Toyota Says Sayonara (Sort Of) to the Golden State

Texas Gov. Rick Perry is
probably looking a bit smugger than usual, if that’s at all
possible. In the latest commerce-war news between Texas and
California—a battle which California appears to be losing
badly—Toyota has announced it’s moving its headquarters from the
Golden State to the Lone Star State.

As a result, 3,000 jobs will be transferred to California to
Texas. Not everybody will be going, though. According to the
Associated Press, 2,300 jobs will remain in California after the
move. But before we mock high-tax, high-regulation California for
getting another kick in the moneybasket,
let’s see how Perry lured Toyota there:

Perry, who made two visits to California to lure employers to
his state, said Texas offered Toyota $40 million in incentives from
the taxpayer-funded Texas Enterprise Fund. The Republican governor
said Toyota is expected to invest $300 million in the new
headquarters.

Guess I’ll put the streamers and confetti away. Here’s a

list (pdf) of all the poor, desperate companies that needed
Texas’ help to find a new home, to the tune of about $465 million
in taxpayer funds so far. Besides such mom-and-pop shops like
Toyota, Texas Enterprise Fund (TEF) awards have gone to needy folks
like Bank of America, Home Depot, Lockheed Martin, and Samsung.

Yes, California is indeed a
terrible, awful, high-tax, high-regulation place to do
business. The mayor of Torrance spells it out:

“When you look at the whole package, it’s difficult to be a
business here,” lamented Torrance Mayor Frank Scotto, whose
community on the edge of the Pacific will suffer as the jobs
migrate to Texas.

“If all these great, high-end jobs are leaving California, then
we are going to turn into a place that’s a retirement community”
with low-paying service-sector jobs, Scotto said. “We can’t have
that,” he added, warning that unless the state has a change of
attitude, “it’s going to be way too late.”

The system that Texas is using to win this fight should give
small government supporters pause, though. This method writ large
feeds the existing cold war-style battle where states use tax
dollars to lure in businesses from other states. That’s the entire
purpose of the TEF program. Many of the businesses who have gotten
money from the program were also donors to Gov. Perry. But as the
Fort Worth Star-Telegram
noted in 2011, leaders in Texas feel as though they have to
engage in this sort of competition because other states do it, too.
This method may bring home the votes, but arguably it delays real
wealth generation and economic growth due to the costs of the
program. It’s part of the same mistaken belief that publicly funded
sports facilities “generate” commerce when they really just shift
it from one community to another (if that). Even states with
conservative reputations are afraid to stop, though, unless all the
other states stop, too.