By Lloyd Graff
The cross currents of job growth, environmental protection, energy and raw material security for the United States make for a public policy jumble.
The Obama administration is showering incentives to build alternative energy facilities using wind and solar under the “green jobs” theme and some Republicans have joined in the chorus. The sad fact is that the subsidies usually benefit foreign manufacturing more than domestic. Bloomberg recently ran an informative piece talking about a $2.1 million subsidy for Suntech Manufacturing to build a poly-silicon solar panel plant in Goodyear, Arizona. It will employ 70 workers to assemble 30 megawatts of power. In China, Suntech plans to boost production 40 percent to 1,400 megawatts.
In Wuxi, China, where the Suntech plant is located, minimum wage is $141 per month, about 15 percent of the U.S. minimum wage.
The stimulus package contained $2.3 billion in tax credits for renewable energy manufacturers. Obama wants to expand it to $5 billion next year.
The unfortunate fact is that the big solar producers are making their stuff in China and Malaysia. It will be installed here by “green workers,” but the incentives will benefit big multinationals more than American manufacturing companies.
Question: Do big subsidies for alternative energy make sense?
5 Comments
Tax incentives only work if companies are making money. Removing taxes is like taking your foot off the brake. It won’t necessarily make the car go faster.
Next, the “Fair Trade” argument assumes that we are importing and exporting roughly equal amounts. It is time to rethink our policy since it is based on faulty assumptions. There is nothing fair about massive import imbalances (based on artificial exchange rates in China’s case). The notion that we can be a nation of service industry workers, selling to each other, is proving to be incorrect.
Re Mike Richards’ comments: Yes, exactly. Let’s fix the trade and currency practices that unfairly hurt American interests. A repaired trade policy could bring rapid improvement to our economy. And stimulus money should be going primarily to U.S.-based companies and U.S.-based labor. We have subsidized foreign and multi-national interests long enough.
Regarding the lead article, let’s remember that a lot of this trade imbalance started with the Clinton administration, was developed into a runaway train under the Bush ideology and now is in Obama’s hands to fix. So let’s point out this problem to the Obama folks–keeping in mind that accountability for trade policy goes across at least three administrations.
Important point: In most mid-to high-tech products, the cost of labor is not as big a problem as material selection issues and manufacturing waste. Lean, innovative design practices can bring jobs back to the U.S., if indeed the U.S. is the largest end-market for those products. When looking at offshoring, companies need to understand what the actual costs of their products are rather than hiding those expenses in corporate overhead budgets. That includes travel, logistics, lost quality, lost time-to-market and risk management issues. A “build in China, ship it all to the U.S.” strategy doesn’t look as good when all factors are considered. In the case of Suntech, if China happens to be the biggest market for their own products, then it would make sense for the company to produce where it sells most of its goods and do subsidiaries in secondary markets. However, we should be giving all of our energy research and manufacturing dollars to our own companies. Period. That’s the only way we are going to get ahead.
The real fact is we can not compete in the world manufacturing market ..We are srtapped with regulartory factor such as EPA, OSHA,Workman comp, product liability insurance,High
corp taxation,every other Tax that can be levyed.and so on and on and on. In the past we were able to level the playing field with tarfs and regulations,but with NAFTA,and the China agreements and every other onesided agreement our country has made WE LOSE UNTIL WE CHANGE THINGS. The answer is simple it makes no difference who brings manufactured good that we can manufacture here in the USA we TARF these goods and use this revenue to pay down the defficate. If these company bring back these jobs we give insentives. REmember we still the market the rest of the world wants..For NOW!!
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Don’t be so bitter. Remember!!! Obama came into a mess. My question is: WHY DIDN’T YOU QUESTION BUSH FOR GETTING US IN THIS MESS IN THE FIRST PLACE?
Wall Street doesn’t want to pay manufacturing workers enough to pay back their mortgage.