The story continues …

Chicago Tribune, “Manufacturing attempts a comeback in upstate New York“:

The effort in the Hudson Valley represents something new: an unusual partnership between government and private enterprise. And because it is no mere government bailout of a flagging industry and focuses on high-tech, future-oriented products, this initiative has potentially greater staying power.

If it succeeds, what’s happening in upstate New York could help the whole country meet one of its most difficult challenges: re-creating the kinds of secure, long-term middle-class jobs that have long been the foundation of American prosperity.

Good story, but honestly, that partnership doesn’t sound that new or unusual to us. How many “technology corridors” and sector “clusters” are there in the United States?

Newnan (Ga.) Times-Herald, “Yamaha celebrates move of ‘sport’ ATV production here“:

Dignitaries, Yamaha officials, and media representatives from around the county were on hand at Coweta County’s Yamaha Motor Manufacturing Corporation Wednesday for the official press conference announcing the transition of sport ATV production to the Coweta plant, and the unveiling of Yamaha’s new “Assembled in USA” logo.

Yamaha’s “utility” ATVs and the Rhino “side by side” vehicles have been built at the Coweta plant for several years. However, the “sport” ATVs had been manufactured in Japan. Over the next few years, the vast majority of Yamaha ATVs will assembled in Coweta. The Coweta plant is already the only location in the world where the Yamaha Waverunner personal watercraft is built.

Yamaha’s news release has more details, “Yamaha Moving Majority of Worldwide ATV Manufacturing to U.S.A.”

And more …

• Conference Board of Canada news release, “Manufacturing Industries Poised for Continuing Recovery in Production and Profitability in 2011.”
• Crain’s Detroit Business, “Border grossing: Michigan companies going global find benefits can top barriers“
• Professor Mark Perry, Carpe Diem blog, “Real Profits of U.S. Manufacturing Corporations Have Recovered To All-Time Record-High Levels .” Currently a visiting scholar at the American Enterprise Institute, Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

Mark Perry, a professor of economics at the University of Michigan, Flint, and a visiting scholar at the American Enterprise Institute, outlines the strengths of the manufacturing sector, including its incredible productivity, in a Wall Street Journal op-ed today. From “The Truth About U.S. Manufacturing“:

Is American manufacturing dead? You might think so reading most of the nation’s editorial pages or watching the endless laments in the news that “nothing is made in America anymore,” and that our manufacturing jobs have vanished to China, Mexico and South Korea.

Yet the empirical evidence tells a different story—of a thriving and growing U.S. manufacturing sector, and a country that remains by far the world’s largest manufacturer. …

And …

In 2009, the most recent full year for which international data are available, our manufacturing output was $2.155 trillion (including mining and utilities). That’s more than 45% higher than China’s, the country we’re supposedly losing ground to. Despite recent gains in China and elsewhere, the U.S. still produced more than 20% of global manufacturing output in 2009.

The truth is that America still makes a lot of stuff, and we’re making more of it than ever before. We’re merely able to do it with a fraction of the workers needed in the past.

That’s a reality of manufacturing: As technology advances and productivity increases, manufacturing becomes less labor intensive. But a growing, competitive manufacturing economy will add jobs — 139,000 last year nationally — far more than a stultifying sector held down by regulatory overreach and excessive taxation.

Professor Perry’s op-ed is behind the WSJ’s subscription wall, but AEI eventually posts the columns at its own website. Here’s a good one he wrote in December for The Sacramento Bee, “EPA’s Costly Rules Will Cost Jobs and Set Back Nation’s Economic Recovery.”

Martin Feldstein of the American Enterprise Institute, writing in The Wall Street Journal, “Want to Boost the Economy? Lower Corporate Tax Rates“:

President Obama has reached out to the business community with talk of lowering the corporate tax rate and improving the tax treatment of profits earned abroad by American companies. That would certainly be an important improvement in our tax system. Unfortunately, his desire to use the elimination of “loopholes” to avoid any loss of corporate tax revenue means that he cannot possibly go far enough in reducing corporate tax rates.

