Benedict Arnold Outsourcing or Reasonable Business Practices? Part III of III:Unions and Outsourcing

Unions see American businesses as the enemy, therefore in their eyes, anything good for business is bad for the union worker. Turn on the news just about any day of the year and you will find people protesting ‘unfair practices’ as if these workers had no other choice but to work for another company or in another industry. Unions by their nature are anti-capitalistic: competition is bad.

What many union workers fail to realize is that competition is their best hope of achieving a ‘fair wage.’ The union worker would be better off if he insisted on being judged as an individual based on his skills and his contribution to the company rather than be part of a collective group which demands benefits and higher wages based on a class of worker without regard to individual efforts. While there may be strength in numbers, as the numbers grow, the interests of a single individual are overlooked in favor of ‘the majority’ of the members.

As I had written in part I and part II about the obstacles American businesses face with excessive government regulation and oppressive taxation, the same holds true with unions. Unions are the cause behind much of the government regulation and oppressive taxation because unions are very powerful lobbies in Washington. Many foreign competitors to the U.S. do not have to contend with unions. Unions also make it difficult for businesses to compete because unions do not care about the bottom line of a business.

Union workers must be paid a certain amount regardless of the actual value of the work to the business. Contracts force businesses to pay for expenses they would not otherwise have to pay. On a construction site, if something is outside a workers job description, he is prohibited from doing that task. I was once on a jobsite where the building under construction had two elevators: the union elevator and the non-union elevator. From what I understand, taking the wrong elevator was a big no-no. But this is not even the stupidest regulations unions write into their contracts. Think about such a non-task as flipping a light switch: a drywall worker cannot turn the lights on or off because that is the electrician’s job! Is it any wonder why a company might want to locate its operations outside of the U.S., to escape this union nonsense?

Benedict Arnold Outsourcing or Reasonable Business Practices? Part II of III: Punitive Taxation

Could the punitive taxes of the U.S. government be a reason why some businesses turn to outsourcing to gain a competitive edge? Consider the additional costs businesses incur complying with the current tax code: payroll taxes, capital gains taxes, taxes on raw materials, excise taxes, FICA, and property taxes. On top of all of these taxes, businesses also have to pay for costs to make sure they are legally complying to the confusing array of taxes. In fact, American businesses pay roughly $250 billion each year to comply with the current tax code. To make matters even worse for American businesses, the tax code is so complicated that no one person understands it completely. Even H&R Block, a company that specialized in filing income taxes for perhaps millions of individuals and businesses every tax season, reportedly filed its own taxes incorrectly understating its tax liability to the tune of an estimated $30.5 million.

Many people are under the impression that businesses have a duty to pay their share of taxes. I submit to you that this is the wrong approach. Whenever a company is required to pay taxes on raw materials, pay FICA (self employed people pay double what employees pay for FICA) and payroll taxes, and every other type of tax, these costs are figured into the overall cost of producing a product. While on paper businesses pay a huge sum of taxes, in reality the consumer is the one who foots the bill.

In order for businesses to cut down costs and bring more jobs to America, all business taxes should be immediately abolished. Many businesses decide to outsource their activities outside of the U.S. because of these very tax laws; many use offshore tax shelters to avoid these unnecessary costs. The solution to me seems very clear: why not make the U.S.A. the world’s largest tax shelter? Such legislation has been proposed in congress HR 25/SB 25 (more commonly known as The Fair Tax). The purpose of The Fair Tax is to eliminate the current income tax system which punishes success in favor of a consumption tax (sales tax) where taxes are only collected at the point-of-sale to the end customer. Where outsourcing is concerned, businesses would no longer be compelled to comply with punitive and confusing tax code and would attract more businesses to locate operations in the U.S. Until that day comes, business owners will continue to play this cat-and-mouse game with the IRS, looking for loopholes in the law and sending jobs that could be American jobs overseas.

Benedict Arnold Outsourcing or Reasonable Business Practices? Part I of III: Government Regulation

In my recent online accounting class, my instructor posed the following question: “Why has outsourcing become a competitive strategy? Provide an example.”

