21 Why the Rich Are Getting Richer and the Poor,Poorer Robert B.Reich [T]he division of labour is limited by the extent of the market. Adam Smith,An Inquiry into the Nature and Causes of the Wealth of Nations(1 776) Regardless of how your job is officially classified prices and investments-avoiding the harsh winds of (manufacturing,service,managerial,technical,competition and thus maintaining healthy secretarial,and so on),or the industry in which you earnings.Some of there earnings,in turn,were work (automotive,steel,computer,advertising,reinvested in new plant and equipment (yielding finance,food processing),your real competitive ever-larger-scale economies);another portion went position in the world economy is coming to depend to top managers and investors.But a large and on the function you perform in it.Herein lies the increasing portion went to middle managers and basic reason why incomes are diverging.The for-production workers.Work stoppages posed such a tunes of routine producers are declining.In-person threat to high-volume production that organized servers are also becoming poorer,although their labor was able to exact an ever-larger premium for fates are less clear-cut.But symbolic analysts-who its cooperation.And the pattern of wages estab- solve,identify,and broker new problems-are,by lished within the core corporations influenced the and large,succeeding in the world economy. pattern throughout the national economy.Thus the All Americans used to be in roughly the same growth of a relatively affluent middle class,able to economic boat.Most rose or fell together,as the purchase all the wondrous things produced in high corporations in which they were employed,the volume by the core corporations. industries comprising such corporations,and But,as has been observed,the core is rapidly the national economy as a whole became more breaking down into global webs which earn productive-or languished.But national borders their largest profits from clever problem-solving,- no longer define our economic fates.We are now in identifying,and-brokering.As the costs of trans- different boats,one sinking rapidly,one sinking porting standard things and of communicating more slowly,and the third rising steadily. information about them continue to drop,profit The boat containing routine producers is sinking margins on high-volume,standardized produc- rapidly.Recall that by midcentury routine produc-tion are thinning,because there are few barriers to tion workers in the United States were paid rela-entry.Modern factories and state-of-the-art tively well.The giant pyramidlike organizations at machinery can be installed almost anywhere on the the core of each major industry coordinated their globe.Routine producers in the United States From The Work of Nations by Robert Reich,copyright(r)1991 by Robert Reich.Used by permission of Alfred A.Knopf, a division of Random House,Inc.,and the Sagalyn Literary Agency
21 Why the Rich Are Getting Richer and the Poor, Poorer Robert B. Reich [T]he division of labour is limited by the extent of the market. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1 776) Regardless of how your job is officially classified (manufacturing, service, managerial, technical, secretarial, and so on), or the industry in which you work (automotive, steel, computer, advertising, finance, food processing), your real competitive position in the world economy is coming to depend on the function you perform in it. Herein lies the basic reason why incomes are diverging. The fortunes of routine producers are declining. Inperson servers are also becoming poorer, although their fates are less clearcut. But symbolic analysts—who solve, identify, and broker new problems—are, by and large, succeeding in the world economy. All Americans used to be in roughly the same economic boat. Most rose or fell together, as the corporations in which they were employed, the industries comprising such corporations, and the national economy as a whole became more productive—or languished. But national borders no longer define our economic fates. We are now in different boats, one sinking rapidly, one sinking more slowly, and the third rising steadily. The boat containing routine producers is sinking rapidly. Recall that by midcentury routine production workers in the United States were paid relatively well. The giant pyramidlike organizations at the core of each major industry coordinated their prices and investments—avoiding the harsh winds of competition and thus maintaining healthy earnings. Some of there earnings, in turn, were reinvested in new plant and equipment (yielding everlargerscale economies); another portion went to top managers and investors. But a large and increasing portion went to middle managers and production workers. Work stoppages posed such a threat to highvolume production that organized labor was able to exact an everlarger premium for its cooperation. And the pattern of wages established within the core corporations influenced the pattern throughout the national economy. Thus the growth of a relatively affluent middle class, able to purchase all the wondrous things produced in high volume by the core corporations. But, as has been observed, the core is rapidly breaking down into global webs which earn their largest profits from clever problemsolving, identifying, and brokering. As the costs of transporting standard things and of communicating information about them continue to drop, profit margins on highvolume, standardized production are thinning, because there are few barriers to entry. Modern factories and stateoftheart machinery can be installed almost anywhere on the globe. Routine producers in the United States, From The Work of Nations by Robert Reich, copyright (r) 1991 by Robert Reich. Used by permission of Alfred A. Knopf, a division of Random House, Inc., and the Sagalyn Literary Agency
THE RICH,RICHER AND THE POOR,POORER 309 then,are in direct competition with millions competition with their counterparts abroad,who of routine producers in other nations.Twelve are often eager to work for far less. thousand people are added to the world's popula-By 1990,keypunch operators in the United States tion every hour,most of whom,eventually,will were earning,at most,$6.50 per hour.But key- happily work for a small fraction of the wages of punch operators throughout the rest of the world routine producers in America.' were willing to work for a fraction of this.Thus, The consequence is clearest in older,heavy many potential American data-processing jobs were industries,where high-volume,standardized pro-disappearing,and the wages and benefits of the duction continues its ineluctable move to where remaining ones were in decline.Typical was Saztec labor is cheapest and most accessible around the International,a $20-million-a-year data-processing world.Thus,for example,the Maquiladora factories firm headquartered in Kansas City,whose American cluttered along the Mexican side of the US border in strategic brokers contracted with routine data the sprawling shanty towns of Tijuana,Mexicali,processors in Manila and with American-owned Nogales,Agua Prieta,and Ciudad Juarez-factories firms that needed such data-processing services. owned mostly by Americans,but increasingly by Compared with the average Philippine income of Japanese-in which more than a half million rou-$1,700 per year,data-entry operators working for tine producers assemble parts into finished goods Saztec earn the princely sum of $2,650.The to be shipped into the United States. remainder of Saztec's employees were American The same story is unfolding worldwide.Until the problem-solvers and -identifiers,searching for late 1970s,AT&T had depended on routine produ-ways to improve the worldwide system and find cers in Shreveport,Louisiana,to assemble standard new uses to which it could be put (Maxwell telephones.It then discovered that routine produ-Hamilton 1989). cers in Singapore would perform the same tasks at a By 1990,American Airlines was employing over far lower cost.Facing intense competition from 1,000 data processors in Barbados and the Domin- other global webs,AT&T's strategic brokers felt icas Republic to enter names and flight numbers compelled to switch.So in the early 1980s they from used airline tickets(flown daily to Barbados stopped hiring routine producers in Shreveport from airports around the United States)into a giant and began hiring cheaper routine producers in computer bank located in Dallas.Chicago publisher Singapore.But under this kind of pressu re for R.R.Donnelley was sending entire manuscripts to ever lower high-volume production costs,today's Barbados for entry into computers in preparation singaporean can easily end up as yesterday's for printing.The New York Life Insurance Company Louisianan.By the late 1980s,AT&T's strategic was dispatching insurance claims to Castleisland, brokers found that routine producers in Thailand Ireland,where routine producers,guided by simple were eager to assemble telephones for a small frac-directions,entered the claims and determined the tion of the wages of routine producers in Singapore. amounts due,then instantly transmitted the Thus,in 1989,AT&T stopped hiring Singaporeans computations back to the United States.