Wednesday, November 22, 2006

Wisconsin Democratic Representative Steve Kagen Outs Self as Socialist

Last Friday Milwaukee Public Radio (WUWM), did a short piece on newly elected Representative Steve Kagen who represents Wisconsin’s 8th congressional district (in the Green Bay area). Producer Christina Shockley kindly supplied us with a transcript.
When asked about the photo of Lambeau Field on his Web site, Kagen replied:

“Well, Green Bay is a great team. It’s owned by the people in Wisconsin. That’s the way every one of our manufacturing jobs should be. If Kimberly Clark were owned by the people in our district, they’d never leave.”
Of course, he’s not necessarily endorsing the economics of Joseph Stalin. He appears to be talking about some sort of private ownership, with the shares held by people in the area (perhaps workers).

But that doesn’t change the fact that the suggestion is boneheaded.

The notion that “every one of our manufacturing jobs” should be in locally owned firms implies that outside risk capital should not be allowed into the area, no matter how many jobs it might produce, nor what the benefits would be.

What happens when a firm wants to raise new capital? Are they forbidden to go outside the area to raise it? Suppose the necessary capital isn’t available locally?

Are local firms to be forbidden to merge with outside firms? No matter what the economic benefits? Such a merger would cause most of the owners of the firm to live outside the area.

And what happens when economic change requires that at least some jobs need to be outsourced for a firm to remain viable in a competitive world market? Would the “people owned” firm refuse to do this? Would everybody stick to this position and watch an industry go into bankruptcy, destroying not only the jobs of local workers, but wiping out the capital investments of local people?

Economic illiteracy has real costs for real people. Romantic notions like “owned by the people” can’t evade economic reality.


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