Businesses Keeping Promises
Will the private sector decide $83.7 billion is enough for West Virginia? That’s an important question now and, I think, through the 2020 election cycle.
It almost seems as if big corporations are in a race to see which one can earn the most points in expressing gratitude for tax and regulatory reforms at the federal level. Apple revealed it will spend $350 billion on new U.S. facilities and will bring back $38 billion it had stashed overseas. Walmart announced it would increase starting pay to $11 an hour. And on and on.
Of course, part of the corporate executives’ thinking is that investing in the United States makes more sense, now that the tax and regulatory climate has improved.
But part of it may well be payback.
For many years, business leaders have complained about high taxes and burdensome regulations. Why, if the feds would just lower taxes and take away some of the red tape, we could create more jobs, ship fewer overseas, and compensate employees better, the bigwigs insisted.
How would it look if, after getting what they demanded, they didn’t deliver?
Bad enough that the next time they asked for something from the government, it would be much tougher to get. So the corporate announcements of good things for workers and the economy in general will continue. My guess is that climate of expressing appreciation will persist at least through the 2020 election cycle.
Which brings us back to West Virginia. If there is a state where government has been blamed for all the private sector’s woes, it is ours.
Much of the criticism was focused on former President Barack Obama’s war on coal and affordable electricity. It wrecked the Mountain State’s mining industry. Now, however, President Donald Trump is reversing many of Obama’s anti-coal policies.
Workforce West Virginia reports that in December, mining and logging employment (unfortunately, the two numbers are lumped together) in our state totalled 21,300. That was up 1,000 from December 2016.
So the mining industry is reacting to the better regulatory climate — though it will never recover entirely.
What about other sectors of the economy in our state?
Well, there was the announcement last year that China will invest $83.7 billion in West Virginia during the next decade, primarily in the energy (natural gas) industry. That may well have been linked to Chinese officials hope to improve diplomatic relations with our country.
That’s a lot of investment, but we need more. Much more.
So the question is this: If the business world indeed is engaged in politically strategic spending, will corporate executives decide West Virginia’s improvements in taxes and regulation merit more new investment than that from the Chinese? Or will they assume that, from a public relations standpoint, $83.7 billion is enough?
My guess is that we’ll get a substantial amount of growth purely for practical reasons, namely, our gas. Between that and the Chinese money, the corporate world may judge that West Virginia has gotten enough to fulfill promises of investment in exchange for lower taxes and fewer regulations.
During the next couple of years, we’ll see.
Myer can be reached at: email@example.com.