Paul Schecklman and Paul Wassgren wrote in National Review this week that Wisconsin — and every state like it — must “reboot” its policy environment to win the next century, trimming tax codes and torching regulations to lure the industries that will build the future. They argue the demographic clock is a competitive threat, that a shrinking pool of bodies demands a state that costs less to operate in. I agree with every word. They have correctly identified the supply-demand imbalance. They lack the courage to name the party it benefits. It benefits me.
Let me show you the arithmetic the op-ed left out. Not in Wisconsin — in Tennessee, where the tax code is already what the Pauls are asking for, and where the body I’m talking about is a man named Floyd.
Floyd is a hand on an injection-molding line I own outside Jackson. He is 61. His back is a running cost I review every quarter. He earns $17.25 an hour, which is $2.80 above the floor and exactly $7.50 below what the same hands would cost in a state with a different tax climate. The Pauls call that differential “competitiveness.” I call it the margin. The differential is mine.
He makes the housing for your garage-door opener. The black plastic box the motor lives inside, the one with the brand name you trust. Floyd has made it for 14 years — longer than the brand has owned the factory, because I bought the factory 6 years ago from a company that also wanted to leave a high-tax state and found Tennessee waiting, arms open, with an incentive package I have since renegotiated. Your garage door opens. Floyd’s back doesn’t. The Pauls would say the system is working. The Pauls are right, and it is.
Now take a different body, because the principle travels. Delia is a hand on a poultry-breading line I own in northern Georgia — same Bible Belt, same regulatory climate, same arithmetic, colder room. She stands at 34 degrees and coats the tenders in a batter that freezes in the bowl if the line slows. The repair to the cold room’s door seal would cost $22. I haven’t spent it. Delia’s hands split by the end of each shift now, and the splits mean she misses a day every 2 weeks, and the missed day costs me exactly the overtime I would have paid someone else to stand there, which is $4.70 an hour for 4 hours, or $18.80. The $22 seal sits in my budget in a column labeled deferred. The arithmetic is correct. The Pauls would have Wisconsin “reboot” to attract exactly the climate where this arithmetic is never challenged — and they name this competitiveness, and they name the workers who flee with their backs and hands already going a “skilled-labor shortage.”
Let me put the numbers where you can feel them.
Floyd earns $35,880 a year. His back — two herniated discs, L4-L5 and L5-S1, documented in a company physical the clinic returned to me 6 months ago — will, on the present trajectory, render him unable to stand for a full shift within 18 months. The accommodation would be a sit-stand stool, which costs $310. Against that, the separation package I will offer him when the pain crosses the threshold — one week’s severance, the form that says voluntary, the signature his hand won’t close around — costs $331.73. The stool and the severance are the same price, adjusted for rounding. The stool buys me a worker whose back holds out. The severance buys me a newer body whose back hasn’t gone yet, at the wage Floyd was earning before the last raise.
The arithmetic is not ambiguous. The stool costs me the same money as the dismissal and buys me an aging asset. The dismissal costs me the same money as the stool and buys me a younger one. I am replacing a depreciating unit with a fully-capable unit for no net cost. The Pauls would say the labor market is clearing — the skilled worker is in demand, the unskilled worker is in surplus, and the market is a sorting mechanism that prices both correctly. Floyd’s back is now the unskilled worker. The market has sorted him. The sorting cost me nothing.
Read the next sentence twice. I priced the replacement of a man I have owned for 6 years at $0, and the replacement will be here on Monday.
The Pauls’ op-ed is what the invitation sounds like when you translate it from think-tank prose into the voice of the man who mails it.
Now widen the frame, because Floyd and Delia are two instances of one principle, and the principle is older than me.
The Pauls call for a “reboot” — deregulation, tax-structure simplification, tort reform, a “confidence-inducing regulatory environment.” Every word of this is an invitation to make the state a jurisdiction where my arithmetic encounters no friction. Deregulation means no inspector asks about the cold-room seal. Tax simplification means the incentive package I extracted on arrival never expires. Tort reform means Delia cannot sue me for the splits in her hands — or if she can, a cap limits the cost of the splits to a figure below what the repair would have cost me, which means the incentive to repair the seal actually falls after the reform passes, which means the Pauls have proposed, in good faith and in the name of competitiveness, a legal architecture where allowing a woman’s hands to split in the cold is the economically rational decision, and the clipboard is in my hand.
