Nathan Newman draws the right lesson from Toyota deciding to locate a new plant in Canada rather than the Republican utopias of Alabama and Mississippi:
Partly this is due to the embarrassing fact that Toyota thinks the education system in those US states is so substance’s. But a key difference in getting the Toyota plant was the taxpayer-funded health care system in Canada, which saves the company $4 to $5 per hour per worker.
Ironically, tightening trade rules increasingly disfavor direct government subsidies to industry– the US and the EU are fighting before the WTO, arguing that US federal and state subsidies of Boeing and EU financing of Airbus are both illegal under trade agreements. The WTO just declared US subsidies to the cotton industry illegal under trade agreements.
Which means that providing national health care (like a strong education system) may emerge as one of the few legitimate subsidies governments can provide to encourage industry to locate in their countries. And the United States is increasingly finding itself in a terrible economic disadvantage internationally because it refuses to create a national health insurance system.
Exactly right. And given the increasing strain that employee insurance is putting on companies, this problem will get worse for the U.S. before it gets better. And as PZ points out, this is not just a problem in the most reactionary southern states, as there is pressure in other states to emulate the no-infrastructure-no-education-low-service-high business subsidy-low tax Alabama model, despite the fact that it doesn’t work.