That's the message from the parent company of United Airlines to employees and taxpayers. The airline has been allowed to palm off "some portion" of $9 billion in pension obligations to the government-run Pension Benefits Guaranty Corporation (PBGC). What this means in that workers will get reduced benefits and you and I get to pick up the bill. The PBGC is an insurance program that, because of the rash of corporate shell games, has had to pay out ever increasing amounts to pensioners. If the PBGC goes belly-up, and it certainly could, the taxpayers will get the arm.
So much for Adam Smith. What's the GOP saying? Not much. They rail about Welfare and Social Security reform but there's little criticism for cop orate welfare. Shareholders have already lost out and now employees and taxpayers will bear the brunt of UAL's mismanagement. The company should be broken apart and sold off.
And don't get too smug, Democrats. This illustrates once again that defined benefit programs, programs touted and lauded by liberals and unions for decades, don't work. Private accounts work.
Wow, you seem a little bitter. But you neglect to mention labor unions' role in UAL's debacle.
Posted by: Paul W | May 12, 2005 at 09:15 PM
I am a passionate capitalist and I do take it personally when pampered, inefficient businesses are given special treatment. The unions did have a role in UAL's original problems, but there have been concession after concession. If we're all true capitalists, we should let businesses like UAL fail if they can't make a profit, not bail them out each time they mess things up.
It's ironic that just as Congress has done the bidding of the credit cartel to pass strict personal bankruptcy laws, a bunch of crooks and liars at UAL get to walk away from their obligations. This gives capitalism a bad rap. And rightly so. Capitalism is more than just government hand outs to business. If government is going to bail out bad companies and industries, let's just remove the pretense and just nationlize industry. That would be fascism, but at least we wouldn't have this charade of free market competition.
Posted by: Daniel | May 13, 2005 at 06:39 AM
"A bunch of crooks and liars at UAL"? Who are you referring to? And just how has UAL been "pampered"?
Posted by: Paul W | May 13, 2005 at 01:13 PM
I'll admit that I am being overly harsh but with workers getting laid off and now the pension being sloughed of, Glenn Tilton could take a hit, in my opinion. With a severance package that could reach about $5 million, he's hardly showing himself to be a leader.
Posted by: Daniel | May 13, 2005 at 02:13 PM
Daniel: It's an interesting story and there's plenty of blame to go around. Several of my clients are United pilots and they have mixed feelings about their union--it has given them lots of perks but it is also a factor in the company's demise.
The implications of it all are enormous. What if UAL goes out of business? What if the PBGC is unable to handle UAL's default and those that will follow? Interesting stuff.
I enjoy your blog. Keep up the good work.
Posted by: Paul W | May 13, 2005 at 02:58 PM
Daniel: It's an interesting story and there's plenty of blame to go around. Several of my clients are United pilots and they have mixed feelings about their union--it has given them lots of perks but it is also a factor in the company's demise.
The implications of it all are enormous. What if UAL goes out of business? What if the PBGC is unable to handle UAL's default and those that will follow? Interesting stuff.
I enjoy your blog. Keep up the good work.
Posted by: Paul W | May 13, 2005 at 02:58 PM