"Once tooling capacity is lost, manufacturing simply has to move."

– John C. McCoy, owner of Omnitech Technical Associates in
Washington State

The news pages are awash with stories of manufacturing flight abroad. But the causes are not well understood. Actually, this snowballing exodus started decades ago with government programs and agencies that wielded a stick or offered a carrot to businessmen.

Many, if not most, American businessmen who relocate abroad aren’t abandoning our nation’s free enterprise system. They’re fleeing socialism. Economist Clyde Wayne Crews, Jr. of the CATO Institute has estimated that "U.S. regulatory costs exceed the entire 2000 GDP of Canada, which stood at $701 billion." A 2003 study by the National Association of Manufacturers echoed those findings: "Compliance costs for regulations can be regarded as the ‘silent killer’ of manufacturing competitiveness." The study calculated those costs to be "in the order of $850 billion – with $160 billion on manufacturers alone, equivalent to a 12 percent excise tax on manufacturing production."

Those businesses that are fleeing to socialist or Communist countries, such as China, are aided by other government programs and guarantees, such as the Overseas Private Investment Corporation (OPIC) and the Export Import Bank, even by promotions of our Commerce Department. These programs serve to remove the risk of moving to nations ruled by corrupt or tyrannical reimes. Incredibly, businessmen relocating to China have commented that it is easier to start a business in Red China than to wade through the red tape that has a grip on our nation.