your tax rate), all sorts of other regressive factors end up making
everyone’s tax rate very near a fixed percentage.
An interesting thing happened in Alabama involving Daimler-Benz,
the big German auto manufacturer.
Under Reagan, the US managed to drive labor costs way below
the level of our competitors (except for Britain). That’s produced
consequences not only in Mexico and the US but all across the
industrial world.
For example, one of the effects of the so-called free trade
agreement with Canada was to stimulate a big flow of jobs from
Canada to the southeast US, because that’s an essentially nonunion
area. Wages are lower; you don’t have to worry about benefits;
workers can barely organize. So that’s an attack against Canadian
workers.
Daimler-Benz, which is Germany’s biggest conglomerate, was
seeking essentially Third World conditions. They managed to get our
southeastern states to compete against one another to see who
could force the public to pay the largest bribe to bring them there.
Alabama won. It offered hundreds of millions of dollars in tax
benefits, practically gave Daimler-Benz the land on which to
construct their plant, and agreed to build all sorts of infrastructure
for them.
Some people will benefit—the small number who are employed
at the plant, with some spillover to hamburger stands and so on, but
primarily bankers, corporate lawyers, people involved in
investment and financial services. They’ll do very well, but the cost
to most of the citizens of Alabama will be substantial.
Even the Wall Street Journal, which is rarely critical of
business, pointed out that this is very much like what happens when
rich corporations go to Third World countries, and it questioned
whether there were going to be overall benefits for the state of
Alabama. Meanwhile Daimler-Benz can use this to drive down the
lifestyle of German workers.
German corporations have also set up factories in the Czech
Republic, where they can get workers for about 10% the cost of
German workers. The Czech Republic is right across the border;
it’s a Westernized society with high educational levels and nice