Economic security means lower and fewer taxes, smaller government, and less spending– an environment for economic prosperity. Republicans in South Carolina have been working toward that end. It’s why we were able to bring in Boeing and the thousands of jobs created throughout the state by the Dreamliner facility.
The attraction of Boeing to our state is a case study in effective economic development. Republicans have worked to keep taxes low, limit regulation, and make sure government stays small and out of the way of business. Washington State, on the other hand, created an inhospitable environment for a major company like Boeing because of the state’s higher taxes and unions. So, instead of expanding in its home base, Boeing came to our part of the country.
The comparison with Washington is interesting.
For one thing, the Boeing plant in SC hasn't created any new jobs yet. It was only announced a few weeks ago, and groundbreaking on its expanded Charleston-area facility is even more recent.
For another, the Charleston plant isn't like Boeing decided to shut down the plants at Renton and Paine Field and move the whole kit and kaboodle south. It's a backup plant. Primary construction will remain at Paine Field, where Boeing has one of the largest factories in the world. If unionization was a zero-sum game, you'd have expected Washington to have withered decades ago; indeed, Franklin Roosevelt's postmaster general, James A. Farley, used to called the nation's most northwesterly continental state "the Soviet of Washington."
So Shane Massey's thesis is false on its face. Washington has not created an inhospitable environment because of its higher taxes and unions. If what he says was true, you'd expect to see a dive to the bottom- but a different sort of dive than is the case in the real world.
In Shane Massey's fantasy land, corporations flock to places like SC because we offer low taxes, a docile work force, a tiny, ineffective government, and a hostility to unions so profound Republicans dream it while they sleep.
But it's not happening.
Sure, unions are a headache for corporations. Unions have an annoying tendency to pressurize corporations into paying better wages and offering better benefits.
"Unions" have also become a shorthand term for hiding the downsides of the globalization of trade and industry. Long before Boeing decided to build a backup plant at Charleston, it had made the decision that the Dreamliner would not be built from the ground up at Everett but would be assembled there with parts sourced from all over the world- wherever Boeing could get the best deal.
Which brings us back to South Carolina. Boeing already had a major supplier in Charleston- albeit a troubled one the company had to eventually take over because of fabrication problems for the Dreamliner (you can look it up). What drew Boeing was that existing presence, and the state legislature's willingness to pony up three quarters of a billion dollars in tax breaks even as the state cuts its budget once a quarter due to declining business and its resulting fall in tax revenues.
So much for a thriving business climate.
The thing about tax breaks is that they represent monies that the state has voluntarily forgone, and will never get back. Ever. All such deals do is create jobs. When this economic development strategy came into vogue after World War II, it made sense. In that trade-regulated world, US companies built US factories and stayed there. Life was good.
Like with the textile industry in the South.
One of the failings of the Massey analysis is that he assumes that Boeing, having held SC to a bigger ransom than any other state was willing to give, it will stay here forever. But when a corporation's presence is based not on a commitment to the place on its merits but rather on the state's willingness to give the company what it wants, the corporation has no loyalty at all to remaining there. Tax laws don't encourage staying put. They encourage depreciating a facility to zero and then building a new one- somewhere. Somewhere that, in a big world full of people who can bolt stuff together, tends to mean there's always another state willing to go knees-up even bigger than the last one.
So your facilities upgrade costs are offloaded to the happy saps whose legislators have just sold them down the river for as long as the deal makes the corporation money.
Which brings us back to Washington.
Why did Jeff Bezos move to Seattle to start Amazon.com? Sure, they have facilities in the South, but what sort? Order fulfillment centers. A handful of employees pull stuff off shelves, put them in boxes, and mail them. Corporate HQ, where they come up with the ideas like the Kindle, remain in Seattle.
Why hasn't Costco left Seattle? The wholesaler runs a highly profitable business model founded on paying its employees way better, and offering a way better benefits package, than its competitors.
Why is Starbucks staying in Seattle? They have a plant in South Carolina. Its employees here roast and distribute coffee beans. That's only economic advantage in the sense that geographic dispersion saves you money in distribution costs. But- again- the idea people stay in Seattle.
Why does the giant Fred Hutchinson Cancer Research Center remain in Seattle? Among other things, because Seattle- with its union headaches imagined from afar, and the social benefits taxes provide, attracts Nobel laureates and smart people generally.
Why does Nordstrom stay in Seattle? Why does Boeing stay where it has been building aircraft since 1916?
Here's the problem Sean Massey misses, mired, as his media man is, in the 1950s.
There are two dives going on. One is the dive to the bottom. South Carolina is willing to attract industries that pay locals less crappily than they would be paid locally to bolt things together. The state makes little on the deal but the otherwise poorly-paid workforce is bought off for a few decades by being paid less poorly.
The other dive is the dive UP.
That's the one SC is losing so spectacularly it doesn't even know it's not in the game.
It's the one Richard Florida has documented- the one where states and communities have the wit to put the amenities in place to attract knowledge workers. They're the people who come up with the idea to drop a Google server farm in SC, where a handful of employees keep the air conditioners running.
If Massey's thesis is correct, New York and Boston should be ghost towns.
And yet, such places aren't. They are among the creative powerhouses of the nation, while Massey is getting dolled up in his cheerleader outfit to celebrate that Boeing is giving us a factory where some people in Charleston will get to bolt together a bunch of components- made somewhere else.
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