Monthly Archives: March 2009

Obama’s Driving Business Out of America

President Obama’s biggest push in this down economic climate appears to be punishing the “evil”, “greedy” corporations who caused this mess (a claim that is dubious at best).   He wants to be the next FDR, a champion of the little-man, a champion of those who are poor.  That is well and good, it is extremely important that we as a society take care of those less-fortunate than I.    But increasing the tax burden on corporations and the wealthy, while claiming to cut taxes for those don’t actually pay taxes is not the way to do it.   Among the most basic principles of fiscal economics is that raising taxes stifles business growth, at least in a competitive world – which we reside in.   If one pushes and pushes, they will eventually push business out.  Thus, losing jobs in America.

In today’s economic climate this is the last thing we need.  We need to create jobs, not lose them.  But Barack, in continuing to support disasterous policy after disasterous policy, is starting to further lose them.  His refusal to cut the corporate tax rate to be more competitive with other countries may now be driving some industries out of the country:

A wave of energy companies has in the last few months announced plans to move to Switzerland — mainly for its appeal as a low-tax corporate domicile that looks relatively likely to stay out of reach of Barack Obama‘s tax-seeking administration…

Over the past six months companies including offshore drilling contractors Noble Corp and Transocean, energy-focused engineering group Foster Wheeler and oilfield services company Weatherfield International have all announced plans to shift domicile to Switzerland.

“Switzerland has a stable and developed tax regime and a network of tax treaties with most countries where we operate,” Transocean Chief Executive Bob Long said in a statement in October, when it announced its move. “As a result, the redomestication will improve our ability to maintain a competitive worldwide effective corporate tax rate.”

“One trend that we see is that particularly Bermuda-based companies are now moving to Switzerland,” said Martin Frey, a partner at law company Baker & McKenzie. “That may only partly be obviously for tax reasons, but also for security reasons and the fact that the Obama administration may go after them.”

There is a reason that various states and foreign governments lower their corporate tax structure: to lure business.  This is no secret, yet President Obama seems so bent on “punishing” corporations (most of which are ethical, productive, and valuable to our culture and society) that he completely disregards the economic consequences and, thus, the long-term health of our country; not to mention the long-term negative impact to the people in our country that he says he is most concerned about.

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The Coming Mexican Civil War

A few months ago when Secretary Gates and the Department of Defense listed Mexico as one of the countries in the future that face destabilization. At the time the Mexican Government and many in America scoffed at the idea. But now the reasoning for DoD’s warning is becoming apparent and probably sooner than anyone expected.

Historically, Mexico’s internal problems have been with Zaptista and other rebels in in its southern provinces. While these rebels have certainly been formidable and been the occasional thorn in the Government’s side, they have been something that the Government has been able to deal with. These groups have mostly just been a cause for Rights Activists in the U.S. and elsewhere, but no big deal.

The new threat in Mexico is scary, well-funded, and a real threat to Mexico and even the SW United States. This threat is the battles between various drug cartels and their battles with the Mexican police force and government.

Over the past half-year battles have raged in northern Mexico between these cartels. People have been murdered, villages pillaged, and women raped. It has gotten so bad that Ciudad Juarez has been determined the most dangerous city in Mexico and Mexican government had to send its military into the city. What makes this scarier is that Ciudad Juarez is literally on the U.S. border and shares the Rio Grande with El Paso, TX and there are indications that these drug wars are seeping into U.S. territory with an increase in drug-related murders and other criminal activity in places along the border from Houston to San Diego.

With this recent development of the Mexican army entering Ciudad Juarez it greatly increases the likelihood of a Mexican Civil War, however hopefully this is a minor threat and will not spill over throughout Mexico. As long as the cartels can say divided against each other there is a good chance a civil war can be avoided.

The Mexican army’s best course of action may not be to stop all the violence but only to maintain law and order in its towns and cities and protect the innocents not involved in the drug trade. It may be in their best interest to allow the drug cartels to battle it out and attenuate their numbers and, hopefully, influence.

But a long-term solution to this problem with the drug trade is more complicated. Most importantly is that the government needs to ensure that it is providing opportunities for economic growth, aka in needs provide job growth. There also needs to be good local governance and infrastructure improvements. The government needs to ensure that it or peaceful entities are providing the services and security people need rather than the cartels. They must not allow the cartels to do their jobs.

For the United States the threat is certainly not as dire, but it needs to watched closely; fortunately the Obama administration is doing so. It was reported today that the administration is looking at the possibility of deploying the National Guard to the border (but isn’t that more of a Governor’s decision?). Certainly there are political considerations to be made here, we don’t want to be “occupying” our own territory with the military. Nor do we want to get directly involved militarily with an internal Mexican struggle aside from perhaps providing equipment and logisitical support to Mexico’s army.

Nevertheless this situation needs to be watched closely and our media and people need to take this more seriously. How can there be such a major crisis right on our border, but no one seems to know or care? This threat in Mexico is both among the most serious facing U.S. Foreign Policy and also one of the best opportunities for us and Mexico to counter the drug trade and to help Mexico along in its next step towards modernization. Remember it wasn’t until the 1990’s that Mexico became a democracy, they still have a long way to go.

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Filed under Barack Obama, War