Opportunities in the Big Three Bailout

If there is any clarity emerging out of the mess that was once the "Big Three," it's that health care and management are two primary causes of the industry's collapse. In both cases, however, the need for a government bailout may provide hidden opportunities.

Management first: After their shameful Congressional appearance, there should be no question that Big Three management must go. They got the companies into this disaster and they have no idea how to get them out (much less any notion as to how to secure government funding).

They need to be replaced by ambitious, creative, future-looking executives with a deep commitment to public service.

As it happens, there's an excellent model for recruiting just such ferocious and tenacious professionals. It's called the U.S. Attorney's Office.

People join the U.S. Attorney's Office for one (or a combination) of three reasons: a deep commitment to serving the greater good, political ambition, and a desire to bolster their resumes for future employment.

All three factors apply to the Big Three mess. It's hard to think of any public service more vital than saving a million American jobs (not to mention all the dependent businesses). Anyone who actually turned one of the Big Three around would provide a political opportunity the like of which could make Rudy Giuliani's springboard look weak. And any member of the executive team that was responsible for resurrecting a Big Three manufacturer would be able to put "miracle worker" on her resume when re-entering the private market.

And if they failed? Well, given the hole that's been dug, who could blame them? It's a pure win-win situation - get the best, give them a job at which success means everything and failure almost nothing, and tell them that the health of the country is at stake. And, since there would be three management teams competing directly with each other, they would be in a situation in which capitalists thrive.

Of course, they should be paid on a GS scale. As investors of last resort, Congress has every right to set the terms. It will be a lot easier to sell the bailout to the public if the executives are paid on the same basis as our crime fighters. The moment the bailout check hits the bank, "auto executive" becomes a public servant. The top person should be chosen by the executive branch (just as U.S. Attorneys are) and then staffed at the local level by that appointee.

When all the money is repaid, the companies can choose any management they want at any price.

In the meantime, however, there is still health care to be considered. As has been pointed out elsewhere, every currently successful car manufacturer has one thing in common: their base is in a country that has universal coverage.

And in almost every scenario for revitalizing the American industry, one of the first things said is that current benefits (especially retiree benefits) will have to be reduced or eliminated.

Given that the only reason to fund the Big Three is to protect the workforce, it's an astonishing thought. The one bright spot in the past decade of auto-greed is the return of quality to American car manufacturing. In other words, the only people in the industry who have been holding up their share are the workers.

Health care benefits do not come free in a union contract. (Having sat on a union negotiating committee in which health care was a major issue, I know this all too well.) Essentially, workers give up current wages for future benefits. Management looks at a total dollar amount that they are willing to pay workers absent a strike. The union must decide how much goes into workers' pockets and how much into the health fund.

So if those benefits are lost, the workers are paying twice over - once in the wages they deferred and now in the benefits that would be rescinded. An auto-worker with cancer, diabetes, or MS doesn't think of his health plan as "gold plated." He thinks of it as the most important deal he ever made.

However, if the government assumed the health obligation of every past, present, and future auto employee (at least for the length of the bailout), they would be giving the auto industry exactly what it says it needs - the level playing field it would need to compete with Japanese, German, and Swedish companies.

What's more (here's the opportunity), the pool of auto employees is large enough to actually make this a viable pilot program that could be used as the basis for eventual universal health coverage.

"Government run health care" doesn't play well in the U.S., but when the choice is between government health and no health care, it should play a whole lot better. And the new administration would be able to choose just about any model it feels best - after all, the UAW isn't in a strong bargaining position at the moment.

We could have a version of single pay, we could have a system based on the Congressional plan, or we could model the auto-workers health system on the V.A. Whichever model is used, the strength and weakness of it will become apparent, and we'll actually have empirical data that can be used in future planning.

Given that the auto industry is hardly the only one being killed by the American system of health insurance, such an approach would not only protect auto-workers. We'd actually be getting something for our investment.

Comments

[Tweet]

God bless you, sir. And let me add a thought to your delightfully retro and absolutely correct outlook: has anyone considered that the solution to companies which are too big to fail is to break them up into pieces we can afford to lose?

McCain said his hero was Teddy Roosevelt. Well?

[BobLablah]

It is absolutely, 100% managements fault. There's no way they should have continued to cave year after year to outrageous union demands. This resulted in overpaid, underworked employees whose sense of entitlement ensured failure. Management must go immediately and bankruptcy must be undertaken to reset the mentality.

[sticksnstones]

Looks like we have just conjured the ghost of Ronald Reagan. Thanks for the input, Gipper.

[runswithscissors]

So only management is allowed to harbor an undeserved sense of entitlement and make outrageous demands? This is what makes me sick about these "free-market" fundamentalists. They castigate labor any time they refuse to give in to their corporate masters, but have nothing to say when upper management takes home billions at the expense of the workers. Those greedy workers who want to take their children to the doctor...d­on't they know that the chairman needs another yacht and the CEO another jet because he loaned the other 3 to politicians?