continuing a thought ...

After too much delay, building on the previous post but moving onto the more esoteric consideration of promoting manufacturing job growth in the Pittsburgh region: government assisted jobs development and promotion.  Miller targets Pennsylvania’s high corporate tax rates as strangling job creation, especially in the competitive field of new facilities location.  And in that he makes a valid point.  But these days government assisted jobs creation largely involves government subsidies.  Texas has become the master at stealing away both facilities and headquarters offices with rich government subsidy programs.  Witness last week's announcement that Toyota North America will bring 4,000 jobs from California and Tennessee to Dallas - with the State of Texas contributing $40 million to that move.  That can be done because Texas runs a large surplus in its budgets.  Why more of a surplus than most other states and certainly more than Pennsylvania and other Northeast/Midwest states?  How about another 30,000ft view of the obvious: because the State of Texas provides less to social and education programs than most states.  Texas shifts the burden of financing these programs to other government entities such as local municipalities and school districts.  Texas residents pay no State income tax but very high real estate and sales taxes.  Corporate taxes in Texas are also lower than Pennsylvania’s.

And that’s where the government and societal philosophy comes in: do we tax at the job-holder or the job-creator level.  By shifting the burden of necessary social and educational needs to residents, especially owners of housing who tend to be older, states like Texas are taxing the users of social programs, dependent children [via their parents] and the elderly.  This frees up resources [tax money] for programs [corporate location subsidies] that benefits job creators in the form of businesses. In turn, these business entities provide jobs that attract young people in their 20s and 30s that, once established, then become essential to job creation and future growth via family formation and corporate expansion.  Subsidizing old retired people to comfortably afford their homes is not part of the Texas strategy.  Subsidizing entities like Apple and Samsung and Facebook, to name three recently subsidized firms in the Austin area, is a strategy and a successful one, for job creation at least.

So which way should Pittsburgh head?  I don’t believe growth for growth’s sake should be a goal.  A high growth rate provides bragging rights but not necessarily a high quality of life – in fact from my experience it’s quite opposite.  So it comes down to “philosophy” as well as simply working with what you’ve got.  Those beautiful green hills and valleys and rivers of western Pennsylvania need to inspire a new creativity and a new path of innovation and success.