Three Little Words

In today’s column Tom Friedman talks about a U. S. company that’s manufacturing machines that make solar panels. Where are its factories?

Not a single one is in America.

Let’s see: five are in Germany, four are in China, one is in Spain, one is in India, one is in Italy, one is in Taiwan and one is even in Abu Dhabi. I suggested a new company motto for Applied Materials’s solar business: “Invented here, sold there.”

Embarrassingly for a guy who cut his chops as a reporter, Mr. Friedman doesn’t ask the CEO of the business why he’s not building factories in the United States. I’ll give you the answer in three words: adverse business climate.

U. S. companies pay the highest corporate tax rate of any OECD country and the effective tax rate is even higher. I’m a little out of touch now but, believe it or not, I used to be something of an authority on German accounting and tax issues. Unless things have changed, German companies don’t need to depreciate purchases over long periods of time. That can be important for a company that’s doing things (like building factories) rather than living on past glories.

I also doubt that any country in the world has as complex a regulatory environment as the United States. Not only is there the federal government but we have 50 state governments and a maze of county, city, and other local governments, all with their fingers in the regulatory pie.

I note that none of the factories are in the UK or France, either. That suggests to me that issues with organized labor might be at stake, too.

I’m skeptical about the so-called “green jobs” not for the reasons that Tom Friedman presents:

If you read some of the anti-green commentary today, you’ll often see sneering references to “green jobs.” The phrase is usually in quotation marks as if it is some kind of liberal fantasy or closet welfare program (and as if coal, oil and nuclear don’t get all kinds of subsidies). Nonsense. In 2008, more silicon was consumed globally making solar panels than microchips, said Splinter.

but because I don’t think that we’re ready, willing, or, probably, able to create the kind of business climate that the new jobs will require. We’re too busy propping up old companies whose business models failed a quarter century ago. I put the term in quotes because I’m quoting people and that’s what they call industrial jobs that manufacture products that may or may not promote ecological soundness. I think it’s a lousy turn of phrase so I haven’t made it my own.

Based on past performance can you imagine the Obama Administration taking the steps necessary to make creating those jobs as attractive as they are in Germany let alone in China? I can’t. I can, however, imagine them subsidizing companies that import products made in Germany, Spain, Italy, Taiwan, Abu Dhabi, and China and touting the relative handful of marketing, sales, and administrative jobs in those companies as green jobs they’ve created.