03 May 2012

Reuters on Tax Incentives for Manufacturing

A very well-done piece from Reuters on the perverse incentives created by special tax breaks for a poorly defined segment of the economy - manufacturing.

H/T @gregmankiwblog.

UPDATE:  On this very theme, at The Atlantic Derek Thompson has a neat piece on Big Macs and the global economy.  Here is an excerpt:
McDonald's is a restaurant, but it functions much like a factory. Labor is supported by a deep well of technological innovation, such as vacuum packing, exceptional preservatives, deep freezing, vibrant artificial flavors, and high-speed microwaves. Workers assemble specific parts at great speed to deliver dependable and replicable products. "[McDonald's doesn't] put something on the menu until it can be produced at the speed of McDonald's," CEO James Skinner said in 2010, sounding not unlike Henry Ford from a century earlier.
Thompson's essay draws upon research in this paper on wages in the global economy.