STRIKE ONE.

The GM workers are striking:

About 73,000 General Motors workers began a nationwide strike in the United States yesterday, marking the first walkout against the carmaker for almost a decade.

It is also the first nationwide strike by car workers in any company since 1976.

The United Auto Workers Union, (UAW) representing General Motors factory employees, have failed to reach agreement with the company's management over pay and benefits.

Talks are thought to have broken down on Sunday after union negotiators sought guarantees that General Motors would build new models in the US. The carmaker can cut labour costs by $25 an hour per factory worker if it moves manufacturing to Japan.

Part of the row between the two sides is centred on $51 billion (£25.2 billion) of healthcare benefits promised to retired workers. General Motors wants to pay the union to form a trust to take on the cost of managing those liabilities. The union is arguing over how much the company will pay into that trust. It is also in dispute over pensions, wages and profit-sharing for existing workers.

Note the absence of such major strikes for three decades. This has much to do with the forces of globalization which diminish the bargaining powers of workers in affluent nations. Add to those weakened powers an environment which doesn't find high CEO benefits a problem but does worry over the necessity to pay for the health care costs of retired workers. Why do the latter when it is possible to take the production abroad, into a country where workers don't expect such benefits at all?

The particular American twist to such effects of globalization is the employer-linked aspect of health care benefits. In some other countries the care of worn-out workers will be the responsibility of the public sector, but here the workers must wait until they are old enough for Medicare. And firms have the obvious incentive of trying to minimize the health care and retirement benefits to their retired labor force. After all, it's no longer producing.

A long time ago I remember reading that the American automobile industry spends more money on health insurance than on steel. Whether that is true or not, the employment-based health insurance system doesn't give the best incentives for the provision of health insurance to all individuals. Indeed, I'd expect the CEOs of the General Motors and other parts of the automobile industry to be among the most eager supporters of government-funded health insurance plans. It would leave them more money to spend on steel.

MSNBC reports on the reactions of the Democratic presidential candidates to the news of the striking GM workers. What do the Republican candidates think, I wonder?

--J. Goodrich

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