Wednesday, October 10, 2007

Honda, The UAW & The Republican Presidential Candidates' Economic Debate

Today's Wall Street Journal features a page one article discussing the clash between Honda and the UAW over the former's hiring practices at its new plant in Greensburg, Indiana.

Having just watched the Republican Presidential candidates' economic "debate," and I use the term very loosely, on CNBC yesterday afternoon, I couldn't help but frame my reactions to the article in light of that candidate debate. I'll be writing a related post over on my 'Conservative Insights' blog, found on my link list on the right, later today. Be sure to check there for more on this topic.

The central issue in the Honda case is that the state of Indiana, when it extended certain tax preference to Honda for locating its new plant there, did not choose to stipulate that hiring must be open to all state residents. Therefore, Honda chose to limit its employment offers to current residents within an hour's drive of the new plant site.

You can read the article to learn the particulars. Basically, the UAW feels that Honda is unfairly limiting employment to a largely white, rural area which will tend toward a non-union shop.

Honda alleges that they want employees living close to the factory, so that weather is not a factor in having workers show up for their jobs in the winter. It's simply coincidental, Honda says, that this limits employees to largely non-UAW applicants.

Predictably, there is a hue and cry, as one Indiana town, Anderson, recently lost the last of three GM factories, idling 1,500 people. All of whom are ineligible for the Honda employment offer.

If you need to see a clear example of capitalism, governmental support, investment and employment opportunities which showcases the existing divide between Democrats and quasi-socialists, versus Republicans and conservatives, regarding economics, this is one.

For whatever reason, the Governor of Indiana, a Republican, chose to extend to Honda conditions of tax preferences devoid of conditions requiring statewide worker applications. It doesn't take a genius to figure out that the Governor, Mitch Daniels, calculated what he'd have to offer, on behalf of his state, to get the Honda jobs, payroll and business tax revenues. To beat out Ohio, he must have realized he had to allow Honda to avoid paying UAW-mandated wages.

Fair enough. If Indianans don't like this, they'll toss Daniels out at the next election.

Meanwhile, Honda is bringing 2,000 jobs to Indiana. Nobody is holding a gun to the applicants to force them to work at Honda. In just three weeks, Honda closed applications for the plant, having sufficient workers available for their needs.

Sounds like an economic success story, doesn't it? It does, and it is, if you accept individual responsibility and the historic economically-driven mobility of the US population.

And yesterday, Senator Fred Thompson noted this, when, in response to a question, replied that nobody guarantees Americans that they will have their job, in perpetuity, in their current location.

I think this, frankly, is the central economic issue of the day.

Government does not plan the economy. We don't, by and large, run a socialist or fascist economic system in America.

Instead, the idea is that government sets certain conditions of law, safety, taxation, etc., then lets individuals, either solely or collectively, decide how to operate within those parameters to pursue their dreams and achieve economic prosperity.

This has resulted in several characteristic American trends. For one, our being a nation of immigrants. The ultimate 'mobility' is to leave your country to enter America, destination probably little-known, in order to simply participate in its prosperity. Having crossed oceans to arrive here, it's unlikely this population pool will really care to which state they must move to realize their economic dreams.

Second, even within the country, as far back as the 1700s, we've been a nation of economic pioneers. Being born in Illinois, I am familiar with the migration of farmers from the played-out fields of New England to the Midwest, and beyond. For decades, people simply moved west when the local conditions left them economically disappointed.

This is, quite simply, our heritage. Nobody guaranteed the early Dakota farmers unemployment insurance, social security, or health insurance. They'd have laughed at the very idea!

Instead, they were more than willing to measure and take their risks, in exchange for homesteading, in order to work and acquire their land.

Where did we suddenly get the idea that being an American entitles you to remain in situ, and simply have an adequate job delivered to you?

This is where the other side of the economic issue is found. Democrats, or liberal Republicans, like, sadly, Mitt Romney, some of the time, will be found here.

Romney, in response to the employment/recession question in yesterday's debate, right after Thompson, said something like,

'We can't let Michigan be in a one-state recession. This is personal for me. We've all got to get together and work to come up with a solution for this state.'

