Chronicle business columnist Loren Steffy wrote this interesting column over the weekend that includes excerpts from an old interview with business restructuring expert Steve Miller, who is currently managing the reorganization of Delphi as its CEO.
The reorganization of Delphi is considered a precursor of the almost inevitable larger reorganization of its former parent General Motors and other large American companies — not to mention the federal government’s Social Security and Medicare programs — that are burdened with huge unfunded pension and retiree health care costs. Mr. Miller sums up the basic problem well in describing the similar problems that he confronted in one of his former reorganization projects, Bethlehem Steel:
In 1960, when [Bethlehem Steel] adopted a lot of its benefit programs, the company had 100,000 workers and about 12,000 retirees. Promising them pensions and health care benefits for life seemed, at best, a distant worry.
More than 40 years later, Bethlehem, by then in bankruptcy, had 12,000 employees and 130,000 retirees and dependents. The math no longer worked.
Read the entire article.
Steffy seems to advocate in that article, by quoting a “turnaround specialist”, that the only solution to this benefit and pension issue is nationalized health care. He never asks the obvious question why nationalized health care is a great solution for the GM’s and Delphi’s of the world – it gets their terrible business decision to guarantee benefits into perpetuity for retirees off of their books and onto the books of the American taxpayer (through a VAT tax, no less. Ugh.) Of course GM loves that solution. Then, they can go on paying janitors $65/hour, paying out a fat dividend, and forget about profits, or the pressure on executives to produce them.
So we shift the debt from one bankrupt ponzi scheme to another bankrupt ponzi scheme? Yeah this is going to work well, NOT!
This is the problem with Liberal thinking, make the government pay for everything, but who pays for the government? And who decides what the government should pay for? Just where exactly in the constitution does it give Congress the right to give government money away to anyone for any reason? The general welfare clause? That is a bit of a stretch isn’t it?