Obama: Back to the future......

[tvashtarkatena]

Health and retirement.

 

The average GM laborer carries 2.6 retirees on his back, to the tune of about $1,500 per vehicle produced.

 

On the flip side, UAW wages at GM are not substantially different than those at Honda and Toyota USA. Steadily advancing worker productivity has prevented GM's COG direct labor component from ballooning to become a substantial factor in their demise.

 

Other factors I did not mention is GM's bloated dealership network and product line. Basically, across the board poor management (including the way they've dealt with the UAW) coupled with economic policies than penalize long lived corporations with burdensome retirement benefit costs, has lead to GM's imminent bankruptcy.

[JayB]

I'm not waving a flag, just stating a fact.

 

Feel free to return to your previous arguments.

[Peter_Puget]

In general unions are fucking their membership now.

 

Several comments:

 

Historicaly unions were very resistant to workforce integration and served to exclude minorities from entering union protected trades.

 

Health benefits are to a very greaqt extent the result of tax incentives.

 

The fact that GM would like to shift costs to someone else is mere chatter on this thread.

 

Out of time bye!

 

 

[tvashtarkatena]

 

The fact that GM would like to shift costs to someone else is mere chatter on this thread.

 

Out of time bye!

 

 

No one, much less GM, has claimed this.

 

 

[JayB]

Health and retirement.

 

The average GM laborer carries 2.6 retirees on his back, to the tune of about $1,500 per vehicle produced.

 

On the flip side, UAW wages at GM are not substantially different than those at Honda and Toyota USA. Steadily advancing worker productivity has prevented GM's COG direct labor component from ballooning to become a substantial factor in their demise.

 

Other factors I did not mention is GM's bloated dealership network and product line. Basically, across the board poor management (including the way they've dealt with the UAW) coupled with economic policies than penalize long lived corporations with burdensome retirement benefit costs, has lead to GM's imminent bankruptcy.

 

Are you talking money wages or total compensation vis-a-vis foreign automakers? All employees of foreign automakers are unionized? How does any of this absolve union leadership for their role in using strikes to force their employers into adopting the compensation/benefits package that you cite as a central reason for the dire situation that the company now finds itself in?

 

Also, none of this addresses the question of why all long-lived industries are not suffering from this same set of problems.

 

 

 

 

 

 

[JayB]

 

The fact that GM would like to shift costs to someone else is mere chatter on this thread.

 

Out of time bye!

 

 

No one, much less GM, has claimed this.

 

 

How would shifting their liabilities onto the public via nationalization of these liabilities amount to anything else?

 

The only reason why I hope that domestic automakers stay in business is so that the public doesn't end up footing the bill for the labor-management co-cluster that they created for themselves. Not easy if you are selling an overpriced product with a reputation for poor quality that no one is especially interested in buying, but hopefully they find a way.

 

[Jim]

Also, none of this addresses the question of why all long-lived industries are not suffering from this same set of problems.

 

 

It's not hard to manage better than the US auto industry.

[tvashtarkatena]

Also, none of this addresses the question of why all long-lived industries are not suffering from this same set of problems.

 

 

It's not hard to manage better than the US auto industry.

 

And a quick analysis of other long lived companies (in the steel industry, for example) reveals that the auto companies are just the biggest tip of a larger iceberg.

 

The oil companies do seem to be doing well, though. I wonder why?

[sexual_chocolate]

maybe gm can hire lee iacocca.

[tvashtarkatena]

Or some Chinese management.

[tvashtarkatena]

How would shifting their liabilities onto the public via nationalization of these liabilities amount to anything else?

 

It would amount to a redistribution of liabilities so that companies such as GM who are committed to meeting the commitments they've made to their workforce after retirement can play on the same level playing field as everyone else. Otherwise, you have what we see today: Older companies being cost penalized for acting morally by actually taking care of their retirees, ie, doing the right thing. In business terms, it is a way to amortize benefit ratios (payers in/retirees) across a broader geographic area: one of globalization's primary goals...and I know you like globalization.

