The Wall Street Journal’s Business World by Holman W. Jenkins Jr. exemplifies the dangers of always looking at the course through the same binoculars. His “Uncle Sam Goes Car Crazy” (WJS Oct. 22, 2008) rant is an attempt to view Detroit’s troubles through Government is Bad glasses, filtering out all other reasons for the slide. He’s wrong, and in a dangerous way.
We can start where we agree: The American automotive industry is cart wheeling into the stands, parts are flying off and people are scared. Jenkins and I part ways mid-tumble. He believes Detroit has “accrued an almost incalculable baggage of government intervention, which explains why more intervention is needed today.” A traditional free-market loyalist, when there’s trouble, Jenkins’ finger points to big government first, automatically and without much input from rest of the body, it would seem.
First, Jenkins blames GM, Chrysler and Ford’s labor inflexibility on the Prohibition-era Wagner Act, claiming the Government makes automakers dole-out higher compensation than the market dictates. I’ll crack open a 70-year-old bottle of rye and toast laws that never change. Salut.
Labor contracts over the last few years have actually added second and third tier employees, mitigating the effect of Wagner. Not that it should have mattered. The labor laws in Germany are even more stringent and their Big 3 seem to be surviving. (Not that any car maker is raking it in a the moment, but Porsche/Volkswagen, BMW and Mercedes are nowhere near putting their respective bellies up.)
Second, Jenkins bemoans the 50s franchising laws, which certainly add to Detroit’s problems, but wouldn’t if they were moving vehicles, which they’re not. Ironically, if The Big 2.8 had not fended off the government’s attempts to raise fuel efficiency standards for a generation, dealers might have more competitive products to push right now. They’d all be selling more cars and trucks. The number of outlets matters, but to a lesser extent.
Next up, off-shoring vehicle construction, as in Detroit doesn’t do enough. I’m not entirely sure whose job Jenkins is trying to save with this argument; it’s not Joe the Tool and Die guy. Jenkins believes that saving American car manufactures means making cars someplace else. I just assume buy an American made truck, despite the Toyota badge on the tail, but that implies the tack is valid in the first place. Anyway, The Big 2.8 build plenty of cars in other countries. Fuel and safety dictates haven’t hampered that effort in the slightest. In fact, due to a limpid dollar, building in good ‘ole US of A hasn’t been this attractive in years.
Lastly, Jenkins states that American companies build better cars overseas and can’t bring them here, again because of an ignorant, intrusive federal government. I’m gathering he’s never been to a Saturn lot. Maybe he’s still confused by the fact that his Ford Focus doesn’t corner like the one he rented in Glasgow. A choice Ford made all on it’s own.
Yes, there are differences in standards from nation to nation. The differences, themselves, do not prevent a world car. The European Ford Focus is built on the Mazda 3 – Volvo 30, 40, 50 platform, that runs nicely on American highways. Its one of the many things Allan Mullaly noticed when he took charge of Ford. He’s been trying to slim and unify ever since. AND he’s not breaking any laws in the process.
Strangely enough, Jenkins misses the Big Kahuna: mandatory health care. GM, Chrysler and Ford have to offer it to their workers, and It costs them a fortune, adding thousands of dollars to the cost of every Trailblazer, Explorer and Durango rusting on the lot. And, you know, helping people survive cancer, heart disease and other ailments along the way.
A national, single-payer health care system would alleviate these costs and level the field Americans play on against Japan, Germany and Korea, as the Chinese stretch out on the side lines. “Socialized Medicine” is beyond Jenkins’ scope, though, regardless of how good it looks as applied to this industry. Government is never the answer in Business World.
“The only thing wrong with corporate longevity,’ Jenkins writes, “are the legal encrustations that accumulate.” To which I say: build better cars and customers will buy them.
There are times when you’ve got to put the binoculars down and take in the full course. Even when you may not like what you see. Laissez faire is a fine ideology; it should never be confining. There are times when other strategies need apply, like… now (for example). One of the world’s foremost authorities on business issues got it wrong four out of four. I expect better of the Journal. With industry leaders getting this kind of advice through their headsets, it’s no wonder the American automotive industry’s spinning off the track.
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Not that I don’t agree with everything you’ve said, but the discussions this post generates will be interesting to watch.
I’m with Jenkins on this one, although there is a lot more in play than just what is in his article. the points he makes are valid, and government intervention will not cure the cold Detroit has. The D2.8 already build better cars, their problem now is perception, resale, and possible warranty coverage problems.
TTAC has railed about the different cars sold overseas that can’t be found here. this has not changed, has it?
Why do the transplants show up and diss the UAW? Because in their own countries (even Japan) they can’t make any headway against unions. Another point taken out of context that Jenkins made well.
I can’t see how shilling for a NHS in America is in anyone’s best interest, not even the UAW. Do you think Obamacare will match what they have now? No, and the mandatory healthcare you mention was their choice at some point. A strike, it seems, would have been cheaper because at least they would have lower cost basis today.
It would be best if a link were available to the article for all to see and make up their own minds. I don’t know if non subscribers can view it.
Actually, Jenkins has a point. All of those are factors in Detroit’s current predicament. I’m not going to let their managment off the hook, as they could have and should have found a way to overcome those obstacles, but they certainly are obstacles to success.
I also agree that forcing our corporations to pay employee healthcare is a huge competetive disadvantage for the automakers and all industries. But we don’t need socialized medicine. People should pay for their own health insurance.
I am always wary of anyone who uses a preconceived political agenda to define a business or economic problem. The resulting analysis will always be deeply flawed, for they will routinely self-select factoids that support their political biases while ignoring the pieces that don’t fit.
As is true with most business failures, the Big 2.8 problem is ultimately a revenue problem. If your customers don’t like what you sell, you sell less of it and you sell what you can at lower prices. If you have superior competitors who are ready to take advantage of your mistakes, your defeat will occur when the cash runs out.
Business begins with customers. Without customers, you don’t get paid. The goal of any business should be to gain and keep customers.
