Economic Furnaces

Superman · 10-10-2007, 03:20 PM

Simple. Corporations are our economic furnaces. The theory is that when they heat up, we all get warm. Their health gets a lot of attention. In America, it's all about whether we are creating a favorable climate for them to heat up. When they do, jobs are created, shares are traded, dividends are paid, etc.

The short-lived Chrysler strike was largely about the same thing as the short-lived GM strike. Medical insurance. I've been seeing this over my entire labor relations career. I was the labor statistician for my state. In other words, if I only had a dollar for every collective bargaining agreement I reviewed....... Okay. Medical insurace has been rising in a frightening way. It has trumped all contract negotiations during my entire labor career. Between negotiations, scheduled raises for workers get eaten up by the surprisingly brisk rise in health insurance premiums. Contracts are typically three years. So by the time the union gets back to the bargaining table, its members feel like they have not gotten a raise in three years. Medical insurance premiums have eaten those scheduled raises.

Back to the strikes. In those discussions, basically, the union expected the employer.....the corporation.....to underwrite the rising cost of health care.

I'm okay, generally, with the notion that corporations are our economic furnaces. I still think it's about PEOPLE, but if the warmth comes from the corporations, okay.

Here's my question. If corporations are the economic furnaces on which we rely in America, then shouldn't we expect them to cover costs like this? Or should their profits come at the expense of workers' wages falling, or at least staying flat while inflation reduces our buying power? Who pays? Whose earnings should be protected? And best of all......Why?

p911dad · p911dad's Garage

I'll take a crack at it. Normally, a corp. puts up the capital that allows the work to take place. This capital is at some risk, and the corp. rightfully expects to get a return on the capital and also to recapture the investment(pay off investors) after some predetermined period. The workers provide the labor that makes the process turn raw materials into some product, which by its sale returns the $ to the corp., covering the risk, recapture and labor. Since medical costs are rightfully a cost of labor, it figures into the cost of the labor in the overall equation, which must end in a positive number, or the corp. dies or must find a way to make the number positive.
So, the labor cost must stay within its range in the equation, or something has to be adjusted. It times are fat, raises are given, health care is easily covered. If times are tight, little or no raises, and it is hard negotiating time for the health care. This has to come out of the corp. income, not some some open-ended government program. If the corp. truthfully can't cover these costs, then something has to give. If we are in a world economy and the other countries are paying for their corp. employees health care, in order to level the playing field maybe we need to do the same to help our corp. stay competitive. Very complicated and difficult question.

kach22i · kach22i's Garage

Quote:

Originally Posted by gmeteer

If we are in a world economy and the other countries are paying for their corp. employees health care, in order to level the playing field maybe we need to do the same to help our corp. stay competitive. Very complicated and difficult question.

It is a complicated and difficult question, and you seemed to of answered it.

Superman · 10-11-2007, 10:36 AM

I understand the realities. As I have said, as we move to a global economy, either Americans will be six times more efficient than other workers (who earn six times less), or we will be at a competitive disadvantage. To the degree that we fail to be that much more efficient than other countries' workers, our wages and benefits will have pressure downward. Water will seek its level. So will labor costs. It is just possible that American wages and benefits must fall. Our affluence and lifestyle will be reduced. Potentially. Likely. And so......it is not the corporations that are at risk here. They will not take the hit.

In America, many workers do feel that we expend so much effort creating and maintaining a favorable business climate......on the theory that what's good for corporations is also good for workers and their families. They feel we do this at their expense. That instead, the focus could be on the workers directly and their families, but that those workers need to accept the premise that their interest are better served by indirectly favoring workers by favoring their employers. So.....at a point like this, were UAW workers' health care insurance costs are eating into wages, they wonder why they cannot look toward those employers to take care of this.

In other words, if there is bad business news, the workers will suffer. But if there is good business news, the corporation will enjoy unusually high profits.

Moneyguy1 · 10-11-2007, 10:41 AM

Actually, the corporation puts up other people's (the investor's) money. Not the same as a sole proprietor's investment.

The primary question is: How can we rein in the costs of medical service which far outruns any inflation? To answer this question, obviously one has to factor in the "welfare" aspect, but to blame everything on this sector is not a real analysis of the problem. Where is all the money going?

