I've talked to Barack a lot about his Patriot Corporation Act, which is not trade per se, but it's certainly part of the economic package around globalization. The Patriot Corporation Act has not gotten the attention that I would hope it would. But, basically it says that if you play by the rules, if you pay decent wages, health benefits, pension; do your production here; don't resist unionization on neutral card check, then you will be designated a "Patriot Corporation" and you will get tax advantages and some [preference] on government contracts.
Read On...
When a man who refuses to wear the American flag on his lapel while holding a seat in the US Senate tells you how you will define patriotism, idiocy is not only afoot; but mounted on a lightning steed. The Patriot Employer Act of 2007 could become a crowbar by which the Federal Government can not only redefine what a “good” American Corporation is, but also define how effectively the Federal Government can interfere in the business marketplace.
Senator Durbin serves as another Jacobin willing to play the pigeon, and help Senator Obama increase the movement of modern America towards a more totalitarian democracy. He also co-sponsored this Neo-Socialist bilge and offered a predictable and risible defense of this indefensible garbage legislation.
Senator Durbin describes the proposed legislation below.
The Patriot Employers legislation would provide a tax credit equal to 1% of taxable income to employers that:
Invest in American jobs, by maintaining or increasing the number of full-time workers in America relative to the number of full-time workers outside of America AND by maintaining corporate headquarters in America if the company has ever been headquartered in America.
Pay decent wages, by paying each worker an hourly wage that would ensure that a full-time worker would earn enough to keep a family of three out of poverty (at least $ 7.80 per hour).
Prepare workers for retirement, by providing either a defined benefit plan OR a defined contribution plan that fully matches at least 5% of worker contributions for every employee.
Provide health insurance, by paying at least 60% of each worker’s health care premiums.
Support the troops, by paying the difference between regular salary and military salary for all National Guard and Reserve employees who are called for active duty AND by continuing their health insurance coverage for the Guard member and his or her family.
All of this sounds relatively benign until the assumptions upon which this rests are examined. A 1% tax break, in and of itself, will not lower the operating costs of any major corporation enough to justify the termination of outsourcing. Outsourcers already take on high level of risk to outsource in the first place.
Nike, for example, risks losing operational control over its supply chain to manufacture Nikes throughout South East Asia. They also have a 15 month production cycle they have to synchronize with a 3-6 month demand cycle that is also seasonal. I wish the operations researcher in charge of optimizing that retail inventory system and thereby managing Nike’s supply chain risk all the luck in the world.
To keep from losing its footwear in the Pacific, Nike had to go into the business of solving non-trivial mathematical scheduling problems and furthermore, set up and monitor an entire shipping network. Nike is now either contracting for, or paying full time salaries to, an additional building full computer programmers and professional mathematicians just to keep track their shoes. Leona Helmsley and Ivana Trump may empathize. Outsourcing is never free.
The point to all of this is simply that Obama’s bill isn’t designed to actually make a corporation comply out of direct economic self-interest. The savings offered by a 1% tax break will not justify Nike insourcing its entire Pacific Rim manufacturing operation. Very few multinational giants will look at this incentive and jump aboard for the sake of the cash infusion alone.
The bill has a much less benign purpose than even that proported by the economic nationalists who seek to subsidize outmoded domestic jobs that would otherwise fall to marketplace attrition. This bill serves as a data marker to help keep a little list; just like the Gilbert and Sullivan character Ko-Ko, in Mikado. Once Senator Obama has his Santa Claus lists of which corporations are naughty, and which ones are nice, the patriot games involving more punitive follow-on legislation can commence.
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