 

Now, if you're a NEW conservative, to renig on such a commitment would probably be seen as a good thing. Any scam in a storm!

 

If, however, you're a true conservative, you would certainly agree that such amortization of retirement costs across a broader geographic area, and fluidity (mobility) of labor due to benefits that would transfer from job to job, would only lower the cost of doing business for everyone (it's awful expensive when your largest industry goes belly up), and thus provide an excellent free market solution to a pressing problem.

 

Not easy if you are selling an overpriced product with a reputation for poor quality that no one is especially interested in buying, but hopefully they find a way.

 

What I said....

Edited February 22, 2007 by tvashtarkatena

[JayB]

I actually don't think that you can prove that this problem is endemic to all "legacy" companies, so you'd do just as well to abandon that line of argument.

 

With respect to the nationalizing retirement - we already have something like that called social security - and the magnitude of the liabilities there is already more than a bit problematic. Leaving that aside, you'd have to attempt to quantify what extent, if any, the availability of pensions has on labor mobility, attempt to calculate what this costs, and then make the argument that these costs are lower than those that would result from the government providing everyone with a guaranteed income in retirement over and above the costs of Social Security and Medicaid. Then you'd have to determine how to pay for it, and attempt to calculate the effect that a net increase in taxes sufficient to pay for this new program would have on economic output - and again compare this to the benefits of increased labor mobility for that subset of the private workforce that is actually covered by a defined benefit plan.

 

The essential problem with GM is a rapidly diminishing market share, which has fallen for a number of reasons, the foremost of which is producing products that are less appealing to consumers than those made by their competitors. If this continues for long enough, you go out of business. End of story. This happens to millions of people who do not work in the auto business every year, but no one gives a shit, much less proposes fundamentally restructuring the economy on their behalf.

 

Should the public be asked to maintain everyone's employment, even if they produce something that no one wants or needs on after the development of superior alternatives? Should the public have guaranteed employment to candlemakers after the advent of the lightbulb? To buggy-makers after the arrival of the automobile? Would the nation be better off if such laws had been enacted?

[tvashtarkatena]

The essential problem with GM is a rapidly diminishing market share, which has fallen for a number of reasons, the foremost of which is producing products that are less appealing to consumers than those made by their competitors. If this continues for long enough, you go out of business. End of story.

 

What I said....

Should the public be asked to maintain everyone's employment

 

No one on this forum even remotely suggested this. What I suggested was a nationwide retirement benefit system, including healthcare costs, for retirees from successful companies. This has nothing to do with maintaining employment or restructuring the economy to aid otherwise unsuccessful companies. This system would allow workers to transfer between industries and geographic regions without having to start from scratch, something that would certainly help the 'market' resolve labor supply and demand imbalances without additional government intervention.

 

Companies would still have to produce what people want.

 

Duh.

[JayB]

You still have to demonstrate that the costs of diminished labor mobility would be less than the costs of the government providing everyone with a pension benefit that exceeds those already provided by Social Security and Medicare...not to mention the costs associated with increasing the tax burden on employees and employers in a manner that's sufficient to fund the program. Not an easy feat.

 

Once the new regs kick in and state and local governments have to account for future pension and health-care liabilities on their balance sheets (for bond issuing purposes) - which will happen soon, it will be interesting to see how receptive the public will be to tax hikes to fund other people's retirement. This will be especially true for those that retire at 55 with benefits that are far more generous than anyone in the private sector gets, after 30 years of 40 hour work-weeks.

 

"This system would allow workers to transfer between industries and geographic regions without having to start from scratch, something that would certainly help the 'market' resolve labor supply and demand imbalances without additional government intervention."

 

Doesn't the market address labor imbalances through either laying off workers if there are more than the business can support, or offering higher wages to attract all of the workers that they need?

