Morning Joe Rewind 12/26/2012 -- Business in the US

Morning Joe is rewinding 2012 during the holiday season, replaying this year's segments that stand out. One segment that stood out this morning was a discussion between Steve Rattner, Dan Senor and Michael Porter, a professor at Harvard Business School. Porter said that large US businesses are global now and the market is global. Other countries that were once economic basket cases are now removing regulations and freeing their businesses to compete globally. At the same time, the US is burdening US companies at home with regulations and taxes, so US companies are moving more operations overseas.

Rattner tried to explain the over-seas' operations as the result of low wages in competing, emerging countries, but Porter said that US companies can compete against low wages with high productivity and efficiency if they are not burdened by high costs which result from too much regulation and too high taxes. I would add that regulations in the US have favored large, established, politically-connected US companies while harming smaller, politically-disconnected US companies, and this helped large politically-connected companies doing business in the US, but the extra costs that the large companies have been able to bear and make a competitive advantage at home are a disadvantage in the global market.

Until the US can reform our statist system, and this entails a tax and regulation system which is killing US companies, US companies will continue to take operations overseas.

The dishonesty of the administration regarding job losses

http://hotair.com/archives/2010/08/06/july-job-losses-hit-131000-rate-stays-at-9-5/

The above link makes the point I made about four months back -- when the administration says we have made progress in the job market because since Obama took office we went from over 700,000 jobs losses in a month to job gains, they are being dishonest.

What happened is that companies acted in unison to shed jobs, and that 700,000 loss couldn't continue from month to month or all jobs would be lost. Since that giant shedding of jobs, each month we are below 100,000 job gains, and because of population growth we are adding to unemployment -- it's a cumulative effect.

It can't be stressed enough how the administration is telling a "royal lie" when they paint the picture of progress in the job market. It's propaganda, pure and simple.

I recently proposed we might be simply adjusting to the reality of our economy and government intervention and there's no recovery in sight, and that we're reaching a new level which shows high unemployment that could be with us for over 10 years unless free market principles are implemented.

If the mid-term elections create a split government with Republicans taking over congress, and if the Republicans fight against more government intervention and fight to lower busines taxes, this could spur investment and kick off expansion and hiring.

Competition among states

Competition among states will likely heat up as so many states struggle to pay their debt. The states with the lowest business taxes and best financial situation will be attractive to businesses looking to escape high taxes and sinking state budgets. Now, if these states will loosen burdensome regulations which aren't needed, we could see some states become the model all should follow.

This could be the way back to a limited government. As more states become financially solid and other states see what's happening, the competitive urge might change wasteful habits and cause the failing states to emulate the successful states, lower or abolish business taxes and attract industry.