Go East, Young Man (in a Toyota)

After more than three decades in Torrance, CA, the giant car manufacturer Toyota (American division) is moving eastward, to Texas.

“When any major corporation is courted by another state, it’s very difficult to combat that,” Torrance CA mayor Frank Scotto whined. “We don’t have the tools we need to keep major corporations here.”

Poor politicians! We make the job of moving around other people’s money and manipulating/controlling their right to exist for their own sakes so very difficult. Somebody should give these guys a raise!

Actually, Mayor Scotto, no government needs “tools” in order to keep a corporation in one place over another. The only thing a government can do is stay the hell out of the way. This is precisely what the government of California does not do, while other states (Texas among them) in some small measure do.

If by “tools” the irate mayor of Torrance CA means coercing companies to stay in a state which feels entitled to have those companies there — well, America has not reached that point yet, but it’s not hard to imagine such proposals floating in the name of “the national interest.” Keep in mind that states like California provide electoral and financial support to our political regime in Washington DC. To keep these anti-free market regimes in power, states like California must remain one-party / high tax/ high regulation states, although it’s hard to imagine that changing in California any time soon.

Of course, lower taxes and less government are not the only reason for Toyota’s move, according to the 4/27/14 Los Angeles Times report. Unlike 1982, when Toyota’s American division first centered itself in southern CA and wished to be close to the western port of entry, today 75 percent of Toyota-branded vehicles sold in the U.S. are built in the middle parts of America. Hence another reason for the move eastward.

Interestingly, back in the early 1990s opponents of free trade liberalization insisted that world-wide capitalism would be bad for America, because it would provide competition and put America out of work. Japan “stealing American jobs and prosperity” was, at the time, cited as the greatest indication of this trend. As it turns out, the strength of a Japanese automobile company has been good for Americans who want jobs in this industry.

Again, and again: The case for a free market is inescapable. Free trade, economic liberalization, low taxes, limited government; the degree to which these are fostered is the degree to which economic progress (as well as better quality products for consumers) grows. It’s as simple as that.

California, while still a wonderful place for life and work in many respects, is also one of the states with the most coercive and anti-business policies today in America. Obama is doing his best to turn America into California, in this respect. State governments like Texas are among the staunchest resisters to Obama’s economic policies, and their economic conditions are better than for the country as a whole. As of March 2014, California’s unemployment rate is one of the worst in the nation — 8.1 percent. Texas is 5.5 percent, too high but a lot better than California. (Source: Bureau of Labor Statistics)

Back in 2005, automaker Nissan relocated from southern California to Tennessee for similar reasons as Toyota today. “The costs of doing business in southern California are much higher than the costs of doing business in Tennessee,” Nissan Chief Executive Carlos Ghosn said at the time. He cited cheaper real estate and lower business taxes as key reasons for the move, the same reasons cited by Toyota today.

The point is that business does what’s best for business. And, if you care about the products/services offered by the business, as well as its employees and stockholders, then you should root for unhampered capitalism. Moralists who frown, peer and shake their puritanical fingers, tsk-tsking, “Shame, shame you selfish profiteers,” from their self-important little government offices in Sacramento and Washington DC don’t understand, or care to understand, this basic economic fact of reality. Nor do their academic cohorts in many of our major universities (economics, political science, history, philosophy departments) who speak with impressive language while having almost no coherent grasp of basic reality.

While freedom of speech and free elections still exist, it’s up to Americans to demand different economic policies from our officeholders than the ones currently provided by governments in California, Washington DC and elsewhere. One of the things still saving America is that not only individuals, but also gigantic business operations, may demonstrate this disapproval by “voting with their feet” — and simply moving to more economically friendly environments.

And well they should.


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