To be honest, I haven’t given too much thought to the federal government’s efforts to bail American corporations out of the economic crisis. No one’s going to help newspapers, it seems, so my main concern was that Jim Rohr of PNC Bank comes out all right. Once that outcome seemed assured, I mostly stopped paying attention. But Jason Togyer’s post, about bailing the auto industry out of its problems, got me thinking about the subject again.
Jason’s a smart guy, and the proof is that he got out of mainstream journalism a few years back. Not surprisingly, he makes the case for a bailout about as well as it can be made. You should read his post in its entirety, but I’ll briefly excerpt a couple key points here:
The main problem faced by GM, Ford and Chrysler is that they’re saddled with health care and pension benefit costs that foreign companies don’t pay.
… The Japanese and German governments pay for those benefits. That knocks an easy $1,500 off of the price of each car made overseas.
But just mention socialized medicine or government-funded pension plans in the United States, and you’re labeled a communist or worse.
… Plenty of people on the left and right are saying “Let Detroit go down the tubes. I don’t live in Michigan. Things are tough in the Mon Valley, too.”
In other words, “Hooray for me, and to hell with you. I got mine.”
I can’t object to any of this, as far as it goes. But I will say that the “To hell with you/I got mine” argument cuts both ways.
I mean, what about the selfishness of the automakers? For years, 45 million Americans who don’t make cars have been making do without insurance. I don’t get the sense Detroit saw that as a crisis. As New York Times columnist Tom Friedman recently charged, auto execs sat on their hands instead of participating in efforts to provide a workable national healthcare system. They stayed out of the public arena entirely, until they wanted us to pay their freight.
At this point, I probably sound like a conservative jagoff — of a genus slightly different from, but every bit as pernicious as, the jagoffs Jason is addressing. Instead of saying “I got mine, screw you,” my message probably sounds like “I’m not getting mine, so screw you twice just for asking.”
But actually what I’m saying is this: If any of us are going to get ours, we all have to get ours. If we decide it’s fair to shoulder the cost of healthcare for our automaking brothers, then they owe us the same consideration.
My only real objection to Jason’s argument is that he’s framed this issue as a response to a particular crisis, in a particular industry. I don’t blame him for that, because he’s merely responding to the arguments out there, and this is how everybody is framing the debate. All that changes is who has their hand out. Last month it was banks, today it’s the car companies. Tomorrow it will be the banks again, and next week it will be someone else. These patchwork bailouts will eventually deplete the Treasury (assuming it hasn’t already happened) and the rest of us will be no better off than we were before, and probably much worse.
As Naomi Klein has written, in recent years we’ve seen the rise of “disaster capitalism” — the use of traumatic events (like wars, for example) to expand corporate power and profits (by providing Blackwater-style mercenaries, say). It’s time to return the favor: We could start by demanding the auto industry line up behind a national healthcare plan — one that its workers would participate in, and that its lobbyists would support.
The auto industry is crippled, sure, but it still carries SUV-caliber weight in Washington. This is our chance to use it. Because if we don’t, the rest of us will be left to shift for ourselves once the lobbyists get what they want. All we’ll have accomplished is propping up a system that was unfair to begin with, and probably won’t survive in the long run anyway.
A couple years back, Malcolm Gladwell wrote a fascinating piece about how corporate America got into its pension/benefits mess. Not coincidentally, the seeds for the current disaster were planted by the auto industry. As Gladwell spells out, the visionary head of the Autoworkers union, Walter Reuther, wanted to set up a system whereby competing automakers would operate industry-wide pension funds. His theory, Gladwell writes, was that “the safest and most efficient way to provide insurance against ill health or old age was to spread the costs and risks of benefits over the biggest and most diverse group possible.”
That is, of course, the basic business model of the insurance industry. But Detroit carmakers opposed the plan because they thought it smacked of — take a wild guess — socialism. Eventually, Reuther gave in. But he did so because he thought he would be proven right in the end. As Gladwell puts it, Reuther was certain that when the automakers “got tens of billions behind in their health-care obligations, when the cost of carrying thou-sands of retirees forced them to stare bankruptcy in the face, they would come around to the idea that the markets work best when the burdens of benefits are broadly shared.”
I’ll favor a bailout for the automakers when they, and their workers, show they have learned this lesson. Until that happens, well … to hell with you.
This article appears in Nov 13-19, 2008.
Is there anything more incestuous than the Interwebs in Pittsburgh? No, I don’t think so! So here I am, commenting on your post commenting on my post.
Anyway, I agree with everything you say. This is not an auto industry problem; it’s an American problem. I just didn’t want to make that commentary any longer than it already was.
As I’ve reported elsewhere on Tube City Almanac, the City of McKeesport was recently in danger of being pushed into Act 47 because Highmark — with no warning — decided to hike its Blue Cross/Blue Shield premiums by 84 percent.
This same problem faces every employer that provides health benefits, including (I’m sure) Steel City Media.
The conservative solution is to say, “Well, people should provide their own health insurance, and not rely on their employers.”
But the average person can’t afford to insure themselves, especially if they have some pre-existing condition.
The humane solution is to spread the risk over as big of a pool as possible. Isn’t that the whole point of insurance? And the biggest possible risk pool — by definition — is the entire population.
Health care is a basic human right in a civilized society. How can conservatives object to it? I’m sorry, but that goes right past “libertarian” into “nihilism,” or maybe “sadism.”
Jason Togyer
Metropolitan McKeesport, Pa.
>>> “Health care is a basic human right in a civilized society. How can conservatives object to it?”
What surprises me even more is that conservatives object to a proven business model. As you say, the whole point of insurance is to pool risk. But judging from the rhetoric filling my e-mail in box of late, we call any sort of collective action “socialism” nowadays. The whole insurance industry is kind of bolshy, I guess. So let that be some comfort to the citizens of McKeesport: Highmark is merely acting in the interests of the proletariat!
Somewhere in my shelf full of books about the decline of the steel industry, there’s a quote from a business executive talking about how it was hard for American producers to compete with firms in Japan and Canada, because THOSE companies didn’t have to pay health costs either. In other words, the complaint automakers are making now — as if no one else had ever faced the problem before — was faced by the steel industry decades ago. You wonder how many US industries will have to be wiped out before we get over this idiocy.
And in answer to your first question, I suspect the only thing more incestuous than Pittsburgh’s blogosphere is its PAID media, active and former. Say hi to Potts for me!