An economy is like a pyramid. Its base is manufacturing and the superstructure above it is services, e.g., banking, insurance, accounting, legal firms, etc. Services eventually go to where the manufacturing is located. If a country loses its manufacturing, it also loses its services. Using the pyramid concept, once the manufacturing base is removed, the superstructure of services above it simply comes crashing down. Once the center of gravity moves over the base, the entire structure will fall. It is basic physics. Economies are exactly like that. Our country has given up too much of its manufacturing base to maintain the structure above. We can be creative in providing incentives for our manufacturing CEOs to bring their plants home. These incentives are most likely going to be related to taxing in some fashion. As an example, there is a country that comes to mind that does not tax profits on goods sold to export. There are obviously other ways to incentivize these companies. Ask Art Laffer and his cronies. They are all creative.
Categories: Gov't and Politics