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Re: Globalization is the great equalizer
LarryM99   5/8/2014 1:20:40 PM
Both tax breaks and education programs can be effective, but the former can happen relatively quickly while the latter typically need longer than an election cycle to see results. All else being equal, government policies will therefore tend towards the quick fix.

During the recent recession there was a real lack of demand for labor at pretty much all levels. In this situation the only real possibility for a jobs program would be to hire one group to dig holes and another to fill them in. Now that we are coming out of that situation companies are starting to really need people. They are trying to get the best people as cheaply as possible, hence all of the tax games and fussiness about picking only people with exactly the right skills and history. As the labor supply shrinks and demand increases both tax incentives and hyper-specific training requirements will figure less and less into the equation.

There have been opportunities for all parties involved to think ahead. Companies could have taken the opportunity to do significant long-term research over this period. The government could have instituted real training programs as the layoffs were growing. Laid-off workers could have gone back to school or otherwise upgraded their skills. Any combination of these would be accelerating the economy and job growth right now.

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Re: Globalization is the great equalizer
henry..12   5/7/2014 8:10:00 PM
@Bert22306 I unfortunately do see a role for Government in rebuilding skills that have all but disappeared in the US over the last 30 years.

Government's current involvement in reshoring amounts to tax breaks (again) for manufacturing jobs. Sadly, many of the more highly skilled jobs are not the focus of the US government's efforts to reshore jobs.

It's easy and fast to move semi-skilled job: the US white goods workers who lost their jobs to foreign workers know this well. A tax break here, a trade zoine here, and pretty soon the scales tip back to domestic production. Interestingly enough, this is a fact around the world.

Where might we need some spurring by GOvernment?  You don't need to look hard to understand the dynamics. Eucation credits, training programs, and the inevitable demand for tax credits. I'm not sure how much any of this ios "needed" but it sure seems like some parts of the US have a lock on the formula. Unfortunately, a big chunck of the formula includes big tax breaks.

I'm reminded of an aero-space company developing composite airframes for small passenger jets. They received many millions of dollars in state-backed loan guarantees. But when I looked at the company the establichment in a New England location (even though it was located near a massive runway) made no sense. That company ultimately relocated out-of-state where there was a larger, highly trained, workforce - and many more millions of gyarantees and tax breaks.


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Globalization is the great equalizer
Bert22306   5/7/2014 6:11:32 PM
What you describe is a self-regulating machine. Jobs move offshore when they are more cheaply done offshore, and then the natural order of things will bring those lower offshore costs up in due course. Which encourages some amount of re-shoring.

The emphasis on government, IMO, is unnecessary. We fortunately live in a country in which we don't expect government to lead us, its lowly subordinate subjects. The other way around, more likely.

I think the most surprising aspect of this is how quickly the regulating mechanism is working these days. It's not generations anymore.

Seems to me, the other natural result is income inequality. There will always be jobs that require lower skill levels. But if you have a tremendous global pool of labor available to industry, then it seems inevitable that pay for the easier-to-fill jobs will continue to be pushed downward. (Re-shoring only happens when these jobs can be done for low-enough pay also at home.) Or beyond that, the job gets replaced by industrial automation, at home. All of which creates more income inequality.

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