Krugman Gets It Wrong - Again

The only group of people that might be illiterate is the personnel (HR) people that would hire people that are illiterate. It has nothing to do with anyone in the US being illiterate or literate. If the pay is attractive and the HR folks know what they are doing, they will have all the “literate” people they need.

Marty that’s all well and good, but you still didn’t explain why Toyota went to Ontario for less money. So is Krugman wrong because you have evidence that Toyota went north for different reasons other than to hire smarter workers, or is Krugman wrong because he is a “liberal”, and a “yankee”? This entry may have just been a way to get some anger off your chest if its the latter.

“And Kos gets it straight from the CBC - that’s right, the Canadian Broadcast Company, the same CBC that blathers against red-state America at every turn”

Oh, please. Most Americans might as well be illiterate for all they know about US/Canada relations and Canada in general.

I got here by following a link on CC that was basically talking about people sticking to their knitting. Good advice, I think.

- - An American living in Canada

I read Krugman regularly and find that he is generally right on target. The Car Connection argues that Canada “apparently” offered more incentives than did US states. No evidence is provided to support that claim.

To write that Krugman is not a ‘car guy’ and therefore should not comment on America’s leading industry is at best silly, and at worst chilling. What then are we permitted to talk and write about? And who decides?

Marty, and many other southerners, have, perhaps, reason to be upset by the reasons Toyota cited for their decision to open a second plant in Ontario. This critical commentary, however, missed both the point of Krugman’s article - why Toyota chose Ontario and not elsewhere - and the opportunity to rectify the statement about literacy and educational levels of ’southerners’ cited by Krugman. The generalization made about the breadth and quality of Krugman’s research is unsupported and a reaching with the evidence and opinion presented. Unfortunately, this interpretation of Krugman’s article is weak, missing key points and opportunities, and appearing exceptionally subjective.

In his article, “Krugman Gets It Wrong - Again,” Marty Padgett reflects more on his personal sensitivities than he does on factual analysis. So, from Rumor Control for Marty, here are the facts:

First, whether or not Toyota located their new plant in Canada because of Southern illiteracy, the FACT is that U.S. literacy rates—and Southern States’ rates in particular—are well below every other industrialized nations’ citizen reading levels. If one does not consider this FACT abhorrent and a threat to our national future, Marty, they delude themselves and society.

Two, Krugman’s main point was not the illiteracy rate so offensive to Marty’s sensibilities; it was in fact that nations with some form of national health insurance—i.e., EVERY industrialized nation except for the U.S.—has dramatically lower per capita health care costs and much higher health outcomes. This FACT is one component in business decision modeling that grows more significant with each passing year as U.S. health care costs are the fastest-rising major cost for firms. Insightful corporate leaders—predominantly Republican by the way—are quickly understanding that they will be more competitive with a national health insurance program at lower costs for all than with the present corporate-borne escalating cost burden.

Marty missed (or chose to ignore) the larger point of Krugman’s piece: that health care may have been a significant factor in Toyota’s decision. Krugman actually pooh-poohed the cited parts-association president’s remarks about American workers needing to be trained via “pictorials” and instead stated that “there are other reports, some coming from state officials, that confirm his 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.” Doesn’t seem all that unlikely, especially given the Alabama governor’s much-publicized, failed attempt to get education spending boosted in his state.

So, Marty, did you actually read Krugman’s piece? And if you did, are you A) truly a dumb southerner, B) another victim of the victim mentality, who will find offense even where none reasonably exists or C) intentionally ignoring the real issue of the piece? You may choose more than one, as appropriate.

In any case, the real issue — health care and its impact on competitiveness — truly does merit far more attention. So why not tackle the real issue? You might even help to make a difference.

Krugman’s real point is that health care costs are too oppressive in the U.S, compared to the rest of the industrialized world. Any argument to that?

Regarding the quality of education of the workforce, do you think we’re spending too much on education? Are our graduating students too smart? Have you been in any kind of service business recently?

You can ignore the massive, systemic problems in public education and healthcare all you want, but that won’t make them go away. And there definitely are consequences to them.

Brad’s comments about helath care costs I think are dead on. As a Canadian who appreciates his health care, but hates the high taxes he has to pay for it, I can say yes, there is a benefit for companies. I think our health care system is OK and if it attracts more companies to manufacture in Canada, great.

As for the quality of the workforce, and its education, there are plenty of idiots and illiterates to go around, Canada is no excpetion. If the “south” is so undereducated, why are so many comapnies of all stripes heading to the southern US? There must be something attracting them apart from the cultural aversion to unions and low taxes. Maybe it’s a flexible, productive and motivated workforce?

Toyota has had trouble finding enough talent in Texas to start manufacturing so what is so surprising about them moving to Canada? https://www.autonews.com/buyArchives.cms?articleId=53870

It sounds to me like they didn’t want to be burned again. Plus, I would think that the real point of Klugman’s article was to improve the education and healthcare system in America.