Seahawk · 10-11-2007, 10:52 AM

Quote:

Originally Posted by Moneyguy1

Actually, the corporation puts up other people's (the investor's) money. Not the same as a sole proprietor's investment.

The primary question is: How can we rein in the costs of medical service which far outruns any inflation? To answer this question, obviously one has to factor in the "welfare" aspect, but to blame everything on this sector is not a real analysis of the problem. Where is all the money going?

Large corporations do not create more jobs than small businesses. The furnace is local, always has been.

Concerning medical services costs: Tort reform. My oldest sister is a doc and the amount she pays in malpractice insurance (she has never been sued) is amazing.

Frivolous lawsuits are the single largest contributor to medical service costs, including redundant tests, the cost of doing business and the cost of risky procedures since many docs assume they will be sued and pass the risk to the consumer.

We have become a society of litigators...*******s.

Moneyguy1 · 10-11-2007, 11:06 AM

Sea:

Precisely. However, the right to go after a Doctor or Hospital that, through negligence, causes injury or death must still be there. One element of the equation is whether the insurers are not ovecharging their clients. There is very little control over the rates charged, and many physicians with no complaints against them still pay the same rates as the less competent individuals. If one eliminates or drastically reduces the right to sue, we run the risk of accepting less then the best of care since certain service providers will simply hide behind the knowledge that victims or survivors will not bother bringing the perps to task. As it is, there is no good data concerning what percentage of affected patients actually submit a compaint or institute legal action. Some are simply put off by the percentage that an attorney will take (generally 40% plus out of pocket expenses and the knowledge that if the case goes to trial and the complainant loses, the defending party can sue for reimbursement of court costs).

I recommend everyone seeking medical service to go to the website of their state Medical Board, enter in the prospective service providers name and find out what, if any, complaints have been made, whether the individual is board certified (some are not) and whether the individual has had a license revoked by another state.

Seahawk · 10-11-2007, 11:19 AM

Quote:

Originally Posted by Moneyguy1

Sea:

Precisely. However, the right to go after a Doctor or Hospital that, through negligence, causes injury or death must still be there. One element of the equation is whether the insurers are not ovecharging their clients. There is very little control over the rates charged, and many physicians with no complaints against them still pay the same rates as the less competent individuals. If one eliminates or drastically reduces the right to sue, we run the risk of accepting less then the best of care since certain service providers will simply hide behind the knowledge that victims or survivors will not bother bringing the perps to task. As it is, there is no good data concerning what percentage of affected patients actually submit a compaint or institute legal action. Some are simply put off by the percentage that an attorney will take (generally 40% plus out of pocket expenses and the knowledge that if the case goes to trial and the complainant loses, the defending party can sue for reimbursement of court costs).

I recommend everyone seeking medical service to go to the website of their state Medical Board, enter in the prospective service providers name and find out what, if any, complaints have been made, whether the individual is board certified (some are not) and whether the individual has had a license revoked by another state.

Agree as well, MG1...I would submit reform, not abolishment of tort law is in order.

My other sister is a lawyer (albeit a prosecutor so they get along) so I have no truck with fee for service. What I have issue with is the lack of any substantive penalty for being frivolous. I always find it interesting that auto insurance companies have financial formulas for trauma to protect their interests but medical law suits seem to be free form.

I was in error concerning my last post, my doc sis has never been successfully sued. Her time and effort defending her honor was both time away from her practice and uncompensated.

Superman · 10-11-2007, 11:56 AM

Thanks, guys. I very much appreciate those rare instances when we have a respectful and insightful public policy dialogue. It might seem like I enjoy the dogfights here and perhaps there is some truth to that (I'm admitting nothing), but I'm really in it for the actual, functional, informative, constructive discussions. Thank you.

livi · 10-11-2007, 12:08 PM

What are the principal arguments against everyone paying an income related sum of money to the state/health care in order to furnace an equally good health care to all citizens ?

dtw · 10-11-2007, 12:09 PM

Speaking from an ignoramus's point of view, I sure enjoy the double-entendre of the thread title.