In a mature business such as autos, it is important that you not only keep your customers, but that you get new ones by taking them away from your opponents. If you have no advantages that allow you to take them away and to keep what you’ve got, then it’s a matter of time before you fail.
Those chickens have been roosting for decades, and they’re finally coming home. The higher costs may have sped things up, but they didn’t cause the problem.
Deleted an irrelevant rant about paying for insurance here. My point is this: We, individually, would pay less, the corporations would pay less, and we, the country, would collectively pay less, under single-payer. Pay less, get more. The only people who lose are the for-profit insurance companies.
A national, single-payer health care system would alleviate these costs and level the field Americans play on against Japan, Germany and Korea, as the Chinese stretch out on the side lines.
This is bandied about a lot but the cash for health care must come from somewhere. Generally this will be in the form of higher corporate taxes (less money for corporate investments or profits) or personal income taxes (less money to buy new cars). There is a zeitgeist among the “single-payer” fans that it is like waving a magic wand and all our collective costs will go away, if only we’d accept “single-payer”. I am not saying I’m against it but it needs to be discussed in a more savvy fashion.
We are seeing the death-throes of neo-laissez-faire economics. General Motors made a widely publicized decision to go balls to the walls on trucks in order to make the numbers look better.
Check out the Detroit Free Press from 2000:
http://www.mindfully.org/Industry/GM-Goal-More-SUVs.htm
The decision in Detroit to ignore cars and gorge on the easy profits from the truck boom is THE major cause of the predicament they are now in. Lots of us saw that this day was coming, but Detroit turned a deaf ear to long term issues and focused on putting bonuses in the boss’ pockets with short term tactics.
Oddly enough, had the government kept the CAFE standard slowly ramping up instead of stopping them dead in their tracks over ten years ago then Detroit would probably have a competitive lineup today.
“Capitalism is the extraordinary belief that the nastiest of men, for the nastiest of reasons, will somehow work for the benefit of us all. — John Maynard Keynes”
On to health care. The advantage of the single payer model is that a horrific amount of overhead is currently pissed away on insurance companies, medical practice billing consultants and the rest of the overhead required to keep the thousands of entities with their hands in the pot fed and watered. Here in California a very popular option is “Kaiser”, which is not a health insurance company but is a health care company. Kaiser is not only the insurance company, but also owns and operates the hospitals and doctors groups. Kaiser physicians are simply well paid employees who don’t need a billing and accounting staff. Kaiser plan coverage runs about 1/2 the cost of traditional insurance company/independent provider coverage. National single payer health care would essentially scale the Kaiser model up by a factor of 10-20.
But we don’t need socialized medicine. People should pay for their own health insurance.
…and if they can’t?
Socialized medicine works better than the American hybrid system, and certainly better than the “No system whatsoever” that’s common in the second world. Every quality of life and cost-per-head metric supports this.
Medical care, like education, is not well-suited to being managed on a for-profit basis.
Is it implicit in the idea of nationalized health care that workers would be forbidden from bartering for superior coverage?
Because the problem isn’t just that the big 3 have health care expenses, it’s that they were handing out gold plated plans. And nationalizing health care isn’t going to change that unless the government wants to strip workers of their vested right to their great plans (the retirees nearly rioted when they deductible went from $0 to $5 a couple of years ago). The problem isn’t that GM has to pay for health care; its that it agreed to pay for very expensive plans when it was on the top of the world, and between the demographic kick in the nuts and shrinking market share, those plans are monstrously expensive.
I don’t see that happening. And only in fantasy land is the national coverage going to be gold plated. It won’t. Because a real national health care plan will have budgets and costs, and won’t even begin to resemble the platonic ideal of national health care some people seem to be carrying around in their head.
What if they can’t afford it?
faster_than_rabbit:
There is room for this, it is called Medicaid or charity.
That is not what is being disscused here. This conversation is about who will pay for the healthcare for those who are gainfully employed.
The two issues are related but not the same.
I don’t put the blame for this on actions by the federal government. Not that the federal government hasn’t taken actions that have ranged from foolish to downright stupid, but those actions are not enough to collectively sink an entire industry.
The article contains this sentence: “The labor laws in Germany are even more stringent and their Big 3 seem to be surviving.”
In Germany, Daimler-Benz has demanded concessions from its unions, and VW basically threatened to produce a vehicle in a lower-cost area (Portugal) if it didn’t also receive concessions. And please note that VW union leaders and executives were recently involved in a rather messy and public scandal.
So all is not sweetness and light on the labor relations front in Germany.
Michael Martineck: Ironically, if The Big 2.8 had not fended off the government’s attempts to raise fuel efficiency standards for a generation, dealers might have more competitive products to push right now. They’d all be selling more cars and trucks.
Doubtful. The imposition of escalating CAFE standards in the late 1970s and early 1980s certainly didn’t result in better cars, or stop the erosion of Detroit’s market share. (What did was the voluntary import restrictions negotiated by the Reagan Administration, and that respite was only temporary, and only encouraged the Japanese to move upmarket even faster.)
Tighter regulations don’t necessarily mean better cars. They just mean cars that meet the regulations. If anyone doubts that, compare a 1974 Chevrolet Impala to a 1964 Impala. There is no doubt as to which one is better looking, better built, more reliable and better performing (except for braking ability – which was dictated by the market demand for disc brakes, not government regulations).
CAFE can’t force companies to build GOOD gas sippers. It only requires them to build gas sippers. And in a hotly competitive marketplace, the better car is still more likely to win. Anyone who doubts that needs to compare sales figures for the Aveo versus the Fit, or the Cobalt versus the Civic.
Michael Martineck: A national, single-payer health care system would alleviate these costs and level the field Americans play on against Japan, Germany and Korea, as the Chinese stretch out on the side lines. “Socialized Medicine” is beyond Jenkins’ scope, though, regardless of how good it looks as applied to this industry.
Except that the transplant operations appear to be doing just fine in this country without it.
The problem isn’t a company being responsible for health care benefits. The problem is a company being responsible for a providing a completely uncompetitive package of benefits.
