Tuesday, November 18, 2008

bipartisan economics doesn't work

The failing U.S. car industry is a good example of why bipartisan economics doesn't work. An economic philosophy must be played out in full or not at all. When a country establishes part of one economic philosophy combined with part of a different economic philosophy, businesses find themselves stuck between a rock and a hard place.

Let me give an example. The Detroit car companies find themselves stuck between two economic philosophies. Republicans don't want government run health care. So health care is the responsibility of the companies where people work. The car companies that Detroit competes against are located in countries where there is universal health care. So that is an expense that the competitors don't have to deal with.

Democrats believe strongly in unions. So unions have hiked up wages and benefits beyond what workers are actually worth. So Detroit car companies have to pay their work force a lot more than the foreign car competitors. Toyota workers, for instance, are paid well but do not have the bloated salaries and benefits that GM and Ford workers do. But if GM or Ford cuts salaries or benefits, they are in danger of losing millions when workers go on strike. This hurts a U.S. car company's ability to compete globally.

What seems to be the problem is this mix of Republican and Democratic economic philosophy. Our car companies could compete and treat workers well if government provided universal health care and unions stayed intact. Conversely, our car companies could compete and treat workers well if companies still provided health care but unions were abolished. But as it is, our U.S. companies get caught between two competing economic philosophies, neither of which will work if done halfway.

As a country we need to decide if our economy will function under a Democratic economic philosophy or a Republican one. Trying to switch back and forth every 4 to 8 years damages a U.S. company's ability to compete globally. And when our companies can't compete globally, our whole economy is undermined.


At 12:46 PM, Blogger Doug P. Baker said...

That is an interesting way to look at the problem. Must be tough on companies indeed.


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