The decline of the “blue model”

Walter Russell Mead, who blogs at The American Interest, has been writing perceptively about challenges for America in the 21st century, I think.  Today’s post on “The Crisis of the American Intellectual” is worth a read.

In it, he links to another of his posts from January 2010 about our society’s shifting political-economic foundation, where he discusses what he calls the “blue model” built on the New Deal and the post-WWII foundation of big government, big business, and big labor:

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.

Mead doesn’t idealize the old system (as many do); he writes that it actually limited competition, customer service, and innovation.  But economic shifts beginning in the 1970s brought global competition that challenged the alliance of big government, business, and labor.

Today, he believes, the only remaining entities that can work on the “blue model” or something close to it are the government (“the last true-blue employer in the country”) and companies that depend on “vast and continuing government support” like protectionist measures, tax breaks, and bailouts.  But government may not get to keep doing this either.  Mead contends that while politicians and government workers tend to believe that contemporary challenges can be met with “blue model” solutions, voters disagree:

First, voters simply will not be taxed to cover the costs of blue government.  Voters with insecure job tenure and, at best, defined-contribution rather than defined-benefit pensions will simply not pay higher taxes so that bureaucrats can enjoy lifetime tenure and secure pensions.

Second, voters will not accept the shoddy services that blue government provides.  Government is going to have to respond to growing ‘consumer’ demand for more user-friendly, customer-oriented approaches.  The arrogant lifetime bureaucrat at the Department of Motor Vehicles is going to have to turn into the Starbucks barista offering service with a smile.

Third, government must reconcile itself to its declining ability to regulate a post-blue economy with regulatory models and instincts rooted in the past.

Mead’s observations here are the best short analysis of what I think is one of the most difficult national trends to grapple with: we aren’t the center of the world economy, and many of our institutions and expectations are built on the idea that we are.

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