Please note that the transplant operations provide their employees with health care plans. The costs from these plans are not hurting the companies.
One area where the transplants do have an advantage is in retiree health care costs. They don’t have many retirees, and they don’t provide generous coverage to the few workers that have retired.
The federal government has already provided a nationalized plan for those over 65 – Medicare. And note that the UAW hasn’t once proposed allowing the Detroit Three to eliminate this cost by simply shifting retirees over to Medicare. Why? Because the benefits aren’t nearly as generous under Medicare as they are under the company plans.
Nor will any nationalized health care plan be nearly as generous as the plan enjoyed by UAW members. The country simply cannot afford it. (Nor can those European countries, but people seem to skip this part.)
The failure of the Detroit Three has many aspects, and makes for a complicated tale. Pinning it on any one factor is misguided. Mr. Jenkins makes that mistake, but let’s not compound his error in trying to rebut him.
psharjinian: Socialized medicine works better than the American hybrid system, and certainly better than the “No system whatsoever” that’s common in the second world. Every quality of life and cost-per-head metric supports this.
It’s considerably more complicated than this. Compare the survival rates of people diagnosed with serious conditions in America and Great Britain. The U.S. wins for every condition except for diabetes, which may be related to the greater incidence of obesity in the U.S. This is the real measure of a health system’s effectiveness. Any system can treat the flu, or mend a broken limb.
The infant mortality rate in the U.S. is inflated by the attempts to save more premature babies. European countries aren’t as aggressive in this regard, and those attempts do not count against them.
I’ve seen the “studies” that attempt to show the inferiority of the U.S. system to other nationalized systems, and they fall into the realm of junk science. The real picture is considerably more complicated. They also ignore that in most countries with completely socialized medicine, the government is slowly cutting back benefits, instituting higher co-pays, reducing payments to health care providers and generally struggling to pay for the cost of this care. (Sound familiar?) A relative in Germany who is a urologist was telling me that he prefers to see patients with private insurance – as opposed to those with only government insurance – because the reimbursement rates are better. Want to bet which patient gets the better care?
In places like Germany, anyone who can afford to do so supplements their government insurance with private insurance. Closer to the U.S., I seem to recall that there was a court case in Canada about this very topic, and the plaintiffs disgruntled with the national coverage won the right to purchase their own insurance. If the nationalized care is so wonderful, I wonder why they even bothered to sue in the first place.
Toxicroach has it right. Any nationalized plan will not be nearly as generous as the one currently enjoyed by UAW workers. Anyone who thinks otherwise hasn’t got a clue (and the UAW knows this, hence its reluctance to shift retirees to Medicare).
So unless the government dictates via the law that, “You can’t bargain for better employer-provided health insurance with your employer,” a nationalized plan will not necessarily provide relief to employers with uncompetitive health insurance plans.
The US currently spends about twice as much per capita on health care as the rest of the industrialized world, yet all of the US’ health statistics are on the bottom end of competing numbers. The data is there, and we are paying more while achieving less.
This graphic makes the point:
http://www.pnhp.org/images/cartoons/hightower_cartoon.gif
For more, check out “Physicians for a National Health Program”:
http://www.pnhp.org/facts/single_payer_resources.php
The idea that every field of endeavor is best served when dominated by for-profit entities is simply wrong, and if you think about it you know it is so. How many for-profit churches are there, and do they serve their communities better than their not-for-profit analogs? Which runs the better colleges, for-profits or non-profits? Thirty years ago the most popular insurance groups were co-operative non-profits Blue Shield and Blue Cross. Today they have gone for-profit and rates have soared.
German companies have to pay 50% of their employees (mandatory) health insurance. And 50% of their pension contribution. And 50% of their unemployment insurance contribution. And 50% of their social security contribution.
Just sayin’.
‘“Socialized Medicine” is beyond Jenkins’ scope, though, regardless of how good it looks as applied to this industry.’
OK, so the domestic automakers are struggling in part due to onerous government regulations regarding health care. Your solution is not to remove these silly regulations, but to essentially impose those same regulations on the entire economy. Is there some logic in this that I am missing? If I break a bone, rather than setting the bone should I break all the bones in my body?
http://www.cato.org/pub_display.php?pub_id=9272
Read that before you support socializing our health care. While you’re at it, google per capita GDP by country and see how the US ranks vs. Canada, France, and the UK.
I’m afraid that Americans have drunk the Corporate Kool-aid. This blind acceptance of we can’t have single-payer healthcare because it would be both lousy and too expensive is nonsense. We are the only major industrial country without it! Wake up you sheep. What we have to give up is not good coverage, but our way, way, way over-bloated military budget.
As for the de-industrialization of America, in particular the automotive industry, that has been going on for quite a while. I don’t think that you could be more inept than these guys have been. It is almost like they were planning to declare bankruptcy, so they could sneak out in the middle of the night and set up shop somewhere else, like Brazil.
The problem with the US private health care system is that the presence of private insurers simultaneously raises the costs while ensuring that care is denied to large numbers of people. The numbers prove it — the US spends more on its health system, but gets inferior results.
That being said, neither reduced health care costs nor socialized medicine would do absolutely anything to save the Big 2.8. Just so long as a Civic is better than a Cobalt, people will pay higher prices for the Civics and Honda will sell more of them. The cost base determines what markets Honda can play in, not whether it is ultimately profitable over the long run.
Even if GM could get workers to work for free, it would still be a losing business. Costs are not the issue.
The numbers prove it — the US spends more on its health system, but gets inferior results.
How much of this is tied to American obesity?
How much of this is tied to American obesity?
The lower number of hospital beds per capita shouldn’t have anything do with obesity. Nor do the higher costs for procedures and pharmaceuticals that cost more in the US than they do elsewhere.
The US health care system is highly inefficient and delivers low bang for the buck, by any objective measure. But you could fix that tomorrow, and still not want to buy a Sebring.
But you could fix that tomorrow, and still not want to buy a Sebring.
Brilliant!
No. We’ve been through this before, and it doesn’t. Sorry, but the tale is considerably more complicated than you make it out to be.
