RKMBs Forums .::Important::. Politics and Current Events US Health Care System Costs Jobs

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Toyota pulls U-turn, heads north

By PAUL KRUGMAN
SYNDICATED COLUMNIST, New York Times

Modern U.S. politics is dominated by the doctrine that government is the problem, not the solution. 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. 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. Which brings us to the story of Toyota's choice.

There has been fierce competition among states hoping to attract a new Toyota assembly plant. Several Southern states reportedly offered financial incentives worth hundreds of millions of dollars.

But last month Toyota decided to put the new plant, which will produce RAV4 mini-SUVs, in Ontario, Canada. Explaining why it passed up financial incentives to choose a U.S. location, the company cited the quality of Ontario's work force.

What made Toyota so sensitive to labor quality issues? Maybe we should discount remarks from the president of the Toronto-based Automotive Parts Manufacturers' Association, who claimed that the educational level in the Southern United States was so low that trainers for Japanese plants in Alabama had to use "pictorials" to teach some illiterate workers how to use high-tech equipment.

But 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.

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 education is only one reason Toyota chose Ontario. 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.

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 United States, 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.

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.

Paul Krugman is a columnist for The New York Times. Copyright 2005 New York Times News Service.

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the G-man said:
Point of information: there is already a fairly lengthy thread about the pros and cons of Canadian vs US Health Care systems.

http://www.rkmbs.com/showthreaded.php/Cat/0/Number/442107/page/

You might want to post this there instead.

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• No one likes the current system. Only the insurance industry is an enthusiastic supporter of the status quo. Doctors hate it, Nurses hate it, Hospital administrators hate it and most importantly, patients hate it.
  
  
• Managed care is only good if you're healthy. When you're sick you want access to the very best care. Murphy will tell you that the very best specialists are never part of your HMO.
  
  
• The low cost administrator is Medicare. 3 cents of every healthcare dollar goes to administrative costs under Medicare. With private carriers that cost is 25-30 cents of every dollar.
  
  
• The insurance industry spends a huge amount of money each year convincing you that you will suffer greatly under a single payer health plan.
  
  
• In addition they spend huge amounts of money on lobbying efforts and campaign contributions to protect the status quo.
  
  
• Critical healthcare has never required a commitee approval for my treatment under Medicare. When my MD refers me for something, all I need do is make the appointment.
  
  
• I have been denied health care by an HMO. The FDA approved a chemotherapy regimine that was considered 'state of the art' on the grounds it was 'experimental'. Not to mention expensive.
  
  
• You really don't want to fight for care when you're already quite ill.
  
  
• I now see world renowned specialists. Were I still with my old HMO, a local internest would be the best I could hope for.
  
  
• Don't get me started on the drug companies!