No, Mitt, actually, we don't.

That would be the job of the Governor of Michigan, and her tax-raising colleagues in the state legislature. Unfortunately for the citizens of the state of Michigan, they've unwisely concentrated their industry in the automotive sector, allowed the UAW to price their workers too expensively, and ignored the inept management of the three large auto makers located in Detroit.

Together, these trends have resulted in an economically troubled state.

Oh, well. Luckily, for Michiganders, there's a little economic zone known as the United States of America, of which they are a part. Forty-nine other states are available, sans passport or governmental permission, to which residents of Michigan are free to move to find better economic prospects.

See the parallel with our economic history? And Indiana's competitive economic attitude?

The only problem with Michigan right now is that too few of it's citizens take individual responsibility for their own economic welfare. They sit on their asses, waiting for a union, a large employer, or 'the state' to take care of them.

To listen to the Democrats, you'd think that we are in a recession, and all need governmental planning to rescue us. Two CNBC-chosen questioners at yesterday's debate, Bartiromo and Matthews, who are pretty much already self-identified liberals, kept pressing the candidates to admit that the US is, or shortly will be, in a recession.

But we're not. Thompson didn't take the bait. Instead, he noted that our government fosters opportunity, but it doesn't guarantee employment.

You need look no further than Indiana, per the Journal piece, to see that there are ways to foster growth, even in the Midwest, at auto plants.

Of course, the jobs may not be UAW-sanctioned. So what?

In a topic discussed at the end of the debate yesterday, unions were described by the candidates as being,

'some good, and some bad.'

Just so. Nobody wanted to name any 'bad' unions, for obvious reasons of vote-getting and fund-raising. However, again, it doesn't take a genius to note the shrinkage in working UAW membership over the past decade, and realize they have ineptly managed their members' situations.

Is Indiana doing something bad to foster non-union employment at Honda in Greensburg? Evidently, not according to the Governor.

Until our politicians become humbler, and return to the roots of America's economic success and vitality, which is based on mobility, we are probably cursed with a continuation of this needless hand-wringing about union jobs in states like Michigan and Indiana, rather than the celebration of new jobs in Indiana.


kdolsky said...

I certainly agree that we don't guarantee jobs and prosperity to anyone but sometimes it seems that's what powerful members of state and federal legislatures along with powerful industry interests get, often on the backs of the less powerful.
There is a strong sense in this country that special interests get their ways with congresspeople who are more interested in personal and party power than doing what is right for consituents. And this makes situations like Michigan's economy more flamable. If we saw these interests acting more repsonsibly we might all feel less as if we are "owed" our share.
Second point is that we have seen increasing gulf between rich and poor and while no one in thier right mind would suggest communism, this is not a healthy environment. Sometimes a bit more socialism, while it may cause heartburn to die hard capitalists, is in everybody's long term best interests.

C Neul said...

While I understand your point, I don't think allowing governmental employees to plot industrial policy is ever a good idea.

Be they civil servants, or elected officials, they are almost certainly less capable than those in the private sector.

Allowing politicians to legislate solutions simply invites corruption into the governmenatl process. For either party.

Regarding supposed income inequality, I respectfully disagree.

First, the figures we are typically fed are, in all probability, outliers. The percentage of very high incomes, relative to still-above-average, but less high incomes, is no doubt much greater.

Specifically, we hear about the $50MM/year CEO, relative to a $30K/year laborer.

We never hear about the actual shape of that company's incomes distribution.

Nor whether that CEO earned above-average returns for the company's shareholders.

One key point, on which I will elaborate in a post on my companion political blog, is that the CEO's compensation does NOT come out of the less-well-paid employee's pockets. It's a board decision. And last I noticed, boards are elected representatives of the shareholders.

Under no circumstances can I see socialism improving this situation, if it needs to be 'improved' at all.

Isn't income inequality one of the drivers of the American Dream? If there's no wealth to which to aspire, what motivates us?

The welfare of our fellow citizen? I thought that is socialism.

I confess to still believing that less governmental stricture and 'guidance' would leave people with more responsibility for their own lives and welfare.