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Caterpillar Strikes Deal to Build Georgia Plant
Topic Started: Feb 18 2012, 08:31 PM (1,540 Views)
Sea Dog
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Jim Miller
Feb 19 2012, 01:09 AM
I wonder who the Canadians are going to vote for down here.
I suppose the simple minded ones will vote Republican.
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tomdrobin
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Caterpillar has a history of aggressively fighting union demands. But, I don't see that as a bad thing. You have to have a balance of power for the union management relationship to work IMO. One of the big downfalls of the domestic auto industry was when they decided it was not in their economic best interest to take on the UAW. From then on it was capitulaton after capitulation, with the thinking they could just keep on raising prices and/or cutting money out of the product (reduce quality) to stay in business. The error in that thinking was they didn't realize the competition they were going to get from foreign manufacturers, particularly foreign companies with non union plants right here in the US. That placed them on precarious financial footing and when the financial meltdown and resulting recession occurred it pushed them over the edge. The government bailouts would never have been necessary had they not let the UAW have their way for so many years. Ford didn't need to be bailed out, but that was only because they had borrowed heavily before the meltdown and had enough cash to survive on. More a matter of luck than forsight.

Some say locating manufacturing to a state with right to work laws is just a ploy to get cheap labor. From what I've heard many of the transplants in the south pay around $18 an hour for unskilled labor. If you ran an ad for unskilled labor at the that pay, even here in Michigan you would get deluged with applicants. Certainly not the $30 an hour UAW rate, but even that has been undercut by the new two tier wage agreements that have people starting at $14 an hour. Seems to me it would be fairer to pay them all the $18 an hour, but apparently the older workers don't want to budge on the fruits of extortion. Seems they would be more concerned about killing the goose that layed the golden eggs (economic security).

I hear if often stated that strong unionization raises the standard of living for everyone. I don't agree. Perhaps it would if everyone belonged to a union, but I hate to think what that would do to the economic health of our industries. Our experience here in Michigan is that it just creates an economically elite segment of the population that creates upward inflationary pressure on everything from professional services to housing. And, the non union fold just get driven deeper in the hole. Seems to me the laws of supply and demand would be a better determinant of wage rates.
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Chris
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Mountainrivers
Feb 19 2012, 01:15 AM
Chris
Feb 19 2012, 01:02 AM
Mountainrivers
Feb 19 2012, 12:52 AM
Chris
Feb 19 2012, 12:49 AM
Mountainrivers
Feb 19 2012, 12:38 AM
Chris
Feb 19 2012, 12:32 AM
Explain.
That's self-explanatory, Chris. A company isn't going to give up it's biggest customer. And, even if it did, another company would come in and take its place.
Agree. But the US is not a company and it does not trade. Individuals do that.
What?
Recall that I was asking for an explanation of telco's "Only problem with that logic, is the US is the worlds largest customer. If it had an economy the size of Liechtenstein that would be a good point." That context might help. He was talking countries, you draw an analogy with companies, but it doesn't really hold.
Didn't think I would have to explain this to you Chris. Lichtenstein is a small country, thus a small customer for a companies goods. The US is the opposite. Caterpillar can't give up its sales in the US because it's taxed. It just has to set its prices such that it can make a profit and pay the taxes. It could easily give up its sales to Lichtenstein and hardly miss it. Not so with the US.
Explain what, rivers, I know what countries are, like the US and Lichtenstein. What I think you need to explain is what that has to do with companies which was what we had been discussing.
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Mountainrivers
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Chris
Feb 19 2012, 03:57 AM
Mountainrivers
Feb 19 2012, 01:15 AM
Chris
Feb 19 2012, 01:02 AM
Mountainrivers
Feb 19 2012, 12:52 AM
Chris
Feb 19 2012, 12:49 AM
Mountainrivers
Feb 19 2012, 12:38 AM
Chris
Feb 19 2012, 12:32 AM
Explain.
That's self-explanatory, Chris. A company isn't going to give up it's biggest customer. And, even if it did, another company would come in and take its place.
Agree. But the US is not a company and it does not trade. Individuals do that.
What?
Recall that I was asking for an explanation of telco's "Only problem with that logic, is the US is the worlds largest customer. If it had an economy the size of Liechtenstein that would be a good point." That context might help. He was talking countries, you draw an analogy with companies, but it doesn't really hold.
Didn't think I would have to explain this to you Chris. Lichtenstein is a small country, thus a small customer for a companies goods. The US is the opposite. Caterpillar can't give up its sales in the US because it's taxed. It just has to set its prices such that it can make a profit and pay the taxes. It could easily give up its sales to Lichtenstein and hardly miss it. Not so with the US.
Explain what, rivers, I know what countries are, like the US and Lichtenstein. What I think you need to explain is what that has to do with companies which was what we had been discussing.
Nevermind, Chris!
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Chris
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Your mention of Lichtenstein reminds me of...new thread...
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Tim from AL
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Sea Dog
Feb 19 2012, 01:16 AM
Jim Miller
Feb 19 2012, 01:09 AM
I wonder who the Canadians are going to vote for down here.
I suppose the simple minded ones will vote Republican.
I'm simple minded, I guess. But, it's OK. Simple is better.
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Chris
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Brewster
Feb 19 2012, 12:21 AM
You're quite correct, Telco.