(When the to make telephones and began hiring even cheaper firm advertised in Ireland for twenty-five data- routine producers in Thailand. processing jobs,it received 600 applications.)And The search for ever-lower wages has not been McGraw-Hill was processing subscription renewal confined to heavy industry.Routine data processing and marketing information for its magazines in is equally footloose.Keypunch operators located nearby Galway.Indeed,literally millions of routine anywhere around the world can enter data into workers around the world were receiving computers,linked by satellite or transoceanic ber- information,converting it into computer readable optic cable,and take it out again.As the rates form,and then sending it back-at the speed of charged by satellite networks continue to drop,and electronic impulses-whence it carne. as more satellites and fiber-optic cables become The simple coding of computer software has also available (reducing communication costs still fur-entered into world commerce.India,with a large ther),routine data processors in the United English-speaking population of technicians Statesfind themselves in ever more direct happy
THE RICH, RICHER AND THE POOR, POORER 309 then, are in direct competition with millions of routine producers in other nations. Twelve thousan d people are added to the world's population every hour, most of whom, eventually, will happily work for a small fraction of the wages of routine producers in America.' The consequence is clearest in older, heavy industries, where highvolume, standardized pro duction continues its ineluctable move to where labor is cheapest and most accessible around the world. Thus, for example, the Maquiladora factories cluttered along the Mexican side of the US border in the sprawling shanty towns of Tijuana, Mexicali, Nogales, Agua Prieta, and Ciudad Juárez—factories owned mostly by Americans, but increasingly by Japanese—in which more than a half million routine producers assemble parts into finished goods to be shipped into the United States. The same story is unfolding worldwide. Until the late 1970s, AT&T had depended on routine produ cers in Shreveport, Louisiana, to assemble standard telephones. It then discovered that routine produ cers in Singapore would perform the same tasks at a far lower cost. Facing intense competition from other global webs, AT&T's strategic brokers felt compelled to switch. So in the early 1980s they stopped hiring routine producers in Shreveport and began hiring cheaper routine producers in Singapore. But under this kind of pressu re for ever lower highvolume production costs, today's S ingaporean can easily end up as yesterday's Louisianan. By the late 1980s, AT&T's strategic brokers found that routine producers in Thailand were eager to assemble telephones for a small fraction of the wages of routine producers in Singapore. Thus, in 1989, AT&T stopped hiring Singaporeans to make telephones and began hiring even cheaper r outine producers in Thailand. The search for everlower wages has not been co nfined to heavy industry. Routine data processing is e qually footloose. Keypunch operators located anywhere around the world can enter data into computers, linked by satellite or transoceanic ber optic cable, and take it out again. As the rates c harged by satellite networks continue to drop, an d as more satellites and fiberoptic cables become avai lable (reducing communication costs still further ), routine data processors in the United Statesfind themselves in ever more direct competition with their counterparts abroad, who are often eager to work for far less. By 1990, keypunch operators in the United States were earning, at most, $6.50 per hour. But key punch operators throughout the rest of the world were willing to work for a fraction of this. Thus, many potential American dataprocessing jobs were disappearing, and the wages and benefits of the remaining ones were in decline. Typical was Saztec International, a $20millionayear dataprocessing firm headquartered in Kansas City, whose American strategic brokers contracted with routine data processors in Manila and with Americanowned firms that needed such dataprocessing services. Compared with the average Philippine income of $1,700 per year, dataentry operators working for Saztec earn the princely sum of $2,650. The remainder of Saztec's employees were American problemsolvers and identifiers, searching for ways to improve the worldwide system and find new uses to which it could be put (Maxwell Hamilton 1989). By 1990, American Airlines was employing over 1,000 data processors in Barbados and the Dominicas Republic to enter names and flight numbers from used airline tickets (flown daily to Barbados from airports around the United States) into a giant computer bank located in Dallas. Chicago publisher R. R. Donnelley was sending entire manuscripts to Barbados for entry into computers in preparation for printing. The New York Life Insurance Company was dispatching insurance claims to Castleisland, Ireland, where routine producers, guided by simple directions, entered the claims and determined the amounts due, then instantly transmitted the computations back to the United States. (When the firm advertised in Ireland for twentyfive data processing jobs, it received 600 applications.) And McGrawHill was processing subscription renewal and marketing information for its magazines in nearby Galway. Indeed, literally millions of routine workers around the world were receiving information, converting it into computer readable form, and then sending it back—at the speed of electronic impulses—whence it carne. The simple coding of computer software has also entered into world commerce. India, with a large Englishspeaking population of technicians happy
310 THE RICH,RICHER AND THE POOR,POORER to do routine programming cheaply,is proving to be levels,reduce wage levels of entering workers,or particularly attractive to global webs in need of this reduce wages overall.This is an important reason service.13y 1990,Texas Instruments maintained a why the long economic recovery that began in 1982 software development facility in Bangalore,linking produced a smaller rise in unit labor costs than any fifty Indian programmers by satellite to TI's Dallas of the eight recoveries since World War II-the headquarters.Spurred by this and similar low rate of unemployment during its course ventures,the Indian government was building a notwithstanding. teleport in Poona,intended to make it easier and Routine production jobs have vanished fastest in less expensive for many other firms to send their traditional unionized industries (autos,steel,and routine software design specifications for coding rubber,for example),where average wages have (Gupta 1989). kept up with inflation.This is because the jobs of This shift of routine production jobs from older workers in such industries are protected by advanced to developing nations is a great boon seniority;the youngest workers are the first to be to many workers in such nations who otherwise laid off.Faced with a choice of cutting wages or would be jobless or working for much lower wages. cutting the number of jobs,a majority of union 'Mese workers,in turn,now have more money members (secure in the knowledge that there are with which to purchase symbolic-analytic services many who are junior to them who wi I I be laid off from advanced nations (often embedded within first)often have voted for the latter. all sorts of complex products).The trend is also Thus the decline in union membership has been beneficial to everyone around the world who can most striking among young men entering the work now obtain highvolume,standardized products force without a college education.In the early (including information and software)more cheaply19s,more than 40 per cent of this group joined than before. unions;by the late 1980s,less than 20 per cent (if But these benefits do not come without certain public employees are exciuded,less than 10 per- costs.In particular the burden is bome by those who cent)(Katz and Revenga 1989).In steelmaking,for no longer have good-paying routine production example,although many older workers remained jobs within advanced economies like the United employed,almost hall of all routine steelmaking States.Many of these people used to belong to jobs in America vanished between 1974 and 1988 unions or at least benefited from prevailing wage (from 480,000 to 260,000).Similarly with auto- rates established in collective bargaining agree- mobiles:During the 1980s,the United Auto Work- ments.But as the old corporate bureaucracies have ers lost 500,000 members-one-third of their total flattened into global webs,bargaining leverage at the start of the decade.General