Kausfiles: A mostly political weblog.

Multiple Orszagism!

OMB Director Orszag responds on his blog to recent skepticism about the health care cost savings he anticipates. ... I'm still skeptical, at least about whether Orszag's long-run "game changers" will save the government from titanic health-care driven deficits starting ten years from now. See, for example, Dr. Groopman on one heavily advertised "game changer," electronic medical records, which threatens to solve the health care cost crisis the way touch-screen voting solved the ballot-counting crisis. ...

If the "game changers" smell a bit like snake oil, and if they aren't (Orszag insists) necessary to offset the cost of expanded coverage over the next ten years, and if meanwhile they position the government as the bean-counting ogre who will be denying medical treatments people might want--where is the political genius in constantly bringing them up? ...More tk. ... 2:40 P.M.

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Ron Brownstein on the problem of reviving Rustbelt manufacturing:

For officials at every level, the great hope is that these fading car towns can move from rust to green, from building autos to manufacturing wind turbines and solar panels or buses and subway cars. These places offer many advantages for such production: factories, supply chains, transportation links, and a skilled workforce "that knows how to do metal," as Democratic Sen. Sherrod Brown of Ohio says.

But there are few examples of such conversions succeeding in the auto plants already closed, notes Dan Luria, research director for the Michigan Manufacturing Technology Center, a government-business partnership. And although Obama's policies ensure that the U.S. will buy more alternative energy and transit equipment in the years ahead, Luria says, there's no guarantee that those products will be built in America, much less in these particular communities, unless Washington encourages it through an integrated set of carrots and sticks beyond anything under discussion. Brown, likewise, is urging a national manufacturing policy. [E.A.]   

Hmm. Why might manufacturers of "alternative energy and transit equipment" want to avoid locating their factories in the heavily-unionized rustbelt? Do you think the ongoing example of Detroit's Big Three might have a cautionary effect on their decision-making? Let's have a "national manufacturing policy" to make them do it anyway--with an "integrated set of carrots and sticks.". ....    2:38 P.M.

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If All You Cared About Was Speed ... : Republican economist Keith Hennessy argues that even a Democratic welfare-like demogrant would have produced a faster stimulus than the infrastructure spending the administration chose--even if only a fraction of the money was actually spent (as opposed to saved). .... 2:37  P.M.

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UAW as Owner: Let the Bosses Take the Losses!

Wednesday, April 29, 2009

Some conservatives are troubled that the UAW is getting a huge ownership share in GM (about 40%) and Chrysler (over 50%): For example, Larry Kudlow:  

What is going on in this country? The government is about to take over GM in a plan that completely screws private bondholders and favors the unions. Get this: The GM bondholders own $27 billion and they're getting 10 percent of the common stock in an expected exchange. And the UAW owns $10 billion of the bonds and they're getting 40 percent of the stock. Huh? Did I miss something here?  

The union's ownership so does not seem a problem. It seems a virtue. Let the UAW, as new owner of GM, pay the price for the overgrown work rules of its locals. Let the UAW demand above-market raises from itself. Let the UAW try to raise money from new lenders after the previous round of lenders has been royally screwed (thanks, in part, to the UAW). And then let the UAW try to sell the cars that result.

The most efficient way to balance competing interests, as Michael Kinsley noted years ago, isn't an adverserial system where various singleminded interests duke it out--either in court or on picket lines--but in the head of a decisionmaker who will feel the relevant consequences. As long as the government steps out of the financing picture, the UAW will feel the consequences of its own excesses. Just don't bail them out again! ...

P.S.: One sign that the WSJ's Holman Jenkins may actually be impressed with Obama's "apparent willingness to drive a hard bargain with the UAW" is that in order to attack the union Jenkins had to write a column about the government's hidden subsidies for Detroit in previous decades. ...

Update: The Cult of Bartley complains that

At the next labor contract bargaining session, the union would sit on both sides of the table.

And the problem with that is ...?

The otherwise estimable Paul Ingrassia applies a blanket condemnation of worker-ownership derived from his study of the University of Wisconsin student store. "There's an inherent conflict between the cost discipline required of owners and the understandable desire of employees to make more money for less work (hey, why not?)" There is. It's a conflict we freelancers face every day! Somehow we manage. A "clean and well-run union such as the UAW" should be able to do it too. ...10:26 P.M.

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I meant "benign" in a good way! Jeez, you call Atlantic owner David Bradley a "benign sucker" and all sorts of people want to rush to his defense! Here's what I meant: Practically every magazine I've ever written for has lost money.** That usually doesn't bother the owner, who is typically rich and willing to take a loss in exchange for the prestige or enjoyment of owning a magazine, or the access and influence it brings. It's an ancient and honorable arrangement. Hence "benign." But at various times, Bradley has sounded as if he actually intended to make The Atlantic and its website a going business concern (noises that are still being made). From a 2003 piece by David Carr:  

["]There has been a 50-year tradition at the magazine of older male businessmen like myself managing The Atlantic as a philanthropy,'' Mr. Bradley said. ''It was largely subsidized and dependent on finding the next Mort Zuckerman. I think it's possible I may be the last member of that generation, and we have to find a way to make this wonderful magazine support itself.''

I suspect he is disappointed. Also, he's overpaying his writers.*** Hence, "sucker." I'm all for it. (I could use someone like that.) ...  

**--Original text left out the "Practically." I forgot about Newsweek, which probably was making some money when I was there. But not a lot. 

***--"as high as $350,000 ..." 10:14  P.M.

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John Judis predicts that Obama's stimulus and budget will "lift overall government spending from the 30s to well over 40 percent of GDP," maybe even to 45 % of GDP in 2009-- a percentage  

more like that of France and Sweden, whose non-crisis budgets total over 45 percent of GDP.

Hmm. If you put it like that, doesn't the Obama presidency begin to look a bit like a ripoff? If we're going to spend 45% of GDP like Sweden, I want a cradle-to-grave welfare state! It doesn't seem like much of a bargain to spend Swedish-style tax dollars for what will remain at bottom an American style fend-for-yourself society (even one with guaranteed access to health care). ...   10:01 P.M.

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At Last: Neoliberal Press Bias!

Embarking on a monumental task that some say is doomed to fail, Los Angeles Unified school officials are taking aim at state laws that make it virtually impossible to fire teachers.