 

With respect to mobility between regions, you'd have to figure out how likely someone is to move to an entirely different region in response to a better opportunity that they are free to seek without compromising their pension, as opposed to taking a better job closer to home. Intangibles like ties to family, friends, hobbies, etc probably limit labor mobility as much or more than tangible factors like retaining a pension.

 

 

 

[tvashtarkatena]

You still have to demonstrate that the costs of diminished labor mobility would be less than the costs of the government providing everyone with a pension benefit that exceeds those already provided by Social Security and Medicare...not to mention the costs associated with increasing the tax burden on employees and employers in a manner that's sufficient to fund the program. Not an easy feat.

 

 

 

 

What do I look like, the Brookings Institute?

 

Cut me a 10 million dollar check and I'll see what I can do.

[JayB]

I think a quick look at the percent of the private workforce that's actually covered by a defined benefit plan would go a long way towards answering this question.

 

This also assumes that someone covered by a pension is actually forgoing better opportunities elsewhere, which is quite a stretch when you consider what kind of skill-sets you typically find in private sector workers who are hanging around for a pension. Is the 55-year old guy sitting atop of the seniority ladder and punching rivets in 747's for a living really forgoing a golden opportunity to work elsewhere for higher wages?

[tvashtarkatena]

You still have to demonstrate that the costs of diminished labor mobility would be less than the costs of the government providing everyone with a pension benefit that exceeds those already provided by Social Security and Medicare...not to mention the costs associated with increasing the tax burden on employees and employers in a manner that's sufficient to fund the program. Not an easy feat.

 

Such a nationwide retirement benefits plan need not be taxpayer funded (except for the increasingly inexpensive information systems required to administer it). It could still be funded by businesses in a manner that levels pay in/pay out ratios across the board. In it's simplest form, businesses might pay into the system based on their active number of employees multiplied by the ratio of all active employees verses all retirees nationwide. Everyone uses the same ratio. As the ratio changes, everyone's payments change accordingly. Payments from rapidly growing companies would increase proportionate to their workforce, payments from stable (but still successful) companies would not.

[JayB]

Still seems like the additional payroll taxes required to fund such a system would be greater than any costs associated with limitations on labor mobility due to pension issues, and would effectively saddle all businesses with the same costs that have crippled the domestic auto companies, and turn the entire country into a giant GM. There's also the question of how all of this would work with respect to existing 401(k) plans, IRA assets, etc.

 

If you raise labor costs in this manner, the odds are quite high that this would render the entire country less competitive, and the reduction in total employment/wages would result in spiraling tax rates to fund the national pension liability with fewer workers or cuts in the said benefits.

 

There's also a strong likelihood that since costs associated with having employees - whether that's wages, health benefits, etc - get tossed into a single bucket - any increase in these costs would put additional downward pressure on money-wages.

 

Rising health-insurance costs are responsible for quite a bit of the oft-noted stagnation in real money wages, even as total compensation has been increasing.

 

I'd personally rather take all of my compensation as cash, have a personal tax-deduction for health insurance expenses, and increased tax incentives/deductions for retirement savings.

 

I'm sure the folks in the health biz appreciate the tax-incentive-fueled bonanza they reap every month for whatever it costs for my employer to pay for full coverage, but I'd much rather pay a fraction of these costs for high-deductible coverage and put the difference into an interest-bearing, tax-free HSA account that I control and either invest or spend the rest as I see fit.

 

 

[Crux]

None of GM's overseas competitors has to shoulder the healthcare costs for employees, nor must they transfer the expense to the price of their cars and trucks. In the world economy, domestic car makers are at a competitive disadvantage for two important reasons that they cannot change under the current economic policies in place here in regard to healthcare: In order for their employees to have healthcare, domestic manufacturers must directly shoulder the related costs. Two, healthcare costs in the US are much higher than elsewhere because the US healthcare system is economically inefficient, as evidenced by the substantially lower quantity of service for the price paid.

