I’ve been thinking about Walter Russell Mead’s Death of the Blue model meme and some of the ramifications. Also thinking back on the history of industrialization and laissez-faire economics in English and American experience. Then Meagan Mcardle had a blog piece on the Daily Beast the other day that had a tangential thoughts of interest.
To Paraphrase rather egregiously: The United States has the largest economy in the world as well as the most dynamic and creative (though there are many who are trying to change that.) It trades a more secure safety net (which might not work in a large and heterogeneous country anyway) for more vigor and growth, even though that creates a greater disparity between rich and poor. Many smaller nations could follow the US lead but if they did they would suffer because they would be competing against a vastly larger pool of potential entrepreneurs etc. This makes it much more sensible for them to curl up and ride the innovation wave the US creates while providing a more comfy and fair life style for their citizens. If the US turned and did the Comfy-Fair thing, the world would lose its innovation mainspring and everyone would suffer because to a large degree our society/economy requires innovation and change to provide the economic voltage that drives the circuits of world trade. There is some research into this and the modeling seems to support the intuition in the main. But the researchers commented that Unions and Regulations offer a buffer against the potential of corporations using up the employees and resources. And it is that thought that intersects my intuition.
Essentially the problem is, and this can be shown in history, that large operations, even if owned and run by persons of great moral character become more and more ruthless as they grow. And as the operation turns from owner/operator to corporation the inherent inhuman ruthlessness gets worse and worse. The more successful a company is the more ruthless its ‘minions’ are going to tend to be. Look at what happened in the Robber Baron era, and then again in the great multinational eras (
60’s and 90’s 50’s to today in my mind.) They were (are) Big Beasts, Gray not Red, in Tooth and Claw. It was nineteenth century progressive regulation then early twentieth century unions that tamed them in regards to their employees. Then it was the regulatory state in the 60’s-80’s taking charge in the 80’s that created Monster Corporations that ‘cared’ about the externals like the environment, customer safety, etc.
But from a libertarians viewpoint, it has always been the state’s fault that these beasts came into being at all. It can be argued that the great corporations were purposely crafted to employ and control great swaths of the population (I don’t think this was actually planned ahead of time, I think it was/is an emergent pattern driven by economic and social realities of the time but I am sure some saw it ahead of time and some will say it was all a vast conspiracy on someone’s part.)
Small firms, networks of firms, partnerships, franchises, etc, are all different ways of spreading technology effectively if perhaps not as efficiently as monopolistic or oligopolistic ultra large firms that came into existence to industrialize the US and compete on the world stage. In the UK this smaller/distributed model remained more common and competed strongly for a while until the incrementally crippling damage of WWI, the interwar boom-bust, WWII and the following socialist experiment so badly damaged it that it was off the world stage for thirty years, unitl Thatcher.
It is these smaller more entrepreneurial firms that are damaged by regulation and unionization the most. Not on purpose but because both cut the small companies ability to turn on a dime and give big companies, which can support big compliance departments, a very large advantage in the ‘rent seeking’ game of playing the regulators.
So the very instruments that you need to tame the Big Beasts of large-scale corporatism are the ones that plow under the smaller firms that offer 1) growth in the economy and 2) alternatives to the big beasts.
A balance is what you seek…
Our problem is that the post WWII boom hid the damage of the Big Beasts and their Tamers for several decades, and during that time we seem to have gotten the impression that there is some natural stable state that is ‘right’ and this state has something to do with large stable corporations and their control of the markets.
It’s clear to me that the bureaucratic-regulatory-union-corporation model does not have legs in a world of real competition from Big Beasts who are not constrained to the same degree.
Sometimes I think the only real hope is that the Industrial Civilization of ‘Big Beasts’ will be supplanted by something one might call the Maker Civilization, where zero cost communications and distributed at need manufacturing cuts the legs out from under all the Big Beasts.