There’s a reason you feel disoriented.
Everywhere you look there is upheaval, turmoil and change. The recognizable buoys of our lives have shifted, the way the world is organized has changed, how we think about the world has been transformed. This is always happening, of course, but just as we do not notice the Earth spinning on its axis, we ordinarily do not notice the world changing — except in extraordinary times, when the velocity of change is so great that we can barely keep up with it.
“What has transpired in the last six months in the U.S. and elsewhere is that the forces of the universe overwhelmed everybody in ways that have forced change, and at a circumstance not of our choosing,” says Michael Useem, who directs the Center for Leadership and Change Management at the University of Pennsylvania’s Wharton School of Business. “We’re making change in a reactive way and not a proactive way. We can wish we had driven the change a few years ago.”
But that’s a wish, and it’s too late for that. For in truth this is a period of historic change. It is a period almost without precedent in terms of the speed, breadth and depth of change. When your grandchildren read about the period we are experiencing right now — and let’s hope they read — they may study things like this:
• Manufacturing. China now is the world’s leading exporter of manufactured goods. The last big change of this scale was the emergence of the United States as a manufacturing and exporting colossus in the 20th century, and the implications of that were profound. It meant that American goods were predominant abroad, of course, but it also meant that American culture made inroads in other societies and that American ways of doing business became the global ways of doing business.
That’s over. Just last week the Manufacturers Alliance distributed a report with an ominous title: “China Displaces United States as Dominant Exporter of Manufactures in Asian Markets: What Happens Next?” One terrifying fact: At the turn of the century, American machinery, telecommunications and electronics exports to the principal Asian trading partners were nearly four times as big as those of China. Last year, Chinese exports to those trading partners were more than double American exports.
• The dollar. For the lifetime of almost everyone on Earth, the dollar has been the medium of world commerce. That has been true in good times and in bad, even during the recession of the 1980s and during the emergence of Japan and the other Asian economic powers at the end of the 20th century.
The symbol of this is the fact that oil is traded in dollars. But now Iran and Venezuela are talking about pricing oil in other denominations. There are rumblings out of China that it is growing tired of buying American bonds and that perhaps a new global currency should be created. The result almost certainly will be a fundamental change in the role of the dollar and in the way the world does business.
• Automobiles. For nearly a century, America has measured its economic health by the health of its motorcar industry. That is the origin of one of the most popular and misunderstood comments in American history, the remark by General Motors President Charles E. Wilson about America’s fate being tied to that of GM. Now Washington is deciding whether what is good for GM actually is good for America.
Early this year Toyota supplanted GM as world’s biggest producer of automobiles, a title GM had held since wrestling it away from Ford in 1931. The automobile industry is in turmoil and trouble, and that is a symbol of a broader transition away from established ways of doing business, from the back office to the assembly line.
• Banking. Americans fought over the role of banks in the days of George Washington, Andrew Jackson, Woodrow Wilson and Franklin Roosevelt, and we are fighting over it in the days of Barack Obama. No longer is it impossible to contemplate an American financial scene dominated by banks that are dominated by Washington. We have witnessed the virtual nationalization of America’s banks, and the most remarkable aspect of it is that the process began in the most conservative presidency since Herbert Hoover’s.
• Wall Street. This fabled part of lower Manhattan has long been a favorite American metaphor. Now many people, some of them members of Congress eager to tax corporate bonuses at rates as high as 90 percent, regard it as a giant crime scene. Wall Street hasn’t been this much in disrepute since 1929. Already some of the titans of the Street have disappeared or been transformed. Early last year, Merrill Lynch, Bear Stearns and Lehman Brothers were giants, admired and feared. Today they are neither. Wall Street faces a crisis of cash, a crisis of confidence and a populist revolt.
• Government. The most stunning headline of the year, aside from the one about the inauguration of a black man as president of the United States, was this, from The Wall Street Journal on Monday: “Government Forces Out Wagoner at GM.” Only months ago it was inconceivable that Washington could decide the fate of Rick Wagoner, the CEO of one of the signature companies in American history. Now it is merely last week’s news. This came only months after Washington demanded the removal of the leadership of AIG and dictated its restructuring.
You don’t have to be a Marxist to know that the phrase “commanding heights” came from a speech Vladimir Lenin delivered in 1922 in reference to the huge financial, agricultural and manufacturing entities that define a nation’s economic life. This era does not represent a soft communist takeover of the American economy — please don’t call or e-mail to say that I’m a communist or that I said that the United States has become a socialist nation — but clearly the government, under both the Bush and Obama administrations, is taking the most activist role it has played since the New Deal, or ever.
• Lest we forget: Health care. It’s one-seventh of the economy. It’s changing, and fast. I rest my case.