Who knew? Speculation about which welfare state will be the first to buckle under the strain
of the pension and medical costs of aging populations usually focuses on European nations with declining birthrates and aging populations. Who knew the first to buckle would be General Motors
, with Ford not far behind?
GM is a car and truck company -- for the 74th consecutive year, the world's largest -- and has revenue greater than Arizona's gross state product. But GM's stock price is down 45 percent from a year ago; its market capitalization is smaller than Harley-Davidson's. This is partly because GM is a welfare state.
Health care for retirees and their families -- there are 2.6 of them for every active worker -- is 69 percent of GM's health costs. GM says it has $19.8 billion in cash, and normal mortality rates will reduce the ratio of retirees to active workers. Meanwhile, Rick Wagoner, GM's chief executive, can only muse, "It's strange. When I joined GM 28 years ago, I did it because I love cars and trucks. I had no idea I'd wind up working as a health care administrator."