Yes,yes, queue the innocent look and disclaimer of intent.

Bill Verburg · Bill Verburg's Garage

Unfortunately there are a lot of parasites(aka lawyers, insurance cos run by and for the benefit of lawyers, pols, accountants and $$ managers ) throwing cold water on the furnaces. They have insinuated themselves into the fabric of society, produce nothing but impediments to progress and brakes on the economy.

Superman · 10-11-2007, 03:12 PM

Quote:

Originally Posted by livi

What are the principal arguments against everyone paying an income related sum of money to the state/health care in order to furnace an equally good health care to all citizens ?

Glad you asked. Relax guys, I can handle this one.

Markus, it's very very simple. Motivation. Health should be used as a method of motivating certain behavior. People whose behavior does not result in economic achievement should feel insecure....at risk.....regarding the protection of their health. It's a control thing. As many have mentioned here, protection from the weather......food......a whole host of things should be unavailable to those whose behaviors do not result in economic achievement.

Superman · 10-11-2007, 03:27 PM

Dave. I absolutely LOVE double-entendres. I would be happy if you could point out how I inadvertently used one in the title of this thread. I must sheepishly confess I had no such vision. Another term I might have used instead of "furnace" would be "engine." If our support of a corporation as an "engine" is supposed to, in a roundabout way, benefit us the workers, then shouldn't that "engine" be put to work handling the rising cost of health care?

BTW, my client's CEO made a presentation today. In my estimation, he is one of those rare managers with the characteristic called "leadership." At any rate, he reported that health care premiums are expected to rise 17% in the next year. He's not just guessing.

dtw · 10-11-2007, 03:47 PM

Furnaces consume/incinerate their fuel.

MRM · 10-11-2007, 04:58 PM

Supe, your education is an undergraduate degree in Public Administration, isn't it?

Superman · 10-12-2007, 07:46 AM

Quote:

Originally Posted by MRM

Supe, your education is an undergraduate degree in Public Administration, isn't it?

No, it's not. I have a BS in Psychology and Philosophy, and an MBA. I've never taken a polysci class. I did run a state gubmit office for a dozen years that regulated the employment relationship. Wages, working conditions, etc. Four years ago I returned to the private sector where I serve a local public agency as a consultant. Don't tell them I'm an idiot. They think I'm worth the bucks they pay to my employer. Sssshhhhhh........

At any rate, as should be somewhat evident from my remarks above, I do understand some of the realities. But the cognitive dissonance you guys see in my writings stems from the personal belief that it SHOULD be all about people. To the degree that business activities serve people, directly or indirectly, I am confortable with those activities. To the degree that business is protected and preserved while the fortunes of people, workers, citizens erode.....it just makes me think there must be some way to bend the commercial part of our world so that those eroding fortunes are addressed. Society works hard to create and preserve a favorable business climate. And successfully, I might add. When I earned my MBA, people wondered whether the Dow would ever reach 3000. So......the furnace is burning HOT. While the workers and citizens and people are starting to struggle with wages AND medical benefits that are nowhere near keeping up with inflation. Again, the only interest I have in a white-hot commercial furnace......is HUMAN. If it does nothing to protect or serve humans, then I cannot imagine an argument that would make me supportive. I have NO use for creating a white-hot business climate if it does not help people. That would be the sole reason I would support that commerce. Give me another reason, not focusing on humans, which would tempt me to be supportive.

MRM · 10-12-2007, 08:10 AM

Interesting. I could tell that you had a liberal edication, but you seemed to have some education in business as well. I thought a Pub Admin degree might explain it. A business undergraduate would have used the term "economic engine", so I didn't think you had a business degree. An MBA is something different, right? So you got into industrial relations through the psych degree? I did it from the other end and was exposed to psych through my HR courses.

For what it's worth, George Washington had a philosphy similar to yours. He was very much an idealist, but he would lecture the ideolouges of the founding fathers that all the ideals in the world didn't matter if the real world considerations wouldn't support the ideal. So he frequently did things that weren't ideologically pure, much to the chagrin of folks like Mr. Adams, on the grounds that starving to death in purity wasn't a very good ideal. The book "His Excellency" has a nice chapter on it.