The anxieties of our time are not fundamentally different from those that surfaced at the start of the industrial era—about the stresses and insecurities of a new economy, the erosion of families and communities, widening inequalities of income and wealth, and the undermining of community. It’s just that the answers the inhabitants of that era devised for dealing with these concerns—the balance they struck between what the new economic forces offered and what they cost—don’t fit the economy and society that we are entering.
A debate is emerging all over the world about the merits of the new economy in terms of the quality of the lives people lead within it. The debate surfaces only sporadically and partially, like the tip of a giant floating iceberg into which all sorts of other, more particular, debates crash. French workers walk out on strike in pursuit of a thirty-five-hour maximum workweek, or against it. German industrialists, concerned about high wages and regulations making it hard to fire or demote employees, threaten to move jobs abroad. Americans march in Seattle against the World Trade Organization. In a national poll, a majority of Americans say they believe the global economy hurts average people; two-thirds worry that good jobs will move overseas, leaving Americans with jobs that don’t pay enough.
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Meanwhile, smaller nations complain about “hot money” rushing into and then suddenly out of their economies, wreaking social havoc. Right-wing movements in several countries fulminate against immigrants and foreigners, and occasionally against poor minorities in their midst; left-wing movements, against global elites who seem to float over and above nations, parking their money in tax havens, vacationing in idyllic spots, living and working in “urban glamour zones.”
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No one, it seems, is particularly fond of global corporations whose top executives appear to be greedy and rapacious, or Wall Street moguls busily “restructuring” businesses in seeming disregard of the communities they uproot or destroy in the process.
But much of the debate is misguided, and much of the blame misplaced. To the extent that there’s an enemy, we’ve seen it, and it’s us. Most of us
want
the new economy’s terrific deals. All of us are consumers, and an expanding number are investors. Rapidly evolving technologies are creating a global network in which we can get exactly what we want from almost anywhere at the lowest price and highest value. We can choose widely and switch on a dime (or yuan, peso, or rupiah). In short, the culprit isn’t out
there
—not in the global corporations, greedy executives, insensitive elites, immigrants, or poor minorities. It’s in
here,
in our own appetites, in what we want to buy, in the great deals we want to get. People within cultures that aren’t as materially prosperous as most Americans view on their satellite televisions all the gadgets and glitter of middle-class American life, and say:
We want that.
And quickly, please.
Yet the social price for all this is mounting, too. If we understood what we are really paying, we might be less enthusiastic about the deals we’re getting. And so would others around the world.
Thumbs up? Thumbs down? Consider two extremes: At one extreme, this and any other society could embrace neo-Ludditism—pass laws to unplug the computers, burn the software, erect a huge tariff wall to keep out cheap foreign goods, place a chain-link fence around our borders to keep out inexpensive foreign labor, block flows of global capital, bar hostile takeovers, disempower shareholders, grant exceedingly long patent protections, preserve all our jobs just as they are, freeze-frame our neighborhoods, and stop innovation in its tracks. The society we would create by doing all these things might be serene and stable, inequalities might be diminished, and citizens might be free to devote themselves to quiet contemplation. But such a society would be very poor materially, relative to the wealth it could otherwise generate, and in various ways it would be profoundly oppressive. (By the way, do not assume that such a neo-Luddite strategy is impossible in an era of global technology. Fundamentalists, Puritans, zealots, and fanatics of many stripes have done it before; somewhere, someday, they will attempt to do it again.)
At the other extreme, we could put our foot on the accelerator and let ’er rip. We could choose the path of fastest growth, widest choice, quickest switch. Pursue this path to its logical end, and we all would be working in a giant global network. Each of our incomes would depend on continuous spot-auction bids for our services. All government supports—regulations, insurance, pooled benefits—would be dismantled as the sorting mechanism became perfectly efficient worldwide. The spectrum from exceedingly rich to exceedingly poor in every nation would exactly reflect the widest spectrum of wealth and poverty in the world. Your own position on that spectrum would depend on how hard you worked and sold yourself (and your children’s eventual position, on how hard they worked to become little paragons of ambition and potential commercial value). We would overflow in material wealth, but no one would feel economically secure. And in the meantime, our society will have been pulled apart, sharply sorted, rendered indistinguishable from any other spot on the globe.
Thumbs up? Thumbs down? What do we choose? For most people, neither extreme is especially attractive. So, in the end, we’re left with the question of balance.
A NEW SOCIAL BALANCE
What’s the best position between these two extremes? What’s the best social balance? There’s no simple answer, because there’s no single “best” trade-off between economic dynamism and social tranquillity. But in pursuit of an answer, you might ask yourself the same basic question Americans asked themselves a century ago when they were struggling to come to terms with what was then a new industrial order: How can we reap the advantages of the new economy while preventing its excesses and tempering its injustices?
Recall that the benefits as well as the burdens of the old industrial economy arose from stable, large-scale production. That’s why reformers a century ago focused on improving the conditions of employment and constraining raw economic power. The benefits of the
new
economy, by contrast, arise from innovation and the increasing ease with which buyers can switch—to better, faster, or cheaper products from anywhere around the world, to higher-returning investments, and to the joint amenities constituting the modern “community.” As we have seen, these same features of the new economy are also contributing to financial insecurity, more frenzied work, widening gaps in income and wealth, an ever more efficient sorting mechanism, and the consequent erosion of personal, family, and community life.
One way to a better social balance might be through a great moral and spiritual “reawakening” in which people rose en masse to renounce the excesses of acquisitive individualism. Such surges have occurred from time to time in history. But history reveals that their consequences have not been altogether positive. Moral fervor, once unleashed, is not easily contained. It seems safer, and more practical, to explore more modest avenues of reform. Some of these will have to be pursued by government; others are more properly left to the nonprofit sector, to faith-based institutions, universities, and social entrepreneurs.