The U.S. corporate tax rate is 35% at the federal level and 39% when the average state corporate tax is included. The average rate in the other industrial countries of the Organization for Economic Cooperation and Development (OECD) is just 25%. Only Japan has as high a rate.

Eliminating every loophole in the taxation of domestic corporate profits identified by the administration’s own Office of Management and Budget would raise less than $60 billion of extra revenue in 2011, enough to lower the combined federal-state corporate rate to 35%. The U.S rate would still be higher than in every other country but Japan, and a full 10 percentage points higher than the average in other industrial OECD countries.

The full piece is behind a WSJ subscription wall, but AEI will post the column on its website on Feb. 22.

See also Curtis Dubay, Heritage Foundation, “Corporate Tax Reform Should Focus on Rate Reduction”

From The Hill, “Groups allied with the Democrats go for broke“:

The ACLU is lobbying the Senate to pass the Paycheck Fairness Act, which is expected to come up for a cloture vote as soon as Wednesday. The measure, which already passed the House, is designed to close the wage gap between men and women in the workplace. 

Last week, the civil rights group sent a letter to senators saying that the group would be “scoring both the cloture vote and the vote on the merits” when the bill comes up for debate. 

Odd. We had always thought the ACLU was a “civil liberties” organization defending the Bill of Rights, but here they are pushing legislation to redistribute wealth via federal mandates and lawsuits against employers. It’s almost as if they’re a generic left-wing outfit, not a civil rights group at all.

Anyway, The Hill’s story cites the National Association of Manufacturers’ “Key Vote” letter against the Paycheck Fairness Act, S. 3772.

The Wall Street Journal also publishes a good op-ed (subscription) on the legislation by June O’Neill of the American Enterprise Institute, “Washington’s Equal Pay Obsession: There’s no epidemic of gender discrimination. So why is Congress proposing another law?”

Women in the workplace don’t face rampant pay discrimination, and yet the Senate may soon pass a bill—already passed in the House—premised on the erroneous charge that they do. The Paycheck Fairness Act (PFA) would be a harmful addition to the many federal laws that already protect women and men from labor-market discrimination.

Sen. Tom Harkin (D-IA) gave a floor speech Monday anticipating Wednesday’s cloture vote on the Paycheck Fairness Act. It’s just the start, he suggests. Next, the Fair Pay Act!

Two excellent commentaries on taxes, business and the economy…

Kevin A. Hassett and Alan d. Viard of the American Enterprise Institute wrote Friday in The Wall Street Journal, “The Small Business Tax Hike and the 97 Percent Fallacy,” demonstrating that the expiration of the 2001 and 2003 federal tax cuts on individual income would indeed hit small business. The “97 percent fallacy” is a reference to Vice President Biden and House Speaker Pelosi’s argument that the higher tax rates will only affect 3 percent of small business, so what’s the big deal?

The numbers are clear. According to IRS data, fully 48% of the net income of sole proprietorships, partnerships, and S corporations reported on tax returns went to households with incomes above $200,000 in 2007. That’s the number to look at, not the 3%. Would Mrs. Pelosi and Mr. Biden deny that the more successful firms owned by individuals in the top income-tax bracket are disproportionately responsible for investment and job creation?

At National Review’s The Corner, Veronique de Rugy, an economist and researcher at the Mercatus Center, makes the case that the temporary tax credits and rebates that the Administration favors to spur job creation are ineffective. For example, the $1,000 tax credit for hiring — which the President wants to boost to $5,000 — is useful only if a small business has a tax liability, much less likely given the current economic climate. In her post, “More on Small Business and the Administration,” de Rugy writes:

If the administration were so eager to help businesses, large or small, it would end the constant public-policy uncertainties that businesses are facing: The health-care overhaul, which will bring new but still unknown obligations to insure employees, and legislation aimed at tackling climate change, which could raise businesses’ energy costs, add to the uncertainty about the economy. The new financial regulation, which will take years to put in place, adds its share of uncertainty, as does the potential expiration of the tax cuts. Meanwhile, as government spending increases, so do the chances of more taxes in the future.

Her arguments about the deleterious effects of uncertainty dovetail well with the conclusions of the National Association of Manufacturers’ 2010 Labor Day report, “Labor Day 2010: The Impact of Anti-Labor Policies on Working Men and Women.”