Motors alone cut has been lost.Indeed,the tacit national bargain is 150,000 American production jobs during the 1980s (even as it added employment abroad). no more. Despite the growth in the number of new jobs in Another consequence of the same phenomenon: the United States,union membership has withered. The gap between the average wages of unionized In 1960,35 percent of all nonagricultural workers and nonunionized workers widened dramatically- in America belonged to a union.But by 1980 that from 14.6 per cent in 1973 to 20.4 per cent by end of the 1980s.2 The lesson is clear.If you drop out of portion had fallen to just under a quarter,and by high school or have no more than a high school 1989 to about 17 percent.Excluding govern-diploma,do not expect a good routine production ment employees,union membership was down to job to be awaiting you. 13.4 percent (US Government Printing Office 1989). This was a smaller proportion even than in the Also vanishing are lower-and middle-leve)man- early 1930s,before the National Labor Relations agement jobs involving routine production. Act created a legally protected right to labor Between 1981 and 1986,more than 780,000 fore- representation.The drop in membership has been men,supervisora,and section chiefs lost their jobs accompanied by a growing number of collective through plant closings and layoffs (US Dept of bargaining agreements to freeze wages at current Labor 1986).Large numbers of assistant division
310 THE RICH, RICHER AND THE POOR, POORER to do routine programming cheaply, is proving to be particularly attractive to global webs in need of this service. 13y 1990, Texas Instruments maintained a software development facility in Bangalore, linking fifty Indian programmers by satellite to TI's Dallas headquarters. Spurred by this and similar ventures, the Indian government was building a teleport in Poona, intended to make it easier and less expensive for many other firms to send their routine software design specifications for coding (Gupta 1989). This shift of routine production jobs from advanced to developing nations is a great boon to many workers in such nations who otherwise would be jobless or working for much lower wages. 'Mese workers, in turn, now have more money with which to purchase symbolicanalytic services from advanced nations (often embedded within all sorts of complex products). The trend is also beneficia] to everyone around the world who can now obtain highvolume, standardized products (including information and software) more cheaply than before. But these benefits do not come without certain costs. In particular the burden is borne by those who no longer have goodpaying routine production jobs within advanced economies like the United States. Many of these people used to belong to unions or at least benefited from prevailing wage rates established in collective bargaining agree ments. But as the old corporate bureaucracies have flattened into global webs, bargaining leverage has been lost. Indeed, the tacit national bargain is no more. Despite the growth in the number of new jobs in the United States, union membership has withered. In 1960, 35 percent of all nonagricultural workers in America belonged to a union. But by 1980 that portion had fallen to just under a quarter, and by 1989 to about 17 percent. Excluding govern ment employees, union membership was down to 13.4 percent (US Government Printing Office 1989). This was a smaller proportion even than in the early 1930s, before the National Labor Relations Act created a legally protected right to labor representation. The drop in membership has been accompanied by a growing number of collective bargaining agreements to freeze wages at current levels, reduce wage levels of entering workers, or reduce wages overall. This is an important reason why the long economic recovery that began in 1982 produced a smaller rise in unit labor costs than any of the eight recoveries since World War II—the low rate of unemployment during its course notwithstanding. Routine production jobs have vanished fastest in traditional unionized industries (autos, steel, and rubber, for example), where average wages have kept up with inflation. This is because the jobs of older workers in such industries are protected by seniority; the youngest workers are the first to be laid off. Faced with a choice of cutting wages or cutting the number of jobs, a majority of union members (secure in the knowledge that there are many who are junior to them who wi I I be laid off first) often have voted for the latter. Thus the decline in union membership has been most striking among young men entering the work force without a college education. In the early 1950s, more than 40 per cent of this group joined unions; by the late 1980s, less than 20 per cent (if public employees are exciuded, less than 10 per cent) (Katz and Revenga 1989). In steelmaking, for example, although many older workers remained employed, almost hall of all routine steelmaking jobs in America vanished between 1974 and 1988 (from 480,000 to 260,000). Similarly with auto mobiles: During the 1980s, the United Auto Workers lost 500,000 members—onethird of their total at the start of the decade. General Motors alone cut 150,000 American production jobs during the 1980s (even as it added employment abroad). Another consequence of the same phenomenon: The gap between the average wages of unionized and nonunionized workers widened dramaticallyfrom 14.6 per cent in 1973 to 20.4 per cent by end of the 1980s.2 The lesson is clear. If you drop out of high school or have no more than a high school diploma, do not expect a good routine production job to be awaiting you. Also vanishing are lower and middleleve) management jobs involving routine production. Between 1981 and 1986, more than 780,000 foremen, supervisora, and section chiefs lost their jobs through plant closings and layoffs (US Dept of Labor 1986). Large numbers of assistant division
THE RICH,RICHER AND THE POOR,POORER 311 heads,assistant directors,assistant managers,and production jobs held by men in highvolume metal- vice presidents also found themselves jobless.GM bending manufacturing industries had paid higher shed more than 40,000 white-collar employees and wages than the routine production jobs held by planned to eliminate another 25,000 by the mid-women in textiles and data processing.As both sets 1990s(Wall Street Journal 1990).As America's core of jobs have been lost,American women in routine pyramids metamorphosed into global webs,many production have gained more equal footing with routine producers were as obsolete as routine American men-equally poor footing,that is.This workers on the line. is a major reason why the gender gap between male As has been noted,foreign-owned webs are hiring and female wages began to close during the 1980s. some Americans to do routine production in theThe second of the three boats,carrying in-person United States.Philips,Sony,and Toyota factories servers,is sinking as well,but somewhat more are popping up all over-to the self-congratulatory slowly and unevenly.Most in-person servers are applause of the nation's governors and mayors,who paid at or just slightly above the minimum wage have lured them with promises of tax abatements and many work only part-time,with the result that and new sewers,among other amenities.But as their take-home pay is modest,to say the least. these ebullient politicians will soon discover,the Nor do they typically receive all the benefits foreign-owned factories are highly automated and (health care,life insurance,disability,and so forth) will become far more so in years to come.Routine garnered by routine producers in large manufac- production jobs account for a small fraction of the turing corporations or by symbolic analysts cost of producing most items in the United States affiliated with the more affluent threads of global and other advanced nations,and this fraction will webs.;In-person servers are sheltered from the continue to decline sharply as computer-integrated direct effects of global competition and,like everyone robots take over.In 1977 it took routine producers else,benefit from access to lower-cost products thirty-five hours to assemble an automobile in the from around the world.But they are not immune United States;it is estimated that by the mid-1990s,to its indirect effects. Japanese-owned factories in America will be pro-For one thing,in-person servers increasingly ducing finished automobiles using only eight hours compete with former routine production workers, of a routine producer's time(International Motor who,no longer able to find well-paying routine Vehicles Program 1989). production jobs,have few alternatives but to seek The productivity and resulting wages of American in-person service jobs.The Bureau of Labor Statistics workers who run such robotic machinery may be estimates that of the 2.8 million manufacturing relatively high,but there may not be many such workers who lost their jobs