Governor, Can You Spell Jobs?

I’ll say it again. Gov. Ted Kulongoski is the least “economically literate” governor that Oregon has had in modern times. He appears to have virtually no understanding of the micro or macro economic effect of government policy. Oregon’s major businesses continue to contract and leave while Kulongoski touts the manufacture of unproven “green technologies” as appropriate replacements.

The latest case in point is the closure of the Daimler/Freightliner plant in Portland with the resulting loss of approximately 900 well paying manufacturing jobs, an additional 600 administrative jobs in the Portland headquarters office and the resulting losses in the multitude of manufacturers and suppliers of parts. Nick Beleiciks, a senior analyst for the state economist’s office in a recent interview in the Portland Tribune noted, “For every job lost in heavy-duty truck manufacturing, three more jobs disappear elsewhere.”

Not that the governor ever pays any attention to his economic advisors, but just so that he understands the math, that means that there are 1,500 direct jobs lost from Daimler/Freightliner and another 2,700 jobs from suppliers. (There is also a ripple effect from the 600 administrative jobs but I don’t have a reference to that multiplier.) Not minimum wage jobs but well paying manufacturing jobs, complete with benefits,

And the sad truth of the matter is that one phone call from the governor could have prevented all of it. One call from the governor to the attorney general could have prevented the loss of all of these jobs. One call that should have been made if the governor or his principal advisors knew even basic high school economics.

Here is the scenario. Several years ago a German truck manufacturer, Man AG sued Freightliner’s parent, Daimler Trucks seeking $500 million in economic damages and $350 million in punitive damages. Because of a quirk in the law, the State of Oregon is entitled sixty percent of any punitive damages collected – $210 million dollars to the state’s coffers for no efforts on the part of the state and no demonstrable damages to the state. It was a windfall of $210 million.

That windfall caught the eye of Attorney General Hardy Myers and the chase was on. But the big catch was that Daimler and Man settled the lawsuit without punitive damages — that means the State of Oregon was entitled to nothing. But that didn’t deter the Myers. With the scent of free money he promptly sued Daimler Trucks demanding the $210 million anyway.

Freightliner General Counsel and Secretary Paul Hurd was quoted in the Portland Tribune as saying that the state’s lawsuit was very much on the minds of company executives when they decided to pull the plug on their Portland operations:
“They are deeply disappointed that Oregon would sue us while other states are courting us. Oregon poisoned the well with the suit. They poured iodine in the water.”
Even Portland’s notoriously liberal city commission got it. The Portland Tribune noted that

“During the past two years, Portland Mayor Tom Potter and Multnomah County Commission Chairman Ted Wheeler have urged Oregon Attorney General Hardy Myers to drop the suit, however. Just last month, Portland’s City Council authorized the city attorney’s office to file a friend of the court brief on behalf of Freightliner.”

These officials noted publicly that they were concerned that this lawsuit would force Daimler/Freightliner out of town, particularly in a time of manufacturing contraction. The Portland Tribune went on to quote from the brief filed by the city and county,

“‘The city puts significant time, effort and money into encouraging employers to locate in Portland and in retaining those employers already located here,’ according to the city’s brief. “˜Especially in uncertain economic times, retaining important corporate headquarters and manufacturing operations are crucial for the health of the city. Any action that threatens a substantial employer within its boundaries also concerns the city. If Freightliner is required to pay an excessive punitive damage award that is not part of the settlement agreement reached with the parties to the litigation, its continued viability in Portland could be threatened.'”

At least Mayor Potter and Commission Chairman Ted Wheeler understood that in a global market businesses have choices and one of those choices is to relocate rather than continue to deal with the anti-business sentiment in a state already notorious for it high taxes.

But it is obvious that neither Kulongoski nor Myers got it. It’s not like it was a secret. It’s not like Daimler/Freightliner hadn’t been talking about this for a considerable time. The Portland Tribune noted “During a February press conference, Freightliner Chief Executive Officer Chris Patterson said the state lawsuit could play in role in the company’s decision about the future of its Swan Island manufacturing plant.”

But Myers office doesn’t believe that the lawsuit had anything to do with Daimler/Freightliner’s decision to leave. That brings to two (Myers and Kulongoski) the number of people in Oregon that believe that nonsense.

Let’s be clear. Daimler/Freightliner didn’t simply close the plant due to a slow down in heavy truck sales. It closed a different line of trucks being manufactured elsewhere but MOVED the manufacture of Freightliner trucks to the Carolinas. The jobs lost in Oregon were recreated in the Carolinas.

But this is not an isolated incident. Gov. Kulongoski and his party tend to measure the well being of Oregon on the amount of money available to state government rather than on the quantity and quality of jobs available to Oregon citizens. As long as the money keeps rolling in to the state coffers, they are oblivious to the long and short-term effects of their decisions. In this instance that chance to enhance the state coffers by $210 million was all that was in the focus of the governor and the attorney general. The cost of pursuing money, to which the state was not entitled, in terms of loss of business and the attendant jobs, was simply off of their radar. They are unable to connect the dots between their policies and the resulting impact on the business community and the jobs that it creates.

Even when their fellow liberals spell it out, Kulongoski and Myers simply can’t understand the message. There is a great ad on television in which a man is pouring out his heart to his psychiatrist — he comes to the pause looks at the psychiatrist for comment and the psychiatrist begins speaking French. Similarly, discussing the economic impact of government decisions with Kulongoski just as well be conducted in Swahili because he is incapable of understanding it in any language.

This is a “Joe the Plumber” moment in which it should become crystal clear as to the real thoughts and priorities of our politicians. And in this instance it simply affirms what you have always suspected — you are here to feed the government, first, last and always.