Gov. Mitch Daniels of Indiana was at the American Enterprise Institute on Tuesday, June 15, for a day long conference, “Health Care Reform: An Initial Checkup,” where he gave the keynote address. Excerpt from his remarks:

I wish honestly that national health care policy had headed in some direction more like this [Indiana's model of consumerism in health care]. When people sometimes ask me what we ought to do or what my reaction to this whole bill is, I sometimes start by saying that “in a dead end, full speed ahead is the worst option.” That’s what I think we did. My own view is that we could hardly have built a health care system more guaranteed to produce excessive costs. . . . Whatever else you think or say about it, don’t call this reform. It didn’t reform anything. It took the form we had and blew it up to poster size. And I’m afraid by perpetuating the drivers of higher costs, it’s setting us up for more disappointments in the future.

Daniels, a Republican, was also interviewed by AEI’s Nick Schulz, editor of American.com. Video segments of the interview are available here. Since there appears to be a renewed push for some form of government carbon-tax-regulation-control scheme, this exchange is timely:

Schulz: The cap-and-trade legislation and carbon regulation are much in the news again, and there’s activity here in Washington on that front. You’ve described the current legislative push for cap and trade as a way to regulate carbon as a kind of imperialism. Sounds like strong stuff, but I want to give you a chance to explain what did you mean by that exactly? If you’re not in favor of cap and trade, are you in favor of, say, carbon taxes or some other way to deal with carbon regulation?

Daniels: The reference to imperialism was a reference to the differential way that at least some of the initial schemes would have fallen on our state – massive cross-subsidy, raise the costs of utility bills, maybe double them in a state like Indiana, raise the cost of doing business, driving jobs out of our state, probably off shore, while leaving untouched or even subsidized places like, well, California or elsewhere. So it was massively unfair, and I tried to raise dissent on behalf of the workers and the ratepayers of our state.

You know, the whole notion here of carbon dioxide regulation seems to me requires a huge burden of proof be carried before we do this. (continue reading…)

Washington Examiner, “Air quality improving despite population, vehicle growth“:

“Air quality is improving in the region — there is no question about that,” said Joan Rohlfs, chief of air quality planning for the Metropolitan Washington Council of Governments. “It’s very dramatic, actually. In fact, it’s almost an issue for us because people are losing their awareness [of air pollution]. We don’t have that many code-red days anymore.”

Besides Earth Day, the peg for the article is the Environmental Protection Agency’s annual report on air quality trends, released to little attention on March 10. The report found that ozone levels have dropped 14 percent between 1990 and 2008, lead has plummeted 78 percent, and carbon monoxide is down 68 percent.

We missed the news when the EPA highlighted the report in an outpouring of national susurration, catching up a few weeks later. As The Examiner reports: “‘No one ever really looks at the data,’ said Steven Hayward, a resident scholar with the American Enterprise Institute. ‘[Public officials] never stand up and say here is the progress we’ve made.’”

Greenwire, the widely read environmental trade publication, is having some stories republished online by The New York Times, and today has a good piece, “Enviro Ad Sparks Debate — Grass Roots or AstroTurf?,” reporting on the Environmental Defense Action Fund hiring activists in North Dakota to promote cap-and-trade. (Original reporting done at the SayAnything blog.) Since Waxman-Markey would hammer a cold-weather, energy-producing state like North Dakota, there aren’t a lot of indigenous, impassioned supporters available. You have to hire them at $90 a day.

The best comment n the story:

“When someone else does it, it’s astroturfing; when you do it, it’s community organizing,” said Kenneth Green, resident scholar at American Enterprise Institute, a conservative think tank. “Both sides do this kind of thing.”

While trade groups and companies tied to oil and coal might be acting on behalf of shareholders when they bus workers to rallies, Green said, “if you look at the size of the environmental industry, it’s a big industry.”

Right. Which is why the gasps of outrage are so phony when the greens, unions and leftwing activists cry about businesses having any organizational role in citizen activism. They don’t want to talk about the substance, the issue, but instead poison the well by saying anything touched by employers is inherently suspect.

