Washington – Our economic system is built on risk. It’s the soul of capitalism. It’s the price of freedom.
You decide to start a business. Investors loan you money. You hire workers. You reap the rewards.
But there are downsides to risk. Capitalism requires losers. Maybe there is a recession. Maybe the scalawags in Washington plunder the treasury. Maybe your business model stinks.
So politics is the means by which Americans try to ease the necessary consequences of failure for entrepreneurs and workers alike. Our political creeds relish “life, liberty and the pursuit of happiness” but also demand that we “form a more perfect Union, establish Justice (and) ensure domestic Tranquility.”
Determined efforts to mitigate risk started more than a century ago and peaked in the golden era after World War II with a regulated economy, union wages and benefits, and programs such as Social Security and Medicare.
Our allies and foes were knee-deep in rubble; there was plenty of cheap oil, and we dominated foreign markets.
We got complacent. There were too many bright young men and women in places like Frankfurt, Germany; Bombay, India; and Shanghai, China, for those happy days to last forever.
The Darwinian rules of the global economy have reasserted themselves, and American politics once again is all about how to ameliorate risk.
The headlines tell the tale.
Detroit stayed too long at the sport utility vehicle dance.
Now the car industry is bleeding jobs and its executives say they cannot afford to provide health insurance and pension benefits for past and current auto workers.
Congress spent the Social Security surplus.
Confronted with an aging population, it is now scrambling to earn bigger yields by privatizing the system, even though that means more risk.
And the Senate Finance Committee heard last week how loopholes in federal pension laws have let high-risk companies shortchange retirement plans, endangering “guaranteed” benefits for thousands of workers and raising the specter of a taxpayer bailout.
Senators on the panel heard from Jayme Manley from West Chicago, Ill., who has worked as a United Airlines flight attendant for more than two decades. Like thousands of colleagues, she may lose half or more of the pension she’s been counting on.
“I am a 46-year-old woman,” Manley wrote.
“I am a wife. I am a mother of four young children. I am a daughter of a proud World War II and Korean War veteran. … I am honest, hard-working, faithful. I am college-educated, community-oriented and family-driven. I am ‘the girl next door.’ I am exactly what United Airlines sought when hiring me as a flight attendant 21 years ago.
“I am their past, but also United Airlines’ future. I am a promise broken. I am despair.”
Jayme is not alone. Nor is United a special case.
A new study of 5,000 U.S. families by Peter Gosselin of the Los Angeles Times demonstrates how business and government are increasingly shifting economic risk to the backs of working families, who are finding it harder to bounce back from the inevitable consequences.
I suppose I’m Pollyanna to suggest we’re in this together, that promises should be honored, and risk – and sacrifice – fairly distributed.
United chief executive Glenn F. Tilton doesn’t seem to see it that way.
At the Senate hearing, he was asked why he has not pared back his own $4.5 million retirement package.
Sen. Ron Wyden, D-Ore., suggested that Tilton’s deal was evidence of “a double standard.”
No way, Tilton replied. It was simply a promise United made when he was hired. The company guaranteed it.
Why, he had earned it through decades of hard work.
Just like Jayme Manley.
John Aloysius Farrell is the Washington bureau chief for The Denver Post. His column appears each Sunday. Contact him at jfarrell@denverpost.com or 202-662-8990.
