Tuesday, March 16, 2010

Entitlements and Employment: Why Bob Herbert is Clueless

Bob Herbert is an angry man. Day after day, watching the world from his office window at the New York Times, he sees the ravages of capitalism and writes about the poor and exploited people toiling for their daily bread. Capitalism, he has written many times, conducts a “war against workers,” and examples abound that prove his point.

In a recent column, Herbert rails against Toyota. No, this is not Toyota making cars with defects, although I am sure that Bob would want to include that item in one of his missives against capitalist oppression. (You see, capitalists not only exploit workers, but they sell them crummy goods on top of that.) This time, the column claims the following with the headline:

“Workers Crushed by Toyota.”

Wow. Is Toyota seizing people and conscripting them to work for pennies a day and live in squalid conditions? Is it confiscating their earnings? (Whoops! Government does that, but Herbert likes government that engages in heavy taxation, which is not oppressive in Bobspeak.)

No, Toyota is committing the Greatest Sin of All: it is announcing a plant closure. In Herbert’s own words, we have:

California has been very, very good to Toyota. It is one of the largest markets in the world for the popular Prius hybrid. Nearly 18 percent of all Toyotas sold in the U.S. are sold in California. The state has showered the company with benefits, including large-scale infrastructure improvements for its operations and millions of dollars for worker training. California is one of the key reasons that Toyota is the wealthiest carmaker on the planet.

Toyota is paying the state back with the foulest form of ingratitude.

The company is planning to shut down the assembly plant in Fremont, Calif., that makes Corollas and the Tacoma compact pickup. The plant closure will throw 4,700 experienced, highly skilled and dedicated employees onto the street during the worst job market since the Depression, and it will jeopardize nearly 20,000 other jobs around the state.

Indeed, Herbert regards Toyota as a terrible ingrate. Why, California permitted this company to build an assembly plant there, and now it is planning to close the plant. How dare the Toyota management think of doing such a thing! Lest one think I am exaggerating, read on:

It is a cold and irresponsible act on Toyota’s part, a decision that was not necessary from a business standpoint and that completely disregards the wave of human misery it is setting in motion.


What we’re dealing with here is the kind of corporate treachery toward workers and their local communities that has ruined countless lives over the past several decades and completely undermined the long-term prospects of the economy.

By the way, what is the crime here? Well, it seems that Toyota is moving its operations to places that don’t meet Herbert’s approval:

The (Toyota) plant is a heck of a lot more viable than the nonstop dissembling of top Toyota executives. The company could keep the plant open and profitable if it wanted to. But, instead, it has decided to shift the production of these vehicles to Japan, Canada, Mexico and Texas.

Why does this “fabulously wealthy” company do such things, adding to the unemployment misery of California? Herbert does not give a direct answer except to imply that Toyota is filled with ungrateful, wretched capitalists who enjoy inflicting misery upon others. The decision makers there are ingrates who don’t understand or care about what is happening in the former Golden State.

I might have a suggestion or two. First, and most important, there is no reason that California, with its wealth of entrepreneurial talent, should have such a high rate of unemployment. While it is true that the housing boom and bust was particularly pronounced in that state, nonetheless California enjoys advantages that should be to its advantage during trying times.

Second, let’s be honest about California; it has become a banana republic for one thing and one thing only: its government is out of control. Steven Greenhut, a longtime observer of government in California, has noted in his new book, Plunder, that public employee unions in California have become kleptocrats and have been bleeding the taxpayers of that state for many years.

Furthermore, as the state coffers – built in large part upon the stock market and housing bubbles of the last decade – have been shrinking, the unions have become more militant, more violent, and greedier. If there is a “war against workers” (Herbert’s words) in California, it has been a war conducted by unionized government employees against everyone else who works for a living.

Don’t think for a second that the Toyota management has not taken notice. They are watching the government unions become angrier, nastier, and increasingly out-of-control; they are watching California’s politicians, who have promoted this war of government against everyone else, become increasingly vengeful, as businesses and individuals pack up and leave some of the highest levels of taxation and regulation in the country.

I hate to tell this to Herbert – actually, I don’t hate to tell him – but the decision by Toyota’s management is not due to some sort of anti-worker arbitrariness on behalf of decision makers. Toyota does not hate California workers and love employees who are Canadians, Mexicans, and Texans. Furthermore, there is a large opportunity cost in moving operations, and the Toyota management no doubt has taken all of these things into consideration.

While I am not privy to what Toyota managers might be thinking, I suspect that they understand that California’s politicians are not going to back down. Indeed, my sense is that they are going to make the government even more oppressive, raise taxes, and crack down on dissidents. Like Michigan, where labor unions have plundered the state’s taxpayers and now reap the nation’s worst economy, California is on a course of self-destruction.

Unfortunately, people like Bob Herbert believe that the course I have laid out is exactly what should be done in trying economic times. He really believes that government should be telling people what to eat, to buy, and what to believe, and he really believes that imposing high taxes and creating a stifling bureaucracy create prosperity.

However, the people who make the goods and pay the bills are not that stupid. Toyota is leaving California, and if Herbert and others cannot figure out the reason, then they truly are clueless.


Matt said...

I love it. I appreciate you taking time to address these things, there are so many examples of 'capitalists are greedy evildoers' out there, and so little time to refute them all!

I'd love to see your take on the Krugman latest (suggesting tariffs on Chinese goods if the Chinese government doesn't allow the renminbi to appreciate to its "proper" value against the dollar). Thanks for the great work!

William L. Anderson said...

Well, I have taken on the China issue on my other blog, Krugman-in-Wonderland. Here is the link:

Matt said...

Ah, I forgot about your other blog! When I searched your name I found this one. Thanks.