Low-information economics

Published 11:12 am Saturday, April 2, 2016

I just came back from a cruise in Asia.

I met lots of nice people and saw a bunch of beautiful places. I didn’t always understand what I was looking at or what was going on in their crazy economies.

But I can tell you one thing for sure — the people of Singapore, Thailand, Vietnam and Hong Kong are keeping busy making things for American consumers.

They’re probably just as busy as the people of Mexico, China and wherever else American companies are having their smart phones, TVs and T-shirts made.

What I saw in Asia — jobs that used to be done by Americans — reminded me of what’s happened in California.

My home state’s criminally high taxes and its punitive regulations have been driving away businesses and companies that make things for decades.

We’re not talking about mom and pop outfits that make organic earrings or high-end backpacks.

We’re talking real companies that hire thousands of people for their offices or factories — Toyota, Nissan, Raytheon Space and Airborne Systems, eBay, Occidental Petroleum and RifleGear, the firearms retailer.

Throw in Charles Schwab, which fled pricy San Francisco, and Farmers Coffee, too. A large percentage of these runaway companies went to Texas, where business people are not automatically greeted like captured enemy combatants.

A lot of California’s human beings left for lower-taxed states, too, especially older people.

Several millionaires that I know are selling their big homes and moving to Nevada or Puerto Rico to escape California’s cruel taxes. I’d do the same if I didn’t have kids and grand kids in L.A.

No one knows how many companies have split from California in the last decade. A recent study that counted what it called “California divestment events” came up with the estimate of 9,000 events.

A “divestment event” is when a business leaves the state entirely, expands in other states instead of California or planned to expand in the Golden State but ran the numbers and chickened out.

California is a mini version of present-day America — and maybe our country’s future.

The liberals who’ve permanently taken over Sacramento have mastered the art of punishing business and abusing the wealthy.

The state is bleeding good working-class jobs, scaring away corporations and watching its economy poke along for the same dumb reasons the rest of the U.S. is: high taxes and too many regulations.

Now California’s Democrats have voted to hike the state’s minimum hourly wage to $15 by 2022.

It’s a stupid Bernie Sanders idea that is the leftwing equivalent of Donald Trump’s dumb idea to slap a 35 percent tariff on stuff imported from Mexico.

Both Sanders and Trump are appealing to low-information voters who don’t understand a thing about economics.

Who pays in the end when you tell businesses they have to start paying a person with a broom $15 an hour or have to pay heavy import taxes?

It’s the consumer, stupid.

The consumer always pays in the end, whether Jerry Brown or Donald Trump know it or not, because businesses always pass the cost of their labor and taxes on to their customers.

If their customers don’t want to pay higher prices, companies eventually have to close up or move to a more business-friendly place like Texas or Mexico.

Corporations are in the business of making money, not losing it like government.

The executives who run them are not as stupid as low-info candidates like Trump or Sanders or the people who vote for them.

A business exec can tell when it’s time to build a new Boeing plant in South Carolina or move his brokerage offices to Austin.

States like Texas and even New York know it’s good for their economies, their people and their taxpayers to lure businesses with low taxes, fewer regulations and a friendly attitude.

California will never learn.

Michael Reagan is the son of the late President Ronald Reagan, a political consultant and the author of “The New Reagan Revolution” (St. Martin’s Press). He is the founder of the email service reagan.com and president of The Reagan Legacy Foundation. Visit his websites at www.reagan.com and www.michaelereagan.com. Send comments to Reagan@caglecartoons.com. Follow @reaganworld on Twitter.