The painful joys of capitalism

Bill Murchison
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Posted: Jan 24, 2006 12:05 AM

The stock market said, salivatingly, it enjoyed Ford Motor Co.'s pain. No sooner had Ford announced the impending demise of 20,000 to 25,000 jobs than the market smiled, nodded and bid up Ford stock by 5 percent: the underlying assumption being that, for Ford, as for the whole U.S. automotive industry, the old days are over and new ones are commencing.

 There's a lot of that going around right now: cars, airlines, textiles, newspapers. It hurts. And it saddens. As an experience, it seems embedded in our national life. The sooner we get used to it, perhaps, the better for all.

 Popular wisdom tells us life has no guarantees. Yet, starting in the '40s, the workplace seemed to offer at least some strong probabilities. One could go to work for a large company, stay on and on, retire with ample -- or at least adequate -- benefits, and coast from there to the, ah, place of final repose.

 The tribulations of the U.S. auto industry -- Ford's plight is merely representative -- call to mind what an atypical period we have been living in. The dream of lifetime employment -- anywhere -- was a fantasy of the post-Depression, post-World War II era. Labor and management in the '40s and '50s thought people would keep on buying cars (or TVs, or refrigerators, or cameras) and management would pass on the proceeds to stockholders and workers.

 All that meant was that technology and native restlessness had yet to create the kind of competitive situation we live in today: new ideas and methods vying for public favor -- and wresting that favor away from its previous guardians.

 Ford, less and less able to make vehicles customers wanted, on the terms for which it wanted to sell them, saw these customers turn to overseas manufacturers. Chrysler and General Motors went down the same bleak street. The old habits held no longer, the most perilous of those being the habit of making large pension and benefit concessions to the unions and then hoping to recover the cost through the customers' habit of buying Fords, etc. What happens when that doesn't work -- when the customers, that is, buy fewer Fords? What happened this week is what happens: A company reorders its priorities at severe cost to workers who believed for some reason (possibly because the company encouraged such a belief) that, yes, some guarantees life does have.

 The pain and the awfulness are real and widespread. And not confined to the automotive industry. The newspaper business, once my own industry, is suffering radical customer withdrawals. The Internet scratches customer itches that, for some, no printed source can hope to address. In response, newspapers are desperately reinventing themselves by downsizing payrolls, redesigning the product or -- in some sad cases -- dumbing down.

 Bad or good? Both, really. Bad for those who see their expectations blunted and their jobs lost. Good for consumers who end up getting -- as is conventionally the case in these revolutionary contexts -- more for less. And good for the quick and ambitious who, seeing the train pulling out of the station, jump aboard.

 For all the pain, we rarely find ourselves living in economic ruins. New skyscrapers are perpetually on their way up. We call it, following the Austrian-born economist Joseph Schumpeter, "creative destruction." An old model dies; a new one rises, Phoenix-like, from the rubble and debris.

  Turnover in a dynamic capitalist society is perpetual, like it or not. Perpetual and painful -- one of those paradoxes that life insists on flaunting. Companies that come back have to die a little in order to live again. The dreams, the hopes, of ordinary people get slammed, but in time, new ways of doing things -- and new things that replace old things -- create new jobs and new opportunities.

 A second consolation: If capitalism can hurt -- which it can, unmistakably -- think how slight is that pain compared to the mediocrity, the stupor, the gritty grayness produced by every experiment ever conducted under the gospel of regulated "success."