Don't kick the dog

Whenever large corporations totter on the edge of bankruptcy, the first reaction of most corporate leaders and most pundits is to recommend forcing labor to bear the lion's share of the burden, usually in the form of reduced wages, reduced pensions, and reduced benefits, as well as the more easily justified layoffs. Perhaps that may be necessary, but before we advocate punishing workers for GM's problems, we should remember several key principles:

1) Labor did not create GM's problems; management did. The workers did not design a product line manifestly unsuited to the needs of consumers and unable to compete with the likes of Honda and Toyota. When GM was producing vehicles consumers were buying, the company was profitable and workers were doing well. GM's workers can still build vehicles; the problem is that the vehicles they are building are not the vehicles consumers are buying. The fundamental problem at GM, Ford and Chrysler is a product line unsuited to the times and a corporate inability to respond quickly to the changing needs of consumers. We should not punish labor for management's mistakes.

2) Retirees in particular shouldn't be punished. They played by the rules all their working lives, producing cars for consumers and profits for the company. Now they're old, they deserve the retirement they've earned, and they're vulnerable to cynical efforts at post hoc rule changes. So the solution should be to turn on them now, changing the rules when they're too old to adapt? I hope not! That would be an enormous injustice.

3) Domestic car manufacturers operate at one significant and substantial disadvantage compared to imports. In the rest of the industrialized world, worker health care, like everybody's health care, is provided through a national health care system. That puts foreign car makers at a considerable competitive advantage over domestics; some estimate the difference can amount to $1500 per vehicle. The answer isn't cutting health benefits for American workers and retirees, however. The answer is nationalizing health care costs, so every American is guaranteed quality health care while American manufacturers are operating on a much more level international playing field. Strangely, this issue isn't getting much attention, but it should, and not just in the automobile industry.

Note: this was originally posted on ketches, yaks & hawks 25 November 2008