I think the bigger picture, not that Americans are perhaps not as well educated as our Canadian brethren, is being missed. Is national health care that significant of a factor in the overall profitability of a company? Are unionized jobs too costly? Are North American companies too focused on short term profits? Are North American CEO’s and senior management compensation packages justified? Why does the market share of domestic OEM’s continue to erode? Why can new domestics continue to expand in North America while the existing domestic OEM’s and suppliers continue to fight for survival? Are there significant barriers to entry for domestic OEM’s and suppliers in other markets that don’t exist here in North America? Why are unionized jobs in Europe, particularly Germany, protected while here in North America it appears to be a different animal? Does the US government need to play a larger role in the North American market to help sustain the domestic companies? What is the relationship between the governments from the respective countries of the new domestic OEM’s and suppliers vs. the relationship of Washington and the domestic OEM’s and suppliers, i.e. Visteon, Delphi, etc? Is globalization truly what we are experiencing or is it a thinly veiled excuse for greater corporate profit?

Mr. Padgett,

First, I find it quite amusing that you would leap to the defense of southern auto workers when they are ‘bad mouthed’ by a ‘liberal’ columnist while at the same time you appear to support an administration who recently tried to do away with overtime pay for those same workers. Not to mention buying the corporate line, particularly from GM concerning health care costs that are supposedly killing their profitability.

Second, Krugman is one of the most astute columnists in print today, disparaging him because of his political leanings is no different than any other predjudice you would appear to be concerned with.

Frankly, healthcare costs have yet to rise to a truly prohibitive expense at this juncture. Compared with what an average canadian pays in the way of taxes to finance their national ‘healthcare’ system, we’re still getting off cheap as workers go. The only real difference is that companies up there don’t have to foot the bill to provide this benefit, thus making it more attractive to manufacture there vs. here. This is essentially what Krugman’s larger point is.

Speaking of GM’s blather about how they can’t compete in the marketplace and still provide proper benefits for their employees and the automotive press’s tacit acceptance of this idea, it is pure balderash! If they wish to be profitable and competitive they need to stop releasing garbage product and stop making bonehead decisions. Case in point, cancelling serveral passenger car development programs (and/or postponing others) and instead focusing on their next generation of SUV’s and trucks in the face of soaring fuel costs and increased demand for more economical transport. Another fine example, selling off debt and limiting future finacing of their GMAC subsidiary, which is (ironically) their only substantially profitable division. Now they have this ‘employee discount’ program that is like a ‘blue light special’ at Kmart. While consumers may flock into dealers in the short term to get bargain basement cars/trucks, in the long run it will be harder for GM to justify their pricing in the future, when this deal expires. To top it all off, it hurts their bottom line. You don’t see Hyundai or Toyota doing this, do you? How is it that they are still profitable?

Now the UAW, the average american worker, and even the consumer, have absolutely nothing to do with this condition. The blame for the state of GM (and really Ford as well..) rests completely on the shoulders of management.

As to Krugman’s generalization about southerners, a lot of statistics can be found to back up the contention that by and large southerners perform poorly, scholastically speaking, compared to their yankee bretheren. It’s just a fact.

Anecdotally, it’s also obvious why. Their voting patterns, their willing submission to being bamboozled by evangelical types (who collect a handsome portion of these folk’s income for the snake oil they peddle), their insistence that scriptural canon be a part of science education (creationism in the classroom), etc all speak to a serious gap (chasm really) between the cognitive abilities of northerners vs. southerners.

You can take offense all you want, but don’t go speaking out of both sides of your mouth. You can’t have it both ways, defending disparaged/illiterate southerners and yet supporting an unswervingly pro-corporate, anti union administration who would like nothing more than to take this country (and the conditions of its average workers) back to how things were at the turn of the 19th century.

And my sentiment doesn’t come as that of some tree-hugging liberal granola eater either. Nor am I some ‘blue collar’ laborer either. I am in the IT field, am a total car fanatic, the child of a former car stylist at General Motors (who worked under the great Bill Mitchell), and have had ‘gasoline in my blood’ from day one. I think you people need to stick to reporting car news and leave the ‘politicking’ to the politicos. Remember that, while 51% of the citizens of our great united states may (if you believe Diebold) have voted for the GOP, 49% didn’t. I imagine that’s a pretty large chunk of your readership..

Bottom line, Alabama lost out on the Toyota factory because (obviously) the canadians gave them a better deal. So while Krugman may not tell the whole story, he’s not entirely wrong either. He just focused on a few of the reasons why.

-John

By the way, right on Dan B! You hit the nail smack dab on it’s head. The questions you list above, are exactly the ones that need to be asked. Isn’t it ironic that while most of the industrialized world protects their manufacturors, their market, and their workers; we have had a succession of administrations increasingly hostile to individuals and institutions that make up the backbone of this country.

