02 January 2009

It's North against South, again

And, of course, the issue, as usual, is economics. (Yes, that little-discussed if not forgotten element of those tensions which resulted in the War for Southern Independence.)

Autoworkers in the North, Detroit, to be precise, are declaring "war" on the South.

Detroiters continue to embarrass themselves by placing the auto industry collapse into an us-versus-them framework. In the midst of all the whining and begging for a bailout, the South has been declared the new enemy, along with the foreign-car manufacturers who are producing cars — in Southern plants — that consumers want to buy. The army of politicians and opinion columnists in Michigan who lay the groundwork for resuscitating this fading industry don't bother to acknowledge that it is in the best interests of any public company to maximize quality for its customers and efficiency of production and profits for its shareholders. Karen DeCoster, here.

DeCoster is commenting on a column by John McCormick, who thinks its time for another smack-down of the South, deserved because of opposition to the bail-out of the Big 3:

The problem here centers on certain southern states -- Mississippi, Louisiana, Georgia and, in particular, Alabama -- where certain bone-headed senators seem to have forgotten that the Civil War ended, with the appropriate outcome, almost 150 years ago.
Wait a minute! Appropriate outcome? What the --? What appropriate outcome? The defeat of southern capitalism by Yankee mercantilism?

Oh. Sorry.

During recent Congressional hearings, these 'good old' southern boys made it clear they could care less about Detroit's survival and blocked passage of emergency loans in the Senate, leaving it to a decidedly reluctant President George W. Bush to approve the financial relief package

What's more, these Alabama representatives argued that they and other southern states had plenty of automotive manufacturing capacity to take up the slack and keep the country's economy going if Detroit was to go belly up. Specifically, Alabama's Republican senator Richard Shelby called Detroit a 'dinosaur' and said bankruptcy was a better solution to the problems facing U.S. carmakers. The state's other senator, Jeff Sessions, also a Republican, said Detroit's collapse would "not be the end of the world. We have a very large and vibrant automobile sector in Alabama."

On one hand, like a strike of government workers, it's hard to know who to root for. McCormick correctly points out the amount of "corporate welfare" foreign autoworkers received to set up shop (in the form of "billions in tax and infrastructure concessions"). On the other hand, since these types of "concessions" don't usually involve giving any money to corporations, but, rather, declining to take money from them, I'm not inclined to see the hypocrisy. But, of course, as a true liberal, McCormick no doubt believes that any time a government doesn't take someone's money it is the same as giving them money. So when he cites UAW President Ron Gettelfinger as saying that Alabama spent "$175,000.00 per employee to create its automotive work force" I'm not sure -- having not researched it -- if any money was actually spent in the normal usage of the word.

But let's say that the money was spent (in the normal usage of the term). Liberals like to speak of tax expenditures as "investments", which they're not (in the normal usage of the term). So far, Alabama has received a net return on that "investment". Those car companies, unlike the Big 3, have not been mis-managed, producing cars people don't really want; and they have put people to work. They aren't asking for more tax "investments" to keep mis-managing executives and unions employed.

And those car companies, as well as their employees, are net taxpayers in the State of Alabama, creating more money (i.e., taxes) to "invest" -- or not (preferably, not).

Besides, when it comes to this hypocritical "corporate welfare" McCormick's talking about, it's interesting, and relevant, to note that "Michigan [did] the same to lure high-tech companies to the state, and most recently, it offered huge incentives to Volkswagen to build a new plant in the state. The game is played the same everywhere". I guess we must conclude that corporate welfare is right only when it inures to the benefit of unions.

Well, at least McCormick isn't blaming the "free" (ha!) market. If only we had such a market.

The free-market method would be to allow for a business environment that would be ideal for businesses to thrive (no taxes or stifling regulations); thereby encouraging companies to relocate to low-cost states on a mutually cooperative basis. This would engender competition among states that would drive down all costs everywhere. But that would mean that the people in power — the politicians and government planners — would become less influential and less wealthy; it is for that reason the free market has not prevailed. DeCoster.
A free market would have required the Big 3 to build cars that people (the market) wanted to buy. Normally, that works quite well. And to the extent that market principles work, they have worked quite well for automakers other than the Big 3. Those other automakers, disciplined by the market have made product people are willing to buy. Of course, and this is where unions come in, a free labor market wouldn't work as well for unionized labor. In a free market, price ultimately comes to what the market, operating freely, will bear. One of the factors is the buyer, precisely, how much the buyer is willing to pay for the product (i.e., labor). In the labor market, the price of labor will come to what the buyer (i.e., employer) is willing to pay for labor. And it doesn't always work to labor's disadvantage: sometimes the market is a seller's market. But they wouldn't know that, because they've been exempt from the market.

It is interesting to hear McCormick talk about hypocrisy. The Big 3 have lost money due to the discipline of the auto market; they have not been exempt from this discipline. The UAW have operated, and wish to continue to do, exempt from a free market of labor. The union operates with a government-backed exemption from market discipline, and then cries foul when those who have not done succeed and object to being asked to pay for this continued exemption from market discipline.

