Question: In an effort to stop the migration of many of the automobile manufacturing facilities from the Detroit area, Detroit’s city council is considering passing a statute that would give investment tax credits to auto manufacturers- Effectively, this would reduce auto manufacturers’ costs of using capital and high-tech equipment in their production processes- On the evening of the vote, local union officials voiced serious objections to this statute. Outline the basis of the argument most likely used by union officials- (Hint: Consider the impact that the statute would have on auto manufacturers’ capital—tqlabor ratio.) As a representative for one of the automakers, how would you counter the union officials’ argument?

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