDeleteAlan Bachers
Your comment shows that you don't know how this works with the oil companies and are listening too much to those Boston Globe editorials about "subsidies". Oil companies have a depletion allowance which is similar to that given to all companies who invest capital for assets and are allowed to depreciate the asset for tax purposes over a particular time period. The oil companies have a depreciable asset in oil reserves which they do this with. It is not a subsidy, although the Democrats always call it that. Why should they not be able to do this if other companies can. Also, why don't you offset the $41 billion with the billions the government gets in royalties from oil produced from federal lands which has been going on for decades. Taxes and royalties from the oil industry are one of the largest source of revenues to the federal government and all the oil companies have been paying in their "fair share" for as long as I can remember. That's more than we can say for GE and many others. All of the $41B in so-called "subsidies" is paid back several fold every year in taxes and royalties. This subsidy argument is a red herring and amounts to peanuts.Current alternative fuels even with all the government subsidies they get are no where near competitive with oil and gas and they pay essentially nothing back to the government in taxes or royalties. They essentially survive because of the subsidies they get from you and me.
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