Boeing Dreams of South Carolina

Boeing plans to build lots of 787 Dreamliners, but they won't all be built in Washington state (from Big Government):

On Wednesday, Boeing announced it would put a second 787 assembly line in Charleston, S.C., rather than Everett, WA.

Union leaders and politicians like Sen. Patty Murray, D-Wash., expressed shock, dismay and outrage at the company’s decision.

Either they are feigning surprise, or they’ve been comatose for the last decade. Your guess is as good as mine.

For years, politicians and labor leaders in Washington have ignored Boeing’s pleas to stay competitive. In 2002,Boeing CEO Alan Mulally told the State House Labor Committee that “the state of Washington is not competitive. . . . meaning it costs us more to operate [here].” He specifically pointed to Washington’s costlyworkers’ compensation system, which requires employers to purchase insurance coverage from the state or be on the hook to cover all claims costs themselves, rather than allowing them to choose from among competing private providers. As a result, Washington collects some of the highest premiums from employers and injured worker rates are well above the national average.

Boeing’s decision to place its second 787 line in South Carolina is too complicated, however, to be blamed on any single factor. In 2002, Mulally told lawmakers that Washington would have to become more competitive in taxes, unemployment insurance (UI) and regulations, among other factors, in order to keep the state attractive for Boeing.

Unfortunately, rather than engaging in an honest discussion about reform in these areas, legislators decided on a $3.2 billion “incentive package” that included some UI and workers’ comp. reforms. Just a few years later, however, the legislature rescinded many of those changes. The Evergreen Freedom Foundation fought a lengthy battle to get the details of the state’s contract with Boeing. Once we finally got them (the unredacted portions), we discovered that Boeing could walk away from the deal at any point without penalties, whereas Washington was on the hook for pricey commitments until Boeing decided to cease building 787s.

This is one of many examples illustrating why one-on-one handouts between governments and businesses are bad for taxpayers, and in the long run, bad for the businesses themselves. Once the luster of the handout runs out, the business will scramble for another, and another, and so on. Better to build a strong business climate across-the-board, which is good for large and small companies alike.

That's exactly right. Cutting deals specifically for a particular employer may temporarily help the state, but if you want to have a long-term improvement in a state's economy, improving the lot for all businesses makes the most sense. If you make it less expensive for businesses to operate, more businesses will want to operate there. Washington State, and for that matter California, is learning that the hard way as business flees to surrounding states to avoid our stupid taxes and regulations.