The fallacy of post-industrial prosperity
By Harold Meyerson, Published: September 4
Of all the lies that the American people have been told the past four decades, the biggest
one may be this: We’ll all come out ahead in the shift from an industrial to a
post-industrial society. Yes, we were counseled, there will be major dislocations, as there
were during the transition from an agrarian to an industrial economy, but the America
that will emerge from this transformation, like the America that emerged 100 years ago,
will be one whose citizens are ultimately more prosperous and secure than their
industrial-era forebears.
What a crock.
On Labor Day 2011, the America that’s replaced the vibrant industrial giant of the
mid-20th century is a basket case. We’ve lost the jobs that created the broadly shared
prosperity that made us the envy of the world. In their place, when we’ve created jobs at
all, they’ve generated neither prosperity nor security.
The most prescient writer on post-industrial America offered a sobering perspective. In
his 1972 book “The Coming of Post-Industrial Society,” sociologist Daniel Bell predicted a
future of service jobs, rising consumption, compensatory entitlements and wars over
taxes.
Even as Bell’s prophecies began to be borne out, though, the champions of the new
economic order — from General Electric’s Jack Welch to every New Democrat and any old
Republican — assured us that America would flourish as a post-industrial innovator in the
new global economy, crafting the cutting-edge technologies whose actual assembly we
could relegate to less-skilled workforces on distant shores. Thirty years ago, when
defenders of American manufacturing first suggested that the nation commit to a
“domestic content” standard in the goods we bought, they were howled down by nearly
every economist and editorial writer in the land. (A friend counted 98 newspapers that
editorialized against it, and none that wrote in favor.)
Today, the economy that arose on manufacturing’s ashes has turned to ashes itself. The
Wall Street-Wal-Mart economy of the past several decades off-shored millions of factory
jobs, which it offset by creating low-paying jobs in the service and retail sectors;
extending credit to consumers so they could keep consuming despite their stagnating
incomes; and fueling, until it collapsed, a boom in construction.
We are only now beginning to understand the toll this economy has taken on America’s
workers — and on our working men in particular. A stunning study from Michael
Greenstone and Adam Looney of the Hamilton Project, published in the Milken Institute
Review, reveals that the median earnings of men ages 25 to 64 declined 28 percent
between 1969 and 2009. Within this age group, the median earnings of men who
completed high school but didn’t go on to college fell 47 percent, while the median
earnings of male college graduates also declined, if only 12 percent.
Part of this decline stems from the shrinking share of working-age men with full-time
jobs, which fell from 83 to 66 percent between 1960 and 2009. The other part stems from
the fall in inflation-adjusted median yearly earnings of working-age men who have
full-time jobs, which have shrunk by about $5,000 since the mid-’70s. Combined, write
Greenstone and Looney, these two declines explain why the earnings of American men
“haven’t been this low since Ike was president and Marshal Dillon was keeping the peace
in Dodge City.”
Anyone seeking to understand the pessimism, frustration and rage of working-class men
needs to begin here, with Greenstone and Looney’s two-by-four-to-the-head tale of
decline. White working-class men in particular have become a disproportionately
receptive audience for those who scapegoat immigrants and minorities for the damage
that has actually been caused by economic and political elites blissfully blind to the
devastation ushered in by their vaunted new economy.
Since that new economy blew up three years ago, many of those elites have been
disabused of the financial fantasies that ordinary Americans long ago ceased to entertain.
The fact that Greenstone and Looney’s study emerged from the Hamilton Project — a
pillar of new-economy thinking, founded by Clinton Treasury secretary Robert Rubin — is
evidence of a paradigm shift in economic vision. From centrist Democratic groups such as
the Progressive Policy Institute and Third Way, to economists such as Hoover Institution
Nobel laureate Michael Spence, to chief executives and former chief executives such as
Dow Chemical’s Andrew Liveris and Intel’s Andy Grove, the new watchword for America’s
future — however challenging it may be to get there — is manufacturing.
Post-industrial America turned out to be a bust. The time for neo-industrial America has
arrived.
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