Naturally, some want to force this exemption on southern auto workers. One of these is Michael Lind, for whom "The South will have risen by bringing down the North." (O, cry me a river.) Bringing down the North -- by, get this, delivering products, like labor and automobiles, that people want. And by objecting to continued financing of UAW exemption from labor market discipline.

I love the way this guy talks. First he points out that E.U. member states collaborate with each other against foreign economic rivals. Then he accuses the South of "collaborating" with the enemy.

Any British or French or German leader who proposed collaborating with Japan or the U.S. in order to wipe out industry and destroy jobs in neighboring EU member states would be jeered out of office. But it is perfectly acceptable for American states to connive with Asian and European countries in the destruction of industry elsewhere in the U.S.
The reason for this "collaboration" is, of course, because for many of us in the South market participants are not enemies. The only enemy is any enemy of the market, the biggest of which is The State. The State is an enemy of the market because it is an outsider to the market, entering into the market uninvited, with nothing to sell that anyone wants freely to buy, and no money of its own with which to buy, and dictating at gun-point the price it shall pay for goods and services, as well as the medium of exchange. It is an enemy of the market because it is parasitic upon the market; it is a leech.

Then (and secondly) Lind claims the South "poached" an entire industry from the North. Apparently, by means of unfair economic practices in the early 20th century, "the Southern states were the first to adopt conscious statewide economic development policies, which then as now meant poaching industries from New England and the Midwest where wages and public spending and regulation were greater." (According to Lind.) Think of the mind-set one has to have about ownership here. The industries which left New England and the Midwest were owned, not by the owners of the industries, but the states in which these industries were located. And when they moved, for reasons that seemed good to them, this move was an act of illegal hunting, fishing or harvesting on the part of the locations to which these industries moved. (According to John F. Kennedy, in this 1954 Atlantic Monthly article, in which he blames "sub-standard" wages, among other things, including unnatural advantages, in contrast with "natural" advantages. "Sub-standard", and "natural" according to whom? The one who defines the key terms "wins" the argument. Kennedy, for example, does not refer to anything called the "unnatural" dis-advantages of doing business in New England.)

"Now," after the aforementioned poaching, the South is at it again, "with the help of Nissan, Toyota, and BMW...trying to replace Detroit as the center of U.S. automobile production, using low wages, anti-union laws, and low taxes to benefit from the outsourcing of industry from societies more advanced than the South, like Japan and Germany. The economic Axis is collaborating with the neo-Confederates against their common opponent -- the American Union."

The American Union is an opponent. Sorry, but it's true. Like The State, organized labor claims an exemption from market discipline. Instead of bringing marketable skills to the labor market, organized labor brings a stick and forces people to buy their product, over-priced or not. But I digress.

Naturally, instead of saying, "Hey, let's make it even easier to do business in New England (or Detroit)," they say, "We need (un!) federal action to force those neo-Confederates to make it as difficult to do business in the South as it is in New England." Those Yankees (they started the North-South business) could easily employ the same practices as the South. If they did that, those "southern" practices would no longer be unfair.

Besides, those aforementioned textile industries, which the South "poached" have since moved on to Asia. You see, those textile industries eventually were put under strictures in the South similar to those once placed upon them in New England. And not surprisingly, Asia is now "poaching" those industries. Thank you, Yanks. Just think, at least those industries stopped in the South on their way out. If the South had been engaging in the same practices as New England, those textile industries might have gone straight to Asia (or elsewhere), utterly by-passing the South.

One is reluctant to hold one's breath waiting for Yankee statists (and their carpet-bagging fellow-travelers in the South) to embrace the idea that the solution to a problem created by government pre-emption of the market is not more government pre-emption of the market. What was it they kept saying to the President? Oh, yes: If you find yourself in a hole, then stop digging. Government pre-emption of the market drove the textile industry to the South. Government pre-emption is now driving the textile industry out of the South and overseas. And the Yankee solution? Why, more government pre-emption, of course.

Same thing, now, with the automobile industry. That's Yankee ingenuity for ya.

Back to the whole North-South thing, raised by McCormick. He ends his piece by asking, "Is it time the South is reminded that a mean-spirited attitude is not a smart play when the whole country is on the ropes?"

Let's just ignore, as he does, the question of just how "the whole country" got put "on the ropes". I'll give you a hint: Government pre-emption of the market. That's rich. Moan and groan because the same people who have always opposed government pre-emption of the market, now oppose government pre-emption of the market.

Here we go again. In the new struggle for southern independence -- southern economic independence -- darn imperialistic Yanks respond with threats. At least they're not threatening armed invasion this time. (I would speculate on how unsuccessful that would be if not for the fact that all troops are now federalized. All other things being equal, however, I don't think it would be as successful as the last invasion.)

No, it's not an invasion. This time, the Yanks want to boycott us. To which I can only respond: Oh, would you please?

I mean if the new war for southern economic independence is going to fought by means of boycott, then by all means: Fire away.

Nanny, nanny, boo, boo.

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James Frank SolĂ­s
Former soldier (USA). Graduate-level educated. Married 26 years. Texas ex-patriate. Ruling elder in the Presbyterian Church in America.
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