Well, here's one guys take on the issue:

"OK, I'm glad we got hosed at the pump"
http://news.cnet.com/8301-10787_3-10...html?tag=mncol

It sounds like a distinction needs to be made here between pensions and retirement programs. They are not the same thing.

A pension is when a company pension fund pays you a big check every month for several decades after you stopped working. That's a recipe for unsustainability unless you can guarantee that there will always be growing profits and more employees paying into the system. (When there aren't, or declining, the math can't be sustained, like a plane stalling out of the sky, or a pyramid scheme.)

A retirement plan does not have to be a pension. It can be an IRA, an SEP, or the 401K that so many companies do fund. The difference is that with one of these, the company is not involved in the final payout. The money goes into the worker's personal retirement account and it's the responsibility to the worker to manage and tend it until and after retirement, at which time it pays out to them just like a pension, except that it is not free money being drained out of the company on a constant basis.

The fact that a non-pension is out of the hands of the company is why so many companies have gotten the heck away from the pension business. It removes a burdensome cost of doing business and a whole layer of administration, yet the worker still gets paid at retirement. Plus it gives the intelligent worker more control over their investments (though it also gives the short-sighted or non-financially-savvy worker the opportunity to completely de-fund their own retirement).

So the lack of a pension does not mean a company is evil. A pension is, in fact, no longer the standard. I'd be shocked if there is a single successful high-tech company (Apple, Google, Intel, Amazon...) offering a pension. Yet they probably offer employer-matched 401Ks. Which are a good deal if you max out the employer match, because that's practically free money you can invest with (free and also pre-tax income). I'll bet those Japanese auto companies also offer employer-matched 401Ks, which puts them at a competitive advantage yet still allows workers to retire.

The point is, let's not talk like pensions represent all employer-funded retirement accounts, because they don't, and they don't need to.

I don't believe I was. I responded to more than retirement programs: Employers would have us believe that they're paying all the costs, when they're really finding new ways to pass them on to not only the consumer, but the tax payer as well. I'm convinced that we would not have anything close to the problems we face if employers, especially large ones, behaved responsibly.

Because corporations haven't been held responsible for their actions, we have a need for governments to step in to take care of the messes they've made (ie, Superfund Sites), the healthcare they've failed to provide, the retirement funding they've ignored, the predatory lending practices they've encouraged, the wasteful energy policies they've pursued (ie, selling, ok pushing gas guzzlers instead of fuel efficient vehicles), and the list goes on.

These are all issues that in the US, so-called conservatives think the government shouldn't get involved in, but the fact is that the market has had decades to work on all of these and it has failed, causing the crisis we're in. All that's left now is the whining from the right wing as new regulations are enacted.

hunh. if I remember correctly, we bailed out GM back in the 70's (or was it the 80's?). how many do-overs do they get, exactly? if this were a small company (<100 employees or so) it would have died the first time, everyone would have moved on to new jobs, and the niche would have been filled by more savvy businesses by now.

I think it would be a much better expenditure of public funds to bail out the workers and let this bloated whale pass on. we could guarantee the retirement plans, protect the out-of work employees, subsidize new industrial development, and still save money compared to keeping this thing afloat.

Just because you and I think employees should have fair wages, health care, and some form of adequate retirement does not mean that some workers are not over compensated.... and got that way through their union bargaining during good times. (More power to them all the way up to the point it puts the company out of business. I think unions are a good thing, but they have to avoid shooting themselves in the foot with their demands.)

No, it doesn't. It's also beside the point. Some is a long way from all, or even most.

I think unions are merely a necessary evil. Their purpose in a truly Free market would be to counter balance corporations, which are also a necessary evil.

Interesting read re: retirement, pensions, economy
 

Interesting read - snippet:

“This relation between the number of people who aren’t of working age and the number of people who are is captured in the dependency ratio. In Ireland during the sixties, when contraception was illegal, there were ten people who were too old or too young to work for every fourteen people in a position to earn a paycheck. That meant that the country was spending a large percentage of its resources on caring for the young and the old. Last year, Ireland’s dependency ratio hit an all-time low: for every ten dependents, it had twenty-two people of working age. That change coincides precisely with the country’s extraordinary economic surge.”

http://www.newyorker.com/archive/200...urrentPage=all

@trident68: Extremely interesting read -- No good deed goes unpunished!

