Friday, June 19, 2009

RIP The Company Man

1950-1975: heyday of the company man. You went to work out of high school gave loyal devoted service until you retired. You earned good wages, had access to affordable health insurance and your company planned and provided your retirement. This is now exceptional.
In many ways this was an artificial time period, a product of World War II solidarity and the political supremacy of the old democrats.
(The old democrats controlled the party from ’32-68. The New Deal was their charter and they sought to provide a comfortable living for the working class and ‘common man’ through the ‘family wage’. I consider the riots of ’68 to mark the transition to the new democrats who wanted to re-invent the world by eliminating traditional mores and customs with the aim of establishing justice without judgment for everybody. To them, the common man is someone with deplorable prejudices and socioeconomic habits that must be re-educated. There are still old democrats in the party but the new are the leaders.)
The opposing political party was concerned with containing communism and promoting business interests. The deal struck between the two was to fund the cold war, protect business by allowing de facto car tels and monop oli es in exchange for conceding labor unions demands and expanding the safety net of the new deal. The market control of the cartels was sufficiently lucrative to let everyone have a piece of the pie.
But what happened to the company man? The new democrats did not dismantle the old system as it was still a source of political power – its decline is a little more complex.
1) Free Trade – this effectively destroyed the cartels as foreign competition put the competitors outside of any one government’s control. The new democrats supported it because it went hand in hand with their internationalist ideals. The opposition party supported it because it benefitted their business allies. (keep in mind business will deal - whoever is in power; so this ‘alliance’ is somewhat asymmetric)
2) Organizational Decay – this refers to the tendency of organizations to become bloated, insular, and unresponsive with time. This is due to inertia, groups within the organization acting for their self-benefit. Market disrupting innovation can hurt it or at best maintain its position as the market leader – therefore its incentive to innovate is small.


P.S. I believe a flux period is beginning for the parties where they can dramatically change across a few election cycles.

No comments: