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.

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