Friday, October 21, 2005

The failure of the welfare state?

I'm not exactly sure which neurons allow this, but it's an incredible conservative feat: the ability to carefully and thoughtfully examine the facts of a situation and then draw the precisely wrong conclusion. Of course it helps if you only examine some of the facts and ignore others.

Today's case in point is today's WaPo op-ed from George Will on GM's recent agreement with the UAW reducing GM's healthcare coverage for workers.

The place where George (can I call you George?) and I agree is that health care has become an enormous, unwelcome burden on American business.

If you're a conservative you then perceive that the GM/UAW agreement is therefore a death knell for that favorite Republican bugbear, the dreaded welfare state, or er, um, in this case, welfare company.

Yes, its true, due to the outrageous cost of healthcare in the US, companies like GM are being forced to give up the ungodly practice of paying for comprehensive healthcare for its employees.

And why do they have to do this? George has the answer, citing President of failed former GM subdivision Delphi Robert "Steve" Miller as his source (and who better I might ask than a failed chief executive?):

"He calculates that a competitive American industrial compensation cost is about $20 an hour. And to get to a total compensation cost of $20, including health care, retirement and workers' compensation, 'which is high in the states we are in like New York, Ohio and Michigan,' you have to have a basic hourly wage of $10. Pay at Delphi's plants in China is roughly $3 an hour."

Ah yes, that low cost bogeyman China. How do they do it? It's funny, but the conservative capitalists who love to use Chinese labor costs in their analysis of overpriced American labor always seem to omit one tiny little detail: China is a communist country that pays for all its citizens healthcare so that its businesses don't have to.

Does Mr. Will, via Mr. Miller believe this is the way the US should go? Apparently not:
“Herb Stein, the University of Chicago economist who served as chairman of President Richard Nixon's Council of Economic Advisers, famously said: If something cannot go on forever, it won't. Delphi's resort to bankruptcy and GM's attempt, with the cooperation of the UAW, to avoid, for now, doing that, suggest that America's welfare state -- its private sector as well as its public-sector components -- is reaching its Herb Stein Moment.”

Ah but if we’re going to go quoting the redoubtable Mr. Klein I prefer this:
“Capitalism survived its crisis and went on to great successes. But the capitalism that survived and succeeded was not the capitalism of 1929.”
--Herbert Stein, The Triumph of the Adaptive Society, 1989


And while Mr. Will and his ilk may wish for us to return to depression era capitalism, wiser souls recognize this as folly.

Without the social contract created by New Deal policies whether private or public, the type of capitalism Mr. Will espouses may well devolve into chaos as the divisions between haves and have-nots widens.

Or perhaps Mr. Will is just trying to sew the seeds of revolution?

[Correction: As Dave Schuler points out China does not provide medical coverage, and in fact, its healthcare insurance system is even less effective than the US'. For an interesting view of China's healthcare systems go here.}

1 comment:

Dave Schuler said...

You might want to check your facts. China does not have and never has had a system of universal healthcare. Historically, the government has funded hospitals and, if you could get to a hospital, you could get some treatment at no or low cost. Most people outside of the large cities couldn't get to hospitals and, consequently, had little or no healthcare. There is no primary healthcare in China to speak of.

China also has no system of universal social insurance.

Nonetheless I agree with the basics of your point. I think that libertarians, conservatives, and anarcho-capitalists who think that the collapse of the Fordian compromise—particularly in the areas of healthcare and social insurance—is a good thing are dopes.