Capital Flaw in US Economy
We are rightly proud of the economic achievments
that have been made in the US using capitalism. Rather than focus on them
with so many others have so aptly done, I want to mention a flaw that
we should be looking to remove.
Consider this situation. Many US airlines are under
extreme financial pressure. A number of factors are involved, but a fundamental
problem is that older, more established airlines have to fund retirement
funds are a level which forces their ticket prices to be uncompetitive.
Just look at the large sloughing of United's pension liability over to
the PGB.
Older companies will die and go bankrupt, repudiating
their debts. Soon thereafter newly formed companies will buy up the unencumbered
remains. They can start with a clean slate, charging less and perhaps
providing the same service.
Where's the loss you might say? It's on retirees of
the vanished company. They no longer have the pensions there were promised.
Car-makers are in the same situation, although somewhat
modified for their industry's special situation. Many large
industrial and service companies face the same funding calculus.
What does this mean beyond the individual hardships it
causes?
Capitalism, as we practice it in the US, has an inherent,
unchecked tendency to favor the bankrupcy of existing companies, their reformation
as new enterprises with the lost pensions of the existing companies footing
the lower expenses of the new companies.
Financial pundits like to use the phrase 'creative destruction'.
This shifting of burden to workers is an unpleasant aspect of 'creative
destruction'.
