Why the USA train left the tracks:
[The United States economy was gutted with double digit unemployment and double digit inflation in the 1970s as a result of this after shock.]
Workers paid the penalty as they always do when corporate and union management in all its arrogance refuses to show leadership.
One View!
JAMES RAYMOND FISHER, JR., Ph.D.
© January 17, 2017
REFERENCE:
Previously, I had suggested why not “economic nation building” with similar resources to “nation building.” This is one of many replies.
A READER WRITES:
Yes, economic nation building worked in America beginning in 1945 with an enormous investment in hard and soft infrastructure, an Interstate Highway System, rural electrification, financing for track homes, the GI Bill, and scores of other programs which created our middle class. In the 70s paying our way stopped and growing inequality has skyrocketed.
DR. FISHER REPLIES:
Exactly. It happened just as you describe. It was also the American "boom" period from 1945-1970, a time of spendthrift optimism with American parents having babies at an alarming rate ushering in the “baby boomer generation.”
It was also a time when young men born during “The Great Depression” were coming of age, but also draft age illegible for the US Military with the possibility of temporary deferment by first going to college.
The years bridged the period when a United States’ “police action” turned into the “Korean War” (1950 – 1953) only to end a stalemate with American military still in South Korea more than six decades later. This was also the time of the most unpopular “Vietnam War” (1955 – 1975) that ended in an ignominious defeat.
Having personally straddled that quarter century, first as a university student (1951 – 1956), then as an enlisted man in the US Navy (1957 – 1963) with two years of active duty on a US Cruiser in the Mediterranean, I can attest to the seemingly ambivalence and uncertainty of the times (i.e., 1945 – 1970) from the perspective of a young man.
Those who took hold of the contradiction and first acquired professional credentials then satisfied their military obligation had access to the “GI Bill.” By taking this serendipitous route to the future they were likely to discover, to their surprise, that post-WWII was their oyster. For those who didn’t, the road was still inviting as jobs were plentiful. Why was this so?
The world was exploding in population and opportunity, and for Americans, especially those with professional training, there was more opportunity than people to fill the openings. America clearly was not ready for the world stage; nor were its people. A lot of mistakes were made which are now coming home to roost. I attempt to personify this incongruity in the person of “DEVLIN” (to be released later in 2017), a young naive American executive who encounters the brave new world only to find it is not according to the world of his school books.
EXCERPT FROM “DEVLIN, A NOVEL”
Devlin dreamed of becoming the next James Watson chemical model building his way to fame and fortune, as Watson had done with the discovery of the double helix of DNA. Besides, he saw himself as a washout as a bench chemist, able to manipulate complex chemical variables on paper, but not able to create the instrumentation for the necessary chemical experiments. He believed he would be a great chemist beyond the lab. It was not to happen.
H. B. Myers, executive vice president, Polychem International Operations, found a niche as the company’s Everyman, which meant he was never able to say “no” to any request. His curse was amplified in his tentative decision-making – he never had enough data! On the other hand, he was a born mediator projecting a charming manner and a cooperative spirit that put others at ease.
He was wise but not political. This enabled him to see all sides of an argument but seldom able to resolve the issue at hand to anyone’s satisfaction. He could calm warring factions, but was ill equipped when it came to the critical decision, and he knew it. He needed someone to front for him, take the heat and compensate for his analytical paranoia.
HB was a talented bench chemist. Devlin was an equivocal dreamer. HB was a true blue company man who valued himself only in terms of how his superiors and peers valued him. He was the composite of everything they thought or said about him. It never occurred to him to question the company’s will or the prudence of its actions, much less the ethics of its pursuits. Devlin questioned everything and the motives of everyone.
As fate often plays tricks on us, HB found his brains came in handy as a company strategist, but he had no stomach for playing the bad ass games that the corporate situation demanded. Devlin had a flair for reading people, taking risks and playing the heavy with no second thoughts. He wouldn’t hesitate to get in the face of anyone, senior management included, when he felt it necessary.