I also think the corporate tax structure should be changed so that companies offshoring manufacturing and then shipping the finished product back be taxed as if they never left.
Let's get this topic back on cat track...

Contrary to telco and brewster's liberal beliefs, economics just doesn't work that way.

How Taxing the Rich Harms the Middle Class
Quote:
 
...when it comes to the corporate tax rate, all is not as it seems. In a recent paper that I co-authored with Kevin Hassett, we explored the effect of high corporate taxes on worker wages. The motivation for the paper came from the international tax literature (summarized by Roger Gordon and Jim Hines in a 2002 paper1) that suggested that mobile capital flows from high tax to low tax jurisdictions. In other words, in any set of competing countries, investment flows are determined by relative rates of taxation. The current U.S. headline rate of corporate tax is 35 percent. The combined federal and state statutory rate of 39 percent is second only to Japan in the OECD. With Japan set to lower its statutory rate later this year, the U.S. rate will soon be the highest in the OECD and one of the highest in the world. What effect do these high rates have on worker wages?

When capital flows out of a high tax country, such as the United States, it leads to lower domestic investment, as firms decide against adding a new machine or building a factory. The lower levels of investment affect the productivity of the American worker, because they may not have the best machines or enough machines to work with. This leads to lower wages, as there is a tight link between workers’ productivity and their pay. It could also lead to less demand for workers, since the firms have decided to carry out investment activities elsewhere.

Our paper was one of the first to explore the adverse effect of corporate taxes on worker wages. Using data on more than 100 countries, we found that higher corporate taxes lead to lower wages. In fact, workers shoulder a much larger share of the corporate tax burden (more than 100 percent) than had previously been assumed. The reason the incidence can be higher than 100 percent is neatly explained in a 2006 paper by the famous economist Arnold Harberger.2 Simply put, when taxes are imposed on a corporation, wages are lowered not only for the workers in that firm, but for all workers in the economy since otherwise competition would drive workers away from the low-wage firms. As a result, a $1 corporate income tax on a firm could lead to a $1 loss in wages for workers in that firm, but could also lead to more than a $1 loss overall when we look at the lower wages across all workers.

Following our paper, several academic economists substantiated our results, using different data sets and applying varied econometric modeling and techniques....
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tomdrobin
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Tim from AL
Feb 19 2012, 04:19 AM
Sea Dog
Feb 19 2012, 01:16 AM
Jim Miller
Feb 19 2012, 01:09 AM
I wonder who the Canadians are going to vote for down here.
I suppose the simple minded ones will vote Republican.
I'm simple minded, I guess. But, it's OK. Simple is better.
Not necessarily. Why would you vote for a political party that is dedicated to taking away the very entitlements you depend on to survive? Death wish?

To be fair we see the same phenomenon with the majority of old folks living on social security. The libertarian leaning GOP make no bones about vouchers for medicare and cutting SS. Their excuse is we have to cut it to save it. The real diehards call it a ponzi scheme. Yet old farts in droves vote for them. The disconnect is hard to understand. Perhaps they are living under the delusions that it's just those getting food stamps and unemployment that are on the right wing screw list.
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Chris
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"The libertarian leaning GOP"

Oxymoron. The GOP merely pays lip service to libertarian fiscal conservatism.
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Stoney
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Tim from AL
Feb 19 2012, 04:19 AM
Sea Dog
Feb 19 2012, 01:16 AM
Jim Miller
Feb 19 2012, 01:09 AM
I wonder who the Canadians are going to vote for down here.
I suppose the simple minded ones will vote Republican.
I'm simple minded, I guess. But, it's OK. Simple is better.
You're far from simple minded, AL. :smoker:
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