Because I knew my response would be rather long-winded and because I needed three posts over the course of the week to receive full credit for participation, I answered in three separate posts (so I have opted to do the same here). The typical response from my classmates was about how terrible outsourcing is and how these companies do not care about America – the basic b.s. we have heard from the Democratic Party and its willing accomplices in the MSM. I saw this as an excellent opportunity to educate my classmates about capitalism and the other side that they clearly had not heard. This is how I responded…

Government Regulation
Three main reasons outsourcing has become an attractive alternative to manufacturing or providing services domestically are oppressive government regulations, punitive taxes, and trade unions. Many countries outside the U.S. do not have to deal with the same kinds of obstacles. In this first post I'll focus on government regulations.

Businesses are burdened with government regulations such as price controls, minimum wage laws, EPA regulations, OSHA safety standards, and a plethora of other regulations. Perhaps when these regulations were passed by congress or some other government bureaucracy, the people and ideas behind them had the best intentions of the country at heart…but what do we know about good intentions?

Price controls and minimum wage laws are created by government with little or no regard for market forces. Supply and demand always dictate what a good or service will cost. To suggest otherwise, that an act of congress can legislate 'fair prices', is as foolish as suggesting that congress could repeal the law of gravity. In the end, regulations distort the true value of goods and services (Beach and Miles, p.70).

Who could be against protecting the environment or making businesses safer places to work? This is the intention behind the Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA) but do these government agencies actually make the environment cleaner and workplaces safer? At what cost do these agencies meet their goals? Are the standards enforced fairly among all types of businesses?

As it turns out, the standards are not the same across the board. According to a working paper by Lloyd Dixon et al for The Rand Institute for Civil Justice, because EPA regulations are much more stringent on larger companies than smaller companies, smaller businesses are discouraged from growing and are at a disadvantage because of the costs associated with compliance (p. xiii). Surely this was not the intent of the EPA – to punish growing businesses, but how does unequal laws make the environment cleaner?

Similar problems of unequal legislation likely apply to OSHA and other government regulations as well. While one could argue the merits of price controls, minimum wage, EPA, OSHA, and other government regulations, the fact of the matter is that many countries have no such regulations; American businesses operate at a disadvantage. Outsourcing becomes attractive to business owners who want to reduce their costs from burdensome regulations to have a better return on stockholder’s investments. Upon further analysis, who could blame them?

Citations:

Beach, W, W. and Miles, M., A. "Explaining the factors of the index of economic freedom"

Dixon, L. et al. “The impact of regulation and litigation on small business and entrepreneurship”.

Update:The Plight of Cory Maye

It has been several months since I wrote my initial post about the injustice that Cory Maye was dealt in a small Mississippi town but I assure you, there will be many more posts to follow. Radley Balko a.k.a. The Agitator has been relentless in his research of this case; I think the least I can do is pass along what he has uncovered. Rather than simply search the internet or conduct a cursory search of public records, Balko went the extra mile and actually went to Prentiss, Mississippi to interview townspeople, local law enforcement officers, public officials, and one of the jurors who made the fateful decision to find Cory Maye guilty with the recommended sentence of death. Balko even took photographs of what remains of the crime scene. The most intriguing photos show where bullet holes remain in the door jam where Officer Ron Jones’ life came to an abrupt and tragic end; photos which seem to support Cory Maye’s testimony (pdf).

This story does not end with the conviction of Cory Maye, however. Balko has also done some investigative reporting regarding the apparent rail-roading of Maye’s court-appointed lawyer by the Town of Prentiss. Something really smells here.

Juror Interview
When Balko interviewed one of the jurors and asked whether or not Cory Maye knew at the time he was shooting a police officer she replied: "I couldn't say. Maybe he did, maybe he didn't. I couldn't say."

When Balko pressed the juror further and asked whether or not Maye was guilty in her opinion she replied: “I couldn’t say.”

