I have heard it said that with the massive bailout of the financial sector American capitalism will never be the same. But if we are going to redefine capitalism to encompass some form of regulated markets, let’s do it right. The latest call for a bailout of the auto industry presents an opportunity to truly redefine the nature of the social wage in this country. Although General Motors will claim that part of why they need assistance is to meet their obligations under union contracts, most reasonable people understand that so called flexible labor markets can’t create a demand for cars that simply does not exist. GM has put all its eggs in one basket for too long: gas guzzling SUVs which no longer have appeal when gas prices rise, as they did during the summer.

The real question that policymakers, especially when contemplating the types of bailouts that are being requested, should be just how can we meet the needs of workers while simultaneously making American industry more competitive around the world. Perhaps the larger message from these economic crises is that we really cannot count on deregulated markets to do this. Government obviously has to play a more active role. One area where government can make a difference is in the area of universal healthcare. When a company adds on average $1000-1500 per car to cover the health insurance costs of both its active labor force and retirees, as per union contract, it finds itself at a competitive disadvantage, especially against foreign competitors whose healthcare costs are picked up by the state.

The answer isn’t to absolve companies of their responsibilities to their workers, but for companies to stand by their workers on matters of such importance. It really is in the interests — the self-interests even —  of business to demand national health insurance. The current healthcare regime predicated on employer provided insurance no longer serves the national interest. This isn’t only because coverage is limited to only those employed or fortunate enough to work for firms that provide it, but because the current system really does put us at a competitive disadvantage.

Initially begun as compensation for not providing higher wages in collective bargaining agreements between the big automakers and the United Auto Workers following World War II, as the idea spread and more companies provided this benefit it ultimately came to be expected as a matter of right. At the time health insurance was relatively cheap, but that is no longer the case. One might even think that corporate America would be begging government to take over health insurance in the same way it begged to be regulated during the early Twentieth Century. Unfortunately, corporate America has not been so eager to relinquish it in favor of national health insurance because it would also weaken their control over their workforces. Because workers need coverage, and increasing prior conditions among an aging workforce makes it difficult to get new coverage, workers are only effectively locked into their employers.

Corporate paternalism not only hurts working Americans by locking them into their jobs, but it ultimately renders us as a nation less competitive because the costs have to be worked into prices. Were there to be national health insurance, American companies could become more competitive, and American labor could become more mobile, which might also ensure a better match-up between skills and jobs thereby resulting in greater productivity.  Even if workers had to pay an additional tax for this insurance, it would be offset by what they would save in the ever rising premiums they currently pay out of their paychecks to cover their families.
If corporate America is going to come hat-in-hand to the American taxpayers for assistance, then we as a condition of that assistance need to demand that this corporate paternalism be ended in favor of a system that not only can make us more competitive, but also empowers workers. The need for national health insurance is only one issue to be addressed as we consider bailing out companies. Others include higher wages, particularly at the bottom of the distribution to reduce income inequality; caps on exorbitant executive compensation for those companies receiving assistance; requirements that companies receiving assistance provide job retraining and job search assistance to those who will still have to be laid off; and an overhaul of existing American labor law so that workers’ rights will be protected. If we are truly going to redefine capitalism at taxpayers’ expense, let’s ensure that it is done in such way that it truly benefits workers.