As Michael Barone notes in his First Rule of Life: “All process arguments are insincere, including this one.”

From WSJ’s Real Time Economics blog, “Don’t Expect Too Many Jobs From Tax Proposals,” an informative piece by Martin Vaughn on the campaigns’ tax positions:

[Business] groups and some economists say the most important change that could promote job creation is a permanent tax rate cut.

“Overall, you need a tax code that encourages investment by U.S. companies, and that’s going to lead to job creation,” said Dorothy Coleman, vice president for tax policy at the National Association of Manufacturers.

Some recent academic studies indicate that the burden of high taxes falls at least as heavily on workers as it does on shareholders.

“It’s increasingly apparent that the benefit of a lower corporate tax rate is higher wages for workers,” said AEI’s Brill.

McCain wants to cut the corporate tax rate to 25% from its current level of 35%. This tax cut may be partially offset with revenue raisers such as withdrawing benefits from the oil and gas industry, but it would not be fully offset, Holtz-Eakin said.

Obama would also consider lowering the corporate tax rate, if it could be paid for by closing existing loopholes. That revenue-neutral corporate tax reform model is unpopular with business groups and is consistent with a recent plan put forward by House Ways and Means Chairman Charles Rangel (D., N.Y.).

Speaking of AEI, the Washington Post today publishes an op-ed by Brill and his AEI colleagues, “The Real Problem with Obama’s Tax Plan.”

If rewards for America’s entrepreneurs and firms are reduced through higher marginal tax rates, their incentives to earn, invest and create jobs will be diminished. Americans will have less incentive to save, and firms will have less incentive to pay dividends. Tax avoidance will become more profitable. A smaller capital stock will mean a less productive economy and lower wages for middle-class and other workers. These disincentive effects also mean that the revenue gain is likely to be smaller than Obama envisions.

The American Enterprise Institute’s Legal Center for the Public Interest hosted a panel discussion Monday on the U.S. Supreme court’s rulings — past and anticipated — on business-related cases. Lots of good debate from a panel of real experts, and the entire program’s audio will be posted at AEI’s website soon.

The conventional wisdom, promulgated vigorously by the mainstream media, is that the current U.S. court is a “pro-business” court, a characterization that the panelists took issue with.

AEI Scholar Michael Greve argued that the court may appear that way because it remains the last U.S. institution that has not succumbed to populism and the spreading around of power and wealth that a prosperous society can afford.

Andy Pincus of Mayer Brown — former general counsel in the Clinton Commerce Department — said, “I don’t think the court is business friendly. I think it’s friendly to some ideas that may also be of interest to business….” For example, Pincus said, the justices are reluctant to replace Congress in the writing of laws and will therefore not find new causes of action. In addition, he contended, the justices see the jury process as a costly, inefficient and inaccurate legal process, shifting costs to parties who probably shouldn’t have been sued at all. To the extent the legal framework allows them to bring some rationality to the process, they will attempt it.

Pincus also provided the perspective of the U.S. legal system from outside.

I know in some quarters it’s heresy to talk about comparing our judicial system with the rest of the world, but in fact, if you represent ….foreign clients, and you say to them, well, you’ve just been sued, and now you have to spend some money to file a motion to dismiss. And, by the way, the way that gets decided is that the judge assumes that everything in the complaint is true, even though you know of course that many of the things are totally preposterous.

And if that’s denied, you have to spend $1 million — with electronic discovery, maybe $10 million, $100 million –  defending yourself, which you have no chance of getting back, even if at the end of the day you’re quite confident you’re entirely innocent, not liable, under whatever the claim is. In most countries of the world, that’s sort of craziness, but that’s the system we have.

Yes, it is. Which goes a long way in explaining this comparison, analyzed by the Tillinghast business of Towers-Perrin, March 2006:

The U.S. had a 2.2% ratio of tort costs to GDP, compared with Germany (1.1%), Japan (0.8%) and the U.K. (0.7%). Aside from Italy (1.7%), the other countries examined in the study have tort costs comparable to historic levels observed in the U.S. in the 1960s and 1970s.