 

The economic forces in this regard predictably will prove undeniable, although many will cling to their denial to the last minute. Denial will continue to manifest in false claims that American healthcare services are generally of higher quality or that single-payer systems cost more. But when push comes to shove by the forces of economics, those in denial will be pushed aside like shade-tree mechanics hoping to keep busy next to the new Jiffy-Lube and Discount-Tire stores. And Americans will then have the healthcare they want, the healthcare their competitors already have.

 

[marylou]

My cat drools when she's happy.

[JayB]

None of GM's overseas competitors has to shoulder the healthcare costs for employees, nor must they transfer the expense to the price of their cars and trucks. In the world economy, domestic car makers are at a competitive disadvantage for two important reasons that they cannot change under the current economic policies in place here in regard to healthcare: In order for their employees to have healthcare, domestic manufacturers must directly shoulder the related costs. Two, healthcare costs in the US are much higher than elsewhere because the US healthcare system is economically inefficient, as evidenced by the substantially lower quantity of service for the price paid.

 

The economic forces in this regard predictably will prove undeniable, although many will cling to their denial to the last minute. Denial will continue to manifest in false claims that American healthcare services are generally of higher quality or that single-payer systems cost more. But when push comes to shove by the forces of economics, those in denial will be pushed aside like shade-tree mechanics hoping to keep busy next to the new Jiffy-Lube and Discount-Tire stores. And Americans will then have the healthcare they want, the healthcare their competitors already have.

 

There are literally hundreds of industries in the US that have to contend with overseas competition, quite a number of which are just as old as GM, yet somehow they've managed to stay in business and avoid amassing the tottering heap of health-care and retirement obligations that GM and the UAW claim are the primary reason for the company's current woes.

 

Yup - nothing whatsoever to do with churning out unappealing defect-laden and recall-prone crap that's resulted in a steady erosion in market share ever since their products became subject to competition. Sorry, this line of reasoning just doesn't fly, and certainly doesn't constitute a logical argument for nationalizing health care.

 

 

[tvashtarkatena]

My retirement plan will be a serious heroin habit, 40/200 vision, and a Katama 1100 with too little air in the tires.

[prole]

I'd qualify that and say some unions have become fat and lazy. Not all. In general what have unions accomplished?

 

eight hour work day

five day work week

health insurance

pensions

paid sick time

fair treatment for women, minorities, and the disabled

higher wages

overtime pay

job safety

paid holidays

paid vacation

family and medical leave

 

Market forces are cold and calculating. The Friedman-lovers think tha somehow the marketplace will take care of all this. History proves otherwise.

 

 

Even if this is true - and I think it is only partially true, and omits the contributions that advancements in productivity brought about by the dreaded marketplace (against a constant current of opposition from guilds, unions, etc) have made towards creating a world in which it's possible for a vastly expanding population produce enough to live on without constant toil (e.g. the 8 hour work-day), etc, etc, etc, etc - this does not constitute an argument for why they are necessary or beneficial today.

 

None of the regulations that you have cited owe their continued existence to unions, so what arguments can you make for their necessity today? If all workers would be better off under unions, how can you account for the existence of people who do not wish to belong to them, much less for the fact that the percentage of people in the private labor force has been steadily declining for decades?

 

 

The decline in union membership in the US is directly related to the erosion of the benefits listed above. As for their "continued existence", for most US workers they do not exist at all.

As for productivity:

"Worker productivity has increased dramatically since the brief recession of 2001, but wages and job growth have lagged behind. At the same time, the share of national income going to corporate profits has dwarfed the amount going to wages and salaries," the study found.

 

"That helps explain why the median household income for working-age families, adjusted for inflation, has fallen for five straight years.

 

"These and other factors have helped push 43 percent of the nation's 37 million poor people into deep poverty -- the highest rate since at least 1975. The share of poor Americans in deep poverty has climbed slowly but steadily over the last three decades," the report said.

From In US, record numbers are plunged into poverty: report