A liberal solution to the automakers crisis

I've already discussed my own solution to the auto industry crisis, but what's interesting is that there is another viable solution to the problem - what we might call the liberal solution as against my radical solution. The American auto companies suffer from two key competitive disadvantages in labor compensation. The first one is that they have to pay for their employees' health insurance. Since the other rich countries all have socialized medicine (which is far more efficient, affordable, and equitable than the USA's insane system), foreign car importers to the United States have a major cost advantage.

The second disadvantage is against not just importers, but foreign automakers who manufacture in the United States as well. As this article shows, the Big 3 automakers pay their workers an average of $73/hour, while Japanese manufacturers in the United States pay only $49/hour. About half of this difference is a result of higher pay and benefits won by the unionized workforce of the American companies that the nonunionized workers of the foreign companies are denied. The rest is a result of Detroit's payment of "legacy costs" - pensions and health insurance commitments that are higher for the Big 3 because their retired workforce is much larger than that of the foreign automakers.

So the liberal solution would involve:

1) Implementing some form of single-payer health insurance, like Medicare for all. Not only is this the only way to rein in healthcare costs and extend coverage to everyone in the country, it would also remove a major burden on the carmakers and every other business that must shoulder the cost of health insurance for its employees.

2) Strengthening unions. The problem is not that Detroit's workers make too much, it's that their foreign competitors exploit their workers to a greater extent, earning them an unfair competitive advantage.

3) Make private pensions less important or eliminate them altogether. We've now seen the results of the brilliant idea that one's retirement income should rest on the whims of the stock market. Restore the public commitment to providing for the elderly.

Okay, this solution does not fundamentally challenge capitalism in any way, so it's not radical. It would simply make the automakers competitive by reconstituting the postwar Fordist production regime - a quintessentially liberal solution. So it tells you quite a bit about today's political situation that not even the so-called liberals would dare call for such modest reforms.


Well it's about time

Rod Blagojevich arrested for massive corruption? If you're surprised then you haven't been following Illinois politics at all.

But this?!
At various times, in exchange for the Senate appointment [replacing Barack Obama], Blagojevich discussed obtaining:

A substantial salary for himself at a either a non-profit foundation or an organization affiliated with labor unions;

Placing his wife on paid corporate boards where he speculated she might garner as much as $150,000 a year;

Promises of campaign funds – including cash up front; and

A cabinet post or ambassadorship for himself.

Just last week, on December 4, Blagojevich allegedly told an advisor that he might "get some (money) up front, maybe" from Senate Candidate 5, if he named Senate Candidate 5 to the Senate seat, to insure that Senate Candidate 5 kept a promise about raising money for Blagojevich if he ran for re-election. . . . On November 7, while talking on the phone about the Senate seat with Harris and an advisor, Blagojevich said he needed to consider his family and that he is "financially" hurting, the affidavit states. Harris allegedly said that they were considering what would help the "financial security" of the Blagojevich family and what will keep Blagojevich "politically viable." Blagojevich stated, "I want to make money," adding later that he is interested in making $250,000 to $300,000 a year, the complaint alleges.

On November 10, in a lengthy telephone call with numerous advisors . . . Blagojevich and others discussed various ways Blagojevich could "monetize" the relationships he has made as governor to make money after leaving that office. . . .

Throughout the intercepted conversations, Blagojevich also allegedly spent significant time weighing the option of appointing himself to the open Senate seat and expressed a variety of reasons for doing so, including: frustration at being "stuck" as governor; a belief that he will be able to obtain greater resources if he is indicted as a sitting Senator as opposed to a sitting governor; a desire to remake his image in consideration of a possible run for President in 2016; avoiding impeachment by the Illinois legislature; making corporate contacts that would be of value to him after leaving public office; facilitating his wife's employment as a lobbyist; and generating speaking fees should he decide to leave public office.
This suggests that Blagojevich was not just exceptionally corrupt even by Illinois standards - and that's already quite an achievement - but that he was compulsively corrupt, that he persisted with ever-increasing levels of corruption even after any well-grounded run-of-the-mill corrupt politician would have realized that he was done for. Blagojevich, on the other hand, thought he could either get a lot of money by selling the Senate seat or appoint himself, which would help position him both to repulse an indictment and run for president. The only way to interpret this is as pathology.

Lt Gov Pat Quinn, who has called for Blagojevich to resign, is next in line for governor. That would be a marked improvement - Quinn has a reputation as a reformer in Illinois politics, he supported the constitutional convention and has spoken out on making the tax system less regressive and the need to reduce greenhouse gas emissions. Quinn may not be as aggressively progressive as we might like, but getting him the governor's mansion might be exactly what we need to start cleaning up the state and making progress on key issues like the state capital funding bill and getting rid of the flat income tax that have been mired for years in the dysfunction created by Blagojevich's megalomania.