Business Friendly States – Choices

The April 21, 2011 Wall Street Journal included an editorial titled, “The Death of Right to Work”.  The editorial discusses the Machinists Union’s challenge to the Boeing company’s decision to build the 787 Dreamliner in South Carolina, one of 22 Right-To-Work states.  The National Labor Relations Board supported the union complaint asking an administrative law judge to stop production in South Carolina because Boeing had included the risk of strikes as one reason for moving production out of Washington State.  Note: per the Journal, “The union has shut down Boeing’s commercial aircraft production line four times since 1989, and a 58-day strike in 2008 cost the company $1.8 billion.”  The Union’s Complaint is that Boeing acted out of “anti-union animus, discouraging membership in a labor organization.”  This supposedly violated federal law.  Indeed, there are many appropriate laws that protect union organizers and union members from retaliation.  However, as written in the editorial, “There are plentiful legal precedents that give business the right to locate operations in right-to-work states.”  This is equally appropriate.  Businesses can and must be allowed to locate in cites, counties, or states that provide the business with its best competitive advantage – in a GLOBAL economy.  The alternative will be the April 19, 2011 Journal headline, “Big U.S. Firms Shift Hiring Abroad.”

John Fund wrote an opinion in the April, 22, 2011 Journal, “California Dreamin’ – of Jobs in Texas.”  Fund’s article identifies multiple reasons for businesses leaving California and businesses moving to Texas, among them are: “California’s hostile regulatory climate,” its labor laws, and high tax rates.  The article quotes Andy Puzder, COE of Hardee’s Restaurants, “You can’t build in California, you can’t manage in California, and you have to pay a big tax.”  Mr. Puzder’s business, fast food, must locate in the neighborhoods where it wishes to makes sales.  People don’t generally drive 100 miles for a hamburger.  Manufacturing businesses, R&D businesses, even movie businesses are not so constrained and can relocate to business friendly locations.  This leaves the notoriously low paying, low-tech service businesses (and jobs) like fast-food restaurants in places like California, and Washington, while states like Texas get the higher value-added,  higher paying manufacturing jobs.

States such as California and Washington have more restrictive labor laws, e.g. closed shops, and more restrictive environmental regulations, e.g. lengthy permit processes, etc. because the citizens of those states have chosen them, through their elected state officials.  If this is truly how the majority of citizens want to live, then the governments of those states are performing well.  However, if a very vocal minority is overly influencing the elected officials, then the majority need to regain control. Again from the Fund article, “One speaker from California shook his head in wonder: ‘You can have the most liberated life-style on the planet, but if you can’t afford to put gas in your car or a roof over your head it’s somewhat limited.”

How does all this fit into making the world a better place for our Grandchildren?  Everyday we make choices; the world decides the reactions.  When we make choices and decisions today, we need to be thinking about how those choices will affect our Grandchildren in 10, 20, 30 years.

Gallery | This entry was posted in Economics, Future for Grandkids, Grandchildren, Grandkids, Uncategorized and tagged , , . Bookmark the permalink.

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