The owners of many major American companies are considering filing for bankruptcy. Why? Because they have to pay so many workers and retires benefits. That is WHY they are having problems, but what IS the problem?
Is it that unions have given workers contracts that are so good, and so heavy on medical/retirement benefits that they simply can not sustain them anymore?
Is it that health care costs are so out of control that no one can afford them anymore?
Is it something else?
There is no question that health care cost are hurting big business, small business, government, school districts, and on and on and on...
GM has 2.5 retired workers on the bankroll for every current worker.
What is the SOLUTION...I will admit I do not really have any great answers to this problem.
What have I come up with:
1. People are living longer, so push back the age they can retire and get benefits
2. Stop illegal immigration. This puts a heavy burden on the health care industry. Somebody has to pay for all the poor and illegal immigrants that go to the ER when they are sick. They don't pay for it.
3. Pass laws capping how much money people can sue doctors. It is true that trial lawyers are the root of all evil, and because of them and the laws of some states, there are less and less doctors. They have to pay way to much for malpractice insurance. Don't let lawyers ruin another industry.
That is all I have, you have anything else to add?
I am telling you, this is one of the biggest issues of the day, that affects all of you everyday. How are we going to fix it?
Sunday, January 08, 2006
American companies at a disadvantage
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It is exciting to think that you have discovered the "root of all evil." It is even more exciting to think that it is only a relatively small group of lawyers. Presumably, our President can now redirect his focus from Iran and North Korea to our civil justice system. You are a Great American and, I must say, a very wise economist.
Some companies should go out of business. The rest of us taxpayers shouldn't pay extra so the federal government can prop up a failing business.
Generally, the federal bankruptcy system is the simplest way to liquidate an insolvent company.
I just don't see a problem here.
No one issue will solve the entire problem. I sure would be interested to see the impact of stopping illegal immigration though.
It might surprise you to learn that it is not trail lawyers who are causing insurance premiums to rise, it is:
Poor return on insurance companies' investments. Insurance companies used to make money by investing premiums in the stock market. They charged premiums to cover losses. The stock market is essentially flat since early 2001. And yet the biggest insurance companies are making record profits. Why? Because they are soaking the doctors and blaming it on trial lawyers.
According to the General Accounting Office and the Congressional Budget office, malpractice costs are only two percent (2%) of overall health care expenditures.
The idea that trial lawyers are causing healthcare costs to to skyrocket is a myth perpetrated by the insurance companies and the politicians they contribute to.
I agree that retirement age should be pushed back some.
Definately raise the retirement age. Well, and the rest. However, if corporations were practical in their financial business, they wouldnt be choking at this point. GM(along with the airlines) are a perfect example of so much greed that they expanded expanded expanded expanded til they hit their own terminal limit. Now, everybody has topay the price for their lack of foresight and business acumen. Corporate capitalism fails again. What the country really needs is a new business model.
what is that model?
and as far as I can see, atleast with GM, they make money on their product, but when you add in all the retirement benefits, that is where the loss comes in...airlines too...
It seems like the airlines are run much more poorly however...I see this all as a big problem.
Are we not supposed to have airlines? OR ones were tickets are $1000 round trip?
Where are the solutions?
I gave what little I could come up with.
How does Southwest Airlines make money?
Car companies? How about designing cars that people want to buy.
Jim,
do you read what I write. I believe they do make money on the PRODUCT...they lose it on all the benefits...there is NO ONE who will argue they lose billions on benefits...
I agree that american cars could make a better product people would want to buy, but they are making money SELLING CARS...
Did you know GM is the largest health care provider in the world?
Didn't know that about GM.
But what accounting classes if any have you taken? The cost of employing labor is part of a company's income statement. When you say that GM is making money selling cars but losing it on benefits you're not making sense. Maybe we should also say GM makes money selling cars but loses it by paying the higher cost of energy to run their plants and factories. The cost of a car includes all of the variable and fixed costs it takes a company to produce and sell it. If the fixed costs are too high, and you can't reduce them, then you have to sell MORE cares or reduce the variable costs. Better designs would sell more cars.
It's kind of like saying the US deficit is only $400 billion this year IF you don't include the cost of the war in Iraq and IF you don't count the money being borrowed from the Social Security Trust Fund.
The point is Jim, that they are paying for all these people's benefits that are not working there anymore. Toyota doesn't have to do that. The unions in the 70's got all these sweet deals, not American companies are paying for it. I'm sure this information will bounce right off your brain into outer space.