No surprise, he was reluctantly promoted into management in the Industrial Division on the strength of his sales, as he was both largely disliked and feared by those with whom he dealt, but not by HB. Devlin he saw as possibly his salvation. He plucked him out of field management and promoted him to vice president, leap frogging him over four intermediate executive positions, having him report directly to him.
This was an unprecedented company move, but an indicator of HB’s clout and authority to satisfy his perceived need. Devlin was the iron fist to his velvet glove, and despite what others thought of the match it enjoyed unprecedented success across Europe and South America with South Africa the latest challenge.
Devlin was loyal to himself, his family and his Irish Catholicism in that order. He knew he had strong opinions, which were double-edged. He believed it gave him perspective to define situations clearly. While he could be abrasive when he thought it necessary, it was also true that when it came to customers and subordinates, he was generally admired. HB hadn’t missed that either.
He was however somewhat juvenile when it came to his outlandish cultural assessments: West coast people were hedonists and dreamers; East coast people behaved as if the United States never grew beyond the thirteen colonies; the South was still fighting the American Civil War finding new ways to keep the Negro in his place; only people in the Midwest were real. There nobody was better than anyone else. He was a card carrying Midwesterner, as was HB.
Devlin had little regard for praise, but thrived in chaos. It was where he found his calm. In chaos, he could quit chasing shadows. His drive was a puzzle to others perhaps because it was so simple. He wanted to avoid waste at any cost which meant effectively harnessing his natural talents. Failing that, he felt life was meaningless.
He hated any kind of waste and detested anyone who flaunted his or her gifts. He was not into revenge when deceived, but never forgot or forgave a transgression. His punishment was narcissistic: he would have nothing to do with that person again.
Devlin could never be confused with a hardy fellow well met. He had a reputation for shooting from the lip, a brooder but dedicated problem solver. His actions weren’t always predictable. He believed it easier to ask forgiveness than permission. Nor did logic limit his problem solving as he had confidence in his intuition. He liked to say he was a thinking feeler rather than a cognitive thinker. This alarmed others, and confused HB who couldn’t argue with his results. Many preferred to see him “as lucky”; HB considered him simply necessary.
Devlin was happiest when engaged in problem solving, and thought nothing of the hours involved. In one sense, he was level headed, and in another, not. This meant he rarely changed his mind, while knowing ideas could be traps of which he was the author.
During World War II, the American military needed specialty water treatment chemicals for railroad locomotives, military tanks, ships and airplanes across the globe. Polychem had the technical “know how” and products to satisfy these requirements. The Department of Defense (DOD) provided fledgling Polychem with access to these far-flung markets. Once WWII was over, these outposts became manufacturing and distribution centers in such places as Venezuela, Canada, Mexico, Great Britain, France, Germany, Italy, Australia and South Africa.
A quarter century after the war (1968), Polychem International, Inc. was on the brink of $100 million in sales but suffering a critical shortage of high talent while handcuffed with the policy of promoting only from within. HB and Devlin rose from otherwise modest careers as trained bench chemists into first the management and then executive ranks of Polychem to fill that void.
WHEN EVERYTHING CHANGED
Taking the reins from President Truman in 1952, President Eisenhower invested in the national highway system, while AT&T was a boom to rural areas, delivering electrical power no matter how remote the location. Iowans remember AT&T fondly during that period.
And yes, the GI Bill was another boom to many, some using it judiciously, others not. It gave me the opportunity to earn my doctorate after “retiring” (the first time) after leaving South Africa with a wife and four young children to support.
For the first time in American history, the working middle class soared to new heights as the "Big Three" automakers were getting rich providing the world with vehicles as WWII had decimated the infrastructure of most advanced societies.
[I saw this up close and personal first as a US Navy hospital corpsman traveling through Europe after WWII, and as a chemical company executive for Nalco Chemical Company visiting facilities in France, Great Britain, Germany, Italy and the Netherlands. Europe was in the process of rebuilding – brick by brick – out of the rubble.]
Small companies such as Nalco Chemical Company became billion dollar establishments, and people in otherwise stalled careers rose to the executive ranks on that momentum. It was the nature of the times.
