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Edited on Thu Aug-26-10 02:16 AM by JDPriestly
He is right about Hong Kong and Mexico. Abolishing the minimum wage does not insure a good environment for businesses or jobs.
Solitary Fracture makes an especially good point about Hong Kong and indirectly about China. Those countries are very risky in terms of the political climate. What makes businesses think that their investments are safe there, that their claims to property ownership will be respected?
The fact is that the English common law system combined with our Constitution is the most reliable protection for those who want to invest and "own" private property. Nowhere else can businesses rely on a system in which their rights are so secure. Our employment laws are quite favorable to employers if you compare them to the laws in Europe. Our courts enforce contracts. Sure we have tougher environmental laws, but that is one of the reasons that we are a better place to live and raise a family.
It is interesting that in Germany where it is difficult to lay off workers, recovery has been much deeper and faster than here where our government allowed businesses to lay off workers with virtually no penalties.
Businesses are investing a lot in China right now, but the fact is that China has only begun to invest in the public infrastructure that will be needed to support all the private development going on there.
The traffic jam near Beijing that went on for days is just one symptom of the need to improve transportation and other public infrastructure. Of course, the improvements will take a lot of money. Sooner or later, China is going to need to increase taxes just to keep up with demands on infrastructure investment. And who do the multinational businesses moving to China think is going to pay for those improvements?
China won't be able to pay for it out of revenue from sales to American consumers. We Americans are spending less and less because we don't have big enough paychecks to cover basic necessities much less Chinese trinkets. The infrastructure improvements will eventually have to be funded out of the Chinese economy. I don't know what China's tax structure is for businesses, but it is going to have to become less generous to the freeloader foreigners coming in and using Chinese infrastructure.
Companies that place their production facilities in third world countries are thinking short-term. They don't realize how good they have had it here. They are killing the goose that laid the golden egg. And they are going to regret it. Peter Schiff is a prime example.
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