General Motors is suffering as oil prices surge and consumer spending wanes, Roger Lowenstein writes in the New York Times. But the biggest, and perhaps fatal, culprit of its recent troubles—with stock prices near a 50-year low—are the generous health care and pension benefits it agreed to lavish upon its workers more than 50 years ago.
GM itself acknowledges it put itself at "a dramatic competitive and cash-flow disadvantage" by spending $103 billion between 1993 and 2007 to fund benefits promised in deals with union kingpin Walter Reuther—money it could have spent on improving technology and design. "The sorry decline of General Motors has proved Reuther right," Lowenstein notes. "The government is the better provider of social insurance. Let industry worry about selling products."