May 2007People who worry about the increasing gap between rich and poorgenerally look back on the mid twentieth century as a golden age.In those days we had a large number of high-paying union manufacturingjobs that boosted the median income. I wouldn't quite call thehigh-paying union job a myth, but I think people who dwell on itare reading too much into it.Oddly enough, it was working with startups that made me realizewhere the high-paying union job came from. In a rapidly growingmarket, you don't worry too much about efficiency. It's moreimportant to grow fast. If there's some mundane problem gettingin your way, and there's a simple solution that's somewhat expensive,just take it and get on with more important things. EBay didn'twin by paying less for servers than their competitors.Difficult though it may be to imagine now, manufacturing was agrowth industry in the mid twentieth century. This was an era whensmall firms making everything from cars to candy were gettingconsolidated into a new kind of corporation with national reach andhuge economies of scale. You had to grow fast or die. Workerswere for these companies what servers are for an Internet startup.A reliable supply was more important than low cost.If you looked in the head of a 1950s auto executive, the attitudemust have been: sure, give 'em whatever they ask for, so long asthe new model isn't delayed.In other words, those workers were not paid what their work wasworth. Circumstances being what they were, companies would havebeen stupid to insist on paying them so little.If you want a less controversial example of this phenomenon, askanyone who worked as a consultant building web sites during theInternet Bubble. In the late nineties you could get paid huge sumsof money for building the most trivial things. And yet does anyonewho was there have any expectation those days will ever return? Idoubt it. Surely everyone realizes that was just a temporaryaberration.The era of labor unions seems to have been the same kind of aberration, just spreadover a longer period, and mixed together with a lot of ideologythat prevents people from viewing it with as cold an eye as theywould something like consulting during the Bubble.Basically, unions were just Razorfish.People who think the labor movement was the creation of heroic unionorganizers have a problem to explain: why are unions shrinking now?The best they can do is fall back on the default explanation ofpeople living in fallen civilizations. Our ancestors were giants.The workers of the early twentieth century must have had a moralcourage that's lacking today.In fact there's a simpler explanation. The early twentieth centurywas just a fast-growing startup overpaying for infrastructure. Andwe in the present are not a fallen people, who have abandonedwhatever mysterious high-minded principles produced the high-payingunion job. We simply live in a time when the fast-growing companiesoverspend on different things.
