Thursday, December 17, 2009

The rust belt

Today's Washington Post features a lengthy article about the recession's impact in Ohio. It has to be regarded as an opportunity missed. Rather than asking tough questions such as why Ohio is suffering so badly, why jobs are so scarce or why businesses have left for elsewhere, the article is instead basically a collection of anecdotes about the difficulty of various individuals in finding work.

To the extent it addresses these questions it is comprised of statements such as the following:
The ladies at Holy Trinity Ukrainian Catholic Church still sell pierogies every Friday, and Youngstown's classic rock station still bows its shaggy head before playing "Crystal Ball" by Styx, but the grit and grime of industrialization has mostly gone overseas.
Gone overseas? While that may be true for Ohio, it is not true for the country as a whole. In fact, at this very moment German-based firm Thyssenkrupp is building a multi-billion dollar steel plant in Alabama which will employ 2,700 people when it reaches full capacity. So why Alabama? As the company says:
Decisive factors included logistical considerations of the company’s supply chain from Brazil to our projected customers; operating costs such as electricity and labor; and site specific capital expenditures.
You can bet the fact that Alabama is a right to work state played a big role. Indeed, all three finalists for the steel plant -- Alabama, Louisiana and Arkansas -- are right to work states. Ohio, notably is not.

The decision by the Alabama government to offer over $800 million in economic incentives also probably didn't hurt. In addition it is interesting to note that Thyssenkrupp is opening the Alabama facility as part of its "NAFTA growth strategy", and will supply steel inputs to one of its Mexican plants.

According to the Mercatus Center's ranking of state economic freedom, Alabama ranks #10 while Ohio clocks in at #32. Such policies have consequences.

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