during the early 1980s, jobs to go around.A case in point:In the late 1980s,fully one-third were rehired in service jobs paying at Nippon Steel joined with America's ailing Inland least 20 per cent less(US Dept of Labor 1986).In- Steel to build a new $400 million cold-rolling mili person servers must also compete with high school fifty miles west of Gary,Indiana.The mill was graduates and dropouts who years before had celebrated for its state-of-the-art technology,which moved easily into routine production jobs but no cut the time to produce a coil of steel from twelve longer can.And if demographic predictions about days to about one hour.In fact,the entire plant the American work force in the first decades of the could be run by a small team of technicians,which twenty-first century are correct(and they are likely became clear when Inland subsequently closed two to be,since most of the people who will comprise of its old cold-rolling mills,laying off hundreds the work force are already identifiable),most new of routine workers.Governors and mayors take entrants into the job market will be black or His- note:Your much-ballyhooed foreign factories panic men,or women-groups that in years past may end up employing distressingly few of your have possessed relatively weak technical skills.This constituents. will result in an even larger number of people Overall,the decline in routine jobs has hura men crowding into in-person services.Finally,in-person more than women.This is because the routine servers will be competing with growing numbers of
THE RICH, RICHER AND THE POOR, POORER 311 heads, assistant directors, assistant managers, and vice presidents also found themselves jobless. GM shed more than 40,000 whitecollar employees and planned to eliminate another 25,000 by the mid 1990s (Wall Street Journal 1990). As America's core pyramids metamorphosed into global webs, many routine producers were as obsolete as routine workers on the line. As has been noted, foreignowned webs are hiring some Americans to do routine production in the United States. Philips, Sony, and Toyota factories are popping up all over—to the selfcongratulatory applause of the nation's governors and mayors, who have lured them with promises of tax abatements and new sewers, among other amenities. But as these ebullient politicians will soon discover, the foreignowned factories are highly automated and will become far more so in years to come. Routine production jobs account for a small fraction of the cost of producing most items in the United States and other advanced nations, and this fraction will continue to decline sharply as computerintegrated robots take over. In 1977 it took routine producers thirtyfive hours to assemble an automobile in the United States; it is estimated that by the mid1990s, Japaneseowned factories in America will be pro ducing finished automobiles using only eight hours of a routine producer's time (International Motor Vehicles Program 1989). The productivity and resulting wages of American workers who run such robotic machinery may be relatively high, but there may not be many such jobs to go around. A case in point: In the late 1980s, Nippon Steel joined with America's ailing Inland Steel to build a new $400 million coldrolling mili fifty miles west of Gary, Indiana. The mill was celebrated for its stateoftheart technology, which cut the time to produce a coil of steel from twelve days to about one hour. In fact, the entire plant could be run by a small team of technicians, which became clear when Inland subsequently closed two of its old coldrolling mills, laying off hundreds of routine workers. Governors and mayors take note: Your muchballyhooed foreign factories may end up employing distressingly few of your constituents. Overall, the decline in routine jobs has hura men more than women. This is because the routine production jobs held by men in highvolume metalbending manufacturing industries had paid higher wages than the routine production jobs held by women in textiles and data processing. As both sets of jobs have been lost, American women in routine production have gained more equal footing with American men—equally poor footing, that is. This is a major reason why the gender gap between male and female wages began to close during the 1980s. The second of the three boats, carrying inperson servers, is sinking as well, but somewhat more slowly and unevenly. Most inperson servers are paid at or just slightly above the minimum wage and many work only parttime, with the result that their takehome pay is modest, to say the least. Nor do they typically receive all the benefits (health care, life insurance, disability, and so forth) garnered by routine producers in large manufacturing corporations or by symbolic analysts affiliated with the more affluent threads of global webs.; Inperson servers are sheltered from the direct effects of global competition and, like everyone else, benefit from access to lowercost products from around the world. But they are not immune to its indirect effects. For one thing, inperson servers increasingly compete with former routine production workers, who, no longer able to find wellpaying routine production jobs, have few alternatives but to seek inperson service jobs. The Bureau of Labor Statistics estimates that of the 2.8 million manufacturing workers who lost their jobs during the early 1980s, fully onethird were rehired in service jobs paying at least 20 per cent less (US Dept of Labor 1986). Inperson servers must also compete with high school graduates and dropouts who years before had moved easily into routine production jobs but no longer can. And if demographic predictions about the American work force in the first decades of the twentyfirst century are correct (and they are likely to be, since most of the people who will comprise the work force are already identifiable), most new entrants into the job market will be black or Hispanic men, or women—groups that in years past have possessed relatively weak technical skills. This will result in an even larger number of people crowding into inperson services. Finally, inperson servers will be competing with growing numbers of
312 THE RICH,RICHER AND THE POOR,POORER immigrants,both legal and illegal,for whom in-the impact of such competition. person services will comprise the most accessible In two respects,demographics will work in favor jobs.It is estimated that between the mid-1980s and of in-person servers,buoying their collective boat the end of the century,about a quarter of all workers slightly.First,as has been noted,the rate of growth entering the American labor force will be immi-of the American work force is slowing.In particular, grants (Federal Immigration and Naturalization the number of younger workers is shrinking. Service 1986-7). Between 1985 and 1995,the number of eighteen-to Perhaps the fiercest competition that in-person twenty-four-year-olds will have declined by 17.5 per servers face comes from labor-saving machinery cent.Thus,employers will have more incentive to (much of it invented,designed,fabricated,or hire and train in-person servers whom they might assembled in other nations,of course).Automated previously have avoided.But this demographic tellers,computerized cashiers,automatic car relief from the competitive pressures will be only washes,robotized vending machines,self-service temporary.The cumulative procreative energies of gasoline pumps,and all similar gadgets substitute the postwar baby-boomers(born between 1946 and for the human beings that customers once 1964)will result in a new surge of workers by 2010 encountered.Even telephone operators are fast or thereabouts (Johnson,Packer et al.,1987).And disappearing,as electronic sensors and voice simu-immigration-both legal and illegal-shows every lators become capable of carrying on conversations sign of increasing in years to come. that are reasonably intelligent,and always polite.Next,by the second decade of the twenty-first Retail sales workers-among the largest groups of century,the number of Americans aged sixty-five in-person servers-are similarly imperiled.Through and over will be rising precipitously,as the baby- personal computers linked to television screens,boomers reach retirement age and live longer. tomorrow's consumers will be able to buy furniture,Their life expectancies will lengthen not just appliances,and all sorts of electronic toys from because fewer of them will have smoked their way their living rooms-examining the merch-to their graves and more will have eaten better than andise from all angles,selecting whatever their parents,but also because they will receive all color,size,special features,and price seem most sorts of expensive drugs and therapies designed to appealing,and then transmitting the order keep them alive-barely.By 2035,twice as many instantly to warehouses from which the selections Americans will be elderly as in 1988,and the will be shipped directly to their homes.So,too,number of octogenarians