Gov. Brown excuses Toyota move with Schumpeter

Gov. Brown excuses Toyota move with Schumpeter

SchumpeterIt was free-market economist Joseph Schumpeter who coined the phrase, “creative destruction.” He meant that a dynamic economy doesn’t stand still. That cars replace buggies; trucks replace conestoga wagons; computers replace typewriters; smartphones replace line phones. A dynamic society is different from a stagnant society, such as under socialism, or the economic edicts of the Roman Emperor Diocletian.

That’s the context of Gov. Jerry Brown quoting Schumpeter about the loss of Toyota’s HQ to Texas. And it’s one thing I like about the governor. He comes up with these references. It’s doubtful Texas Gov. Rick Perry ever heard of Schumpeter. But who got the jobs?

Brown talked about “the creative destruction of capitalism…. I put the emphasis on creative. Change is inevitable. There’s a fellow named Schumpeter who talked about the creative destruction of capitalism…. If you’re totally static, you’re a dead economy. Things are always moving.”

Right. And one thing that “moves” is capital, from areas of too much government to areas with more reasonable government. It’s South Vietnamese fleeing before the invading North Vietnamese tanks in 1975, then taking to boats to America. There a couple hundred thousand Vietnamese in California right now who can tell you about that. Human capital was “destroyed” in Vietnam, so it moved here.

With AB 32, SB 375 and thousands of other absurd anti-business laws, California has been repelling businesses, which “are always moving” to Texas and other states, or to other countries, to find freedom.

We do have Tesla,” Brown said. “We have an electric bus company from China. Certainly we would like more. But not every state can do everything. That’s why we have 50 states.”

But Tesla exists only because of massive state and federal subsidies. The BYD Motors electric buses were bought by the Los Angeles County Metropolitan Transportation Authority, a government monopoly. If L.A. had a private-sector bus system, as do many cities around the world such as the jitneys in Manila, what’s called “paratransit,” would the private owners buy these electric buses? No way.

“Creative destruction” replaces the inefficient with the efficient. That’s why California jobs are being creatively destroyed and replaced with Texas jobs.


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  1. David in the OC
    David in the OC 3 May, 2014, 14:59

    Here is another quote from Schumpeter, “Capitalism, Socialism and Democracy”, Ch. 11: “There is a kind of radical …who is unwilling to grasp the most obvious facts, let alone their wider implications.” Hence, Gov. Brown’s misunderstanding of what Schumpeter actually meant by creative destruction. I’m not too concerned that Toyotas will become obsolete by virtue of this move, or that the inevitable job losses to other businesses in the South Bay dependent on Toyota employees’ spending are due to the obsolescence of their consumer goods and services. Ch.5: “The capitalist achievement does not typically consist in providing more Teslas for queens but in bringing Toyotas within the reach of factory girls in return for steadily decreasing amounts of effort.” OK, maybe he didn’t write about Teslas and Toyotas, but the point is the same.

    Reply this comment
  2. Fred Mangels
    Fred Mangels 3 May, 2014, 15:10

    A related article from Reason magazine on why people leave states:

    Reply this comment
  3. John Swain
    John Swain 3 May, 2014, 22:40

    Creative destruction is multi-interpretive, as are its uses, like any other term. Dependant upon the individual conciousness of the person interpreting it. Change is constant because it is synonymous with that which is in perpetual motion…. Life. Creative destruction of capitalism is only as rapid as the innovative construction of change to Socialism which must be accomplished through the election of true leadership in those who have the ability to advance community development and heightened levels of awareness in our people as the true controllers of the quasi-environment.

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  4. Bill Gore
    Bill Gore 4 May, 2014, 07:30

    Rick Perry is a Bozo and Brown is a former Jesuit seminarian high-intellect, but Perry still gets all the girls.

    While he may laud the schumpeterian wave of creative destruction that is laying waste to his tax base, eventually he will see these towering tsunamis of destructive economic change heading straight for the sacred ivory towers of government, including the sacrosanct pensions….

    Brown’s conceit is that the small percentage if californians that aren’t on welfare or ‘working’ in obscure government cubicles will find jobs at Apple or Google, or at the next Apple or Google. Problem is there are no more Apples and Googles coming down the pike to save California’s economy.

    Reply this comment
    • Ted O'Steele, CEO
      Ted O'Steele, CEO 4 May, 2014, 15:23


      Same as it ever was…

      Same clowns out here predicting no sign ups for Obamacare–we passed 8 mil last month
      Same Clowns out here predicted rising health care costs– they are falling
      Same Clowns out here predicted Brown would never balance the budget– he did
      Same Clowns out here predicted Calpers demise by 2010– it’s funds are rising
      Same Clowns out here predicted ——- on and on

      Clowns — Discuss now– and PLEASE stay on your standard talking points.


      Reply this comment
      • Donkey
        Donkey 4 May, 2014, 18:02

        TCS, you are so dimwitted! Most of the sign ups for Obamacare are non-payers, health care costs are rising, the budget is not balanced by any measure solely on the fact that California has over $2 trillion dollars in outstanding, bonds, pension, and healthcare debt, no one predicted Calpers demise, it is clear that bk’s are the result of SB400 and related to Calper dirty RAGWUS. 🙂

        Reply this comment
  5. Ted O'Steele, CEO
    Ted O'Steele, CEO 4 May, 2014, 21:22

    LOL “non-payers” — also turns out to be false!


    though good job in fast ignorant posting!

    Hurry! Post again now!!!!

    Reply this comment
  6. Leotis Ahmad Jones
    Leotis Ahmad Jones 5 May, 2014, 03:53

    HEY Governor DipSquat, visit Toyota R & D facility in Japan…..don t look getting destroyed. Dumb dodo, bet Tesla is just a brand in 10 years, owned by Toyota made in Kentucky, Texas, not in Fremont. You pompous pile.

    Reply this comment

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