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March 13, 2005

No Bankruptcy Reform for Airline Worker Pension Debts

So with the new bankruptcy law, if you are a giant credit card company owed money by a struggling family, you can prevent them from escaping their debts.

But if you are a baggage handler at an airline and you are owed money for your pension from the shareholders of a failing airline, well, you are shit out of luck, and have to accept pennies on the dollar in any federal help available.

Shareholders Don't Own Companies: Conservatives love to say that the interests of shareholders should be the only criterion for corporate governance. The shareholders own the company, so it's theirs to do with what they want. Except when the company goes bankrupt, suddenly the shareholders don't REALLY own the airline. All they own is the stock, so they aren't responsible for any costs beyond the value of the stock. Any additional costs are someone else's problem. As shareholders, they may have made collective deals with the workers to pay them pensions, but they aren't held responsible with their own money for paying those debts.

Look carefully at this reality revealed by bankruptcy law. Corporations are not owned by shareholders, since the shareholders take on none of the responsibility of ownership, especially the responsiblity -- supposedly so prized by conservatives -- to pay back debts. Corporations are creatures of government, created with the social privileges of limited financial liablity of shareholders. Since their debts are ultimately public, as with pension bailouts and lost benefits for workers, the public should demand for greater control of their decisions when solvent.

If the government or the broader society has to cover the costs of reckless decisions made in the fat years, they should demand a bigger cut of the profits to pay those social costs.

Posted by Nathan at March 13, 2005 08:25 AM