In essence, rather than seek to preserve and protect the old jobs, old communities, and old relationships, or go to the opposite extreme and let ‘er rip, a balanced society would seek to accomplish several goals:
Cushion people against sudden economic shocks.
To protect individuals and families against the volatility of the new economy, there are many possibilities short of neo-Luddite measures to block choices and bar switches. One way to alleviate the sudden pressure of job loss would be to ensure that anyone who needed a job would have one. If no jobs were currently available, public-service jobs would make up the shortfall. In addition, unemployment insurance (a legacy of the industrial era, when “employment” was the norm) could be replaced with earnings insurance, designed to smooth out what might otherwise be abrupt drops in income.
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Say your earnings dip 50 percent from one year to the next. The earnings insurance would make up half the difference. If your earnings doubled from one year to the next, you would pay some percentage of the gain into the earnings insurance fund. Such earnings insurance would help not only the poor, but also middle- and upper-income people anxious about the possibility of suddenly losing their economic footing. And such insurance would be extended to anyone, including part-time workers. We could also guarantee that all job holders receive a minimally decent income. Anyone who works at least forty hours a week would be eligible for an income supplement that brought their total earnings up to at least half the nation’s median income.
To further cushion against shocks, employee benefits could be made fully portable. That is, rather than attach health and pension benefits to particular jobs through tax-favored treatment of health and retirement benefits (another vestige of the industrial era), we could uncouple such benefits from specific jobs and attach them to people instead. The tax savings could be used to supplement the health and retirement needs of workers directly, regardless of where they worked; low-income workers would get proportionately more help. All citizens would have access to affordable health insurance.
We could reduce sharp shocks to a community when business or financial capital suddenly departed by instituting
community
insurance. For example, if a community or region were to lose more than, say, 5 percent of its economic base in the course of a year, it would automatically get funds to help smooth the transition—to retrain people for different jobs, to help providers of local services slim down, to soften the decline in property values. Such insurance could be financed by a small tax on businesses or capital suddenly moving into a particular community or region. The same idea might be extended to entire nations, in the form of a small “transactions tax”—say, one tenth of 1 percent—on the value of all fast-moving global financial transactions. Not only would such a small tax throw a bit of sand in the speculative wheels of international finance, but it could also finance a stabilization fund to smooth the ups and downs of national currencies.
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Trade laws could be amended to provide greater relief from sudden surges of imports than is available through the so-called escape clause under current trade treaties. Now nations are eligible for such temporary trade protection only if a domestic industry is competitively injured by the surge. But
social
injury should count as well. Workers and their communities should be able to petition for temporary relief when a sudden surge of imports threatens substantial job dislocation and community abandonment.
Widen the circle of prosperity.
Inequalities of income and wealth are wider than they have been since the early years of industrialization, in the late nineteenth and early twentieth centuries. What can be done? Most of the people who have been losing out are those lacking an adequate education—the first prerequisite to success in the new economy. So the best investment in their future prosperity is to improve their store of “human capital.” More on this in a moment. But education takes considerable time. And even if children from poorer homes were learning like mad, they’d still start off their adult lives at a severe disadvantage. Education doesn’t address their social disadvantages, their isolation and lack of connections. It also doesn’t address their lack of capital assets.
Another means of extending prosperity, therefore, would be to make capital assets more accessible. For many years, the capital-asset elevator has been lifting America’s wealthy ever-higher without their moving a muscle (except, perhaps, to speed-dial their brokers). The biggest single consequence of the 1990s bull market was to make those who were already rich before 1991 fabulously richer. Even if and when the stock market sags, the long-term outlook for capital assets is unremittingly bright. So in addition to better schools, we might consider providing every young person in America, upon reaching the age of eighteen, a financial “nest egg” of, say, $60,000, which he or she could then reinvest in additional education, a business venture, stocks and bonds, or some combination of these. Such endowments would be financed by a small wealth tax on the very richest among us.
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Give caring attention to those who need it most.
How can we ensure that children, the elderly, and the disabled receive the caring attention they need? As I’ve noted, people who are paid to provide such caring attention—nurse’s aides, home health-care aides, nursing-home aides, child-care workers, schoolteachers, social workers—do some of our society’s most important and humane work. Society as a whole could pay them substantially more, provided they meet adequate standards of performance. Beyond higher pay, these workers also deserve higher status in society, and more respect. Higher pay and more respect would make these jobs attractive to skilled people, and give people more reason to get the skills these jobs really require.
Furthermore, we could take up where Progressive reformers left off a century ago when they created kindergartens. Given the demands of the new economy upon families, it would seem reasonable to extend schooling downward to include three- and four-year-olds and offer them safe and stimulating preschool programs. It also seems reasonable to extend the school day outward for all school-age children, with supervised play and study until most of their parents have finished work in the evening.
Businesses should be encouraged—perhaps required—to offer parents flexible time to do their work, and paid leave to care for a young child or an elderly relative in need. Many firms already offer these amenities to their high-paid creative workers, but few such benefits are available further down the hierarchy. And businesses, as I’ve pointed out, are quickly transforming themselves into contractual networks in which fewer workers are “employees” in the old sense. Thus, such requirements on employers may be less effective over the long term than direct public supports for people who work. One such support could be made available through the tax system. Because the costs of child care (and, often, of caring for an elderly relative) are literally “business expenses” that would not be incurred absent paid work, such expenses might be made fully deductible from income taxes.