Wow, awesome link. That story explains why I said what I said: Sure, it's a good idea to have employers contribute to retirement and health care, but it's inherently risky - for both the company and the employee - to have the administration happen at the company level, to have the quality of your plan be dependent on your Enron or AIG employer. We need an innovative hybrid between employer-administered plans and full-blown socialism, because either extreme is excessively faulty by nature.

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Here is another article on the fate of GM.

Good read, ArcticStones; it expresses my point of view. Feeding money into GM delays the inevitable restructuring they will simply have to do at some point.

The lower wages go, the worse things get.
 

If by restructuring, you mean firing all of top management, then yes, that's necessary, but that won't happen. Instead, they'll force workers into getting less pay. That's exactly the problem our economy is having! It's why we've had people borrowing beyond their means for years. They've been hoping that their wages would rise as corporate profits soared. It didn't happen, and now few people can afford to buy GM's expensive SUVs. Management failed to recognize what was happening, so they don't have inexpensive, fuel efficient cars to sell. Their solution? Blame the workers, force their wages down even more, and make things worse.

You know, that attitude isn't just the US and isn't just this century. I remember in the UK in the 1980s, we heard that management didn't manage well enough because they weren't paid enough, while workers didn't work hard enough because they were in insufficient fear for their jobs. Apparently they were two different species that needed to be motivated differently. If chickens are coming home to roost here, it's thirty years' worth.

A tasty bit from a piece by Friedman in the OP-EDs of the NYTimes. How to fix a flat

And at the very end:

.
Oooh, I like that.

To qualify for a Taxpayers’ Investment, surely it is reasonable to demand that GM’s current top management first put on the table an Innovation Plan. This plan must contain at least the following elements:

1) A realistic assessment of why they have failed to innovate – at least in the right direction.
2) An admission that current top management has failed, and must take the consequences:
3) i.e. firing themselves.

and:

4) A promise that they & future top managers personally will use all their private liquid funds to invest in GM... (great incentive!)
5) ...and that this will happen on precisely the same terms as for Taxpayers’ Investment.

may I also suggest:

6) The middle and high level managers who left GM because of deep frustration at the incompetence/inflexibility of their superiors be headhunted, re-hired and promoted...
7) ...while the causes of said frustrations, if not fired, be demoted.

.

My take from that is that all of upper management at all (banks too) of these companies that need bailouts should be fired.

Personally, I would put a special Social Security tax of 100% on everything these guys make over minimum wage for the rest of their lives. Yes, that would mean that if they make $1 more than minimum wage, they pay $1 in tax and the fools who paid them have to pay the same! Sure, I am angry about this, but I'm sure that when I cool off I'll still feel the same way.

I heard an interesting idea today (can't find it right now but hopefully I can find the link again) regarding "solving" this problem.

Effective (nearly) immediately, the gov't should refresh its fleet of cars. And each vehicle must be environmentally sound (electric, solar, hybrid, etc).

This will help spur the Big 3 to produce environmentally conscious vehicles and allow them to ramp up their R&D. Perhaps the gov't could either loan them some money for this or invest in specialized companies that are jointly owned?

A flaw in this plan is that non-Big 3 would want in on this as well...

Just a thought...

An interesting take on this: http://www.usnews.com/blogs/flowchar...enefit-gm.html

After watching the Big 3 CEOs testify to the Senate yesterday and part of the testimony today to the House, I've come to agree with the bankruptcy solution. Giving $25B to these guys in addition to the already passed $25B (for development of energy efficient vehicles) won't solve their long term problems. Their costs will still be higher than their competitors.

Unfortunately, bankruptcy is going to mean leaving the retirees and UAW workers holding the bag and at risk of taking a huge beating. This makes bankruptcy an absolutely horrible solution, but the only one that has a chance of maintaining the industry and all the associated jobs in tact. Got to be done; best alternative on the table for the time being.

But if the government is going to put any money into it, shouldn't it be into those retirement pensions so workers are not left holding the bag?