Disincentive to Create US Jobs?

Boeing is opening a facility in South Carolina to build the 787. A US company creating high-paying jobs inside the United States. Should be great, right? Wrong. The National Labor Relations Board is not happy.

The labor board's complaint filed earlier this month alleges Boeing decided to build a $750 million aircraft assembly plant in South Carolina because it was concerned about strikes by union workers in the state of Washington. Associated Press

Ah. South Carolina is a right to work state. The Washington unions will suffer if production moves. Can't have that. So, the NATIONAL Labor Relation Board has decided to come down on the side of Washington over South Carolina. Playing favorites? The question then becomes this: What incentives is the NLRB creating? Well, if NLRB gets its way, Boeing won't open a facility in SC. The WA unions will benefit, right? Not necessarily. The NLRB can only complain within the US. Boeing might instead escape union strikes by locating overseas, which will benefit neither SC nor WA.

Manufacturing has been fleeing the US because of things like this. Every job that has fled overseas is because it is cheaper to produce there. Even with the shipping costs, it is still cheaper. Unlike the service economy which must be close to its clients, manufacturing can escape overbearing government by leaving the jurisdiction. Businesses can, like people, vote with their feet.

End the Fed

Ben Bernanke, Chairman of the Federal Reserve, had the first ever press conference in the nearly century history of the institution. He said not to worry about inflation and that unemployment should slowly decline over the next two years. I beg to differ. Sure, employment should improve but inflation is coming. Look at the price of gold: it was going for $880/oz. in Jan. 09 but is currently trading at $1540/oz. Silver has gone from $11/oz. to $49/oz. in that time. Gas and food are also climbing. Oh, the government will assure you that gas is going up because of speculators and greedy oil companies. Never mentioned will be that with each new dollar that is printed, the ones in your wallet become less valuable.

The primary purpose of the Fed was originally to keep the money stable, make it a reliable store of value. Inflation is anathema to that. However, governments love inflation. Inflation is a tax. Inflation allows government to continue spending or to pay off debts with devalued currency.

None of what I say would come as a revelation to Bernanke. So, he knows inflation is coming. He knows that to rein it in will require a rise in the interest rate which will choke off job-creating investment. None of this is new. He, better than most, knows where these policies have led in the past. What is he thinking? He didn't explain it in his unprecedented press conference.