Toyota's vote of confidence in Canadian workers and medicare
people decently is sometimes a competitive advantage.' - The New York
Woodstock - Score a big one for the constructive role of government in
society, especially for Canada's public medicare program and the
country's internationally-recognized education standards.
The latest vote of confidence comes not from fringe voices on the
left, or even from the centre of the political spectrum. It comes directly
from the world of business and in the process it puts those critical
of Canada (naysayers like Conservative leader Stephen Harper) squarely
on the defensive.
When Toyoto Motor Corp. announced that it would build a new
$800-million car-manufacturing plant in Canada, it did much more than
give the Canadian auto industry a major shot in the arm. It was also a
vote of confidence in the Canadian way of life.
In doing so, Toyota also exposed the hollowness of the anti-government
rhetoric routinely pumped out by the corporate sector, its
bought-and-paid-for think tanks (like the Fraser Institute) and media flagships like the National Post and most of Canada's
open-mouth, right-wing radio.
The plant will be Toyota's second in Canada. It will build the RAV4
sport utility vehicle and have a capacity of 100,000 vehicles a year.
Predictably, the business press was muted in reporting this aspect the
there were exceptions. A notable one was the New York Times.
"Modern American politics is dominated by the doctrine that government
is the problem, not the solution," The Times reported July 25 in an
article by Paul Krugman.
"In practice, this doctrine translates into policies that make low
taxes on the rich the highest priority, even if lack of revenue
undermines basic public services. You don't have to be a liberal to
realize that this is wrong-headed," he wrote.
"Corporate leaders understand quite well that good public services are
also good for business. But the political environment is so polarized
these days that top executives are often afraid to speak up against
conservative dogma. Instead, they vote with their feet."
U.S. politicians made a mighty effort to convince Toyota to build its
new plant on American soil. Several southern states offered hundreds
of millions of dollars in incentives. But Toyota turned its back on
them and came to Canada.
In doing so, it cited two main reasons - the quality and training of Canadian
workers and the advantages offered by Canada's universal medicare
Each of these are advantages that the National Union of Public and
General Employees (NUPGE) has long believed are under-appreciated by
the business community - especially within Canada - and that more
should be done to promote.
Taxes so low they backfired
"What made Toyota so sensitive to labor quality issues?" Krugman
"There are other reports, some coming from state officials, that
confirm (Toyota's) basic point: Japanese auto companies opening plants
in the Southern U.S. have been unfavorably surprised by the work
force's poor level of training.
"There's some bitter irony here for Alabama's governor. Just two years
ago voters overwhelmingly rejected his plea for an increase in the
state's rock-bottom taxes on the affluent, so that he could afford to
improve the state's low-quality education system. Opponents of the tax
hike convinced voters that it would cost the state jobs."
But superior education standards weren't the only reason. Medicare
also played a huge role in the company's decision.
"Canada's other big selling point is its national health insurance
system, which saves auto manufacturers large sums in benefit payments
compared with their costs in the United States," Krugman wrote.
"You might be tempted to say that Canadian taxpayers are, in effect,
subsidizing Toyota's move by paying for health coverage. But that's
not right, even aside from the fact that Canada's health care system
has far lower costs per person than the American system, with its huge
administrative expenses. In fact, U.S. taxpayers, not Canadians, will
be hurt by the northward movement of auto jobs.
"To see why, bear in mind that in the long run decisions like Toyota's
probably won't affect the overall number of jobs in either the United
States or Canada. But the result of international competition will be
to give Canada more jobs in industries like autos, which pay health
benefits to their U.S. workers, and fewer jobs in industries that
don't provide those benefits. In the U.S. the effect will be just the
reverse: fewer jobs with benefits, more jobs without."
U.S. loses big
The article concludes:
"So what's the impact on taxpayers? In Canada, there's no impact at
all: since all Canadians get government-provided health insurance in
any case, the additional auto jobs won't increase government
spending," Krugman added.
"But U.S. taxpayers will suffer, because the general public ends up
picking up much of the cost of health care for workers who don't get
insurance through their jobs. Some uninsured workers and their
families end up on Medicaid. Others end up depending in emergency
rooms, which are heavily subsidized by taxpayers.
"Funny, isn't it? Pundits tell us that the welfare state is doomed by
globalization, that programs like national health insurance have
become unsustainable. But Canada's universal health insurance system
is handling international competition just fine. It's our own system,
which penalizes companies that treat their workers well, that's in
"I'm sure that some readers will respond to everything I've just said
by asking why, if the Canadians are so smart, they aren't richer. But
I'll have to leave the issue of America's comparative economic
performance for another day.
"For now, let me just point out that treating people decently is
sometimes a competitive advantage. In America, basic health insurance
is a privilege; in Canada, it's a right. And in the auto industry, at
least, the good jobs are heading north." NUPGE
Web posted by NUPGE:
27 July 2005