No, it isn’t. Every time this is brought up, any number of people trot out anecdotal cases about how one or more people in Canada or Europe chose to pay for treatment rather than wait. That doesn’t invalidate the fact that, by statistical evidence, countries with socialized care are healthier and pay less. Yes, it inconveniences people who could pay more, but it doesn’t sicken or kill those who can’t, and it’s more effective on a holistic level.
And it costs less. Really, it does. Americans pay more through direct payments to providers, private insurance, group insurance and taxes than any other nation does for straight cradle-to-grave.
This is a bit of an absurd example, but bear with me: If privatization and deregulation was the ultimate cure-all, why do we have socialized military and police forces? Why not pay militias and have rich individuals raise regiments? Answer: because history has shown such to be deeply stupid, just as private healthcare is proving to be a trainwreck. Making services for-profit and removing regulation is not a carte-blanche answer.
Read that before you support socializing our health care. While you’re at it, google per capita GDP by country and see how the US ranks vs. Canada, France, and the UK.
Conversely, have a look at infant mortality, life expectancy and, yes, per-capita health-care spending. American companies and individuals spend more and get less: what is it about this that people fail, or refuse, to understand?
How much of this is tied to American obesity?
Canada is fat, too, and still spends less. But keep the red herrings coming.
*sigh*
It’s another step down the long, dark road to socialism. As long as people keep buying into the hype of socialist health care and jiggered statistics, there will be nothing any sensible person can do to stop it. The problem with our “hybrid” system isn’t the private part, but the public part. Besides, who’s going to pay for all this entitlement? Oh, that’s right. I will. And my children. And my children’s children, at this rate.
I’m guessing Jenkins hasn’t owned a domestic car. He’d have written differently.
I’d just as soon not get too involved in the healthcare debate (I’m supposed to be working, you know) but observation indicates that we do lose quite a bit of system effectiveness by not providing ready access to preventive and on-going care. People who don’t have access to other, regular care do use emergency services when they are out of options or time and this costs extra and the outcomes are, frequently enough, worse.
Who’s going to pay for it? Well, you… me… and I really don’t mind paying a share.
Also, it seems to me that the automakers’ big problem with healthcare isn’t so much that they have to pay for the workers going along but that they have giant future comittments that they’ve never funded. They padded past profits at the expense of future obligations. Bad plan.
@ psarhjinian:
If they can’t afford healthcare they should pay as much as they can possibly afford and then the rest can be subsidized by the government. I disagree with removing personal responsibility for paying for healthcare because it also eliminates personal responsibility for using healthcare responsibly.
Seems like a common problem for both automotive and health care industies is executive pay. If GM’s BOD had fired Rick Wagoner instead of giving him a vote of confidence (for what?) a few years ago things could only have improved for them. A sense of urgency would have been communicated, and would at least have helped to improve things. Instead Red Ink Rick got a huge increase earlier this year (again: for what?).
Likewise, affordable private health care is possible, but not if you have so many executives who need $multiple hundreds of millions per annum to stay properly motivated (can we try doing this with slightly less motivated executives?).
Related issue: banking and insurance are the natural parasites of the capitalist system. Both provide essentially a risk-free service, and deserve a modest fee for doing so. However, both have used political connections to ensure earnings that far outweigh the benefit they provide to the system. Just look at the past month to see how well these professionals have been managing our assets.
Consider mid-level health care executives in John Horner’s neck of the woods: a single company paid several of these six figure bonuses at a recent year-end, for what? Essentially for saying: “Sorry sir/madam, we don’t cover that…” Nice job if you can get it…
@thebigmass:
Read that before you support socializing our health care. While you’re at it, google per capita GDP by country and see how the US ranks vs. Canada, France, and the UK.
I suggest googling the WHO global health rankings. Notice How far down the list the USA is. Then observe that almost all of the highest ranking countries have some form of socialized health care.
If GDP per capita is your most important metric, then huzzah!–the U.S. beat Canada, France and the UK. However, Qatar is nearly double the US GDP per capita. Sure, you have to live under an absolute monarchy, but hey, check out that GDP!
…jiggered statistics…
And your unbiased source of facts would be?
Look, just admit you don’t agree with it and cite examples of why. What you’ve given us, though, is some vague assumption that socialism is somehow morally inferior by virtue of your being a “sensible person”.
I could say that capitalism is a dark road, and it’s going to result in tears, and that it’s cruel and immoral and, you know what, I’d be stupid to do so because I haven’t given a shred of evidence to say why, other than my assumption of my preferred system’s infallibility, and my further assumption that everyone either agrees with me, or is a cretin.
Socialized services are not always bad, market-drives services are not always good. And vice-versa. Usually, the best system is somewhere in the middle because, well, people are involved, and rigid ideological assumptions utterly fail in the real world.
Wow, where do I begin…
Let’s start at the end:
“I expect better of the Journal.”
This article from the Journal was well articulated and masterfully reasoned. I will expound.
The thesis of Holman’s argument is that “if it were a human issue, it would have been netted out over time. Instead we have seen the continual demise of this industry over the past 4 decades. Why? Because continued government intervention has made fair competition impossible”.
This isn’t fully addressed in the counter argument other than “build better cars and customers will buy them.” I am afraid that this glosses over the thesis glibbly.
The crux of the argument is whether government has tied the hands of business into continually making decisions that are beneficial in the short-term yet painful in the long-term.
Case in point: healthcare.
“GM, Chrysler and Ford have to offer it to their workers,”
I’m sorry but they do NOT have to provide healthcare, yet due to tax incentives and social engineering by the government in the 30’s, which remains today many companies due. And unions have sought to expand these benefits when it was not in the employers interest to do so, which by the way are empowered by government to hold their employers ransom to extract. Example of a government caused problem?
I could go on and on.
This article from the Journal was well articulated and masterfully reasoned.
You must have read a different article. I read a shallow, half-baked political rant that showed absolutely no understanding of the auto industry or how it works.
