UseMyFedTaxesInMyState

Despite Everything, Capitalism Is Alive and Well

Favel believes that “labor unions such as the UAW are one of the biggest barriers to free market capitalism.” I believe that the issue is a bit more complex than he describes. It is generally thought that the “labor cost” of the average vehicle is approximately 10 percent of the total vehicle cost. If this is true, then how can this be the “biggest barrier”?
A few examples to larger impediments to “free market capitalism” are the following:
1] Legacy costs related to pensions and healthcare of older companies. If the US government does not “re-structure” this social environment, all companies will eventually shoulder this burden increasingly as they age. One potential solution in the current environment would be to only have companies that are less than 25 years old. That way a company would not have any employees retiring or requiring expensive medical care.
2] Currency manipulations by foreign governments that cause inconsistent economic value transfer into foreign markets.
3] Decades of "Bail-Ins" that state and local governments have provided primarily to transplant auto companies. Significant growth in taxpayer subsidized new auto manufacturing capacity – in the name of jobs – has demonstrated the consequences of an incoherent national industrial policy over the last 25 years. It should not go unnoticed that Senator Bob Corker, as mayor of Chattanooga, probably played a significant role in marshalling over $0.5 Billion Dollars in incentives to have a foreign automaker, VW, build a plant in Chattanooga – all in the name of 2000 plus automaker jobs in Tennessee.
The biggest paradox of so-called “free market capitalism” is that the market is NOT free of obligations and consequences. If one looks at any area where there have been incentives to grow markets like, automotive manufacturing, housing, and retail, - one can see an explosion of overcapacity that has lead to economic breakdowns for the constituents in those markets.
For many years, many have assumed that the lack of a coherent economic plan is a plan. The lack of a real US economic plan does not work in the context of foreign countries that have robust economic strategies.
Refer to this article: www.businessweek.com/m...