June 1, 2009
GM, of course, declared bankruptcy today. A number of things—bad management, poor products and screwy labor relations—hurt the company. But in the end, the biggest problem GM couldn’t solve related to the company’s liabilities to retirees. The company, which currently employs about 150,000 hourly workers, was responsible for the health care of over 1 million people and pension obligations for over 650,000 people. These pension obligations were probably the largest factor in GM’s demise and public policy should, at minimum, stop encouraging companies to take on anything like them.
The lure of pensions is obvious. A pension is another benefit that a company can provide to...
December 9, 2008I've had some fleeting contact with the management of the Republic Windows and Doors plant that striking workers have famously occupied. Working on an article for Governing Magazine about Chicago's use of Tax Increment Financing (TIF)--a form of government-to-business subsidy--Chicago's Planning and Development Commissioner cited Republic as a shinning success story for the city. Because TIF financing (which uses property taxes to return the subsidy to the public treasury) relies on the business continuing to operate and continue to pay taxes, it seems likely that the City of Chicago will end up in trouble too as a result of the company's shut-down.
December 7, 2008At a meeting I attended a top Ford Executive made an interesting point: Automakers, he said, wanted to avoid bankruptcy because the mere fact of a bankruptcy filing would reduce new car sales to near-nothing. Thus, he said, they "didn't want to call it bankruptcy" but would "pay the price" nonetheless. I am against auto bailouts, but he may have a valid point here. I would not buy a car, no matter how well made, from a company in Chapter 11. After all, cars need regular service and any car from a given manufacturer has at least some parts that no other manufacturer uses. If the manufacturer no longer exists, then the car parts might not.
Although plenty of car companies have merged or partially merged to get out of trouble--recent-memory examples include Chrysler and AMC and Renault and Nissan--I can't think of any auto company anywhere in the world that has entered chapter 11 or its...
December 6, 2008Reports have it that Congress and the President have agreed to an auto industry bailout. Bad idea. But here's one prediction: this $15 billion stopgap is all the automakers will get in direct aid-as-aid. It isn't that Congress will suddenly become convinced that bad companies should be allowed to fail. Rather, it's that other concerns will take precedence and can serve the function of an auto bailout anyway. Thus, I'd suspect that future aid to automakers, direct and indirect, will flow under other labels. Two likely vehicles: infrastructure stimulus and health care reform. An infrastructure bill could and probably will include grants and loans to help build “green” industry. Cash-desperate automakers will take them. Health care reform, if it strengthens the individual market and shifts some obligations,...
December 2, 2008Doug,
The situation you describe in the UK here is outrageous however one looks at it. Indeed, it provides a strong case why the United States should not switch to the type of single-provider health care system that exists under the UK's National Health Service. But I'd take issue with your conclusion:
But turning the entire system over to government ensures that Americans will lack the health care they need and will end up paying a lot more for whatever care the government deigns to provide.
For at least two reasons, I don't think this makes sense.
November 21, 2008
Ithaca: Where the 1960s Never Ended.
Ithaca, New York, home to my noble alma mater, has long been considered a place where the 1960s never ended. Now, via William Jacobson in The American Thinker we find that the Ithaca Common Council has voted to make Ithaca a "sanctuary city" for anti-war protesters--who, frankly, don't need sanctuary anyway. But the Common Council hasn't seen it fit to apply the same standard to those who might support the Iraq war. When a member of the...
November 20, 2008President-elect Obama has named Tom Daschle to head the Department of Health and Human Services. By some measures the largest department in the government, Daschle is sure to take center stage in Obama's inevitable effort to reform the U.S. Healthcare system. So what of the choice? Well, Daschle has some good ideas, one wrong idea, and one really bad one. A quick rundown:
Good Ideas: Daschle believes that individuals, mostly, should have to pay for their own health care and opposes the current mixed-economy health-care system that costs a ton but doesn't provide good care for most Americans.
The current U.S. health care system--which isn't...
November 5, 2008Michelle makes a good point below. There's also a good case that an Obama administration will be good news for those who favor depository institution reform. Some background: Right now, three major types of depository institutions--banks, thrifts, and credit unions--provide pretty similar services to Americans. All make loans, offer checking accounts, and provide certain types of investments. Each one has different regulatory requirements. Although enormous differences exist, it's fair to say that credit unions generally face the most government oversight while thrifts...
November 4, 2008
Voting this morning in my busy Fairfax County Precinct, I realized something: the old way of voting--on paper ballots--is better than every new fangled contraption scientists have dreamed up.
Before I entered the polls this morning, I was dimly aware that Virginia's legislature had approved a law mandating paper ballots. To me, this was a rather silly exercise: except in a few large cities, vote fraud just isn't that common or consequential even though both Democrats and Republicans love to accuse the other side of stealing elections. The best way to vote, I thought, was the easiest and most high tech. I was wrong.
October 27, 2008An article from the Australian Herald-Sun newspaper points out that the release of new AC/DC albums has correlated with economic recessions in the United Kingdom. True.
Another odd correlate: expansions of Bradley International Airport outside of Hartford, Connecticut. Whenever the airport expands, the economy contracts.
Bradley, according to the FAA, the 50th busiest airport in the country, serves the cities of Hartford, CT and Springfield, MA. Relative to the size of the cities it serves--both under 200,000 in population--it's a pretty busy airport. Some people doing...