It also displayed an ignorance of Cerberus’ goals and why it particularly is failing with Chrysler. I’ve predicted from the inception that Cerberus was pursuing a production outsourcing/JV-based strategy, and that it would fail because the JV’s would be difficult to form and that they would run out of cash before these could bear fruit. By now, it should be clear to everyone that this was the intent and that the goal has not been met.
If they can’t afford healthcare they should pay as much as they can possibly afford and then the rest can be subsidized by the government.
The thing is, adding this layer adds cost to the system. Who decides? Who budgets? Who does analysis? All those layers of abstraction between you and the doctor/nurse/whatever are essentially wasted money. One reason Medicare costs so much, yet delivers so little, is that a huge amount of dollars fed into are spent managing the bureaucracy instead of just delivering the service.
Think about GM for a moment: if you wiped out the internal bureaucracy responsible for nickel-and-diming their vehicles to death and put that money straight into the product, it might work out quite well.
I disagree with removing personal responsibility for paying for healthcare because it also eliminates personal responsibility for using healthcare responsibly.
I don’t think many people use health care irresponsibly. Except for a tiny slice of deviants, people don’t choose to get sick and seek treatment for fun, or that they’d somehow eat better and take regular exercise if there wasn’t a safety net there (because, goodness knows, they don’t do so now).
On the other hand, if someone could go to the doctor, pharmacist or dentist early and seek preventative treatment (at a few hundred bucks cost to the system or so) without worrying about cost, we’d have a lot more people in much better shape who weren’t turning to the emergency room as a last resort (at tens of thousands of dollars in costs). This is especially the case with poor and or mentally unstable people, who often don’t hit the system until very late.
@BuckD:
I’m glad you read and responded to the Cato link I posted. To your first point, I am well aware of the WHO global health ranking. Trouble is, WHO includes such nonsense as ‘fairness in financial contributions’ in their rankings. Gee, why would countries with socialized medicine score so much better using this methodology? Since the WHO methodology is ideologically driven, the report is not remotely valuable.
To your second point, GDP is not the most important metric (nor is any single metric of paramount importance). It is a quick and easy way to measure the productivity of an economy. I was merely pointing out that we are significantly more productive than those three nations (obviously Qatar, with vast oil wealth and a small population will score well in this metric).
Finally, for those that bemoan the failures of our current health care system: government makes more than half of all current health care expenditures and exercises great control over prices. They control more than half of a system which you consider a failure. Your response is to give them more control?
Pch,
Well then let us disagree, because, yes, it was a rant, but half baked, no.
As for Cerberus, he said they didn’t understand the industry and it’s workings and now they do and are getting out.
How is that any different from what you are saying (paraphrasing) , “they wanted to do something but weren’t successful”. The question is why weren’t they successful.
This all really boils down to a chicken or the egg argument. As such:
Did governement create a system which force bad decisions or were bad decisions made which forced government intervention.
Nonetheless the domestic autos have been in a deathspiral that they have not been able to exit either by government or self-imposed restriction. I favor the government restriction argument.
How is that any different from what you are saying (paraphrasing) , “they wanted to do something but weren’t successful”.
He’s blaming the wrong components, and therefore completely misses the story.
The author is blaming costs and unions, when the real challenge was the difficulty in outsourcing the manufacture of a complex product in a short period of time. Cerberus ignored the fact that that the long cycle times involved in developing a vehicle and the relationships needed to ensure its production would require substantial time and cash to make it work.
PE funds tend to work on 3-5 year cycles, and turning Chrysler into an outsourcing operation could optimistically take a decade. Cerberus would have to reinvent its culture and change its investors to make this work, and they clearly aren’t prepared to do either.
Many people are doing what they think is right, and generally aren’t half-assing it. But decisions get made due to extraneous circumstances that have unintended consequences.
The US auto industry is woefully mismanaged. Being in charge and knowing how to get things done are two completely different things.
Unfortunately, the US companies became so large that they never got to see how badly they were mismanaged. They underestimated their competition and overestimated their own talent, the latter of which has generally been lacking. The Cobalt is a Cobalt, whether or not the worker who assembled it is in a union or whether he has socialized health care.
Lack of consumer choice and knowledge appear to be the main drivers for the healthcare ‘crisis’.
Hospital A charges X for setting a broken arm and Hospital B charges X + Y. Consumers have no idea what the ultimate price will be.
Your insurance will cover for a set percentage, while another insurance carrier will cover for 10% less than that, but will cover different services which you may or may not need.
The insurance game (and it is a game) is like going to Vegas, except you have no idea what the small and big blinds cost, whether there is a pot limit or even how much the drinks cost. In short, consumers don’t know how to shop for insurance because it’s a game of smoke and mirrors. It would be like going to a car dealership with no stickers on the cars.
Seems like a simple fix: Government require all providers to post a price sheet: Rack rates, Cash rates and the rates for each individual insurer they accept.
We do this for food labels and car labels, so why not on healthcare? Consumers would then be able to cross shop having a baby, setting a broken arm, cancer treatment, etc. Isn’t this the biggest problem with healthcare solved??
Mr Martineck:
Jenkins wrote a solid piece. I’ll quibble with one of your assertions:
The labor laws in Germany are even more stringent and their Big 3 seem to be surviving.
The labor laws in Germany are different. More stringent? I had a German girlfriend whose apprenticeship contract prohibited pregnancy leave. Other contracts strongly discourage part-time second jobs.
Also, German high-school, apprenticeship and technical blue collar training are world class. And their pay/benefit/jobsbank/ policies aren’t/weren’t half as insane as the UAW’s (which tend to over pay the brain-stem janitorial sweeper and under pay the highly skilled toolmaker.)
I think Jenkin’s point about the UAW and US labor law (in non right-to-work states) is valid.
John Horner: For more, check out “Physicians for a National Health Program
So physicians can be just as clueless about health care as anyone else?
I like this howler:
“Despite spending more than twice as much as the rest of the industrialized nations ($7,129 per capita), the United States performs poorly in comparison on major health indicators such as life expectancy, infant mortality and immunization rates.”
