THE ‘BLUE MODEL’ EXPLAINED

Came across a very good piece on why the current U.S. government model is not only a throwback to times which no longer exist, but is unsustainable in its current form.

A few excerpts follow.

From Walter Russell Mead’s American Challenges: The Blue Model Breaks Down:

In the old system, both blue collar and white collar workers hold stable jobs, a professional career civil service administers a growing state, with living standards for all social classes steadily rising while the gaps between the classes remain fairly stable, and with an increasing ’social dividend’ being paid out in various forms: longer vacations, more and cheaper state-supported education, earlier retirement, shorter work weeks and so on. Graduate from high school and you were pretty much guaranteed lifetime employment in a job that gave you a comfortable lower middle class lifestyle; graduate from college and you would be better paid and equally secure.

Life would just go on getting better. From generation to generation we would live a life of incremental improvements — the details of life would keep getting better but the broad outlines of our society would stay the same. The advanced industrial democracies of had in fact reached the ‘end of history’: this is what ‘developed’ human society looked like and there would be no more radical changes because the picture had fully developed.

Call this the blue model, and the chief division in American politics today is between those who think the blue model is the only possible or at least the best feasible way to organize a modern society and want to shore it up and defend it, and those who think the blue model, whatever benefits it had in the past, is no longer sustainable.

Not only was the government model blue, but so were the successful big private companies.

As the old system dissolved, companies had to become more flexible. As industry became more competitive, private sector managers had to shed bureaucratic habits of thought. Lifetime employment had to go. Productive workers had to be lured with high pay. The costs of unionization grew; in the old days, government regulators simply allowed unionized firms to charge higher prices to compensate them for their higher costs. The collapse of the regulated economy (plus the rise of foreign competition from developing countries) made unions unsustainably expensive in many industries.

Some companies (like the automakers) seemed large enough and rich enough that they clung to the blue model long after the sell-by date. The result was a long, slow and grueling decline whose late stages are still unfolding today. They lost market share to more nimble rivals. Their workforce became old and expensive, and they were supporting ever larger numbers of retirees on the basis of smaller market shares and shrinking profitability.

These days, private sector blue companies can only survive with vast and continuing government support. Government protection from foreign competition (economically wasteful and illegal under our trade agreements) is one option; direct subsidies and cash transfers (bailouts and tax breaks) is another. Neither works very well or very long. Both are expensive.

The entire piece is very much recommended reading for anyone who has had the nagging suspicion that something is not right (which includes all of those people surveyed who respond that the “country is not no the right track”) but couldn’t quite put their finger on the mechanics of the answer.

It continues with a look at the ‘blue model’ governments–both state and federal–as well as the coming ‘blue model’ crack-ups. It ends on a downbeat, if accurate note.

As I continue blogging about the American future, one of the subjects that will come up again and again will be the blue crack up–we are all going to be singing the blues as the process moves on.

The whole piece is a very good read, especially for libertarians and conservatives looking for a bit of history on how the U.S. got itself in its current predicament and why the political elites seem paralyzed about offering any meaningful solutions.

One solution they might start contemplating: privatization of various government agencies to allow them to sink or swim.

If they are truly needed, people will pay for their services.

by Mondo Frazier
image: http://www.geekologie.com
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