When asked if Cory Maye deserved a new trial, the juror responded: "Oh, yes. He ought to get a new trial. Everybody deserves a chance."

In the course of the rest of the interview, the juror also revealed that she had very little memory of the trial because she was taking medication at the time and that she “didn’t hear everything,” that she did not like Maye’s attorney, and “couldn’t say” if she based her decision in part because of her dislike for Maye’s attorney.

If she really “couldn’t say” much, could one interpret a little reasonable doubt on the part of this juror at least?

Rumors Surrounding the Pearl River Basin Narcotics Task Force
Balko visited several people close to Cory Maye who passed along comments they had heard from local law enforcement regarding the conduct of the task force which conducted the raid on Maye’s home. One of the phrases he heard frequently was that the Pearl River Basin Narcotics Task Force had a ‘cowboy mentality.’ According to Balko, the general consensus was that many in law enforcement “wouldn’t be at all surprised if they [the task force involved in the raid of Maye’s home] didn’t knock before kicking down that [Maye’s] door.”

An unnamed officer is quoted as saying:

Nobody around here wears a halo. People think the gun and the badge mean credibility. That if an officer says drugs were there, they were really there. It don't. I wouldn't be at all surprised if they didn't knock before kicking down that door. I wouldn't be surprised if those drugs they found really weren't there, either.

Balko also interviewed others who had been subject of raids by the Pearl River Basin Narcotics Task Force who made similar statements. Of course most of these comments are hearsay, off the record, or made by individuals with questionable integrity and should be taken with a grain of salt. Having said that, it sure would have served in the interest of justice had some of these people testified in the trial. Hopefully more of these people will identify themselves and be heard.

The Bullet Holes
According to Maye’s testimony, he was laying on his stomach on the floor as he shot at the intruders who turned out to be police officers. Why is this important? The examiner who completed the autopsy for Officer Ron Jones believed that the bullets entered Jones’ abdomen from a downward trajectory. If what the examiner said was true, this would mean that Cory Maye either lied or was mistaken about the position he took when he fired the shots. The prosecution was trying to prove that Cory Maye was lying in open court to damage his credibility.

The photographs posted on Balko’s blog seem to support Maye’s testimony. Notice the shape of the bullet holes in the door frame and where they are positioned. I am not an expert in the field of ballistics (neither was the coroner in this case for that matter, nor was a ballistics expert used in the court proceedings) but the location of one of the holes is near the top third of the door; a person would have to be very tall to hit this part of the door at a downward trajectory I would think. Even if Cory Maye was tall enough to shoot at a downward angle, this still would not explain why the bullet hole is elongated in a manner which suggests an upward trajectory.

As this story progresses, more and more questions emerge. But why hasn’t the MSM picked up on it yet? In the mean time, individuals such as Radley Balko continue to ask the questions which will hopefully someday give Cory Maye a second chance for justice. The least we can do is share his story.

***NEW DEVELOPMENT***
Radley Balko has the very latest on the Cory Maye case as of 5-16-06. Maye’s defense team has submitted a brief to the Circuit Court of Davis County in The State of Mississippi Fifteenth Judicial District with the goal of receiving a new trial. The grounds for a new trial are as follows: insufficient evidence, erroneous forensic evidence submitted by the state, Maye was denied his right to be tried in Jefferson Davis County, ineffective counsel, ineffective assistance of counsel, and the availability of new exculpatory evidence.

Fearless Philosophy Blogpost of the Month (April 2006)

April’s selections present a couple of firsts for the Fearless Philosophy Blogpost of the Month worth noting: the first 2-time winner, the first time 2 posts came from the same blog (by separate authors), and the first time 2 previous winners appeard in the same month (and from the very first FPBPOTM no less). I am sure I will think of a couple of other ‘firsts’ later but I’ll resist the temptation to bore my readers with such trivial matters…

Third Place goes to Kevin of The Liberal Wrong Wing with his post: The Minimum Wage is Bad Economics. Yes, the minimum wage is bad economics and Kevin does a masterful job of explaining why:

To raise the minimum wage, ironically, hurts those it intends to benefit the most. Unskilled, poor and young workers will be hurt the most. Those who have minimum wage jobs now would inevitably lose jobs in the event of a minimum wage increase. Those who live in poverty would only seep further into poverty for their jobs would be lost. It is better to have a [low paying] job rather than no job at all.

