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Ending What Little Competitive Governance the US Has

July 19, 2011

Boeing’s president said he is “moving the 787 Dreamliner work to South Carolina due to strikes happening every three to four years in Puget Sound.” The NLRB isn’t happy about Boeing’s efforts to exit onerous labor regs. Now they’re filing a complaint that may halt the move. Economist Ed Glaeser has a good article on what this implies for US innovation:

Perhaps company presidents should never admit that they consider labor conditions when moving production, but they surely always will and that isn’t a bad thing. When a company moves to a lower-wage state, it is both making itself more competitive and boosting labor demand in a poorer place. Surely, equity enthusiasts should cheer when jobs come to low-income areas.

The U.S. has benefitted enormously from migration. For centuries, people and companies have been free to choose locations that meet their needs. We need our industries to be as nimble and innovative as possible, and we should all worry about any legal precedent that restricts the ability of U.S. manufacturing to compete.

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One Comment
  1. July 19, 2011 11:12 pm

    I’m confused. Why is a federal agency interfering in a state-to-state move? Seems like this should not be in NLRB’s jurisdiction. (Of course nowadays, most federal agencies get involved in pretty much whatever they please.) If the Commerce Clause of the Constitution still has any meaning to it (which it probably doesn’t), Boeing should take NLRB to court for their interference.

    I guess we know whose pocket the NLRB is in–labor groups opposed to states competing for business. Glaeser makes some good points.

    BTW it’s not just wages that determine how favorable a state is. The direct and indirect costs of bureaucratic red tape can easily swamp any differences in average worker wages between states. Some states like California, which seems to be bent on going full socialist, are almost blatantly hostile to businesses. Other states do stupid things like passing business taxes that tax every transaction point in the production and distribution of a product (as opposed to just revenue or profits from the final sale to consumer).

    Just as a FYI, the Tax Foundation (http://www.taxfoundation.org/) does a lot of good analysis looking at the various state business climates. I am not affiliated with them, just a fan and a regular listener to their podcasts.

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