poor. This was the plaintive cry of thosenwho wanted to bail out New York City.nIn fact, as then-Secretary of the TreasurynWilliam Simon has observed, New Yorknwas systematically looted by its municipalnunions.nBecause of their vast power, the city’snunions were able to secure salaries,nfringe benefits, and pension rights farnin excess of those accorded workersndoing comparable jobs in the privatensector. To pay off the unions, the cityntaxed its productive elements to thenlimit, and borrowed heavily by issuingntax-free municipal bonds. When investorsnrefused new bond issues, the citynfaced financial ruin. Admittedly, NewnYork’s experience was a “worst case”nscenario, but the role of unions in underminingnthe Graybelt as a whole has beenncrucial. Unions—public and privatearenfar stronger in this region of thencountry than in any other. Hence, publicnpolicy has long reflected union demandsnfor “progressive” legislation—nnot merely for “the poor,” but for middle-classnworkers as well. The unionnshop is the rule in the Graybelt, as arenhandsome benefits for employees. Innsome states, unemployment compensationnruns as high as 90 percent of fullnsalary. Such policy not only gives thenunions enormous leverage in bargainingnwith employers, it saps the will to work.nDuring the great car-buying slump ofn1975-76, for example, senior autonworkers in Detroit exercised their senioritynnot to keep their jobs, but to benlaid-off first—and the State of Michigannreported mailing thousands of unemploymentncompensation checks tonFlorida during this period.n1 he upshot of all this “progressivism”nis a region in which union workersnget more, produce less, and soak thenprivate sector for an elaborate systemnof social benefits. Is it any wonder thatnso many Graybelt firms are moving out.’nLest the drain on the region’s livelihoodnshock those responsible intoneconomic sanity, Messrs. Rifkin andnBarber have devised an ideological solu­n141nChronicles of Culturention to the problem. The lion’s sharenof pension funds in this country belongnto public and union workers in thenNortheast. As pointed out earlier, thesenfunds are nominally administered byngovernment or by union and/or corporatentrustees, although real control hasnlargely been handed over to privatenbanks, insurance companies, and othernprofessional asset managers. These professionals—who,nafter all, are expectednto see that the funds in their keepingnare safely and profitably invested—arendoing precisely that. They are pouringnmillions into the booming Sunbelt,nmuch to the chagrin of Graybelt politiciansnand union leaders who see theirnown pension funds being used not onlynto develop a rival area, but to supportncompanies that are nonunion or evennanti-union. The counterstrategy urgednby Rifkin and Barber is predictable:nwrest control of the pension funds fromnthe capitalist oppressors, and use themnto restructure the economy of the Graybeltnalong socialist lines. The authorsnenvision government and union directorsnon the boards of Graybelt banksnand corporations, and even the creationnof public and union enterprises to competenwith established firms. At the verynleast, they maintain, pension powernshould stanch the flow of capital tonother regions.nJrrofessor Drucker has answeredntheir grand design in advance. First,nunions and government have alreadynproved themselves to be the worst possiblenmanagers of pension funds. Theirnretirement plans are disgracefully underfunded,nsusceptible to cronyism andncorruption, and poorly invested. Worstnof all, they go unregulated. State andnlocal plans are not covered by existingnlaws, and while union plans are officiallynsubject to the same laws as corporatenplans, the Labor Department has donenlittle to correct long-standing abuses.nSecond, union leaders have been lessnthan eager to exert control over jointlynadministered funds. The reason, saysnDrucker, is they quite rightly fear thatnnnactual management would put them innan untenable position. Workers maynalso be owners, but the two interestsndo not always coincide. Younger workersnare interested in increasing wages;nolder workers, anxious to secure theirnpensions, have a big stake in maximizingnprofits.nThis leads Drucker to his third andnsalient point: America is undergoing anmajor demographic change. We havenan aging population.nThis fact, to which Rifkin and Barbernbarely allude, is central to Drucker’snanalysis. The baby boom of the laten1940s was an aberration. It has beennfollowed, not by successively highernbirth rates, but by zero populationngrowth. This in turn means that whennthe war babies reach retirement age,nthey will have to be supported by a worknforce proportionately smaller than theirngeneration. If this eventuality, couplednwith steady advances in the prolongationnof human life, is not to give rise to anbitter struggle between generations,nwarns Drucker, we must do everythingnpossible to increase our output so thatnwe will be able to support both groups.nOnly a capitalist economy can do thenjob. “Productivity of capital,” saysnDrucker, “has been the one area innwhich free-enterprise, market-basedneconomies have shown decisive, in fact,noverwhelming superiority over statecontrolledn’planned’ economies.” Accordingly,nif the millions of dollarsnpresently lodged in pension funds arento insure a comfortable retirement forntoday’s workers, they must be investednin a capitalist economy and not a socialistnone. Investment in the socialistnUtopia sketched by Rifkin and Barbernwould not be investment at all, butnconsumption—devouring seed capitalnto satisfy present wants instead of futurenneeds.nJMessrs. Rifkin and Barber insistnthat the capitalist alternative to theirnplan is “to reduce the standard of living,nthe social services, and the wages ofnlabor to such an extent that the localn