Except that when life expectancy rates were studied in the U.S. among various groups, they found no link between long life and health insurance coverage. Indeed, some of the longest lived people were poor Native Americans. It’s more about genetics and lifestyle.
As I explained, infant mortality rates in the U.S. are raised by attempts to save premature babies. Other countries are not as aggressive in this attempt, which lowers their infant mortality rate. Those infants aren’t counted in the rate.
Childhood immunization rates? There are several programs aimed helping parents immunize children. The idea that children aren’t being immunized becaus of no insurance coverage is a myth.
In Pennsylvania, the CHIP program makes sure that NO child lacks health insurance coverage. What’s the biggest problem? Getting the parents to take the child to the doctor in the first place! The parents aren’t keeping appointments (or even bothering to make them in the first place), even though the service is provided for FREE!
On a related note, I met with a representative of the statewide dental association. He was advocating funds in the state budget for a program that paid dentists to serve poor children for free. This is an important and worthwhile program, as it was designed to nip potential dental problems in the bud for poor children, and teach them the importance of good oral hygiene.
What was the biggest problem? Parents not keeping appointments! They didn’t even bother to show up, even though the services are provided for FREE!
Yet, somehow, I’m sure that this is the insurance company’s fault…
John Horner: The idea that every field of endeavor is best served when dominated by for-profit entities is simply wrong, and if you think about it you know it is so. How many for-profit churches are there, and do they serve their communities better than their not-for-profit analogs?
There are no for-profit churches; otherwise, they would lose their tax-free status, and basically cease to be churches. At that point, they become businesses providing services to the community that hold religious services on the side.
John Horner: Which runs the better colleges, for-profits or non-profits?
Virtually every college I’ve ever seen begs for money from the government and from graduates (which is why I keep getting calls from my alma mater; the alumni office isn’t calling me up just to chat).
You can sit in my office and meet with the representatives of Temple University (a semi-private university based in Philadelphia), Penn State University (a fully public, land-grant university) and the representatives of the statewide association for small, liberal-arts private colleges. Listen as they beg my boss and his colleagues not to cut their appropriation in the state budget for the coming fiscal year.
Of course they don’t have to be concerned about profits; they are relying on tuition, donations from alumni and companies and a big fat appropriation from state government.
Let’s compare apples to apples, please…
John Horner: Thirty years ago the most popular insurance groups were co-operative non-profits Blue Shield and Blue Cross. Today they have gone for-profit and rates have soared.
And nothing else has changed in those 30 years. The demographics of the customers haven’t changed at all; the medical procedures are exactly the same; and customer expectations regarding what medicine can cure and what an insurance company is expected to cover have not changed one bit.
For many people, a cancer diagnosis 30 years ago was a death sentence. Today this is not necessarily the case. But the medicines and treatment that have given people hope cost money. A lot of money. Do you really believe that these costs haven’t risen for insurance companies as well?
psharjinian: No, it isn’t. Every time this is brought up, any number of people trot out anecdotal cases about how one or more people in Canada or Europe chose to pay for treatment rather than wait.
First, I provided more than anecdotal evidence, and second, said evidence went beyond saying that some people in Canada go to the U.S. for service.
Residents of Quebec sued to be able to buy private insurance, and won. That is more serious than simply saying a few Canadians went to Michigan or Ohio for a procedure. There was dissatisfaction with the nationalized plan sufficient to provoke a lawsuit; the highest court in Canada agreed with the plaintiffs.
The simple fact is that residents of European countries that are able to do so supplement their government insurance with private insurance. If you doubt that, I can put you into contact with my friends in Great Britain and family in Germany who will explain this to you.
The nationalized plans don’t provide the level of benefits that UAW workers currently enjoy. Again, compare the benefits. If you think that any nationalized plan is going to be as generous as the current UAW plan, you are dreaming.
psharjinian: That doesn’t invalidate the fact that, by statistical evidence, countries with socialized care are healthier and pay less.
Two unrelated statistics lumped together to prove something else. Sorry, but there is no proof that the socialized care, in and of itself, is making people healthier. As I noted above, when various groups of Americans were studied for health and longevity, there was no link between those factors and longevity. Until recently, European nations were more homogenuous than the U.S. in their make-up, and they certainly don’t have the large numbers of illegal immigrants that we do.
psharjinian: This is a bit of an absurd example, but bear with me: If privatization and deregulation was the ultimate cure-all, why do we have socialized military and police forces?
You’re asking the wrong question.
Regarding a private army, there is very little chance of making a profit in it, so why bother. The question you need to ask is, “Can someone make money off of it?” If not, people won’t bother to provide the service, unless they are interested in providing it for free, either for charity or as a hobby.
There aren’t enough Soldier of Fortune readers willing to serve for low-enough pay to make a private army profitable, and there aren’t enough customers (who wants to pay for a private army?).
Regarding private police forces, there are private security forces in many neigborhoods (such as Beverly Hills, and even neighborhoods that aren’t as well-heeled), and private security guards (for Hollywood stars and many ultra-rich individuals). On that one, you’re way off base.
psharjinian: Conversely, have a look at infant mortality, life expectancy and, yes, per-capita health-care spending. American companies and individuals spend more and get less: what is it about this that people fail, or refuse, to understand?
See above.
psharjinian: I don’t think many people use health care irresponsibly. Except for a tiny slice of deviants, people don’t choose to get sick and seek treatment for fun, or that they’d somehow eat better and take regular exercise if there wasn’t a safety net there (because, goodness knows, they don’t do so now).
No, they don’t chose to get sick, but that doesn’t mean that they aren’t engaging in behaviors that they know, in the long run, COULD be harmful to their health.
I doubt that anyone says, “I’m going to overeat, and eat very few vegetables and fruit, because I really want to develop heart disease and diabetes in about 20-30 years.” But they do it anyway, because they either think that they can beat the odds, or that they value the immediate pleasure (the food tastes great!) over the possible ill effects down the road.
psharjinian: On the other hand, if someone could go to the doctor, pharmacist or dentist early and seek preventative treatment (at a few hundred bucks cost to the system or so) without worrying about cost, we’d have a lot more people in much better shape who weren’t turning to the emergency room as a last resort (at tens of thousands of dollars in costs).