This is not a prediction. This is the design.
“Ye shall therefore keep my statutes, and my judgments: which if a man do, he shall live in them: I am the LORD.” — Leviticus 18:5
The Lord did not say every man. The Lord said a man who does them. A man who signs a contract at $17.25 and holds his back together for 6 years has done his part; the statute of his obligations is satisfied by the signature. The state’s deregulation is the modern form of the same covenant — the law removes the claims that keep the statute from closing, and the act closes. Floyd has lived in them. Delia has lived in them. My attorney has lived in them. I am the party the covenant releases.
You bought the garage-door opener. You bought the nuggets on the value menu. You like the price. The tax climate that enabled the price is the climate the Pauls want to export to 30 more states, and I agree with them, and you paid the price in Floyd’s back and Delia’s hands, and now you’ve read the invoice you received at checkout.
Here’s the part I want your eyes on, because it’s the part you were trained not to see: the “demographic crisis” the op-ed is alarmed about is a labor shortage. The labor shortage is a supply constraint on my ability to depreciate bodies. A tight labor market means Floyd can ask for the stool without being replaced by the next Floyd — because the next Floyd isn’t there. The pool is shrinking. The Pauls call this a crisis. I call it a price signal. The crisis is not mine. The crisis is Floyd’s — his scarcity just gave him a leverage he has never had — and what the op-ed proposes, in the language of “reboot” and “competitiveness,” is to wipe the leverage away before he learns to use it.
You see the shape of it now. The decades-long project — deregulate the state, starve the safety net, break the union, criminalize the stay — is not a response to labor scarcity. It is a program to manufacture labor precarity, and the precarity is the price signal I need to keep the replacement cost near zero. A worker with options is a weather event. A worker whose every exit is wired to a prepaid bus ticket out of the state — the Pauls’ “migration,” their “skilled-worker flight” — is exactly the input I require to run an injection-molding line on a man whose back is a stopwatch. The op-ed thinks it is describing a problem. It is describing my supply chain, in the voice I would use in a boardroom, and handing it to the legislature to codify.
Now a different face, because the law must always have a face. Marina is Delia with a passport and a colder warehouse. I own a distribution center in Nevada, in the unincorporated county where the inspector calls ahead and the tax rate is lower than the one the Pauls want for Wisconsin, because Nevada has already been rebooted. Marina stands at the end of a conveyor that never stops — 10 hours, 47-minute lunch, the bathroom pass that counts against her rate — and the meatpacking knife the station before her uses is cleaned with a hydroxide spray that leaves a residue on the cardboard she lifts. The residue transfers to her hands. Her hands will not close by the end of the year. The gloves I have not bought her cost $2.80. The $2.80 is the markup the staffing agency charges me for one day of her replacement’s labor. I’ve saved $4,200 on gloves across the warehouse this year. The cost of replacing Marina — a day of training, a new hire processed through the staffing agency that insulates me from her W-2 — is $46.
“If a man shall cause a field or vineyard to be eaten, and shall put in his beast, and shall feed in another man’s field; of the best of his own field, and of the best of his own vineyard, shall he make restitution.” — Exodus 22:5
The Lord drew the line at the field, not at the hand. The beast that eats the field creates a restitution obligation. The conveyor that eats the hands creates a cost comparison. I have never found a verse locating the obligation inside the warehouse — merely the cow, the grapes, the fence, the neighbor. The glove is unfenced. The hand is a field on the wrong side of a property line the law has chosen not to extend.
You paid for the box. The woman who sealed it will be replaced before Christmas because the replacement — a 22-year-old whose hands still close — costs me exactly the $46 the Pauls’ policy environment ensures I will always be able to spend. The $46 moves from one line of my spreadsheet to the next. The sheet grows longer by four rows a year. I am told there is a limit to how many rows a sheet can hold. I have not looked it up.
As it was in the beginning, is now, and ever shall be: the supply chain without end. Amen.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.