Tuesday, March 04, 2008


As usual, economist Thomas Sowell has some real gems in his latest commentary "Rescuing the Rust Belt":

1. Jobs are always disappearing. The big question is why they are not being replaced by new jobs. Rust belt policies that drove out old jobs also keep out new jobs. NAFTA makes it easier for politicians to blame the problem on foreigners. In fact, foreigners make ideal scapegoats for politicians. After all, people in Japan or India can't vote in American elections.

2. Senator Obama says that he is for free trade, provided it is "fair trade." That is election year rhetoric at its cleverest. Since "fair" is one of those words that can mean virtually anything to anybody, what this amounts to is that politicians can pile on whatever restrictions they want, in the name of fairness, and still claim to be for "free trade." Clever.

3. In the short run, you can get away with all sorts of things. But, in the long run, the chickens come home to roost. The rust belt is where those rising costs have come home to roost. While American auto makers are laying off workers by the thousands, Japanese auto makers like Toyota and Honda are hiring thousands of American workers. But they are not hiring them in the rust belts. They are avoiding the rust belts, just as domestic businesses are avoiding the high costs that have been piled on over the years by both unions and governments in the rust belt regions.

Bottom Line: TANSTAAFL


At 3/04/2008 5:42 PM, Blogger spencer said...

yes, but American auto producers are doing exactly the same thing of shifting production out of the rustbelt to other areas of the country.

Both are being bribed by the state and local government in the new locations to build plants there.

Typical Sowell analysis of ignoring half of the issues so he can prove his priors.

At 3/04/2008 9:05 PM, Anonymous Anonymous said...

Spencer, by "bribe" do you mean competing for the business by providing a much friendlier business environment via lower overall taxes, tax breaks and "right to work" laws?

At 3/05/2008 9:46 AM, Anonymous Anonymous said...

What a stupid agrument by spencer. So, you are attributing all of the Sun Belt's growth to bribes. Now that is a dumb argument.

Check into how hard it is to start a business in Cleveland and you'll realize why none do. There is so much paperwork and regulations to go through just to open up a convenience store that business leaders just don't find it worthwhile. Couple that with high taxes and an eroding population base and you get to the root of the Rust Belt's problem.

So, no its not just high taxes that keep businesses out of the Rust Belt. If it was just taxes, there would be no businesses in California and New York. It is also a political attitude that is against growth and against new businesses. Best example of it is the reelection of Dennis Kucinich last night. In his speech, he said he won the fight against corporate interests.

Fine Dennis you won. All of corporate America will now leave your and your city alone.


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