Of course I can answer this one for you, Dan: “Is globalization truly what we are experiencing or is it a thinly veiled excuse for greater corporate profit?”. Its definitely the latter! Corporate America’s sole allegiance is to its shareholders (who are increasingly concerned with short term gain over long term stability, not to mention the greater good of our nation).

-John

could it be because of canada’s health care system, toyota will not have to furnish and pay for health insurance???

Most of you miss the important first point here - Krugman has no evidence to support his claims other than a quote from a Canadian industry booster. Why is Toyota having trouble finding people in Texas? Or Alabama? Well, maybe Toronto with its 4 million people and about 2000 fired Ford autoworkers has more experience available than the state of Alabama, which only has 4 million people total, a third of them living outside the Bham area. He can’t prove southern auto workers have less education or are “illiterate” - I wonder how he’d do with a robotic arc welder and a 1000-page instruction manual?

Oh, and as for this…whose fact is it?

As to Krugman’s generalization about southerners, a lot of statistics can be found to back up the contention that by and large southerners perform poorly, scholastically speaking, compared to their yankee bretheren. It’s just a fact.

So, it’s actually an incorrect comparison to say that Canada was offering fewer tax incentives than a U.S. state, since Canada’s health system’s paid for through high taxation.
Ergo, Canadians one and all, are paying for the Toyota plant’s employee healthcare plan. G-d help us if they institute national healthcare here. Because, as we all know, the government is way more efficient and diligent than private industry. Ha.

Dave, you may not find the government efficient,and you may not want government providing your healthcare. But… I’d challenge you to find another industrialized country with higher per capita health costs, higher health-related administrative costs, higher percentages of its population un/underinsured. I know the answer: none! The U.S. fee-for-service health care system is THE most clostly per person and delivers, statistically, lower outcomes. Moreover, government doesn’t have to be the health provider, just the conduit through which all would be insured.

This doesn’t make all other industrialized nation’s health insurance programs great or perfect—but it does make them all more efficient and more effective than ours. Relating back to industry, it therefore makes our overall production costs higher for this specific cost factor. And…this is Krugman’s point. It’s not a new story; it’s just one American’s choose to ignore, as Marty so ably demonstrated in his article and above.

Letter to the Editor, The Birmingham News
Friday, July 15, 2005
On June 30, Toyota awarded a new assembly plant to Woodstock, Ontario, Canada. The Automotive Parts Manufacturers’ Association issued a formal press release complimenting Toyota. After the announcement, I was interviewed by media for additional comments. I was asked to elaborate on details related to the skilled workers in Ontario and in the Southeastern United States. The comments were my own personal comments and are not shared by Toyota or any other vehicle manufacturer. International surveys have verified the average skill level of Ontario residents is one of Ontario’s competitive advantages in North America. My comments taken in their total context were meant to highlight that quality and were not meant to disparage workers elsewhere.
I never used the word “illiterate,” nor would I. I have been in this industry a long time. The use of diagrams and illustrations is common. I was horrified that my remarks were reported as they were.
I have led four trade missions to the Southeastern United States. Several Canadian suppliers have set up plants there as a direct result of these trade missions. If I believed what the article implied, would I have done so? I think not.
I must profoundly apologize for the agony the interpretation of my comments has caused. I hold a high regard for the residents of the Southeastern United States. I do not think in the way the newspapers have made it seem.
Gerry Fedchun
President, Automotive Parts Manufacturers’ Association
Toronto, Ontario, Canada

Before too much comparison is made between private/public health care, let one thing be noted from someone who has lived with both. The overall quality here is much higher, the speed is amazing. In England people have died while on the waiting list for routine operations. They have also been told they are too old for an operation. Expectations are very high in the States for healthcare, it would raise taxes significantly for those expectations to be met. My company has a very good system of showing how much they pay for and how much they contribute to my healthcare. Most people never see this. If you really want a real 39% tax rate (after all adjustments) and a 3 year wait to get a hip replacement go for national health care.

Thanks to Catherine for posting that response from Fedchun, which I hadn’t seen.

Sorry, the facts are simply impossible to ignore. As one who recently traveled through the South, I am not surprised by Toyotas’ decision.
First of all..there is the obesity. I was astounded by how many people are just flat out OBESE. Flat out Blew me away…No wonder health care costs are staggering.
Second..and I will just come out and say it..these people are DUMB. Period. But they are stupid by design. education,in many areas of the South, Great Plains,Bible and Rust Belts, etc..is frowned upon; the intelligent are viewed with deep,deep suspition..what matters most to these people are the Bible, Patriotism(Which is mainly about believing even childlike propaganda) sports, movies, Television shows(these are the people that make “American Idol” Popular) and their various hatreds(Blacks,gays,immigrants,etc..)
The attitude I saw most was one of educational apathy..knew there was a world out there, but didn’t know anything about it, and simply did not care..