A level playing field

December 6, 2005

Every now and then one hears an appeal to “level the playing field“. This is a call for help; but, not for help in the name of charity, rather … in the name of justice. The person asking for a level playing field is saying that the existing situation is unjust to them. They do not want a special dispensation, but recompense. This plea is an important weapon in the arsenal of the beggar, because if you believe it, he is no longer a bum asking for a handout, but a wronged man asking for his due.

The phrase is popular enough for there to be an apparently left-wing “Level Playing Field Institute“. There’s also a novel titled “The Level Playing Field“, about the Japanese “infiltrating” U.S. markets. Recently (Dec 6th, 2005), Rick Wagoner, GM’s CEO sounded just like that novelist. In an op-ed, published in the Wall Street Journal, he says: “GM wants a level playing field, not a bailout“.

He cites three areas where he claims injustice is being done to GM: health-care costs, exchange rates and unchecked litigation. Of these, heath-care costs (not just for current employees, but for retirees) is the largest contributor to GM’s financial woes. On the issue of health-care, Mr Wagoner says this:

Foreign auto makers have just a fraction of these costs, because
…their governments fund a much greater portion of employee and retiree health-care costs.
Some argue that we have no one but ourselves to blame … That argument, … ignores the fact that American auto makers … created a social contract with government and labor that raised America’s standard of living and provided much of the economic growth of the 20th century. American manufacturers were once held up as good corporate citizens for providing these benefits. Today, we are maligned for our poor judgment in “giving away” such benefits 40 years ago.

Now, the second paragraph is just a way of saying something along the lines of: when we at GM were not pushing for workers to be too productive and when we were promising them things that we could not deliver on, everyone was cheering. Now that it has nearly bankrupted us, why are you blaming us? [Basically he’s asking: who were we to know! We’re just human beings; our corporate jets and multi-million dollar salaries don’t make us immune to short-term thinking and a quest for approval.]

The first paragraph is the plea for a level playing field. The argument is simple:

  1. Other countries forcibly take tax money and pay for health-care
  2. To level the playing field, the U.S. should forcibly take more tax money than it currently does, and spend it on health care

Here is an equivalent argument:

  1. Chinese companies use slave labor to produce some product more cheaply than we can in the U.S.
  2. To level the playing field, the U.S. should force some people into slavery too

GM made a contract with their workers; they didn’t make any social contract with the country. That’s completely bogus. They made that contract with their unions. Many people all over the country did not join GM or other firms that made impossible promises. Many of these others earned less than GM workers. The reward they got was that their companies were more competitive. Also, that they did not allow themselves to be lulled into a sense of complacency, by believing they would be taken care of somehow.

Now, Wagoner wants these non-GM people to pay. Having earned less than their equivalents who worked for GM, he now wants them now to contribute to the GM folk in retirement. This is the justice he seeks; this is the levelling he asks for.

Disclaimer: Wagoner has done many things right at GM. I do not think GM is necessarily doomed. I even own GM stock (I’m not recommending it.) I think Wagoner has been facing up to reality to the extent he thinks feasible; it may not be fast enough. Indeed, the recent urgency might have been catalyzed by the “barbarian at the gate”. But, that’s material for a different post.