Punchinello’s Chronicles

October 12, 2008

Corporate Welfare?

Filed under: Foolish Rants — Punchinello @ 1:26 am
Tags: , , ,

Which one needs the other more: corporations or countries? That’s an interesting question posed in this book I’m reading about global economics. We live in a time when communications, transportation, and computer technology are making for an increasing number of borderless transactions. If a multinational enterprise doesn’t like the country where it’s doing business, it can easily move to a different country.

It’s the same with state governments here in the US. It isn’t at all like the past, where a factory would be built near to resources and it would be very difficult to re-locate that factory. Nowadays, manufacturing and service companies can pretty much be located anywhere. In fact, the corporate headquarters is one thing, but the many international divisions are quite a different thing.

When a corporation couldn’t easily move somewhere else, the state or national government had a power advantage. If the government wanted to raise taxes, demand regulations, change social programs, or anything else, the corporation under that bordered control had to go along. Governments got used to calling the shots, getting money, and doing what they pleased.

Now, though, if a government agenda costs too much or raises payroll taxes and withholding too much, the corporation leaves. Then what happens to the geographic area and its population?

An awful lot of people talk about how corporate tax benefits, reductions, and incentives all form something they’re calling corporate welfare. It’s a buzz phrase meaning that corporations don’t have to pay taxes, and get a lot of extra money they don’t need. It’s a way of telling us that corporations are ruining the world, they’re in bed with the governments, and somehow we citizens are being screwed.

Is that true? What if we just wipe out all corporations in the United States. In fact, let’s just wipe out all corporations everywhere on the planet. How would that work out for us?

Ohio just lost a General Motors manufacturing plant. It’s a location for light trucks and sports utility vehicles (SUVs), gas-guzzling monsters of the road. There go the last 1100 jobs, not to mention the five other assembly plants closed by the automotive company in recent times. How many jobs does that remove?

One of the reasons for all this is slowing sales. How many cars can people everywhere in the world afford to buy? How many people live with an American standard of living, with money to buy a new car? And what about the competition of cars from European companies? At what point are there more cars available than anyone could possibly buy?

Which would you rather have: a steady job that pays decent money, working for a corporation that was enticed to move to your area? Or would you rather stop all the “enticing,” demand no more corporate incentives, let the corporations move to wherever they want to move, and you can find a job somewhere else?

If you happen to live in a developing country, just now getting to the point where there are more things to do in life than run a dirt farm, what would you do to attract a corporation? Would you build airports, roads, communications systems? Would you offer tax incentives or labor rates? You wouldn’t have to do all that, of course, but then why would some large company move to your country?

Everyone wants to blame their miseries on someone else, some fall-guy or “big oil,” or corporate greed. Sure there’s greed in high-level management of some corporate offices. There’s greed in banks and financial investment companies too. Hm…but isn’t there also greed in each of us who wants a $50K salary and lots of vacation days, sick pay, mental health days, shorter hours, and a company car?

Let’s make the United States a citizen’s country. We’ll throw out all those corporations that want a reason to build a plant or headquarters anywhere in the country. We’ll demand that the companies here should pay more and more taxes. Oh, wait; corporations don’t pay taxes really, they just build increases right into the price of their products.

Nevermind, we’ll just tax them more and more, and use all that money to expand healthcare. We’ll demand that corporations should absolutely give unlimited healthcare to anyone who works for the company, their families, and even after they’ve retired or been fired. Corporations have unlimited money, after all, and they keep getting even more money from governments.

What kind of dumbass thinking is that!? Why in the world would any corporation, anywhere in the world choose to build a location in a country that’s just waiting; chomping at the bit to make it as expensive as conceivably possible for the company to do business?

Mr. Obama is pleased to tell us that he’ll demand that all company employees have a fundamental right to healthcare and benefits of all sorts. To pay for it all, he’ll demand that corporations fork over the dough. What Mr. Obama seems to forget or doesn’t realize is that in today’s world not a single corporation is required to do a damn thing in the United States.

No corporation “has to” hire American employees, build buildings here, open assembly plants here, or pay the payroll taxes involved in covering every social welfare program a government can dream up. It’s a simple thing to move to Singapore, Thailand, New Zealand, Australia, Brazil, China, India, Egypt, or anywhere else on the face of the planet. What will Mr. Obama do then? Chase after them and pitch a hissy fit?

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