Helping the Local Economy

The reason Lincoln County is losing so many jobs is because of government regulations, zoning, and the inadequacy of government education. High taxes and regulatory costs stifle the local economy. This article shows how reducing government will stimulate the local economy and bring jobs into the county.

Throughout much of Lincoln County’s history, many residents have depended on local textile mills for their livelihood. Even those who weren’t employed directly by them still benefited from the gains to the local economy those jobs brought. But recently, so many textile mills in the county have been laying off workers or even closing down entirely. According to The Charlotte Observer, in 1990 manufacturing jobs represented 37% of the workforce in Lincoln County; in 2004 it’s down to 29%. And there doesn’t seem to be anything coming in the near future to take their place. What is the problem here, and what can be done about it?

Half of the textile mills that closed down moved their operations overseas. Superstores such as Wal-Mart sell foreign-made products at low prices, reducing demand for domestic goods, so the ones that stay behind are hurt and have to lay off people as a result. What makes these foreign goods cheaper? Common wisdom seems to be that greedy corporations are taking advantage of lower wages in foreign countries, but this just doesn’t hold water. American wages have been higher than these other countries for forty years or more; why, all of a sudden, are they moving there now? Why not forty years ago? Why aren’t they moving to Africa where the wages are even lower? And why aren’t we getting jobs from Japan since our wages are lower than Japan’s?

Another problem with this theory is one of monetary exchange. We pay for goods in dollars, but if the workers are in (say) India, they’re getting paid, not in dollars, but in rupees. That means that somewhere along the way, the company has to exchange the dollars they get from American consumers for rupees to pay their Indian workers. But that means that someone else was wanting dollars, someone who had rupees to trade for them. And that someone else is going to spend those dollars, directly or indirectly, in the American economy, either by purchasing goods and services from America or investing in American interests. Every dollar that goes out of the country comes back in within three months. So, shouldn’t all this capital coming back in be spurring the creation of more jobs? Shouldn’t we just be trading out the old jobs for the newer, better ones, like when people who made buggy whips had their jobs phased out to make way for automobile makers? And no one in Germany seemed to mind when we “took” their textile jobs in the first place.

The answer to all of this becomes clear once you realize the costs of employment that businesses incur in this country above and beyond their employees’ wages. Everything from the possibility of discrimination lawsuits, EPA violations, workforce quotas, the employer’s share of the payroll taxes and employee taxes, and the high cost of government regulation in general. According to the John Locke Foundation, in a survey of over 400 North Carolina businesses, an “onerous regulatory burden” was cited as a significant impediment to economic growth. According to the Cato Institute, American businesses pay more money complying with government regulations than they make in profits. In light of these facts, it doesn’t take an economic genius to see why manufacturing jobs are going elsewhere. Every regulation, every demand, every new policy enacted by the government costs money. At some point, it just becomes too expensive to keep doing business here. In many cases, the choice is between moving overseas or going out of business entirely.

Businesses don’t mind paying a fair wage for good work. If they did, then everyone would be working for minimum wage and there would be nothing anyone could do about it. But business owners and managers know that if they offer competitive wages, they get better workers, which means better productivity and ultimately more profits. That’s why the jobs aren’t going to Africa; they can’t get anywhere near the rate of return they can get in the US and other countries. But the high cost of regulation here can easily make the cost of employing workers two or three times as high as their wages alone. It’s easy to see how these extra costs can tip the balance in favor of developing countries such as India and Taiwan.

The most obvious solution to all of this is to repeal these regulations and let the businesses move back here. Of course, since this is largely a state and Federal issue, there isn’t much a County Commissioner can do about those. But there are other things we can do at the county level, things that don’t require the aid of the state or Federal governments. We can make our county more attractive to businesses by repealing the Zoning Ordinance (see Why Zoning Doesn’t Work). We can cut out all of the waste from our government and get taxes as low as possible. According to the John Locke Foundation survey mentioned above, the tax burden was cited as the #1 impediment to economic growth. And in their 2004 tax report, they found that the tax burden on Lincoln County citizens averaged 4.8% of each citizen’s income, more than the statewide median of 4.21% (Catawba and Gaston Counties were both lower, with 4.6% and 4.57%, respectively). But targeted tax cuts and corporate subsidies, the solutions which have been preferred in the past, just aren’t working. We need large-scale tax cuts to both give the businesses the incentive to come here and give residents more money in their pockets to spend on them.

Now, I’m not going to snow you and pretend that this is going to bring the big textile companies back. While I’m sure the Commissioners would love to bring in a couple of nice, hefty plants, because that’s just the kind of image they’d love to use to show the voters what a great job they’re doing, I just don’t think that’s in the cards anymore. But another way, maybe even a better way, is to bring in more smaller businesses to the county. Instead of a couple of plants that employ 1,000 people each, bring in dozens of smaller businesses that employ dozens of people each. The same overall quantity of jobs would be there, but we wouldn’t have so many eggs in so few baskets. So there wouldn’t be quite the shock to our local economy if one of them suddenly needs to lay off some workers or even closes down entirely. It’s not as sexy, but it’s much more practical.

How do we do that? Just by getting government out of the way. Getting rid of zoning entirely, and getting rid of as much of the tax burden as possible, will give these businesses the incentive they need to come here. It won’t make us a Charlotte or even a Hickory by any long shot, but it will give us a good, strong local economy. Ask any of the companies who employ people here, even the ones that closed down, and they’ll tell you that Lincoln County workers are good, loyal, hard workers. The problem isn’t us, the problem isn’t the companies, the problem is government. I am the only candidate for County Commissioner with the courage to make the tough choices and do what is right to get our local economy back where it needs to be. And the Libertarian Party is the only political party dedicated to doing this at all levels of government, bringing America back to the prosperity that freedom once gave it.

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