is expected to triple. with financial transactions,airline and hotel As these decaying baby-boomers ingest all the reservations,rental car agreements,and similar chemicals and receive all the treatments,they will contracts,which will be executed between need a great deal of personal attention.Millions of consumers in their homes and computer banks deteriorating bodies will require nurses,nursing- somewhere else on the globe(Deutsch 1989). home operators,hospital administrators,orderlies, Advanced economies like the United States will home-care providers,hospice aides,and techni- continue to generate sizable numbers of new in-cians to operate and maintain all the expensive person service jobs,of course,the automation of machinery that will monitor and temporarily stave older ones notwithstanding.For every bank teller off final disintegration.There might even be a who loses her job to an automated teller,three new booming market for euthanasia specialists.In- jobs open for aerobics instructors.Human beings,it person servers catering to the old and ailing will be seems,have an almost insatiable desire for personal in strong demand.4 attention.But the intense competition nevertheless One small problem:The decaying baby-boomers ensures that the wages of in-person servers will will not have enough money to pay for these ser- remain relatively low.In-person servers-working vices.They will have used up their personal savings on their own,or else dispersed widely amid many years before.Their Social Security payments will, small establishments,filling all sorts of personal-of course,have been used by the government to care niches-cannot readily organize themselves into labor unions or create powerful lobbies to limit
312 THE RICH, RICHER AND THE POOR, POORER immigrants, both legal and illegal, for whom inperson services will comprise the most accessible jobs. It is estimated that between the mid1980s and the end of the century, about a quarter of all workers entering the American labor force will be immi grants (Federal Immigration and Naturalization Service 19867). Perhaps the fiercest competition that inperson servers face comes from laborsaving machinery (much of it invented, designed, fabricated, or assembled in other nations, of course). Automated tellers, computerized cashiers, automatic car washes, robotized vending machines, selfservice gasoline pumps, and all similar gadgets substitute for the human beings that customers once encountered. Even telephone operators are fast disappearing, as electronic sensors and voice simulators become capable of carrying on conversations that are reasonably intelligent, and always polite. Retail sales workers—among the largest groups of inperson servers—are similarly imperiled. Through personal computers linked to television screens, tomorrow's consumers will be able to buy furniture, appliances, and all sorts of electronic toys from their living rooms—examining the merch andise from all angles, selecting whatever color, size, special features, and price seem most appealing, and then transmitting the order instantly to warehouses from which the selections will be shipped directly to their homes. So, too, with financial transactions, airline and hotel reservations, rental car agreements, and similar contracts, which will be executed between consumers in their homes and computer banks somewhere else on the globe (Deutsch 1989). Advanced economies like the United States will continue to generate sizable numbers of new inperson service jobs, of course, the automation of older ones notwithstanding. For every bank teller who loses her job to an automated teller, three new jobs open for aerobics instructors. Human beings, it seems, have an almost insatiable desire for personal attention. But the intense competition nevertheless ensures that the wages of inperson servers will remain relatively low. Inperson servers—working on their own, or else dispersed widely amid many small establishments, filling all sorts of personal care niches—cannot readily organize themselves into labor unions or create powerful lobbies to limit the impact of such competition. In two respects, demographics will work in favor of inperson servers, buoying their collective boat slightly. First, as has been noted, the rate of growth of the American work force is slowing. In particular, the number of younger workers is shrinking. Between 1985 and 1995, the number of eighteen to twentyfouryearolds will have declined by 17.5 per cent. Thus, employers will have more incentive to hire and train inperson servers whom they might previously have avoided. But this demographic relief from the competitive pressures will be only temporary. The cumulative procreative energies of the postwar babyboomers (born between 1946 and 1964) will result in a new surge of workers by 2010 or thereabouts (Johnson, Packer et al., 1987). And immigration—both legal and illegal—shows every sign of increasing in years to come. Next, by the second decade of the twentyfirst century, the number of Americans aged sixtyfive and over will be rising precipitously, as the baby boomers reach retirement age and live longer. Their life expectancies will lengthen not just because fewer of them will have smoked their way to their graves and more will have eaten better than their parents, but also because they will receive all sorts of expensive drugs and therapies designed to keep them alive—barely. By 2035, twice as many Americans will be elderly as in 1988, and the number of octogenarians is expected to triple. As these decaying babyboomers ingest all the chemicals and receive all the treatments, they will need a great deal of personal attention. Millions of deteriorating bodies will require nurses, nursing home operators, hospital administrators, orderlies, homecare providers, hospice aides, and techni cians to operate and maintain all the expensive machinery that will monitor and temporarily stave off final disintegration. There might even be a booming market for euthanasia specialists. In person servers catering to the old and ailing will be in strong demand.4 One small problem: The decaying babyboomers will not have enough money to pay for these ser vices. They will have used up their personal savings years before. Their Social Security payments will, of course, have been used by the government to
THE RICH,RICHER AND THE POOR,POORER 313 pay for the previous generation's retirement and to done so legally. fi/lance much of the budget deficits of the 1980s.Among symbolic analysts in the middle range are Moreover,with relatively fewer young Americans in American scientists and researchers who are busily the population,the supply of housing will selling their discoveries to global enterprise webs. likely exceed the demand,with the result that the They are not limited to American customers.If the boomers'major investments-their homes-will be strategic brokers in General Motors'headquarters worth less (in inflation-adjusted dollars)when they refuse to pay a high price for a new means of making retire than they planned for.In consequence,the high-strength ceramic engines dreamed up by a huge cost of caring for the graying boomers will team of engineers affiliated with Carnegie-Mellon fall on many of the same people who will he paid to University in Pittsburgh,the strategic brokers of care for them.It will be like a great sump pump:Honda or Mercedes-Benz are likely to be more than In-person servers of the twenty-first century will willing. have an abundance of healthcare jobs,but a large So,too,with the insights of America's ubiquitous portion of their earnings will be devoted to Social management consultants,which are being sold for Security payments and income taxes,which will in large sums to eager entrepreneurs in Europe and turn be used to pay their salaries.The net result:no Latin America.Also,the insights of America's real improvement in their standard of living. energy consultants sold for even larger sums to Arab The standard of living of in-person servers also sheikhs.American design engineers are providing depends,indirectly,on the standard of living of the insights to Olivetti,Mazda,Siemens,and other Americans they serve who are engaged in world global webs;American marketers,techniques for commerce.To the extent that these Americans are learning what worldwide consumers will buy; richly rewarded by the rest of the world for what American advertisers,ploys for ensuring that they they contribute,they will have more money to actually do.American architects are issuing designs lavish upon in-person services.Here we find the and blueprints for opera houses,art galleries, only form of trickle-down'economics that has a museums,luxury hotels,and residential complexes basis in reality.A waitress in a town whose major in the world's major cities;American commercial factory has just been closed is unlikely to earn a property developers,marketing these properties to high wage or enjoy much job security;in a swank worldwide investors and