McCain's Visit to Lima Ohio Today, and the Political Economy of America

After a town hall today in Lima, Ohio, John McCain is scheduled to meet with city officials about the clos ing of a DHL shipping site in nearby Wilmington, Ohio, which will put about 8,000 people out of work. These sorts closings are often terrible for small cities because when a major employer uproots an entire local economy can be endangered. For every job lost to a big company, two or three additional ones are likely to be imperiled in the local service sector -- retail, hotel, and restaurant employees, for example.

So why is DHL closing its shipping site? The answer tells us a lot about how our economy works, why global financial capital has taken prominence over American jobs and the places where Americans work and live, and also about the ways of Washington. It even tells us something about the McCain campaign.

You see, the shipping site that DHL is closing used to be owned by Airborne Express, an American company with roots in Ohio. But several years ago German-owned DHL decided to buy Airborne Express. Obviously, DHL has no particular connection with Wilmington or with Ohio or even with the United States. So it's no surprise that, a few years after the sale, DHL turned to United Parcel Service to move some of its packages, presumably at a slightly cheaper rate. UPS will send the packages through an airport in Louisville, Kentucky. That means DHL won't need its shipping site in Wilmington, Ohio.

Economists have a cold-blooded term called "social costs" to describe the effects on society of what might be otherwise a perfectly efficient transaction from the standpoint of the parties directly involved, such as DHL's decision to use UPS and close down its Wilmington, Ohio shipping site. Although some people may gain jobs in Lousville, Kentucky, it's likely that more jobs will be lost in Ohio (after all, DHL believes the change will save it money). In addition, lots of people in Wilmington and Lima, Ohio, will have to endure the cost and emotional pain of trying to find new jobs, perhaps even moving to another city in order to do so. Property values in Wilmington are likely to drop as a result of the job losses, making it even harder for people there to uproot themselves and move elsewhere.

Had Airborne Express remained the owner of the shipping site in Wilmington, these social costs might never have occurred. Airborne was rooted in Wilmington, Ohio. Presumably, its executives would have taken every possible step to keep it there. So here we have an instance in which global capital -- exemplified by German-owned DHL -- imposes social costs that might even be larger, in total, than any efficiency gains from moving the shipping center to Louisville.

Here's where politics comes in. Congress and the administration have certain powers to prevent foreign purchases of American airline and shipping firms, given the potential effects on American security. When German-owned DHL sought to buy Airborne Express, some members of Congress expressed concern. DHL then did what any firm, foreign or domestic, would do in these circumstances. It hired a Washington lobbying firm, to lobby Congress and get the deal approved.

Who, exactly, did the lobbying for DHL? According to the Associated Press, it was none other than McCain campaign manager Rick Davis.