American companies are at a disadvantage. They have to pay much, much higher benefits packages to employees and retirees than companies in other countries. Then when you add in all the regulations the government puts on them, and all the BS law-suits that they have to fight in court, and you can see why they are having trouble.
I am going to give you one example game. Back in the 90's, the auto business was still afloat. It was this time when a shift occurred in the demand for new vehicles. A much larger percentage of new buyers were choosing to lease, instead of purchase. It was a lot less expensive. Everybody thought this was a great idea, and went along with it. The manufacturers built more and more, cuz the demand was higher. The dealers made it part of their sales pitch, because it put more deviveries on the books. The customer was able to save money in a place that they usually worried about, and the economy was booming so they didnt think about 5-10 years down the line. Well, the economy plummetted, and nobody could afford new cars anymore...not even a lease. Guess what? There is a glutted market of almost new ex-lease vehicles out there. Suddenly, the demand for new vehicles dropped into the sewer.
There was no forethought on the part of the manufacturers, and even if there was, I dont think it could have done anything. Because, corporate capitalism does not allow for doing anything besides overporducing during rising trends. If you have a corner on the market, then you have options, but not in the auto or airline business.
And, no, we do not need the airlines. Though, I have an easy solution for them. You do not need 20 flights going from everywhere to everywhere. The most successful airlines are the ones who choose selected routes, and carry the best service for less money.
Most American companies don't have a five-year plan, much less a 10 or 15-year plan. Executives are compensated on short-term results instead of long-range planning and performance. Because of that, they make decisions which improve short term profits and bite them in the butt in the longer term. They can't see from one oil "crisis" to the next. They are still marketing SUVs like crazy, and where are the hybrids?
What regulations are US car companies subject to that foreign companies are not? And how much of each car price includes the cost of "BS lawsuits?" Which lawsuits would those be?
Jim,
when you ask stupid questions like:
What regulations are US car companies subject to that foreign companies are not? And how much of each car price includes the cost of "BS lawsuits?" Which lawsuits would those be?
it seems very clear that you have no clue and anything I say will not save you. All the regulations put on American companies is one reason they leave. (and lower wages).
How many more rights and privilages is the state of California going to make companies give their employees? I think small buisness owners have to allow transexuals to have full sex change operations on their health plans...and I think the males have to be given 6 months off paid maturnity leave. Look at the lack of production in places like France. Don't they work about 30 hours a week now?
Game,
You obviously have no clue what you are talking about. Males get NO paid maternity leave. Companies are NOT required to cover sex change operations.
Did you know that Toyota is one of the largest US automobile manufacturers? They have plants in Texas, Indiana, Kentucky, Alabama, and West Virginia. How do you suppose they are NOT subject to the same regulations that GM and Ford are subject to? How do you suppose that their cars are immune from "BS lawsuits?" How do you suppose they compete with GM and Ford and still hire US employees?
What the heck does France have to do with anything?
I ask "stupid" questions which are quite relevant to the discussion in an attempt to make you use some of your own brain power instead of relying on NewsMinimum, PowerlessLine, and NewsBusted for your talking points.
knew you could not sniff out a joke Jim...I'll try and make it more obvious next time...
and that was really a big dis to me Jim...you took the word "Newsmax" and turned it into "Newsbminimum"....I can't compete with that...then, when I was about to cry because I was beaten so badly...you took the word "newbusters" and changed it into "newsbusted"...I might have to end my life now...Jim always wins the argument...changing words into other words obviously wins any argument..
witih arguments like that..I should just give up
"changing words into other words obviously wins any argument"
My last paragraph was not my argument. It was my response to your blowing off my "stupid questions." See, you are now veering off point chasing the silly stuff and not acknowledging that there might just be something to the Toyota points.
Jim, this is not an issue that gets me all worked up...I simply think there is a huge problem with the cost of health care...really that is what I was trying to get at...okay?
I agree there is a huge issue with healthcare costs. Huge, and it is huge for all of us for all companies. And since the cost of malpractice is only 2% of all medical costs, that's not the problem.
Seems like every other industrialized country in the world has universal healthcare provided by the government. Sure you hear some negative points about it, but are some negative points worth the alternative of pricing medical care (and US made products) out of the market?
What is the most successful and efficient "bureaucracy" in the country? Social Security. It is amazingly effeciently run. Government healthcare could be just as efficient.
Your going to say it's socialism, of course. What's your idea?
This is an issue where I really don't know. I hear stories of people getting on waiting lists to get into the hospital in Canada...not worth it if that is the case.
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