The New Economy

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Technology has set off a scramble for jobs, profits and global markets

Near the corner of Main and Walnut streets in the small town of Maynard, Mass., stands a massive complex of aged red-brick buildings. Within those walls, workers toiled amid clanging, churning machinery to produce carpets in the 1850s and Army blankets during two World Wars. But today the sturdy, old facade houses an entirely different enterprise. The noisy machines and grease-stained factory floor have given way to offices where engineers huddle over glowing oscilloscopes and secretaries peck quietly at word processors. The woolen mill has been reborn as the headquarters of the Digital Equipment Corp., the second largest computer manufacturer in the world.

That metamorphosis is symbolic of a sweeping transformation that is creating a New Economy. It is a two-tiered economy marked by swift change and stark contrasts. While traditional smokestack industries are reeling from foreign competition, surging high-technology companies are leading the world in innovation. Though hundreds of thousands of blue-collar assembly-line workers have lost their livelihoods, white-collar engineers have had their pick of high-paying jobs. Last year 25,346 businesses went bankrupt, the most since the Great Depression, but 566,942 new companies opened their doors. Says Delaware Governor Pierre du Pont IV: "The transformation of our jobs, the movement of our people, the improvements in our skills over the first 80 years of this century have been stunning. But it is entirely likely that those changes will be matched and exceeded during the final 20 years of the century."

The upheavals are rewriting the script of industrial winners and losers. The job market has become a shifting mosaic of dead ends and bright prospects. Alarmed and angry, more and more workers and politicians are calling for protectionism to keep foreign products out.

Heavy industries such as autos, steel, rubber and shipbuilding that were once synonymous with American industrial might have rapidly declined. Some 211,000 autoworkers, or 19% of the industry's blue-collar work force, are on indefinite layoff. In the steel industry, which is operating at only 42% of capacity, 119,000 workers are idle.

To be sure, the biggest cause of the distress is the temporary effect of the worst recession since the 1930s. In addition, though, the economic order has changed, and U.S. business will never return to its prerecession status. Says John Wilson, chief economist of the Bank of America: "This recession is unique. Always in the past, autoworkers knew they would be hired back. This time, I think, they sensed from the beginning in Detroit and St. Louis and Los Angeles that they would not all be re-employed."

Yet even as the lights are dimming in some old-line industries, technology is spawning boundless opportunities in such esoteric fields as microelectronics, lasers, fiber optics and genetic engineering. In six years Apple, a leading manufacturer of personal computers, has evolved from a two-man operation in a garage to a corporation employing more than 4,000 people. Last year it ranked 411 on the FORTUNE 500; no company had ever gone from a start-up to the Fortune list in so short a period.

Fabulous wealth is being generated almost overnight. When TeleVideo Systems, which makes computers

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