Here's to You, Ontario. Costco, you're the One.

On a day when the fractures within American labor became open rebellion, apparently caused by still declining union membership and influence, it’s useful to note two other news stories that illustrate the validity of some old verities, sadly lost in the age of Reagan-Bush.

Paul Krugman’s New York Times column zeroes in on the new North American Toyota plant. A number of U.S. locales competed for it, with the “incentives” that have become standard since the 1980s, and which form one foundation of the success of companies like Wal-Mart: the tax breaks, free roadways and other bribes that often cost localities more than they will ever get back. (Wal-Mart in particular has been known to take the money and, when they’re scheduled to begin paying back in actual taxes, run.)

But Toyota chose none of these places: the plant is being built in Ontario, Canada. The reasons, as Krugman writes, are highly instructive.

Canada’s workforce is better educated than the workforce in the competing states, mostly in the South, where taxes are low and so the standards of the school systems are lower still.

The other main reason is health care. Canadians workers are covered by national health, so that’s a major cost that industry doesn’t have to bear.

In both cases, public responsibility for a public good is seen as important to a healthy economy and the society as a whole. This is especially true because of the nature of these jobs, and the costs of failing to meet these responsibilities in a sane manner. Krugman writes:

… in the long run decisions like Toyota's probably won't affect the overall number of jobs in either the United States or Canada. But the result of international competition will be to give Canada more jobs in industries like autos, which pay health benefits to their U.S. workers, and fewer jobs in industries that don't provide those benefits. In the U.S. the effect will be just the reverse: fewer jobs with benefits, more jobs without.

So what's the impact on taxpayers? In Canada, there's no impact at all: since all Canadians get government-provided health insurance in any case, the additional auto jobs won't increase government spending.

But U.S. taxpayers will suffer, because the general public ends up picking up much of the cost of health care for workers who don't get insurance through their jobs. Some uninsured workers and their families end up on Medicaid. Others end up depending on emergency rooms, which are heavily subsidized by taxpayers.

In other words, the cost of heeding the something-for-nothing rhetoric of low taxes that gets people elected, is that U.S. taxpayers don’t get the benefits of good schools, health care and good jobs, and wind up paying anyway.

That’s not today’s orthodoxy, of course. Neither is the way that one successful company looks at the value of its workers to its business.

In another recent New York Times story, “How Costco Became the Anti-Wal-mart,” a Wall Street analyst frowns on that company’s employee policies.

Emme Kozloff, an analyst at Sanford C. Bernstein & Company, faulted Mr. Sinegal as being too generous to employees, noting that when analysts complained that Costco's workers were paying just 4 percent toward their health costs, he raised that percentage only to 8 percent, when the retail average is 25 percent.

"He has been too benevolent," she said.

Paying people decently and treating them as human beings and fellow members of your society is indeed a novel concept in today’s culture and business environment. Witness Hewlett-Packard just the other day, pleasing Wall Street with its cost-cutting plans: laying off thousands of workers, and ENDING PENSIONS for all of them.

Of course, Costco has relatively happy employees, who stay with the company (so less cost for continual training of newbies), and their relationships with the company and with customers is therefore sincere.

Here’s what Costco is doing:

Besides paying considerably more than competitors, for example, Costco contributes generously to its workers' 401(k) plans, starting with 3 percent of salary the second year and rising to 9 percent after 25 years.

ITS insurance plans absorb most dental expenses, and part-time workers are eligible for health insurance after just six months on the job, compared with two years at Wal-Mart. Eighty-five percent of Costco's workers have health insurance, compared with less than half at Wal-Mart and Target.

Costco also has not shut out unions, as some of its rivals have. The Teamsters union, for example, represents 14,000 of Costco's 113,000 employees. "They gave us the best agreement of any retailer in the country," said Rome Aloise, the union's chief negotiator with Costco. The contract guarantees employees at least 25 hours of work a week, he said, and requires that at least half of a store's workers be full time.

Here’s another part of the story: Jim Sinegal, Costco’s founder and CEO, makes some $350,000 a year, which as he says means he is very well rewarded, and he’s worth a lot in stock and bonuses, but compared to other chief executives, his salary is scandalously low---why, it’s “less than 10 percent of many other chief executives, though Costco ranks 29th in revenue among all American companies,” the Times says.

"I just think that if you're going to try to run an organization that's very cost-conscious, then you can't have those disparities,” Sinegal said. “Having an individual who is making 100 or 200 or 300 times more than the average person working on the floor is wrong."

Wrong? What an unlikely word to hear coming out of a CEO’s mouth in this day and age!

What’s it all about? I grew up in a time and in a place where unions were strong, and even as children we feared a steel strike almost as much as Communist atom bombs. It was still possible to hear our parents tell stories they’d heard from their parents about the hard days before unions and the sometimes harder days of organizing them. In high school I was shown a peaceful green valley which had once been filled with the shacks where miners lived, I was told. The valley was ringed with lights by the company, shining down on those shacks all night so no meetings could be held undetected.

At the height of labor’s power, American industry was the strongest in the world and the economy grew and grew. A few far-seeing if not exactly enlightened industrialists like Henry Ford had long before figured out that if they didn’t pay workers a decent wage, there wouldn’t be many customers for their cars and other products. But their benevolent self-interest went only so far, and the unions were there to stand up for workers’ rights, and give them a real voice.

The relationship of business and labor was established during FDR’s long presidency, and at the same time so was the role of government in the equation. Nobody really complained much about paying taxes for schools, when education was a key to every child’s future, or for social security, because everybody got old. And there was growing support for universal health care, because everybody got sick.

Business may not have been crazy about the minimum wage, but they were happy enough to take federal subsidies, and watch their new economy prosper thanks to federal and state highways, subsidized air and rail transport. They were also happy to have junior execs with college degrees made possible by the GI Bill and other federal and state higher education grants and loans.

But prosperity began to seem automatic, and even greater prosperity was televised with such conviction that it seemed anyone could get rich, and being rich was what it was all about. So along with selling the high consumption ideal, the new media machinery sold the notion of the entrepreneur as high stakes gambler hero, with mere plodding workers treated like serfs, like losers. Hope was no longer the schools or the labor union, but the lottery.

When the U.S. steel industry began its collapse in the 1970s, the unions---not perfect by any measure---somehow took the brunt. With all those jobs gone and everyone running scared, it became much easier in the 1980s for business to ignore unions and intimidate workers into not organizing. Unions and “gubment” became defined as the problem.

I remember an older man in Pennsylvania saying quietly, “You know why they killed the unions, don’t you? The bosses looked out at the employee parking lot and saw too many Cadilacs.” He said it like a joke, but he meant it, and years later, I realized that he was at least partly right. There can be no question that along with the buying power and “keeping score” with their competitors, a major benefit for the executives getting those typically huge salaries and bonuses these days, is the marked contrast to the relative pittance paid to their employees. There are apparently a lot of people out there who can’t think of themselves as winners unless there are many more people who lose.

Unfortunately for them and for us, an economy and a society based on the principles of personal selfishness and greed, liberated envy and cultivated unconsciousness as well as institutionalized ignorance, can’t last for long.

Here’s to you, Ontario. Costco, you’re the one.