Peter F. Drucker continuing question and answer session on taxation, labor and trade unions, codetermination, the future of Soviet Bloc countries, and capitalism and free enterprise
Drucker continues the question and answer portion from the previous session, discussing tax rebates and how to get out of the taxable gains tax, before disagreeing with Hartley on the question of inflation, stating that Reagan’s administration has not done anything that Carter would not have done. He identifies expenditure cuts as the things that were, politically, the least difficult to make. What is likely to happen, Drucker states, is that we do what the management does when faced with the need to cut expenditures, which is to cut employees, student loans, etc., by 12 1/2%. Hartley responds that middle-class subsidies are always the hardest to cut, and contends that there is one difference between where the U.S. is now and where it would be if Carter were reelected, stressing that there has been a change in the political culture--a consummation into the government of a change that had already taken place in the political culture. Hawkins then redirects the session to the question of the role of labor and trade unions in the decline of capital formation and the pushing up of the labor fund share of total income over the past several decades, and, secondly, to what extent there has been a coordination and integration of labor and employee participation in capital investment decisions. Drucker responds that, in the private sector, labor unionization is now below what it was before the New Deal, which, in turn, means that executives have to look at a union movement that does not see itself as victorious, but threatened with execution. Where there are strong and visible unions, executives can count on their fighting desperately to cement themselves into the power structure (codetermination). He also anticipates an increasing need for cooperation aggravated by increasing pressure on the part of the visible unions to preserve themselves. Drucker stresses that one cannot keep the owners of the country’s productive resources out of the decisions--the only question is whether organizations want union leaders who do not represent employees. Power follows property, and all the property is in the hands of the employees of America. Hawkins adds that management tends to blame unions for far too many problems, but observes that unions can create very great difficulties for certain industries, and labor can price itself out of the market. Drucker states that the most dangerous thing in Europe today is that nobody in an English union believes that there is such a thing as productivity. They then face the question of the communist Soviet Bloc and what it will take for the Bloc to disintegrate. Hartley responds that the Soviets will still have the same people and infrastructure there regardless of the Bloc disintegrating, and that it is difficult to visualize what a collapse would entail. That being said, he says, several of the countries of Eastern Europe continue to decline in terms of production. He ultimately predicts that the Soviet Bloc countries’ problems will be of a kind that makes them less likely to want to assume responsibility for another situation like Poland, or go into Afghanistan. Drucker then discusses the falling birthrate among the European Russian population--the lack of baby boom and the infant mortality over the last several decades have resulted in a human deficit that has never been made up. Likewise, non-Russian-speaking Russians have not been fully incorporated into society and learned the language, so there has not been much integration or assimilation. Finally, they talk about capitalism and free enterprise, and if the concepts of delayed gratification and hard work are contrary to the evolving social values and atmosphere of contemporary society. Drucker responds that such concepts about capitalism are a myth, and that values have not changed--what has changed is the structure of society and capitalism. After a break, Drucker commences discussing management and where young people are being positioned. The trend is toward multinationals, he says, and over the last thirty or forty years, there has been an extension of nineteenth century practices into the twentieth century. Specifically, the U.S. has gone back to the old model of the subsidiary of the mother parent company producing for its own market, with some minor changes. With more young people entering colleges, there are fewer people available for blue-collar work. Thus, America will be forced to automate what it can and farm out what it cannot. Drucker cautions that executives should not believe that shifting to low-wage labor areas is more than a short-term expedient. It is a delusion to believe that low-wage laborers can compete with automation today. Steel, he states, is the critical element for all economies and defense communities, and a new kind of integration should be developed based on marketing, design, and quality control. Americans, traditionally, have had a very hard time learning to do quality control. Drucker then predicts that, in ten years, the multinational company will likely have doubled in the U.S.
Drucker, Peter F. (Peter Ferdinand), 1909-2005 New York University New York University. Graduate School of Business Administration Taxation Tax rebates Taxes Tax reform Reagan, Ronald Carter, Jimmy, 1924- Employees - Dismissal of Employment (Economic theory) Student loans Labor Labor force Labor productivity Labor unions Unions, Trade Capital productivity New Deal, 1933-1939 Productivity Communism Eastern Europe after communism Eastern European economics Poland Afghanistan Infant Mortality Capitalism Free enterprise Multinational corporations Subsidiary corporations Colleges and universities College students Blue collar workers Automation Steel Quality control Marketing Design Americans Symposia Capital formation Codetermination, Worker Soviet bloc Eastern Europe Low-wage labor Defense budgets
Source
Original recording, April 22, 1981; Drucker Archives; Box 68
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