By Michael Califra and Alan Galak
The Middle Class Action Project, which is working to revive this country’s manufacturing base, and with it the good-paying jobs that have traditionally sustained the American middle class, has developed a list of proposals to help achieve those goals. Members of the group, co-founders John Kubinski and Robert Holst,have been meeting with local politicians for months eliciting support for the plan.
Entitled, Made in New York by New Yorkers, one major element calls for unleashing the purchasing power of New York on the State’s own businesses. NYC and NYS spend billions of dollars each and every year on construction projects; one goal of the Middle Class Action Project’s plan is to simply to require that all procurement contracts go first to NYS, then US businesses for competitive bidding – growing the states own manufacturing base and stimulating the local economy. In the event that an out of state or foreign manufacturer is chosen, the plan would require those companies to open an assembly plant in the state in order to win a procurement contract.
While the economic benefits of New York State spending as many of its own tax dollars on in-state businesses are obvious, the legal foundation for the plan rests on the fact that a market participant, which is what the State would be as a producer of the goods and services it would be buying, can give preferential treatment to its own businesses without being in violation of the Constitution’s Interstate Commerce Clause (Market Participant Excemption of the Dormant Commerce Clause).
But does New York State still possess a large enough manufacturing base to make the plan feasible? Or would it amount to a “feel good” exercise with no economic benefit?
One of the Middle Class Action Project’s executive members, Ilya Galak, an electrical engineer by trade, decided to test the plan on his own. Each year, Galak procures hundreds of thousands of dollars in electrical supplies for projects in his company. The normal procedure is for Galak to contact an agent who will bring him bids on supplies from various manufacturers that meet his speculations. Those bids nearly always come from foreign companies.
Recently contracted to install the low voltage systems in a new Manhattan office tower, Galak decided forgo the agent process and to try and find something he’s never seen – a manufacturer of industrial electrical cable located in the State of New York. It didn’t take long before he found Tappan Wire & Cable. They were able to sell him the kind of high-quality, industrial cable that agents normally bring him from foreign manufacturers, and at a price that was identical. This means a project that would normally have put money into the pockets of a foreign company is now helping to generate economic growth here at home.
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There is much more to generating economic growth than simply trying to lure companies to the state with the promise of limited tax breaks. We can also grow New York’s economy as aggressively as foreign governments do by spending as much of our own tax dollars in the state as possible. The Middle Class Action Project in cooperation with Citizens Magazine (President – Arkadiy Fridman) also envisions a ratings guide – the Made in America Rating System (MARS) to help consumers and the State determine where a product is made. The ratings system would be run as a nonprofit organization similar to United Laboratories (UL), which approves electrical products. Participation would be voluntary, but with local and US manufacturers getting first dibs on billions of dollars in contracts, every manufacturer would have an incentive to take part in what could be the road to making the Empire State a center of American manufacturing once again.
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