What technology did to economic life throughout the past century can be boiled down to more choice, less security. There is no reason to think that this trend is about to change. In a world in which individuals have an ever-expanding array of options, here’s the challenge for individuals and institutions alike: to maximize their ability to seize opportunities and to minimize their exposure to the inevitable disruptions.
At the turn of the previous century, the United States in many ways remained closer to the still-forming nation of 1800 than to anything we would recognize today. In 1900, more than 40 percent of American workers were involved in farming, and manufacturing employed 30 percent. The entirety of the services sector-—from the professions, finance, and retail work to education, government, and “white-collar” activity of every kind—employed less than 30 percent of the labor force. Those figures are roughly comparable to contemporary China’s—and radically different from today’s American workforce, with more than 80 percent in the services, less than 2 percent in agriculture, and manufacturing making up the rest.
Behind this change in numbers are revolutions in technology, especially the industrialization of agriculture and the mechanization, globalization, and digitization of nearly everything else. The effects on social and economic life have also been nothing short of revolutionary, especially in the nonstop expansion of individual choice and the resulting need for constant institutional change.
The shift in power that has given individuals more choice has also rocked all institutions.
In 1908, Henry Ford introduced the Model T, available in any color the customer wanted “as long as it is black.” This typified the options available to Americans in many realms. Most grew up, lived, and died within a few dozen miles of their birthplace. That changed only after the sequential disruptions of the Great Depression, World War II, and the rise of the Sun Belt. Women now make up a majority of the American electorate; in 1900, only Wyoming and three other lightly populated Western states let women vote. Such barriers lasted much longer for African-Americans and other minorities.
Even at mid-century, the beginning of effective memory for today’s baby boomers, a rapidly expanding economy still offered what seems in retrospect a very narrow realm of choice. Local and “long-distance” telephone service was all via “Ma Bell,” the AT&T monopoly. The Big Three networks dominated television, and the Big Three of Detroit produced more than 90 percent of the cars on American roads. AM radio stations coast to coast played the same “Top 40” list of hit songs, and the local movie houses and drive-ins showed the same big Hollywood releases. The local bank or savings-and-loan officer decided the rate you would pay on your mortgage and the rate you would earn on your passbook savings account. The local stockbroker handled the investments you wanted to make, and your employer worried about your pension. Time, Life, Newsweek, and the Book of the Month Club helped determine what you considered newsworthy or important.
The revolution of individual empowerment and choice has been so profound that many Americans don’t even recognize that it has occurred. Could there ever have been a time when you didn’t have a choice about which movie to see, where to live, how to shop for mortgage rates, or how to send a package to another state?
A profound shift, but with a corollary that we may well underestimate. The same big, centralized institutions that formerly constrained choices for consumers also helped us all. They used their power to shelter people who worked within or relied on them. The Big Three automakers struck deals with big labor that offered near-guaranteed careers, pay raises, and pensions to unionized workers and the white-collar counterpart to executives. Something similar, with variations, was true across a range of public and private organizations.
The same shift in power that has given individuals more choice has rocked all institutions. To be more precise: The institutions that shelter higher-end Americans, from prestigious universities to mighty financial firms, have survived in stronger shape than those that have sheltered lower-wage Americans. But all have been battered.
We have lived through the process of “creative destruction,” as capitalist theorists applaud it. This has applied through American history, but especially in this digital age, at an ever-accelerating pace. Yesterday’s security is gone. The only choice for individuals, and for institutions, is to prepare for the destruction to come, in hope of embracing the opportunities it creates.
The author is a national correspondent for The Atlantic.
This article appears in the June 9, 2012 edition of National Journal Magazine.