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November 2012

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Government Aid for Manufacturing or
Dangerous Sell-Outs?

Anyone who truly cares about our nation's economic recovery knows that our manufacturing base needs to grow. For progressive trade unionists, that means supporting genuine efforts by government to offer help to workers and companies in a balanced way that benefits our communities.

Controversy is certain to follow any time tax dollars are in play. And, with individual states scrambling to attract industry, balancing the interests of business, labor and taxpayers can go out the window.

Before I talk about a cautionary and dangerous precedent from Alabama, let's review a good model of government support for industry.

Coming from Ohio, I see firsthand the benefits that have come from the Obama administration's rescue of the auto industry. Contrary to the mythology of the right wing, this was no freebie.

Federal tax dollars were only made available to General Motors and Chrysler after they and the UAW both made sacrifices to improve competitiveness and productivity. Thousands of automobile and parts production jobs in dozens of states were saved and the multiplier effect on other services and small businesses was extraordinary. Taxpayers, workers and businesses all got a lift.

Now for Alabama. Last year — in a move that was practically unnoticed — the state passed a law solely designed to induce a Chinese firm to build a $100 million steel facility there that will employ 100 workers.

Despite being a relatively poor state, the legislature approved $20 million per year for two years of "incentives" for Golden Dragon's copper pipe and tube plant in addition to other state aid.

That's a whole lot of money. But what the money is earmarked for is the real obscenity. Alabama's appropriation is geared to helping Golden Dragon pay fines for illegally dumping steel below the cost of production on the U.S. market. They would be rewarded for breaking our nation's already weak trade laws!

Golden Dragon hasn't yet applied for the funds. But ground is being cleared for a new plant and when they apply, as expected, the die will be cast. One doesn't have to be an economist to know that other Chinese firms visiting the U.S. to consider making investments will now be pressuring more states to follow the Alabama example.

If you are as upset by this story as I am, if you want to see a balanced economy, not one where corporations get all the breaks and the taxpayers get the shaft, let's agree to keep a close watch on what is happening in our state legislatures. A race to the bottom among our states for a handful of manufacturing jobs is no cure for what ails our economy.


Also: Hill: Defending our Democracy Read Hill's Column

Salvatore J. Chilia

Salvatore J. Chilia
International Secretary-Treasurer