purchasers. resort populated by film producers and banking Americans who specialize in the gentle art of moguls,she is apt to do reasonably well.So,too,public relations are in demand by corporations, with nations.In-person servers in Bangladesh may governments,and politicians in virtually every spend their days performing roughly the same tasks as nation.So,too,are American political consultants, in-person servers in the United States,but have a far some of whom,at this writing,are advising lower standard of living for their efforts.The the Hungarian Socialist Party,the remnant of difference comes in the value that their customers Hungary's ruling Communists,on how to salvage a add to the world economy. few parliamentary seats in the nation's first free Unlike the boats of routine producers and in- election in more than forty years.Also at this writing, person servers,however,the vessel containing a team of American agricultural consultants are America's symbolic analysts is rising.Worldwide advising the managers of a Soviet farm collective demand for their insights is growing as the Base and employing 1,700 Russians eighty miles outside speed of communicating them steadily increases. Moscow.As noted,American investment bankers and Not every symbolic analyst is rising as quickly or as lawyers specializing in financial circumnavigations dramatically as every other,of course;symbolic are selling their insights to Asians and Europeans who analysts at the low end are barely holding their own are eager to discover how to make large amounts of in the world economy.But symbolic analysts at the money by moving large amounts of money. top are in such great demand worldwide that they Developing nations,meanwhile,are hiring have difficulty keeping track of all their earnings. American civil engineers to advise on building roads Never before in history has opulence on such a scale been gained by people who have earned it,and
THE RICH, RICHER AND THE POOR, POORER 313 pay for the previous generation's retirement and to fi/lance much of the budget deficits of the 1980s. Moreover, with relatively fewer young Americans in the population, the supply of housing will likely exceed the demand, with the result that the boomers' major investments—their homes—will be worth less (in inflationadjusted dollars) when they retire than they planned for. In consequence, the huge cost of caring for the graying boomers will fall on many of the same people who will he paid to care for them. It will be like a great sump pump: Inperson servers of the twentyfirst century will have an abundance of healthcare jobs, but a large portion of their earnings will be devoted to Social Security payments and income taxes, which will in turn be used to pay their salaries. The net result: no real improvement in their standard of living. The standard of living of inperson servers also depends, indirectly, on the standard of living of the Americans they serve who are engaged in world commerce. To the extent that these Americans are richly rewarded by the rest of the world for what they contribute, they will have more money to lavish upon inperson services. Here we find the only form of `trickledown' economics that has a basis in reality. A waitress in a town whose major factory has just been closed is unlikely to earn a high wage or enjoy much job security; in a swank resort populated by film producers and banking moguls, she is apt to do reasonably well. So, too, with nations. Inperson servers in Bangladesh may spend their days performing roughly the same tasks as inperson servers in the United States, but have a far lower standard of living for their efforts. The difference comes in the value that their customers add to the world economy. Unlike the boats of routine producers and inperson servers, however, the vessel containing America's symbolic analysts is rising. Worldwide demand for their insights is growing as the Base and speed of communicating them steadily increases. Not every symbolic analyst is rising as quickly or as d ramatically as every other, of course; symbolic analysts at the low end are barely holding their own in the world economy. But symbolic analysts at the top are in such great demand worldwide that they have difficulty keeping track of all their earnings. Never before in history has opulence on such a scale been gained by people who have earned it, and done so legally. Among symbolic analysts in the middle range are American scientists and researchers who are busily selling their discoveries to global enterprise webs. They are not limited to American customers. If the strategic brokers in General Motors' headquarters refuse to pay a high price for a new means of making highstrength ceramic engines dreamed up by a team of engineers affiliated with CarnegieMellon University in Pittsburgh, the strategic brokers of Honda or MercedesBenz are likely to be more than willing. So, too, with the insights of America's ubiquitous management consultants, which are being sold for large sums to eager entrepreneurs in Europe and Latin America. Also, the insights of America's energy consultants sold for even larger sums to Arab sheikhs. American design engineers are providing insights to Olivetti, Mazda, Siemens, and other global webs; American marketers, techniques for learning what worldwide consumers will buy; American advertisers, ploys for ensuring that they actually do. American architects are issuing designs and blueprints for opera houses, art galleries, museums, luxury hotels, and residential complexes in the world's major cities; American commercial property developers, marketing these properties to worldwide investors and purchasers. Americans who specialize in the gentle art of public relations are in demand by corporations, governments, and politicians in virtually every nation. So, too, are American political consultants, some of whom, at this writing, are advising the Hungarian Socialist Party, the remnant of Hungary's ruling Communists, on how to salvage a few parliamentary seats in the nation's first free election in more than forty years. Also at this writing, a team of American agricultural consultants are advising the managers of a Soviet farm collective employing 1,700 Russians eighty miles outside Moscow. As noted, American investment bankers and lawyers specializing in financial circumnavigations are selling their insights to Asians and Europeans who are eager to discover how to make large amounts of money by moving large amounts of money. Developing nations, meanwhile, are hiring American civil engineers to advise on building roads
314 THE RICH,RICHER AND THE POOR,POORER and dams.The present thaw in the Cold War will no and related management services bound for the rest of doubt expand these opportunities.American engi-the world.In return,IBM's top executives are neers from Bechtel(a global firm notable for having generously rewarded. employed both Gaspar Weinberger and George The most important reason for this expanding Shultz for much larger sums than either earned in world market and increasing global demand for the the Reagan administration)have begun help in the symbolic and analytic insights of Americans has Soviets design and install a new generation of nuc-been the dramatic improvement in worldwide lear reactors.Nations also are hiring American communication and transportation technologies. bankers and lawyers to help them renegotiate the Designs,instructions,advice,and visual and audio terms of their loans with global banks,and symbols can be communicated more and more Washington lobbyists to help them with Congress, rapidly around the globe,with ever-greater preci- the Treasury,the World Bank,the IMF,and other sion and at ever-lower cost.Madonna's voice can be politically sensitive institutions.In fits of obvious transported to billions of listeners,with perfect desperation,several nations emerging from com- clarity,on digital compact disks.A new invention munism have even hired American economists to emanating from engineers in Battelle's laboratory in teach them about capitalism. Columbus,Ohio,can be sent almost anywhere via Almost everyone around the world is buying the modem,in a form that will allow others to examine it skills and insights of Americans who manipulate in three dimensions through enhanced computer oral and visual symbols-musicians,sound engi- graphics.When face-to-face meetings are still neers,film producers,makeup artists,directors, required-and videoconferencing will not suffice- cinematographers,actors and actresses,boxers, it is relatively easy for designers,consultants,advi- scriptwriters,songwriters,and set designers. sers,artists,and executives to board supersonic Among the wealthiest of symbolic analysts are jets and,in a matter of hours,meet directly with Steven Spielberg,Bill Cosby,Charles Schultz,Eddie their worldwide clients,customers,audiences,and Murphy,Sylvester Stallone,Madonna,and other employees. star directors and performers-who are al most as With rising demand