Reflections on the Rust Belt

As Illinois' already inhospitable climate for jobs worsens with new taxes piled on, some reflection on our Rust Belt. Thomas Sowell:

Like the United Automobile Workers union in its heyday, unions in the steel industry and other industries piled on costs, not only in wage rates having little relationship to supply and demand, but in all sorts of red-tape work rules that added costs.

State and local governments in what later became the rust belt also thought that they too could treat the industries under their jurisdiction as prey rather than assets, and siphon off more of the wealth created by those industries into state and local treasuries with ever higher taxes — again, without considering repercussions.

In the short run, you can get away with all sorts of things. But, in the long run, the chickens come home to roost. The rust belt is where those rising costs have come home to roost.

While American automakers are laying off workers by the thousands, Japanese auto makers like Toyota and Honda are hiring thousands of American workers. But they are not hiring them in the rust belt.

They are avoiding the rust belt, just as domestic businesses are avoiding the high costs that have been piled on over the years by both unions and governments in rust belt regions.

Are you listening Democrats? Governor Blagojevich? Sen. Obama?

And this--what happens if the tax cuts expire:

And it is the Congress elected this November that will determine the future of the Bush tax cuts.

The markets are well aware of this. From a supply-side perspective, it is no surprise that the dollar is weak and equity markets both volatile and bearish. The top tax rate on estates, under current law, is scheduled to go from zero to 55 percent on January 1, 2011. The personal tax rate on dividends, now 15 percent, is slated to shoot back up to 39.6 percent, capital gains from 15 percent back to 20 percent, the top rate on personal income from 35 percent today back up to 39.6 percent. And Democrats, both presidential and congressional, count most or all of these reversions as relatively limited tax increases on "the rich."