Reconciling Detroit to "Japan"

TW: Have posted many times on the inaccuracy of the claim that "Detroit" wages are vastly higher than "foreign car" wages in the US. The graph depicts the issue clearly. Strip out the retirees and "Detroit" workers make $4/hr more than "foreign" workers.

Another key argument against "Detroit" is that they do not make the right cars. One of the primary (although certainly not sole) reasons they do not is underinvestment in new cars. The perniciousness of the retiree overhang for "Detroit" is that the fixed costs associated with the retirees (but not the younger "foreign" operations) suck up billions of dollars that could otherwise fund R&D or other corporate uses. This creates a vicious circle whereby Detroit makes a car and takes much of the profit to pay its past workers, while the "foreign" automakers take the profits and fund the next generation of those vehicles
"Americans want". It is not this simple of course, but you get the idea (and this ignores all those subsidies the "foreign" folks get to set up shop in the first place).

http://www.nytimes.com/2008/12/17/business/economy/17leonhardt.html