Sorry, but this won’t cut costs. We’ve studied this in Pennsylvania, and it has also been studied in a national scale. If anything this approach encourages so many extra, expensive tests to detect various conditions that it raises costs.
psharjinian: This is especially the case with poor and or mentally unstable people, who often don’t hit the system until very late.
The poor are eligible for Medicaid and various state insurance programs. Their problem is one of life management skills, not lack of insurance. My wife was a social worker and now works in the Harrisburg School District as a special education teacher. She has extensive experience in dealing with the truly poor. They are eligible for myriad government programs; their problem is their own behavior. She has firsthand experience with this.
The same with mentally ill individuals. Unless you confine them and force the medical treatment on them, there is no guarantee that they will avail themselves to various services, even if they are free.
If private insurance is so bad, then why do virtually all of the nations with nationalized health care allow citizens to supplement their care with private policies, and why do so many of the citizens avail themselves to this opportunity?
Isn’t this the biggest problem with healthcare solved??
It isn’t. The biggest problem is in the relationship between the insurer and the policyholder and how it taints the care received.
Insurers attempt to forecast their profits by assessing the odds that the policyholder will need their money. There are two ways for the insurers to beat the odds and earn above average profits: (a) cherry pick the pool so that the risk is below average and (b) deny coverage to those who have the most expensive ailments.
What this means is that the sick patient who doesn’t suit the first category can’t get coverage — no insurer wants his business because there is no way to charge him enough to earn a profit from him. The patient in the second category has to be able to sue. You can guess of these two who is better able to afford the attorney, and the delays created in the legal system could literally be fatal to one of them.
Health care doesn’t work well with a free market model when costly medications and high tech both exist. The patient can’t regulate his costs, unless he chooses death, and he can’t get insurance if he really, really needs it.
I did not see dramatic difference of opinion between Jenkins & Martineck. I think Jenkins is fairly sardonic about role of Detroit management in failures of their companies. He rightfully include government into equation, but every government has to regulate industries, especially those who mass produce consumer goods capable of maiming and injuring. If we look at Europe most of countries adopted US style federal governance and regulations. Their laws are even more restrictive and favor labor over manufacturing entities. They have high pay structure, at least 4 weeks vacation on top of generous health benefits. Yet even Detroit’s European subsidiaries are doing better then mother lobe. Perhaps, because they are removed and can operate with some degree of corporate freedom. Ford of Europe and Opel/Vaxhaul are not loosing much ground to VW and Toyota. Even cheaper GM “domestic” product (Saturn Astra) is build in Belgium with all European components. Lets face it: boards of directors and all C-level of Detroit management failed its employees and shareholders alike. Not as bad as boards and management at Bear Sterns, Lehman Bros, Merrill Lynch, AIG; but failure does not have gold silver and bronze medals or ranking.
And your unbiased source of facts would be?
Nonexistant, because everyone believes the WHO isn’t biased, when it clearly is. Measuring the “fairness” of the distribution of health care (previously mentioned) may help leftist UN officials sleep at night, but so long as it gives people the wrong impression about the quality (the real important part) of health care here in the U.S., it’ll give me fits.
Call me an ideologue, but I regard American capitalism as the best thing to happen to us in the past 100 years or so. All the past few weeks of bank bailouts has showed me is that you can’t depend on the government for anything. All of those regulators. Hundreds of them. They let this subprime, credit default swap, 40 to 1 leverage crap happen on their watch. Somehow, we think having even more useless regulators not knowing what they’re doing will fix things. Ridiculous.
All of those regulators.
They didn’t really regulate much of anything. Which was supposedly what you wanted, until it didn’t work out so well. Apparently.
From many of the above comments, it is clear that the Corporate Kool-Aid is working.
For whatever flaws are in other countries socialized health systems, show me anyone who would want our system (not including some well-to-do sniveler).
Note to all you corporate apologist: keep giving up your income and power to the rich, they really have your best interests at heart. In fact don’t forget to thank them for all they have done to you as they show you the door.
Oh, geez and guess what? Now that you are unemployed, you don’t have any health care!
ralphzilla :
October 22nd, 2008 at 1:37 pm
I’m afraid that Americans have drunk the Corporate Kool-aid. This blind acceptance of we can’t have single-payer healthcare because it would be both lousy and too expensive is nonsense. We are the only major industrial country without it! Wake up you sheep. What we have to give up is not good coverage, but our way, way, way over-bloated military budget.
As for the de-industrialization of America, in particular the automotive industry, that has been going on for quite a while. I don’t think that you could be more inept than these guys have been. It is almost like they were planning to declare bankruptcy, so they could sneak out in the middle of the night and set up shop somewhere else, like Brazil.
America also has a Constitution that is unique in the world. So if everyone else if jumping off the cliff, you would to? What kind of reasoning is that? It’s insane.
“Government is never the answer in Business World.”
This is a naive view of business. Corporations are not politically conservative, they are politically correct and if they think they can make more money with a regulatory scheme than without, they endorse regulation. Most corporations love big government because the cost of complying with regulations keeps barriers high for potential competitors. Look at how taxicab companies try to use local laws to outlaw jitney services. Also, big government means the opportunity for big contracts to provide those big government services.
Capitalists are not necessarily free market disciples of Hayek. Nor politically right wing, as can be seen with billionaires like George Soros and Peter Lewis. It should be noted that Wall Street and the financial industries give more money to Democrats than Republicans. Capitalists are in it to make money, not ideological points. They will indeed sell you the rope you might use to hang them, and then sell derivative investments on the money they loan you to buy it. While the WSJ editorial staff may be generally pro-business, that view flows out of their conservative/libertarian ideological roots and not vice versa.
It took 50 years and Ronald Reagan to fix FDR’s mistakes (that prolonged the Great Depression). I fear that it may take as long to correct the redistributionist errors Obama and the Democrats commit over the next 4 years.
@ralphzilla:
I would much rather have our system than the socialized systems.