comes rising compensation. well known on the streets of Dresden and Tokyo Whether in the form of licensing fees,fees for ser- as in the Back Bay of Boston.Less well rewarded vice,salaries,or shares in final profits,the economic but no less renowned are the unctuous anchors result is much the same.There are also non- on Turner Broadcasting's Cable News,who appear pecuniary rewards.One of the best-kept secrets daily,via satellite,in places ranging from Vietnam among symbolic analysts is that so many of them to Nigeria.Vanna White is the world's most enjoy their work.In fact,much of it does not count watched game-show hostess.Behind each of these as work at all,in the traditional sense.The work of familiar faces is a collection of American problem-routine producers and in-person servers is typically solvers,-identifiers,and-brokers who train,coach,monotonous;it causes muscles to tire or weaken advise,promote,amplify,direct,groom,represent,and involves little independence or discretion.The and otherwise add value to their talents.5 work'of symbolic analysts,by contrast,often There are also the insights of senior American involves puzzles,experiments,games,a significant executives who occupy the world headquarters of amount of chatter,and substantial discretion over global 'American'corporations and the national or what to do next.Few routine producers or in-person regional headquarters of global foreign'corpora- servers would 'work'if they did not need to earn the tions.Their insights are duly exported to the rest of money.Many symbolic analysts would 'work'even if the world through the webs of global enterprise.money were no object. IBM does not export many machines from the At midcentury,when America was a national United States,for example.Big Blue makes market dominated by core pyramid-shaped cor- machines all over the globe and services them on porations,there were constraints on the earnings the spot.Its prime American exports are symbolic of people at the highest rungs.First and most and analytic.From IBM's world headquarters in Armonk,New York,emanate strategic brokerage
314 THE RICH, RICHER AND THE POOR, POORER and dams. The present thaw in the Cold War will no doubt expand these opportunities. American engi neers from Bechtel (a global firm notable for having employed both Gaspar Weinberger and George Shultz for much larger sums than either earned in the Reagan administration) have begun help in the Soviets design and install a new generation of nuclear reactors. Nations also are hiring American bankers and lawyers to help them renegotiate the terms of their loans with global banks, and Washington lobbyists to help them with Congress, the Treasury, the World Bank, the IMF, and other politically sensitive institutions. In fits of obvious desperation, several nations emerging from com munism have even hired American economists to teach them about capitalism. Almost everyone around the world is buying the skills and insights of Americans who manipulate oral and visual symbols—musicians, sound engi neers, film producers, makeup artists, directors, cinematographers, actors and actresses, boxers, scriptwriters, songwriters, and set designers. Among the wealthiest of symbolic analysts are Steven Spielberg, Bill Cosby, Charles Schultz, Eddie Murphy, Sylvester Stallone, Madonna, and other star directors and performers—who are al most as well known on the streets of Dresden and Tokyo as in the Back Bay of Boston. Less well rewarded but no less renowned are the unctuous anchors on Turner Broadcasting's Cable News, who appear daily, via satellite, in places ranging from Vietnam to Nigeria. Vanna White is the world's most watched gameshow hostess. Behind each of these familiar faces is a collection of American problem solvers, identifiers, and brokers who train, coach, advise, promote, amplify, direct, groom, represent, and otherwise add value to their talents.5 There are also the insights of senior American executives who occupy the world headquarters of global 'American' corporations and the national or regional headquarters of global `foreign' corporations. Their insights are duly exported to the rest of the world through the webs of global enterprise. IBM does not export many machines from the United States, for example. Big Blue makes machines all over the globe and services them on the spot. Its prime American exports are symbolic and analytic. From IBM's world headquarters in Armonk, New York, emanate strategic brokerage and related management services bound for the rest of the world. In return, IBM's top executives are generously rewarded. The most important reason for this expanding world market and increasing global demand for the symbolic and analytic insights of Americans has been the dramatic improvement in worldwide communication and transportation technologies. Designs, instructions, advice, and visual and audio symbols can be communicated more and more rapidly around the globe, with evergreater preci sion and at everlower cost. Madonna's voice can be transported to billions of listeners, with perfect clarity, on digital compact disks. A new invention emanating from engineers in Battelle's laboratory in Columbus, Ohio, can be sent almost anywhere via modem, in a form that will allow others to examine it in three dimensions through enhanced computer graphics. When facetoface meetings are still required—and videoconferencing will not suffice— it is relatively easy for designers, consultants, advi sers, artists, and executives to board supersonic jets and, in a matter of hours, meet directly with their worldwide clients, customers, audiences, and employees. With rising demand comes rising compensation. Whether in the form of licensing fees, fees for ser vice, salaries, or shares in final profits, the economic result is much the same. There are also non pecuniary rewards. One of the bestkept secrets among symbolic analysts is that so many of them enjoy their work. In fact, much of it does not count as work at all, in the traditional sense. The work of routine producers and inperson servers is typically monotonous; it causes muscles to tire or weaken and involves little independence or discretion. The `work' of symbolic analysts, by contrast, often involves puzzles, experiments, games, a significant amount of chatter, and substantial discretion over what to do next. Few routine producers or inperson servers would 'work' if they did not need to earn the money. Many symbolic analysts would 'work' even if money were no object. At midcentury, when America was a national market dominated by core pyramidshaped cor porations, there were constraints on the earnings of people at the highest rungs. First and most
315 obviously,the market for their services was largely there be insufficient purchasing power in the eco- limited to the borders of the nation.In addition, nomy.After all,who would buy al]the goods whatever conceptual value they might contribute flowing out of American factories if not American was small relative to the value gleaned from large workers?This,too,was part of the tacit bargain scale-and it was dependent on large scale for struck between American managers and their whatever income it was to summon.Most of the workers. problems to be identified and solved had to do Recall the oft-repeated corporate platitude of the with enhancing the efficiency of production and era about the chief executive's responsibility to improving the flow of materials,parts,assembly,carefully weigh and balance the interests of the and distribution.Inventors searched for the rare corporation's disparate stakeholders.Under the breakthrough revealing an entirely new product to stewardship of the corporate statesman,no set of be made in high volume;management consultants,stakeholders-least of all white-collar executives- executives,and engineers thereafter tried to speed was to gain a disproportionately large share of the and synchronize its manufacture,to better achieve benefits of corporate activity;nor was any stake- scale efficiencies;advertisers and marketers sought holder-especially the average worker-to be left then to whet the public's appetite for the standard with a share that was disproportionately small. item that emerged.Since whitecollar earnings Banal though it was,this idea helped to maintain increased with larger scale,there was considerable the legitimacy of the core American corporation incentive to expand the firm;indeed,many of in the eyes of most Americans,and to ensure America's core corporations grew far larger than continued economic growth. scale economies would appear to have justified.But by the 1990s,there informal norms were By the 1990s,in contrast,the earnings of sym- evaporating,just as(and largely because)the core bolic analysts were limited neither by the size of the American corporation was vanishing.The links national market nor by the volume of production of between top executives and the American produc- the firms with which they were affiliated.The mar-tion worker were