Job Preservation

For months, we were all bombarded with political ads. It didn't matter if someone was running for national, state, or local office, they promised to deliver jobs and accused their opponents of supporting "job killing" policies.

It didn't matter what a ballot issue was about. It could be a property tax initiative, or cannabis legalization, or whatever. But it's supporters would claim that the initiative would create jobs, and its opponents would insist that it would kill job creation and/or throw thousands more people out of work.

But let's get real. There's only so much the government can do about job creation. Even the vaunted WPA and CCC didn't lower unemployment by much. WW2 produced almost full employment, though.

Those jobs mostly weren't government jobs, either. They were manufacturing jobs created by private industry, in response to demand. Demand that was largely government driven, but at the cost of, well, going to war, and borrowing massively to do it.

They also taxed massively. A 4% "Victory Tax" was added to everybody's regular tax rate. The money was plowed into building ships and planes, and adding to the government payroll by several million through the draft.

The industrial infrastructure that this built made the US the world's #1 manufacturer and exporter. Of course, the pooch has been screwed in the meantime, but there are still lessons that can be drawn from this.

#1. Taxes do not necessarily "kill jobs". From the 1940's through the mid-60's, the top tax bracket remained over 90%. Corporate income taxes were about the same though.
We also had much stiffer tariffs than we do now. That helped keep industry money in the US. Less expensive to buy the US made supplies than to buy foreign supplies that were less expensive, but came with a high tariff.

One idea I never hear any of these "jobs driven" politicians ever mention is reimportation tariffs. Most other industrialized nations have some form of this. Bic, for example, is a French company. If you buy a Bic pen here in the US, it was made either in China or Mexico. If you buy one in France, it say "Fabrique En France" on the barrel.
Why? If Bic brought their Chinese made pens back to France to sell, they would have to pay a high tariff to "reimport" them. I don't know the specifics, but it's high enough that it's better for Bic to make their domestically sold pens in France.

An outsourcing tax would more preserve jobs than restore them, but it really needs to be done. I never hear this one, either.

If an employer decides to, say, use Indian engineers in India, then make them pay full employment and income taxes on these "outside contractors" that aren't even working in the US. Make them pay both halves of FICA, Federal income tax, and even state income tax. Assess the tax based on US wages, rather than what they're actually paying the foreign contractors.

I'm betting that a lot more of these jobs would come back to the US if we made it too expensive to use "cheap foreign labor". It would also make employers think twice before outsourcing any of their existing staff.

Another factor that can put US made goods at an advantage are transportation costs. A few years ago, when gas went to $4/gallon, transportation costs increased enough that it drove up orders to American furniture manufacturers. It's cheap transportation that makes it economical to build heavy items overseas and import them here, rather than buying domestically.

This is actually true for almost any low margin item. Even a moderate rise in transportation costs can make it more economical to produce something domestically rather than at a foreign source.

What we need is an international freight tax. Artificially inflate the transportation costs.

#2. Government spending on stuff stimulates job growth far more than direct government hiring. Those planes and ships during WW2 were purchased by the US Government, but they were built by private industry. Today, we still buy a lot of ships and planes, most are still made here, but it doesn't take nearly the manpower that it used to.

What still takes manpower is to make just about anything else. If the taxes don't work to create or even preserve jobs, then that will mean that they'd rather pay the extra tax. So the government would have more tax revenue. To buy stuff. All kinds of stuff. Frivolous, wasteful government spending!

Every Federal office should have new furniture, coffee makers, fixtures, whatever. Complete makeovers. All government buildings should have new facades. Every American should get a microwave for Christmas from Uncle Sam.

But it would all have to be American made. Final assembly in the US from at least 90% US sourced parts, or no contract.

Even after the money runs out and the government can't buy such prodigious amounts of stuff, we will have gone a long way towards re-establishing an industrial base. Even if Uncle Sam doesn't buy you're widgets every year, maybe he'll buy them one out of every three years. Then you'd need to keep your US operations running full time to get that one fat contract every three years.

#3. Don't forget the military. We can free up a lot of money by spending less on the military. Foreign bases and high tech toys are expensive, but personnel aren't as much.
Cut military spending in almost every other area, but don't shrink the size of its "workforce". It's the country's largest employer, and we don't need yet more unemployed people.

Here's where infrastructure spending comes in. Much of the military could easily be converted into an infrastructure corps, similar to the Army Corps of Engineers, but much bigger.

A less expensive military that does something useful. Join the Army, build a bridge.
But I rarely ever hear of most of these ideas even being discussed. Not just by politicians. Nothing from pundits or bloggers, either.

But you know who does talk about these things? Businesspeople. People who own businesses know exactly what the government could do to make them change their behaviour.

Then they hope that politicians don't do that.

But, to me, the big question is always this--all of these measures will cost money. Will the American public be willing to shoulder large price increases in the interest of preserving the economy?