Statists on the left often use the appeal to emotion fallacy by using such terms as ‘living wage’ (as opposed to ‘entry level wage’) to promote their statist agenda masquerading as people who care about ‘the common man’. For anyone who assumes that minimum wage laws help the poor, I strongly suggest to read Kevin’s post.

Second Place goes to Brad Warbiany of The Liberty Papers who asks the question that many of us who voted for Bush (myself included) in the last election are asking: Why Did I Vote for You? Brad pulls no punches in this post and his honesty is refreshing. This is not the typical ‘Bush bashing’ that is commonplace on the left. Though I do not agree with all (but most) of Brad’s criticizms, all are well-reasoned and articulatley argued. Among his criticizms are Bush’s signing of McCain-Feingold, ‘No Child Left Behind’ without the voucher provision, his perscription drug bill he successfully passed through congress using some ‘fuzzy math’, his unwillingness to veto a single bill after making threats to veto, and hiding behind an undeclared ‘war on terror’ to imprison American citizens without due process. Would we put up with this kind of conduct from a Democrat president?

On the other hand, Brad’s original question tends to answer itself; though many of us may have buyer’s remorse for voting for George W. Bush, how much more remorseful would we be right now if we had successfully voted in Al Gore in 2000 or John Kerry in 2004? Sadly, the field of potential presidential canidates in 2008 does not seem to offer any better choices for liberty-minded voters.

This is Brad’s third selection to the top three (first, second).

And the winner is…

The Fearless Philosophy Blogpost of the Month for the Month of April 2006 goes to Eric Cowperthwaite of The Liberty Papers with his post simply titled: The War on Drugs. If my post does not convince you that the war on drugs is a complete failure and is one of the gravest threats to liberty, perhaps Eric’s post will:

Lest anyone think I’m simply a libertine who wants to get high, think again. It’s quite clear that these drugs are bad things, destructive of mind and body. The problem is, who gets to choose whether I will destroy my mind and body with cocaine? I’m continuously amazed that the same people who believe a woman should be able to choose whether to get an abortion, or not, the same people who believe in a "right to die", are people who think it should be illegal for me to choose to smoke marijuana. Either my body is my own to do with as I please, or it is not.

From there, Eric delves into the human cost of the war on drugs and its threats to the individual’s life, liberty, and property. From the innumerable examples of lives this war on drugs has destroyed, Eric holds up a pair of individuals who were denied justice: Eugene Siler and Cory Maye. The treatment of these men is not atypical and is not the type of treatment a free society should let stand.

Eric closes with his assessment of what the war on drugs cost and to the extent it has been successful:

[E]very additional dollar spent on fighting drugs has done nothing to stop the violence and the corruption. In fact, although violent crime per capita has dropped considerably in this country, it has increased in the inner cities where drugs and drug gangs fight their battles for turf and profits. The use of drugs and alcohol has increased, not decreased. The import and sale of drugs to this country has increased ten fold since the 1950’s. Brazil, Venezuela, Mexico, Guatemala, Panama and Colombia are virtually dominated by drug cartels.

This is Eric’s second first place selection (June 2005) and third selection to the top three (March 2005, third place). Eric has announced that he will be soon leaving the blogosphere due to changes in his personal and professional life. I know that I am not alone when I say that he will be greatly missed. If you haven’t read his writings at The Liberty Papers or Eric’s Grumbles Before the Grave, you are missing out on some of the best Classical Liberal writing anywhere.

Congratulations to all of this month’s winners. Be sure to come back next month because you never know - your post could be the next Fearless Philosophy Blogpost of the Month!