Too big to fail

Joseph Schumpeter's Creative Destruction is a powerful two-word summation of the dynamics of capitalism. It explains much, including the four-word counterforce that it elicits: Too big to fail. A wonderful summary of how these two phenomena square off is in this week's New Yorker, Peter Boyer's "The Road Ahead: Smyrna, Tennessee, vs. Detroit." Actually, the plot involves Detroit, Smyrna and Washington. We had all heard the rough outlines of this story before, but consider this gem from Boyer's coverage:

G.M's most urgent problem was a crushing debt burden, much of it from its obligations to worker-benefit programs. The union workers had been promised lifetime pensions and full health coverage, and, after a 1970 strike they were also granted the option of retiring after 30 years. That meant that a worker who joined the company at eighteen ... could retire at forty-eight and collect benefits for more years than he'd spent as an active employee...

Part of the explanation comes via this quote from the perplexed former auto worker/union leader who cannot grasp how and why the party ended. "George Washington would roll over in his grave and call it treason for letting foreigners [Nissan in Smyrna and the rest of the 'Auto belt' that radiates out across the South from Smyrna] come in here and take away what we had built."