[Mb-civic] Krugman

[Mike Blaxill]

http://www.truthout.org/docs_2005/112805M.shtml

Age of Anxiety
    By Paul Krugman
    The New York Times

    Monday 28 November 2005

    Many eulogies were published following the
recent death of Peter Drucker, the great
management theorist. I was surprised, however,
that few of these eulogies mentioned his book
"The Age of Discontinuity," a prophetic work that
speaks directly to today's business headlines and
economic anxieties.

    Mr. Drucker wrote "The Age of Discontinuity"
in the late 1960's, a time when most people
assumed that the big corporations of the day,
companies like General Motors and U.S. Steel,
would dominate the economy for the foreseeable
future. He argued that this assumption was all
wrong.

    It was true, he acknowledged, that the
dominant industries and corporations of 1968 were
pretty much the same as the dominant industries
and corporations of 1945, and for that matter of
decades earlier. "The economic growth of the last
twenty years," he wrote, "has been very fast. But
it has been carried largely by industries that
were already 'big business' before World War I.
... Every one of the great nineteenth-century
innovations gave birth, almost overnight, to a
major new industry and to new big businesses.
These are still the major industries and big
businesses of today."

    But all of that, said Mr. Drucker, was about
to change. New technologies would usher in an era
of "turbulence" like that of the half-century
before World War I, and the dominance of the
major industries and big businesses of 1968 would
soon come to an end.

    He was right. Consider, for example, what
happened to America's steel industry. In the
1960's, steel production was virtually synonymous
with economic might, as it had been for almost a
century. But although the U.S. economy as a whole
created lots of wealth and tens of millions of
jobs between 1968 and 2000, employment in the
U.S. steel industry fell 60 percent.

    And as industries went, so did corporations.
Many of the corporate giants of the 1960's,
companies whose pre-eminence seemed permanent,
have fallen on hard times, their places in the
business hierarchy taken by new players. General
Motors is only the most famous example.

    So what? Meet the new boss, same as the old
boss: why does it matter if the list of leading
corporations turns over every couple of decades,
as long as the total number of jobs continues to
grow?

    The answer is the reason Mr. Drucker's old
book is so relevant to today's headlines:
corporations can't provide their workers with
economic security if the companies' own future is
highly insecure.

    American workers at big companies used to
think they had made a deal. They would be loyal
to their employers, and the companies in turn
would be loyal to them, guaranteeing job
security, health care and a dignified retirement.

    Such deals were, in a real sense, the basis
of America's postwar social order. We like to
think of ourselves as rugged individualists, not
like those coddled Europeans with their oversized
welfare states. But as Jacob Hacker of Yale
points out in his book "The Divided Welfare
State," if you add in corporate spending on
health care and pensions - spending that is both
regulated by the government and subsidized by tax
breaks - we actually have a welfare state that's
about as large relative to our economy as those
of other advanced countries.

    The resulting system is imperfect: those who
don't work for companies with good benefits are,
in effect, second-class citizens. Still, the
system more or less worked for several decades
after World War II.

    Now, however, deals are being broken and the
system is failing. Remember, Delphi was once part
of General Motors, and its workers thought they
were totally secure.

    What went wrong? An important part of the
answer is that America's semi-privatized welfare
state worked in the first place only because we
had a stable corporate order. And that stability
- along with any semblance of economic security
for many workers - is now gone.

    Regular readers of this column know what I
think we should do: instead of trying to provide
economic security through the back door, via tax
breaks designed to encourage corporations to
provide health care and pensions, we should
provide it through the front door, starting with
national health insurance. You may disagree. But
one thing is clear: Mr. Drucker's age of
discontinuity is also an age of anxiety, in which
workers can no longer count on loyalty from their
employers.