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Tom Gladwin begins the symposia providing introductory comments on the topic of the event, which explores new growth industries and new growth markets in the U.S. and world economies, before introducing the panelists, Peter F. Drucker and Alex d’Arbeloff. Drucker states that industry is in the very beginning, not the end, of major restructuring, and that very few people realize how enormous the changes to the economy have been. According to Drucker, since the 1920s, the greatest changes have occurred in places not covered by the Wall Street Journal and not seen in economic statistics--the most significant change has been that the U.S. has been entering a post-business society, in which the major fruits of economic enterprise are not used for material goods and services. Leisure, he notes, has been the largest beneficiary of the prodigious upsurge in productivity over the course of the twentieth century. However, in the developed world over the long term, working hours will likely go up rather than down, and certainly for the main center of the labor force. Other types of work sector hours, such as that in blue collar labor, will decrease as the work becomes more marginalized. Drucker thus notes that one of the major market problems of the future mainstream labor force will be to get a share of time, not a share of money. The fight for time is acute, Drucker states, and competition for larger shares of a shrinking market can only be fought by lowering profit margins. The major growth has been in the competition for time as the prime market share. The other two great growth industries--healthcare and education--have not been material. The first training of continually educated people was after the Great Depression, in the 1930s, when the medical school of NYU had a refresher course for physicians. In structure, there is no sector of society in which one can expect greater changes than the educational sector, in part because of the strengthening shift toward continuing education in the U.S. The future students in business schools, he stresses, will be training for the non-profit sector, not the traditional business sectors, and this development, alongside the continuing education of already highly-educated people, will result in a three-tiered management education system. Drucker goes on to note that leisure has emerged as the U.S.’s most capital-intensive industry. For every hour of leisure, people spend one hundred to two hundred dollars in capital investment. Beyond the emphasized fields, Drucker notes that transportation and international trade have also changed, and describes how the greatest effect of the development of management has been to eliminate cost differentials. According to Drucker, what matters is being close to the market, and trade has always been viewed as the barometer of the world economy, but emphasizes that, over the last five years, trade has slowed sharply, but the economy has not because of the large investment boom. Nothing has changed structurally more than defense, he notes, but it is also possible to anticipate that the resistance against defense spending is going to grow increasingly because, more and more, defense is no longer a boon to the civilian economy, but a burden. Drucker then states that the U.S. is in an upsurge of populism, and its target is going to be the finance industry because the present financial scene is obscene and the contempt of financial manipulators for people who work is gross and felt strongly. Therefore, finance will be a political issue in terms of the role and function of finance and an economy dominated by it. The purpose of production, he says, will lead to a critique of the financial sector, and he argues that the heyday of the unbridled growth of surplus finance is over. A series of windfalls have created the financial establishment of today, and the present financial establishment is driven by enormous liquid funds that exceed anything that can be invested productively, and are thus out of all economic discipline. Drucker concludes that where growth markets and structural changes are, should be the concern of executives today. Gladwin then introduces d’Arbeloff, who begins by discussing Drucker’s teachings on long-range planning before talking about his experience in electronics. In general, he says, the last three years in the electronics industry have been very tough. The few successes have been at the expense of somebody else, and the big problem has been the electronics’ industry’s tremendous shift from America to Japan. The solution, according to d’Arbeloff, is to compete more globally, particularly in the area of quality. In order to make the solution work, involvement and participation by people, tools, training, an open atmosphere where information could be exchanged, and a reemphasis on the integrity of management are necessary. In order to have more growth, d’Arbeloff states that domestic U.S. electronics manufacturers should be able to complete such necessary steps on a consistent basis. In general, formal education has been of great difficulty, and the idea that trade is not a growth business may require some examination--the U.S. electronics industry must learn how to export in order to successfully develop manufacturing and local markets. He goes on to talk about memory chips, and how American manufacturers went out of the business of producing them. However, he notes that the market has now entered a boom, and that the U.S. now has a chance of reentering the Japanese market, but needs the will to stay in it. He emphasizes, however, that American engineering must be brought up to speed, with excellent quality, in order to be competitive with the Japanese.
Drucker, Peter F. (Peter Ferdinand), 1909-2005 New York University New York University. Graduate School of Business Administration Wall Street Journal Statistics Leisure Blue collar workers Time Education Great Depression Business schools Nonprofit organizations Nonprofit organizations - United States - Management Transportation International trade Defense industries Defense spending Populism Financial services industry Liquid funds Electronics Exports Japan Japan--Economic policy Japanese Symposia D’Arbeloff, Alex 1920s Profit margins Healthcare Gladwin, Tom Electronics industry
Original recording, April 13, 1988; Drucker Archives; Box 68