Krugman Gets It Wrong - Again

July 26, 2005
Paul Krugman has some rather flaky opinions about the state of America. But we're not a political site - and Krugman's no car writer, which is why neither of us should try to cover the others' territory. Except Krugman has tried - and has gotten it wrong when it comes to Toyota's new plant in Ontario.

The plant is due to open in 2008; it'll build 100,000 RAV4s a year and employ 1300 people. It will stand less than a hundred miles from Toyota's existing plant that builds Lexuses and Corollas and Matrixes.

Now, getting a plant for some states is akin to winning a lottery - only the tickets for the lottery cost about $250 million, as they did for Alabama when they lured Mercedes-Benz to the state in 1993. In this case, Canada offered up a total of about $100 million in subsidies, far less than some U.S. states were bidding, apparently.

Krugman argues that America lost out on the plant (remember, it's 1300 jobs) because American workers were "illiterate." He cites a comment from a Canadian partsmakers' booster group as his evidence. And in the process, he falls back on ugly stereotypes and simultaneously shows off the thin research he performs as habit to write his columns.

Krugman repeats: "'Nissan and Honda have encountered difficulties getting new plants up to full production in recent years in Mississippi and Alabama due to an untrained - and often illiterate - workforce. In Alabama, trainers had to use "pictorials" to teach some illiterate workers how to use high-tech plant equipment.'" Pictorials? Like the ones that come with IKEA furniture?

Are you offended? As a southerner who used to live in Alabama and has had "illiterate" auto-worker friends in Alabama, I am. Auto companies would no sooner hire illiterate workers to build their cars as they would to run them. Untrained? Yes, even though Alabama is now a hub of auto production. But illiterate? That must explain why not only Benz but Honda and Hyundai have chosen Alabama for production. Or Nissan in Tennessee. Or BMW in South Carolina. Or Toyota itself most recently, in Texas.

Krugman's threadbare argument comes right from DailyKos, the liberal blog thought leader condemned by Bernard Goldberg in his tight new book, 100 People Who Are Screwing Up America". 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 - and Gerry Fedchun, president of the Automotive Parts Manufacturers' Association, whose the CBC adds (and Krugman must have missed) "will see increased business with the new plant."

"The educational level and the skill level of the people down there is so much lower than it is in Ontario," Fedchun said.

It's a common gambit for prejudiced writers from the rest of the country to fall back on stereotypes. "The workforce isn't as good as Canada" is Krugman's code language for "southerners are stupid." So why do factories hum in just about every southern state? Why did Toyota choose Mexico for additional Tacoma production? Presumably, with educational levels dropping off the cliff the further south you go from New York City, Baja Mexico would certainly lose out to the metro Birmingham area. Why would Toyota expand engine production in Alabama within the past year?

Of course Krugman's goal isn't to adequately describe the auto industry, it's to set up a straw man to push his argument that America should offer health insurance. Never mind that the Constitution doesn't mandate my right to Viagra - Krugman only sees industry through the lens of how it can enrich his ideals, not how it can enrich the thousands of auto workers now employed in Texas, Tennessee, Mississippi, Alabama, Georgia, South Carolina and North Carolina.

There is, after all, a bottom line every manufacturer must heed. And there is a difference in workers who are new to building cars, versus those moved around from Michigan to Ohio depending on where the union can resettle them. In the 25 years since Nissan set up in Tennessee, it's been no mystery what quality of workers are available in the Deep South. And though some require more training, it's still a much better proposition than building a plant in a unionized area - unless, as in Ontario, Toyota overcame the cost disadvantage by getting hundreds of millions in tax concessions, saved money by coupling the back-office operations with another plant and saved money on the materials for construction by building in a country with a lower materials cost basis.

Repeat after me, Paul - Southerners aren't stupid. But sometimes, columnists are.

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