Wednesday, January 18, 2012

WSJ: U.S. Loses High-Tech Jobs as R&D Shifts Toward Asia

Jan 18 Wall Street Journal p. B1

"The U.S. is rapidly losing high-technology jobs as American companies expand their research-and-development labs in China and elsewhere in Asia, the National Science Board said Tue."

The article uses 3M, Caterpillar Inc., and General Electric as examples of companies that have massively expanded their overseas research labs.

Meanwhile, Kraft plans on eliminating 1,600 positions in North America (Ziobro, "Kraft to Cut Jobs" p. B3).

John Williams' Shadow Stats, which uses government data to provide alternative accounts of unemployment and other economic measures, puts the broadest measure of real unemployment at about 22%

Mobile, transnational capital has no national allegiances and cares little (if at all) for the welfare of populations...

Unfortunately, US legislators often pass tax and trade laws that reward corporations for shifting labor, production, and investment abroad.

For instance, in 2004 a tax holiday was given to US transnational corporations, allowing them to repatriate earnings cheaply. Another one was proposed last winter. 

Here is what CBS' Moneywatch said on Dec 13 2011 about the last tax cut, ironically called the "American Jobs Creation Act of 2004," on repatriated earnings for US Corporations:

Support wanes for corporate tax "holiday" on foreign profits
By Alain Sherter

[Excerpted] "The 15 corporations that reaped the greatest dividends under the "America Jobs Creation Act of 2004" -- including giants such as Altria (MO), Coca-Cola (KO), Hewlett-Packard (HPQ), Johnson & Johnson (JNJ), Pfizer (PFE) and Procter & Gamble (PG) -- brought home a total of $155 billion, according to an October report by Democratic lawmakers (who oppose the tax holiday). Those companies proceeded to reduce their U.S. workforce over the next three years by some 21,000 jobs, while also trimming their domestic R&D spending. The report also found no evidence that the 840 enterprises that repatriated profits following the tax cut went on to increase overall U.S. employment.

"What did companies use the tax savings for? Largely repurchasing stock and giving raises to corporate executives, it appears. The top 15 repatriating corporations increased their stock buybacks by more than 50 percent in the two years following the tax cut, the Senate permanent subcommittee on investigations found. Annual compensation for corporate leaders at these companies jumped roughly 57 percent over that period, with many of the top execs receiving bonuses of at least $1 million....

"Another reason to question the value of giving multinational corporations what amount to massive tax giveaways on foreign profits: It encourages companies to funnel earnings abroad, often using dubious tax schemes, in expectation of a future holiday..."

Majia here: Although it is difficult to stop corporations from outsourcing and globalizing, we can pass legislation that DOES NOT REWARD THEM FOR DOING SO.

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