In the last couple of years I’ve been writing about the death of the blue social model. By that I mean that the characteristic form of 20th century industrial democracy has come unglued, and that the advanced industrial democracies around the world must adjust to basic changes in the way the world works.
For those who missed those earlier essays or want to take another look at them, the American Interest put out a summary; you can read it here. Briefly, the idea is that after World War II America was organized around a group of heavily regulated monopoly and semi-monopoly companies. AT&T was the only telephone company; there were three big networks, three big car companies and so on. There was very little foreign competition, and these companies were able to offer stable, lifetime employment to most of their workers. The workforce was heavily unionized, and the earnings of the big companies were divided between shareholders, managers, workers and government in a predictable way. An intellectual and administrative class of planners, social scientists and managers ran the big institutions and administered the government.
Several forces came together to break up this system. Foreign competition, first from rebuilding Germany and Japan after World War II and then from low wage newly industrializing countries around the world, eroded the market position of companies like the Big Three auto manufacturers. The rise of offshore banking eroded the tight financial controls of the postwar era. Growing consumer impatience with the high prices and poor quality offered by monopoly companies like the telephone monopoly led to political pressure to deregulate and introduce more competition. Technological change, especially in information processing and communications, led to disruptive changes that shifted the advantage to nimble and lean companies and left the bureaucratic, slow moving giants of the Blue Age behind. American society became increasingly individualistic, with both the left and the right rebelling against the authority of experts and bureaucrats.