Saturday, June 11, 2005

Different places, similar problems

Do China and U.S. Face Same Woes? - New York Times
TRADITIONAL large employers - the very foundations of the economy - are in trouble. They have debts they may not be able to pay, and are having great difficulty making any money. So they continue to borrow and look to the government for help.

The government could just let them fail, saying that those who cannot make the grade in the new era of globalization should make way for those who can. But there are costs to such a strategy, over and above the fact that those companies have friends in high places.

Millions of people rely on the companies for more than jobs. They have promised to provide the most basic of needs, including health care and old-age pensions. If they are allowed to fail, the costs could be large.