Uwe Reinhardt on elimination of retiree health benefits
Uwe Reinhardt, Ph.D. sends us a message in response to news reports on the elimination of retiree health benefits by Bethlehem Steel and by Aetna. Our response follows his.
Click on this link to learn about another American chicken coming home to roost. (Not ever having raised chickens, I don't actually understand this metaphor, but I hope its use here is appropriate). Bethlehem's workers should have expected this, as should all other workers with retiree benefits promised them by a corporation. After all, they were presumably adults when these deals with their company were done.
For some reason, millions of American workers in their prime were convinced that their particular company was stronger, smarter and had longer longevity than does the United States government. Where people learn such civics and economics has always been a mystery to me. But that is the "truth" they knew, perhaps because they had been taught it in high school or on TV or by their local Chamber of Commerce.
Did it ever occur to anyone that when the executive of the ABC Corporation in, say, 1975, promised a worker then that "the company" would purchase him or her $10,000 or more worth of health care 30 years hence (when that promising executive might be dead already), that such a promise was highly dubious on its face? How could that executive possibly have known that the ABC Corporation would even exist in 2005? After all, it might have been wiped out in 1995 by a competitor in Shanghai or Singapore or Japan. If not that, it might have been wiped out by a future American genius, such as Jerry Levin of Time Warner, who virtually gave away that company to the shareholders of AOL, a fluffy virtual company whose stock would be called "funny money" if it were not so tragically worthless (not even to speak of the geniuses who ran WorldCom, Enron and so on). If not that, the ABC Corporation might in the future be headed by a ruthless, greedy executive who might look to breaking such earlier promises as a nifty way to shore up the company's bottom line and, thereby, the value of his gazillion stock options--all to the loud cheers of an adulating financial press?
Where did Americans ever gain the impression that, over the long haul, a string of unknown future ABC Corporation executives of a corporation constantly being buffeted by global competition would be a more reliable source of retirement security than the government of these United States? Who teaches them these fairy tales? Can anyone enlighten me on this one?
In 2001, General Motors acknowledged in its annual report to have completely unfunded liabilities for retiree benefits other than pensions (mainly health care) of $34.5 billion. The company's net worth (shareholders' equity) that year was $19.7 billion. It gives you some idea of the financial pressures besetting the company for having taken on this social security system on behalf of GM workers, current and former. Although Rock Wagoner, the current CEO, is widely acclaimed for his operating skill, GM's stock tanked when earnings were up recently, reportedly over the huge unfunded retiree benefit overhang (health care plus unfunded pension obligations that should, ideally, have been funded). Can't you see some future GM manager simply throwing in the towel, union be damned? Sitting out a strike over that issue might be worth it to the GM shareholders and the executive's stock options.
I guess I am supposed to feel sorry for the Bethlehem Steel workers who might lose the promised health benefits, or for other workers who surely will in the years ahead. I don't. "Should have respected your government more," is what I would tell them. "Shouldn't call everyone who proposes to have government do what a private corporation cannot possibly do a 'socialist.' Now sit back and enjoy your American dream, my friends. And a dream it was, if only you had thought about it." That's where I am on this one.
Best
Uwe R.
Here's another story on retiree health benefits. Like the previous one, it comes to me courtesy of Naomi Shaiken.
http://www.ctnow.com/business/hc-aetna0208.artfeb08,0,5399206.story?coll=hc%2Dheadlines%2Dbusiness
Similar story--same response by me.
Uwe
Don's comment: What is your response to Professor Reinhardt's message? Are you angry with him for slamming the hapless working stiff who is the victim of corporate abuse? Are you angry with the corporate leaders who are depriving their hard-working employees of their promised benefits? Are you angry with the union leaders who failed to assure that trusts that they fought for were fully and permanently funded? Are you angry with the superfluous vested interests that are thriving as they continue to dispense the "government can't do it" rhetoric? Or are you angry with yourself for your continued inertia when the need is so great?
Regardless, do NOT walk away from this message simply fuming. Do NOT simply leave it to others to take up the task of reforming health care. The average American really does not understand the policy implications of various reform proposals. It will take a massive grassroots effort to educate the public. Each one of us MUST be a part of that effort.
The Coalition for a National Health Program (CNHP) is being launched to conduct education and advocacy on the only truly workable, cost-efficient solution: a publicly funded, publicly-administered national health insurance program for the United States. Participation in the coalition will require "only" that you agree to support health care reform by mobilizing friends, associates, organizations and the community in activities that advance the understanding of this option that is clearly the imperative. The strength of this movement will not be in funds, but in people: you, me, and everyone else that cares about the future of health care in America.
The CNHP website:
http://www.cnhp.us
Bookmark it now, and be prepared to visit it soon to sign on, and to use its resources in your grassroots efforts.