fading:An ever-increasing number ketplace was worldwide,and conceptual value was of subordinates and contractees were foreign,and high relative to value added from scale efficiencies.a steadily growing number of American routine There had been another constraint on high producers were working for foreign-owned firms. earnings,which also gave way by the 1990s.At An entire cohort of middle-level managers,who had midcentury,the compensation awarded to top once been deemed white collar,had disappeared; executives and advisers of the largest of America's and,increasingly,American executives were export- core corporations could not be grossly out of pro-ing their insights to global enterprise webs. portion to that of low-level production workers.It As the American corporation itself became a glo- would be unseemly for executives who engaged in bal web almost indistinguishable from any other,its highly visible rounds of bargaining with labor stakeholders were turning into a large and diffuse unions,and who routinely responded to govern- group,spread over the world.Such global stake- ment requests to moderate prices,to take home holders were less visible,and far less noisy,than wages and benefits wildly in excess of what other national stakeholders.And as the American cor- Americans earned.Unless white-collar executives poration soid its goods and services all over the restrained themselves,moreover,blue-collar pro-world,the purchasing power of American workers duction workers could not be expected to restrain became far less relevant to its economic survival. their own demands for higher wages.Unless both Thus have the inhibitions been removed.The groups exercised restraint,the government could salaries and benefits of America's top executives, not be expected to forbear from imposing direct and many of their advisers and consultants,have controls and regulations. soared to what years before would have been At the same time,the wages of production unimaginable heights,event as those of other workers could not be allowed to sink too low;lest Americans have declined
315 obviously, the market for their services was largely limited to the borders of the nation. In addition, whatever conceptual value they might contribute was small relative to the value gleaned from large scale—and it was dependent on large scale for whatever income it was to summon. Most of the problems to be identified and solved had to do with enhancing the efficiency of production and improving the flow of materials, parts, assembly, and distribution. Inventors searched for the rare breakthrough revealing an entirely new product to be made in high volume; management consultants, executives, and engineers thereafter tried to speed and synchronize its manufacture, to better achieve scale efficiencies; advertisers and marketers sought then to whet the public's appetite for the standard item that emerged. Since whitecollar earnings increased with larger scale, there was considerable incentive to expand the firm; indeed, many of America's core corporations grew far larger than scale economies would appear to have justified. By the 1990s, in contrast, the earnings of sym bolic analysts were limited neither by the size of the national market nor by the volume of production of the firms with which they were affiliated. The mar ketplace was worldwide, and conceptual value was high relative to value added from scale efficiencies. There had been another constraint on high earnings, which also gave way by the 1990s. At midcentury, the compensation awarded to top executives and advisers of the largest of America's core corporations could not be grossly out of pro portion to that of lowlevel production workers. It would be unseemly for executives who engaged in highly visible rounds of bargaining with labor unions, and who routinely responded to government requests to moderate prices, to take home wages and benefits wildly in excess of what other Americans earned. Unless whitecollar executives restrained themselves, moreover, bluecollar pro duction workers could not be expected to restrain their own demands for higher wages. Unless both groups exercised restraint, the government could not be expected to forbear from imposing direct controls and regulations. At the same time, the wages of production workers could not be allowed to sink too low; lest there be insufficient purchasing power in the eco nomy. After all, who would buy al] the goods flowing out of American factories if not American workers? This, too, was part of the tacit bargain struck between American managers and their workers. Recall the oftrepeated corporate platitude of the era about the chief executive's responsibility to carefully weigh and balance the interests of the corporation's disparate stakeholders. Under the stewardship of the corporate statesman, no set of stakeholders—least of all whitecollar executives— was to gain a disproportionately large share of the benefits of corporate activity; nor was any stakeholder—especially the average worker—to be left with a share that was disproportionately small. Banal though it was, this idea helped to maintain the legitimacy of the core American corporation in the eyes of most Americans, and to ensure continued economic growth. But by the 1990s, there informal norms were evaporating, just as (and largely because) the core American corporation was vanishing. The links between top executives and the American production worker were fading: An everincreasing number of subordinates and contractees were foreign, and a steadily growing number of American routine producers were working for foreignowned firms. An entire cohort of middlelevel managers, who had once been deemed `white collar,' had disappeared; and, increasingly, American executives were exporting their insights to global enterprise webs. As the American corporation itself became a glo bal web almost indistinguishable from any other, its stakeholders were turning into a large and diffuse group, spread over the world. Such global stakeholders were less visible, and far less noisy, than national stakeholders. And as the American cor poration soid its goods and services all over the world, the purchasing power of American workers became far less relevant to its economic survival. Thus have the inhibitions been removed. The salaries and benefits of America's top executives, and many of their advisers and consultants, have soared to what years before would have been unimaginable heights, event as those of other Americans have declined
316 RICHER AND THE POOR,POORER NOTES 1.The reader should note,of course,that lower wages in other areas of the world are of no particular attraction to global capital unless workers there are sufficiently productive to make the labor cost of producing each unit lower there than in higher-wage regions. Productivity in many low-wage areas of the world has improved due to the ease with which state-of-the-art factories and equipment can be installed there. 2.US Department of Commerce,Bureau of Labor Statistics,Wages of Unionized and Non-Unionized Workers',various issues. 3.The growing portion of the American labor force engaged in in-person services,relative to routine production,thus helps explain why the number of Americans lacking health insurance increased by at least 6 million during the 1980s. 4.The Census Bureau estimates that by the year 2000,at least 12 million Americans will work in health services-well over 6 per cent of the total work force. 5.In 1989,the entertainment business summoned to the United States $5.5 billion in foreign earnings-making it among the nation's largest export industries,just behind aerospace.US Department of Commerce,International Trade Commission,Composition of US Exports',various issues
316 RICHER AND THE POOR, POORER NOTES 1. The reader should note, of course, that lower wages in other areas of the world are of no particular attraction to global capital unless workers there are sufficiently productive to make the labor cost of producing each unit lower there than in higherwage regions. Productivity in many lowwage areas of the world has improved due to the ease with which stateoftheart factories and equipment can be installed there. 2. US Department of Commerce, Bureau of Labor Statistics, `Wages of Unionized and NonUnionized Workers', various issues. 3. The growing portion of the American labor force engaged in inperson services, relative to routine production, thus helps explain why the number of Americans lacking health insurance increased by at least 6 million during the 1980s. 4. The Census Bureau estimates that by the year 2000, at least 12 million Americans will work in health services—well over 6 per cent of the total work force. 5. In 1989, the entertainment business summoned to the United States $5.5 billion in foreign earnings—making it among the nation's largest export industries, just behind aerospace. US Department of Commerce, International Trade Commission, `Composition of US Exports', various issues
