The welfare kings on Wall Street

Roger Cohen has written an ode to Pan Am and his days of travel on it. I remember flying on Pan Am myself and getting a plastic junior pilot wings pin. He goes onto to opine that perhaps the auto manufacturers should go the way of Pan Am along with some other imprecise and ill-informed maundering.

Not that the optimism of his outlook doesn't have appeal.

Churn -- of people and businesses -- has always defined America. Nobody subsidized U.S. Steel or the automaker Packard in the belief that the world without them was unthinkable.

Coming to the United States from Europe, I found this constant reinvention bracing. Look at the top 40 companies by market capitalization in Europe and most have been there for decades. Not in the United States, land of Google and eBay. Churn requires death as well as birth. The artificial preservation of the inert dampens the quest for the new.

That is true. New technology and innovation are tremendously appealing as economic fuels. But there are a few details missing from Mr. Cohen's summation and one of his commenters provides them in a heavily-reader-recommended response to Mr. Cohen's column. It is an excellent response to so many in government and media who chatter on about the automotive and manufacturing industry in the United States without real knowledge of what they are talking about.

It's all well and good to declare that the market should decide the fate of the auto companies, and that that's what keeps America dynamic, but the market, since becoming International, is not what it used to be. American manufacturers are forced to compete against countries that, for one thing, provide healthcare to their workers, instead of leaving it to the unions to fight for it. You suggest that we shouldn't go the way of European-style subsidies, but at the same time, we are being forced to compete with heavily subsidized manufacturers around the world. You blame the failure to produce the cars people want when in fact Detroit has produced precisely the cars (and trucks) that people wanted, at least until the price of gas went through the roof. Sure, there's plenty of blame to be directed at Detroit for short-sightedness and bad decisions, but this isn't only about Detroit. Our entire manufacturing base has been decimated because we are being forced to compete with countries that support their manufacturing bases, while at the same time refuse to allow us to export to them. Japanese can't buy American cars. Koreans can buy very few. Europeans do allow us to trade more freely, and General Motors as well as Ford are very successful in Europe manufacturing fuel-efficient, reliable cars. I believe the same is true for China, although I may be wrong on that one. A large part of the problem for General Motors is the cost of providing healthcare for former employees. In any civilized country, healthcare would be provided by the state, and at less of a cost.

We're all having fun beating up on the Detroit executives and the "greedy" unions and being so self-righteous about how they should be punished, but the truth is a bit more complicated. We're selling our manufacturing base, and our entire country, to the highest bidder. We give billions to banks with no questions asked. Politicians are getting rich. Oil companies are getting rich. Healthcare companies are getting rich. Workers, people who actually make things, are getting poor. That's what's killing dynamism. Where are our priorities?

-- Jim Doyle, Honolulu

When the average worker has no job, no income, no place to live, the economy comes to a halt. That's what the greedy financial types have actually been betting on. That they could get rich without creating too many of those out-of-work workers. Out-of-work workers created by sending their work overseas and with constant cuts in headcount creating the vaunted productivity increase, and for those who retained their jobs, cuts in their benefits, benefits whose loss is not underwritten by the government. Workers have been squeezed and abused and have not shared in the economic boom times. Their wages, if they have them, have stagnated, while CEOs' wages have soared and the average Wall Street worker gathers in unbelievable wealth.

In all of this boom time for business, one point has been repeatedly ignored. The worker at the bottom of the real economy is also the consumer who supposedly powers the economic engine of the country. And now we're finding out what happens when government, financial and business leaders give lip service to doing the best for the country and yet in reality have squeezed so hard that they've seriously injured their source of power, the American worker.

The Republican free market ethos that Reagan championed and Republicans since Reagan have propagated wildly without thought for consequence has finally met its end. And Bernard Madoff is the perfect symbol of the excess, the greed, the misdirection and lying that those policies have inflicted on our country. The only real question is, "How many more are there out there like him?" How many other leeches and parasites have drawn away wealth from the real economy?

So despite the "optimism" of the churn of the free market philosophy that Cohen finds so appealing, considerable resources must be spent on building back up the real engine of our economy, the workers. Their role in the equation has been reduced by all the free market proponents to that of a commodity whose price is to be minimized. Of course, when the economy relies on that same commodity to spend income that it doesn't have, it comes to a screeching halt.

The equation must be changed. A little less for the welfare kings on Wall Street and a little more for the workers on Main Street.