That said, I’d much prefer reform to our system; I would like less government intervention. I would prefer a system where the cost of care was realized by those receiving care. I believe this has been mentioned, but most people have no idea how much their visit to the doctor is actually costing them. By isolating people from the costs (via government and insurance payments for most services) the market never actually works to drive prices down. People have no incentive to look for the best price. Unfortunately this allows doctors, insurance companies, and government to charge whatever they want. This does hit every one of us (either through taxes or a reduction in salary/wage). If everyone in the country used the MSA/HSA with major medical coverage I believe we’d see a huge reduction in our health-care spending as the market eliminates inefficiencies. I know the market is going to be demonized, but bear in mind that the market is nothing more than the sum of our individual economic decisions.
geeber, thanks for using facts to refute cherished myths. Once this thread veered off into arguments about “single-payer health insurance” [euphemism for taxpayer-funded health services] I knew it’d go into a tailspin.
All those folks discussing Jenkins’ piece should take a little time and read it:
http://online.wsj.com/article/SB122463178413656455.html
I don’t mind criticism of Jenkins’ analysis of how and why the D3 got into trouble. It has flaws. (Jest as Martineck’s argument suffers from his ideological blinders.) But the main point of the piece is that the GM-Chrysler merger is driven by the idea that the combine will be “too big to fail,” hence will be allowed to become a dependency of the US Treasury.
John Horner, do you know where that quotation attributed to Keynes (“Capitalism is the extraordinary belief that the nastiest of men, for the nastiest of reasons, will somehow work for the benefit of us all”) came from? I googled it and found lots of (generally leftist) articles using it, but none that cited a source. It isn’t mentioned on Snopes, but that doesn’t guarantee it isn’t mythological. Keynes definitely favored government “counterbalancing” of business cycles, but unless he was in his cups I doubt he would say businessmen and consumers are the “nastiest of men” simply for pursuing their own interests (”nastiest of reasons”).
I could point out the specific events that are causing Big 2.8 to bleed money and make crap cars/trucks that no one wants. But I do know that their focus should be on making cars. Not creating jobs or providing health care for people. If they could focus on their cars and cars alone, instead of the unions and their supposed responsabilty to employ the good people of America, they could actually make a better car and create more jobs in the future as a result.
I work for a major USA Fortune 500 company in the last 3 years we have seen 4 cuts to our health beneift package.
Last year I actually needed the service of the doctor for more than a cold and it cost me well over $3500 in “uncovered expenses”
My “insured” child got hurt and needed an ambulance and emergency room services to the tune of $2750 in “uncovered care”.
My insurance provider: the largest in the country!
Monthly deduction for family coverage: $400+
Oh, forgot to mention the two successful malpractice lawsuit won by people very close to me in the last 4 years!
So please explain to me how we in the USA have the best healthcare system in the world?
Everyone with health insurance in the USA should sit down with a lawyer or an insurance specialist and review their policy and coverage. The vast majority of you will come away rather angry and/or scared at exactly how little coverage you actually have. Sure break a leg and you will not end up financially broken, but get sick and need real specialist to treat you or even diagnose your problem and you can quickly end up in very deep debt with your employer provided insurance.
BTW, you must also wait for treatment in the USA. Doctors do what is profitable for them so they like to open up MRI places and stuff like that. Other less glamorous stuff, well depending on were you live in the USA go luck!
Geeber: I too have worked in social services before and I can give you some real valid reason why poor folks cant keep up with doctors appointments and the likes.
Working poor people generally do NOT get sick or personal days off from work and clinics and doctors are not open in the evfening or weekends.
Many people work in enviornments were they are not able to take a leave of absense to get proper treatment.
The vast majority of doctors do not have offices located in the poor part of town. For many people in the USA this equates to a 20 to 30 mile trip, not easy for poor people with limited tranportation options.
Going to the doctor is fine but WTF is the point if you cant afford the necessary medicine?
I have delt with lazy, shiftless folks that dont give a damn but in all honesty they are the minority. The overhwhelming majorty of folks I worked with were WORKING (TAX PAYING) FAMILIES.
Pay the doctor to treat one child and not pay ther rent for the whole family? Kind of a hard choice to make, right!
I wonder – if private iinsurance is so bad, then why do virtually all of the nations with nationalized health care allow citizens to supplement their care with private policies, and why do so many of the citizens avail themselves to this opportunity?
Think about this statement for a moument, you use it as a knock on universal healthcare but I see it as the beauty of it. Have more, make more, by all means spend more on your health, I bet the better doctors like this practice also. On the otherhand with universal healthcare if you lose your job you are NOT ass out! Yeah you might have to give up your supplemental coverage but you know what, your family is still covered and a broken arm and or leg will leave you with thousands in debt. You do not have to end your childrens participation is sports and other HEALTHY activies over fear of them getting injuried with no coverage.
We have become so twisted in our logic in the USA that people no longer know how to live and actually enjoy life.
Comments like these are the reason I read TTAC, and why the internet rocks. Kudos!
Im With John Horner all the way. BTW the Canadian Govt did a study of the US health care system, and found 20% was absolute pure unadulterated waste, caused by the billing mess created. And that did not count the innumerable hours of US citizens spent trying to figure out how to cope with the system. When i talk to my US friends i am appalled by how much time and resources they have to devote to this issue. And is the health care they get really better? sure for some, but how about the average person? Any number of countries have been shown to have better and cheaper systems. Canadas actually is not one of the best, but thats another story.
rocket88, the Canadian government is hardly an impartial source on the subject of health care systems.
If you’d like to read something that refutes the “20% waste” assertion, this is a nice article:
http://www.cahi.org/cahi_contents/resources/pdf/CAHI_Medicare_Admin_Final_Publication.pdf
On “60 Minutes” and such media megaphones there are innumerable stories about brutish health insurers heartlessly denying exotic or experimental treatment (i.e., refusing to pay for it). I haven’t seen any stories about surgeons who brutally deny care because they won’t work for free. Nor any stories about how insurers have brought medical expenses down–by tough bargaining with providers for big discounts.