Flaying the Grinch that Steals the Joy

BEN WATTENBERG

December 25, 1991|By BEN WATTENBERG

WASHINGTON — Washington. -- Happy New Year, but hold the exclamation point. T'aint a season to be jolly.

GM, Xerox, McDonnell Douglas, Eastman Kodak and Westinghouse have announced big layoffs. More stunning, so has IBM. State and local governments are pink-slipping. Unions are helpless. It's not just hitting the once-employed; many states, including California, are rolling back welfare payments. Americans are justifiably glum and scared.

Is it just another recession, or is it something else? Might there be a good side to it? As the designated hitter on the Hooray Team, I offer a broad thought about what's happening and how we can best direct it.

It is the end of American-style Big-Daddyism. Welcome to 21st-century American individualism.

A job with IBM once implied a lifetime contract; the pay was high and the benefits were out of sight. So too a ''job with the government'' -- any government -- was regarded as very stable and also loaded with benefits. Unions promoted stability, wage floors, health plans and pension benefits.

People receiving government benefits often got them because they were ''entitled.'' It was automatic and secure.

It became a way of life, and a pretty good one. One reason it's said that ''income hasn't gone up'' is that so much value has come as ''benefits,'' which don't count (statistically) as ''income,'' except to recipients.

Now, accelerating change. Foreign competition means businesses must run as taut ships; diminished tax revenues mean governments have to be business-like. The buzz words are ''restructuring,'' ''lean and mean,'' ''downsizing'' and ''privatizing.''

That means layoffs. And that frays the cords of loyalty to corporation, government and union. An old American word has resurfaced: self-reliance.

That need not be bad. In fact it can be fine, if it's worked out right. It's certainly in a grand American tradition of ''rugged individualism.'' This is not a cotton-candy country. We do best when we remember that.

People getting laid off can be a catastrophe, but only an unhappy inconvenience if other jobs are available. So far, the evidence is positive; 20 million new jobs came on line in the 1980s, during restructuring. The current unemployment rate is low by earlier recessionary standards (under 7 percent). Jobs are mostly churning, not evaporating.

The pension system has bent to the new turbulence. Spurred by 1978 legislation, most major corporations now offer ''defined contribution'' plans. That means pensions are owned and run by individuals. They're portable and accommodate the churning. Proposed changes making Individual Retirement Accounts (IRA)

fully tax deductible are on target. Increasing the IRA ceiling would make sense.

Medical care is another story. Corporate health plans don't help those laid off. If you want to switch jobs, you may have to pay higher rates because of pre-existing medical conditions. All that yields tragedy, or decreased labor mobility -- neither a recipe for a new age of individualism. The best of the new medical-reform proposals call for earmarked tax credits, or vouchers, to provide individualized health insurance for all, employed or not.

Americans are also doing it by themselves. Government job retraining programs help, but the surge in college attendance is coming from people in their middle years seeking personalized retraining on their own. Other trends are feeding resurgent individualism: telecommuting, flextime, out-sourcing and self-employment. Feminism, too.

Disenchantment with big government and corporate solutions has promoted ideas to promote individualism. From right to center-left, from the Kempite ''Conservative Opportunity Society'' and ''The New Paradigm'' to ''The New American Choice'' of the Democratic Leadership Council and candidate Bill Clinton's ''New Covenant,'' the message is the same: ''empowerment.''

The challenge is to marry American individualism to a post-modern safety-net state. Let parents have choice over what schools their kids will attend, paid for by government. Tenant ownership of public housing helps poor people to make it on their own.

Americans have always wanted to be captains of their own ship. The current waves of economic sadness and scariness will yield more captaining on steadier seas. Happy New Year!

Ben Wattenberg, a senior fellow at the American Enterprise Institute, is author of ''The First Universal Nation,'' published by The Free Press.

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