[To give you a sense of this dramatic change in the American Midwest rust belt, in the late 1940s, I would visit my uncle in Detroit every summer. He was the Chair of the Department of Commerce & Economics at the University of Detroit, a Jesuit university, and he lived in an upscale neighborhood. He had an extensive consulting business with an office in the Fisher Building across from GM’s headquarters in downtown Detroit. I, however, played organized baseball with factory workers’ kids during those summers, families that lived in more plush neighborhoods than my uncle’s.
The kids I played baseball with planned on working in the automotive industry after high school; none planned on going to college. Dearborn was a few miles away and I saw that side of Detroit as well since my cousin had friends who lived in that area. Homes I visited had large indoor swimming pools where we played water polo, and swam laps. The surprising thing was the mindset of these kids was the same as the factory workers, that is, secure in the belief that the future belonged to them. Their fathers were automotive executives or with companies that had commercial alliances with the automotive industry. I was told that many of the homes were also those of UAW executives. The homes I visited were vainly ostentatious with the necessary accoutrements to suggest wealth.]
A typical GM, Ford or Chrysler family had a mother and father, son and/or daughter, and often son-in-law and daughter-in-law working at one of these automotive plants with only a high school education or less during this period (1945 – 1970). Nepotism was not rare but universal. Assembly line workers in these families, collectively, were more affluent than my uncle or many other professionals including some in medicine and law. Yet, there the resemblance ended.
These homes didn’t have libraries, didn't have nice paintings on the wall, didn’t have fine furniture or thematically appointed décor as did my uncle’s home and that of his neighbors. They had lots of vehicles and seemingly unlimited disposable income with the homes displaying room-to-room garish trappings that spoke to financial security but little discernment.
This gravy train lasted until the rest of the world caught up with the United States, and that started in the 1970s and crested in the late 1980s and early 1990s.
Corporate management has taken heat for this slippage, but for the working middle class it represented the great betrayal of the UAW and other such unions. From the late 1940s, these unions continued to sue for worker wage and benefit concessions, but at the expense of giving management complete control of the actual work.
As a consequence, workers came to increasingly work for wages and benefits no longer finding satisfaction in the work, itself. They behaved like renters no longer as owners. To no one’s surprise, workers came to be suspended on automatic pilot as if part of a never ending assembly line.
Union management leadership came to be just as corrupt and ineffective as corporate management, which it mirrored. While corporate management denied the changes that were happening across Europe and Asia, maintaining the same infallible authority and business-as-usual practices, the game of industrial commerce was being taken from the United States bit-by-bit as Europe and Asia caught up with and then surpassed its dominance, To make matters worse, Americans rushed to buy these foreign automobiles, televisions, electronics, machine tools, and glass products.
While union management continued to deny the changes, continued to sue for more and more wage and entitlement concessions, the boom that was thought to last forever, saw the fading of a stable US economy and a vibrant working middle class, as the manufacturing industry was quietly moving abroad, leaving behind empty factories and tens of thousands of unemployed workers.
[The United States economy was gutted with double digit unemployment and double digit inflation in the 1970s as a result of this after shock.]
Even when it was obvious that consumers’ tastes had changed and that the American market was imploding, corporate management of the “Big Three” automakers continued to manufacturer gas guzzling vehicles when Europe and Asia were meeting the new demand with smaller more fuel efficient vehicles. Other major American manufacturing fell into the same dysfunctional trap.
When trouble was conceded, what did these operations do? As previously mentioned, they sent the jobs overseas where labor costs were more reasonable and built new state-of-the-arts manufacturing facilities abroad because they could be built more cheaply, leaving behind the hollow decaying out-of-date factories in the United States.
The result was the collapse of the Midwest rust belt into a sea of empty facilities with the shrinking of the working middle class to a shadow of its original grandeur.
Workers paid the penalty as they always do when corporate and union management in all its arrogance refuses to show leadership.
So, you see, I have no trouble with your analysis. It is time we quit patting ourselves on the back and realize we all own this problem as no one’s hands are clean and go about taking charge again, and this time, less grandly and overtly, but more sensibly and realistically.
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