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4.7 applied where it is needed in the private sector. Critics have spent years demonstrating that the Defense Department’s payroll could be halved without incurring a risk of invasion, or that any agency above a certain critical size can generate its own work. The connection has only rarely been made between these axioms and AT&T, GM, and the countless other private bureaucracies which are generating their own work as surely as the Pentagon. Another of the critics’ handicaps has been their apparently irrepressible humor. C. Northcote Parkinson, Laurence Peter, Galbraith sharp students all have thrown in the laugh lines and thereby discredited their views among the academic/government audience that identifies solemnity with seriousness. One other impediment to analyses of business institutions should be mentioned: with all its secrecy laws and talent for procrastination, the federal government is still a hundred times more visible than corporations. By applying several long-established principles about public organizations to the behavior of the private economy, we can make sense of how business has reached its current position. The fundamental tenet of organizational life is that the institution and its members are dedicated to preserving their positions. The institution then, is like a guaranteed income, but one offering high levels of support and operating with a reverse-means test. Mention of “guaranteed income” or “featherbedding” often inspires images of surplus railroad firemen playing poker in the caboose, or citizens of Nicaragua chewing sugar cane on a public works project. The distinction of the institutional featherbed is that no one appears to be idle. It is a question of supply and demand, the same as any other economic function. In the short run participants may increase the supply of work through such tasks as updating their phone directories or monitoring the memo flow. In the long run they may create whole new categories of work and then supervise new departments to carry them out. But what are we to think when we see an advertisement like the one our fourth largest private employer, ITT, placed in national magazines in December, 1973? That was the time, it may be recalled, when shortages seemed about to cripple every part of the economy, when Newsweek featured a cover saying, “Running Out of Everything?” In its ads, ITT advertised not the productive might of its 428,000 employees or the quality of their output. In an advertisement that might have been written in 1934, ITT stressed the simple fact that it kept bread on so many tables. “Creating jobs is our 64 The Teias Observer most important responsibility,” it said. “Creating jobs is what we do best . . . When you consider that American business will have to develop jobs for 27 million new workers by 1990, it’s clear that the contributions of multinational companies will be critical to the future growth of America’s economy.” If it came from a public institution, we’d start hearing complaints about the rebirth of the WPA. INDICTMENTS of the institutional economy have for years had a shrill and futile tone. The complaints have borne the sound of the “hungry-children-inIndia” lectures to families with unemptied plates. The corporations waste money while millions are poor; they build electric toothbrushes while millions go homeless. All this is true, but unpersuasive; for behind it is the understanding that the corporations are not what keeps us from dealing with poverty in this nation any more than the multinational companies are what keeps us from dealing with poverty in the world. Within the last year the stakes have changed. Close examination of our institutional life is now a necessity. The potential reward for this self-examination is that it may help us learn how to use our human resources to compensate for shortages of other materials. For three centuries this country has pursued a paradoxical kind of “efficiency,” in which our efforts to get men off the assembly line have been matched in intensity only by efforts to provide work for them in the offices. Now we may have reached the point Japan and Israel occupied a generation ago: they were, and we may soon be, short of material, short of energy, but abundantly supplied with talented manpower. First, we should put the “resource shortage” in perspective. It is true that we have grown constantly more dependent on external sources for most of our raw materials. Already we import nearly the whole of our supplies of chromium and tin, of nickel, manganese and bauxite. In a world prone to dispute, there is little cheer in this fact: Many of the products we don’t need to import will cost more, since the rest of the world will be bidding for them. Still, the danger is less that we will actually run out of commodities than that we will have to take distasteful steps to cope with shortages. Within the next few years, rationing-type controls will almost certainly be extended to cover a much wider range of the economy. One reason is that shortages tend to develop a momentum of their own and to transfer scarcity from one part of the economy to another. Last year’s beef shortage immediately inflated prices of chicken and cheese. The shortage of petrochemicals for making plastics quickly tightened markets for substitutes ranging from sisal to paper. WE COULD avoid expanded controls, of course, if our supply system could keep up with the shifting demand if, for example, Detroit could stop making Cadillacs one day and produce all Vegas the next. On the evidence, this is not a realistic hope. The institutional mentality makes corporations slow adapters, when they adapt at all. Mechanically, too, the institutional economy has made us prisoners. The assembly line of 1940 used less fuel and more men to produce each refrigerator or tin can than today’s factories do. But when fuel gets tight we can’t just switch back to the old process; instead, the factory may have to cut production and lay off men. Our economic evolution has also eliminated another form of adaptability. Thanks largely to Detroit, cities all over the country have ripped out their trolley tracks abandoned their inter-city rail lines. The large institutions have tied up and immobilized so much of the nation’s wealth that no one else can rush in where America, Inc., fears to tread. The point is simply this: since we can’t count on a flexible supply, we must expect a more restricted demand. The infernal gasoline rationing of last winter is a good example of what happens. The complications that a more widespread system of controls would bring are suggested by the contrast between gasoline rationing in Los Angeles and gas rationing regulation becomes the pivot of economic and social life. There is no ready alternative to the service under restriction. Consequently other activities may suffer, and other shortages can develop. It is in the regulators’ power to confer or deny a whole range of personal and economic freedoms; so the rationing plan must . be worked out in careful detail. It may have to include restrictions on sports, agriculture, and other businesses. alternative of an adequate system of public transport is at hand. Rationing is a possibly inconvenient, but certainly non-oppressive, way of absorbing a shortage. So if an inflexible economy means that American controls are more like the first model than the second, what is the danger? At the most personal level, the kind of people who will enjoy filling out ration books or assigning timber-use permits are the very people we don’t want to put in charge of how we live. There is a more important hazard, a style of life and thought best illustrated not by domestic example but by the Russian administrative state. To say this is not to Red-bait, but to suggest that Russia is a product less of socialist principles than of institutional ones. Soviet life stands as the emblem of the creative extension of bureaucratic controls, of energy concentrated on restriction, of ambition stifled or aborted.