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November 28, 2005

Bad for the Country - New York Times

Paul Krugman starts his latest article on health care by quoting Engine Charlie Wilson from his confirmation hearing to be Eisenhower's Secretary of Defense:

Bad for the Country - New York Times : "What was good for our country," a former president of General Motors once declared, "was good for General Motors, and vice versa." G.M., which has been losing billions, has announced that it will eliminate 30,000 jobs. Is what's bad for General Motors bad for America? In this case, yes.

Most commentary about G.M.'s troubles is resigned: pundits may regret the decline of a once-dominant company, but they don't think anything can or should be done about it. And commentary from some conservatives has an unmistakable tone of satisfaction, a sense that uppity workers who joined a union and made demands are getting what they deserve.

We shouldn't be so complacent. I won't defend the many bad decisions of G.M.'s management, or every demand made by the United Automobile Workers. But job losses at General Motors are part of the broader weakness of U.S. manufacturing... that offers workers decent wages and benefits. And some of that weakness reflects two big distortions in our economy: a dysfunctional health care system and an unsustainable trade deficit.... If the United States had national health insurance, G.M. would be in much better shape than it is... tying health insurance to employment... systematically discourages the creation of good jobs, the type of jobs that come with good benefits.... G.M.'s health care costs are so high in part because of the inefficiency of America's fragmented health care system. We spend far more per person on medical care than countries with national health insurance, while getting worse results.

About the trade deficit... a reorientation of our economy away from industries that export or compete with imports, especially manufacturing, to industries that are insulated from foreign competition, such as housing. Since 2000, we've lost about three million jobs in manufacturing, while membership in the National Association of Realtors has risen 50 percent. The trade deficit isn't sustainable... one of these days the easy credit will come to an end... we'll have to reorient our economy back toward producing things we can export or use to replace imports. And that will mean pulling a lot of workers back into manufacturing. So the rapid downsizing of manufacturing since 2000 - of which G.M.'s job cuts are a symptom - amounts to dismantling a sector we'll just have to rebuild a few years from now.

I don't want to attribute all of G.M.'s problems to our distorted economy.... But the distortions in our economy clearly make G.M.'s problems worse. Dealing with our trade deficit is a tricky issue.... But... [i]t's long past time to move to a national [health] system....

Fixing health care would be good for General Motors, and good for the country.

Posted by DeLong at November 28, 2005 12:31 PM