FREE MARKET MYTHOLOGY EXPOSED
Toyota, Moving Northward

The latest from Princeton economist Paul Krugman. From the New York Times:

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.

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.

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 on 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 trouble.

Click here for the rest.

This is yet another example where the real world is completely different from the neo-liberal economic theory that dominates political discussion in the US. The main point is that fair economic treatment of workers and citizens does not hurt the bottom line. It may mean that the rich don't get quite as rich as they'd like, but that's just too bad. It most certainly does not mean fewer jobs with less pay--the reality is that neo-liberalism causes fewer jobs with less pay, and it's time for these propaganda lies of the elites to end. Maybe this new labor coalition (see post below) will do something about that.

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