Walter Russell Mead’s blog serial Beyond Blue, currently at #5, Jobs, Jobs, Jobs (from which the pictures in this piece come) is a fascinating monograph putting the changes our society/economy is going through into perspective. Dr. Mead’s explanation goes back to the 19th century:

In the 19th century, government promoted the rise of the family farm, selling cheaply and ultimately giving away millions of acres of farmland, and promoting the rise of railroads (which could carry the produce of western farms to world markets). In the 20th century the government promoted the rise of large, stable corporate employers that offered armies of white and blue collar employees lifetime employment and a bevy of benefits.

And later this:

Currently, the American legal and regulatory system is set up to bind as many people to employers as possible. The government wants you to be a wage slave and sets up a regulatory framework that keeps as many of us as possible yoked to bosses and management. The IRS doesn’t like the self-employed, fearing they many conceal income. Banks and credit card companies view such people with suspicion, and it is notoriously difficult for start ups and part time enterprises to have access to formal finance. Many services are hard for the self-employed to get on terms like those made available to employees of large corporations: from health insurance to retirement planning, many things are harder and more expensive for the self-employed. The payroll tax system is brutal: the self-employed pay both the employer and employee halves of Social Security and Medicare taxes, almost 20 percent of income and likely to go higher. Many cities will tack on unincorporated business taxes, mass transit taxes, and other interesting feudal exactions and dues.

The gov’t used(s) the current ‘Blue Model’ in some senses as a social damping mechanism because it provides for a more hierarchical top down command system (of interest in the Cold War climate of the 50’s to80’s) while also providing a relatively efficient economy and outlets for frustration from the masses. This model has worked since the collapse of the 19th century model….the great depression…but itself is now becoming unstable/unaffordable in its turn because it requires too much command and control.

Too much how? Well now that a high percentage (all high value) workers have been amplified by basic literacy, information systems and other technology, they are capable of much more than the drudge work they used to perform at the command of a ‘supervisor’ and demand / need more autonomy. Many organizations accommodate and move on and up. Others keep the older structure or some bastardized version and sink into the muck. Companies that almost have to operate in the old mode because they deliver one sort of highly regulated good or another, get radically more expensive compared to near peers operating outside the penumbra of regulation and lose relevance and competitiveness at a steadily increasing speed. Look at the post office, once the epitome of efficiency.