The Demise of the Big 3 is Good for our Community

Last week’s announcement of the acquisition of Xerox by Fuji, Ltd. is another nail in the coffin of Rochester’s Big 3.  I would contend that they have been long dead and good riddance.

I don’t mean to minimize the suffering of those who may lose their jobs as a result.  Nor, am I ignoring the emotional impact on a community that long identified with our erstwhile leading employers and benefited from their contribution to our community. 

I am simply saying that these events over the last 25 years or so are part of the natural order.  Just as the Bronze Age gave way to the Iron Age, companies come and companies go.  Both Xerox and Kodak were part of the Nifty 50 highflying stocks in the early 1970’s, a list that includes many companies that are long gone.  Those that have survived, including GE, IBM, and AT&T, have done so by morphing into something else.  A time traveler from the 70’s wouldn’t recognize them today.

I am tempted to quote Michael Douglas’ “greed is good” speech from the movie “Wall Street.”  But, the last time I did that I was buried by hate-email.  I could also quote its counterpart in economic theory, Schumpeter’s “Theory of Creative Destruction.”  But, that would put you to sleep. Instead I’ll simply point out that the demise of the Big 3 is not one of the Seven Deadly Sins and, moreover, we are complicit. 

As a consuming society, we have explicitly expressed a preference for email over the post office and Netflix over Blockbuster – to say nothing of the number of businesses that have been disrupted by the Internet from travel agents to Big Box retail.  No one looks back and mourns the loss of jobs from those transitions.  We’re too busy consuming what they sell.

And, so, the Big 3 are no longer Rochester’s biggest employers because their customers now prefer the better products and services of others. 

For the most part, the impact of the Big 3 on the local economy has been gradual.  The move of Xerox’ headquarters, the big layoffs at Kodak, and the sale of Bausch & Lomb occurred over a 30 year period.  And, what has happened in the wake of those activities?

Entrepreneurs have founded companies, like Conserve, eHealth Technologies and SunCommon NY, which have grown quickly, providing jobs and healthy working environments.  In short, our community has become less dependent on large mega-corporations and thrives on fuel provided by smaller companies with local owners. 

Local business owners are more likely to be good citizens of our community.  They support local charities, create jobs locally, and ask less of taxpayers in the form of infrastructure and tax breaks. 

We -- their neighbors, customers and stakeholders – should stop mourning the loss of a bygone era and begin to identify with the community we have become.

I think I’m turning liberal… I really think so

I was watching a remembrance of the Watergate affair on the Discovery Channel the other night.  It was a great show incorporating newsreels, interviews and film clips from “All the President’s Men”.  Among the commentators was Rachel Maddow who speculates that Richard Nixon would be considered a conservative Democrat by today’s standards.  It was Nixon, after all, who signed the EPA into existence.  Imagine a Republican doing that today. I think it may be fair to say that the country has become more conservative since Tricky Dick exited the national stage.

But, the reelection of Barack Obama suggests a counter trend.  Republicans and pundits offered lots of explanations (read excuses) of why Democrats held their ground in the last election, ranging from the Hispanic vote to women’s issues to gay marriage.  If you’re into statistics, you could use any of these examples to make that case.

However, I think a better explanation can be found in a demographic trend.  As of 2011, more than250 million Americans (nearly 80%) live in or near a major city. And, nearly all major cities, including four in Texas, voted Democratic in the last election.

So, do liberals move to the city or do cities make people liberal?  I am inclined to believe the latter.  As Josh Kron wrote in Atlantic magazine, “The difference is [not where but] how people live: in spread-out, open, low-density privacy -- or … in-your-face population density and diverse communities …”.  In simple terms, if you live and work in a diverse environment you learn that we all have the same basic needs, the same joys and sorrows and the same desire to connect with our community.  It doesn’t really matter what color our skin is, where we come from or who we sleep with.

The urban environment tends to open you up.  So, the hard right dialog (about immigration, gay rights, birth control) that dominates today’s conservative politics drives urbanites and suburbanites into the arms of the Democrat Party. 

Liberal vs. liberal

There is a difference between the definition of the word liberal -- which can simplistically be defined as open to new ideas and willing to set aside traditional values – and Liberal as it describes a contemporary political philosophy. 

The model of Liberal government embraced by today’s Washington Democrats still reflects the 1930s New Deal and the 1960s Great Society.  Liberals are supposed to be progressive – forward looking.  So, why do they continue to embrace an 8-decade-old political philosophy?

Today’s urban young professionals are joining small, entrepreneurial companies.  The organizations are unstructured; the jobs require creative energy; and, success is based on either first mover advantage or superior execution. 

Contrast that with the early experiences of the Baby Boom generation.  We found job opportunities in large companies whose organizations were modeled on a military hierarchy that was embedded in our elders’ experience in WWII. 

Graduate schools of business reflect this transition as well.  If you went to the top B schools in the 60s, 70s and 80s, you were well prepared to work in the marketing department of Proctor & Gamble, the product planning group in one of Detroit’s Big 3 or the finance group of a big bank.

Today, nearly every top B school has a program that fosters entrepreneurship. 

What’s that got to do with liberalism?   Liberalism morphed into its 20^th Century form driven by the abuses of large companies.  The movement gave rise to trade unions, a social safety net and government regulation.  Today’s hip, urban, liberal Millennial generation scoffs at the idea that the safety net will be there for them in their senior years and small entrepreneurial companies are unaffected by trade unions… and, they certainly don’t want to be regulated.

The 21^st Century economy will drive changes to how we are governed.  Today’s urban youth will continue to be socially liberal.  But, they are unlikely to tolerate the downsides of an unsustainable model that has its roots in the experience of their great grandparents.  A generation of Americans that grew up with the Internet isn’t going to tolerate public institutions that operate on a 19^th Century bureaucratic model. Nor will they tolerate a healthcare system that absorbs more and more of our national income without improving outcomes, a social safety net that will collapse of its own weight or an education system that doesn’t match graduates with jobs and careers.

Going forward, the national debate won’t be about spendthrift compassion vs. cold-hearted austerity.  It will be about developing a healthcare system that can care for our poor and elderly without bankrupting the country, restructuring education to deliver globally competitive graduates and ordered liberty that provides equal opportunity to all.

When that happens, I’ll be a liberal.

WHO WILL LEAD?