The High-Risk Society

Publishers Weekly - Publisher's Weekly

With job security all but gone, the economic realities of the 1990s have made risk and uncertainty "the price of prosperity," according to this challenging overview by Business Week economics editor Mandel. Speedy technological change and global competition, both of them "capricious and unpredictable" in impact, disrupt employment and start-up business prospects; corporate restructuring "downsizes" payrolls and "outsources" services, writes Mandel, while government deregulation dilutes worker safeguards. Employee and small-business worries, in turn, chill the retail market. Retirement goals become uncertain. High-risk prosperity beckons the adventurous, not the timid or complacent, to its potentially vast rewards. This is a stimulating study, with strategies for the displacedand some far-out economic solutions, among them "wages-and-income financial markets" with a function not made altogether clear. (Nov.)

Kirkus Reviews

A thoughtful though limited discussion of a puzzling situation: Why, despite relative prosperity, is economic anxiety so high?

Mandel, economics editor of BusinessWeek magazine, maintains that unlike the stable corporate world of the 1950s and '60s which offered low risks and high rewards, and the transitional period of the '70s and '80s, which imposed high risks and low rewards, we are now confronted with an era offering high risks and the potential for high rewards. Traditional business practices—loyalty, seniority, and a reliance on government regulation—no longer guarantee success. With quantum leaps in information technology, corporate downsizing, and government deregulation, the comfortable predictability of the good old days has been replaced by economic turmoil. The entire economy is now characterized by a dynamism previously limited to the financial markets, and success requires a bold strategy: Embrace risk. Corporations must invest in the development of innovative products and reorganize along untested lines; individuals must invest in future-oriented education and accept multiple job changes or self-employment; the alternatives are decreasing profits and income. The costs of the attendant uncertainty, however, are high, in terms of confusion in the marketplace, missed opportunities, cautious and confused investors. To mitigate the losses caused by this turbulent situation, Mandel proposes measures ranging from income averaging for tax purposes to linking compensation to futures markets. To his credit, Mandel acknowledges that those with substantial personal wealth and education are in a much better position to take risks, but he is more reticent about the increase in economic inequality that would result from his proposals. Accepting aggregate growth as the ultimate concern seems to crowd out serious consideration of distributive issues.

While the trials and tribulations of uncertainty in economic life are not ignored, Mandel definitely looks at the current and future economy through rose-colored glasses.