Liberals are fond of saying that the reason General Motors and US based companies in general are having so many problems competing is because Toyota and Volkswagen, located in Japan and Germany respectively, don’t have to pay health care costs and US based companies do – putting GM at a disadvantage to foreign competition.
Megan Mcardle, deputy countries editor of the Economist, exposes this myth:
This is a persistent meme on liberal sites, and with good reason: the logic is compelling. The only problem–and it is a slight one–is that this meme is not true. In both Japan and Germany, workers at large corporations get their health insurance via joint contributions from employeer and employee, just as they do in the United States. Big corporations in both countries also have pension schemes, just as in the United States, and higher social security contributions.
To be sure, their health care costs are lower, in large part because they are administered by the government, which rations it more strictly than GE can. But their pension fund deficits are often worse than ours.
Where does this idea come from that the Japanese and German corporations don’t have to pay any costs to cover their employees’ health and retirement? And why hasn’t anyone bothered to check it?
I am not surprised. Economist Don Boudreaux has more.
Update: Catallarchy has more.