On November 9 of last year, Rupert Murdoch, the president of New World Inc. and former publisher of the New York Post, delivered the Manhattan Institutes third annual Walter B. Wriston Lecture in Public Policy. Mr. Murdochs theme was the hostility of incumbent social and political institutions to new tecbnologies, and the dangers that hostility presents to economic and social welfare. It is a topic with obvious relevance for New York, a city at the center of the world information economy, but often overburdened by the rules, regulations, customs, and entrenched interests of earlier eras. What follows is an edited version of Mr. Murdochs remarks.
Ladies and gentlemen, it is a pleasure and an honor to be here tonight. Last year I enjoyed hearing Tom Wolfe in this forum. As you know his marvelous novel The Bonfire of the Vanities features a New York tabloid newspaper run by a ruthless foreign publisher, so I guess under the fairness doctrine the Manhattan Institute is giving me equal time.
For the British publishing industry, the computer revolution began in 1986, when we at News Corp. moved our operations out of Fleet Street to a new high-tech plant at Wapping in Londons Docklands. For the next 13 months, we were under siege by British labor unions.
Incredibly, as recently as four years ago, British newspapers were still printed with hot lead, a process that had changed only by degrees since Gutenbergs day. British labor unions had successfully prevented the technological revolution from reaching Fleet Street. They had a noose around the neck of the industry, and they pulled it very tight.
In 1986, we had to hire four men to run a printing press in San Antonio, Texas. In Chicago, it took a maximum of five men; in New York and Sydney, six. In London, it took 18 men to do the same job, all paid salaries at least 100 percent above the national average.
Eighteen men could not even get near a printing press at the same time. But they were not expected to. They were paid fulltime for working half-shifts, sometimes only on alternate days, occasionally only once every three weeks. Many of our employees worked second jobs—90 percent of the News of the World publishing department, for example. Some worked for rival publications, some were cab drivers or mechanics, one owned a vineyard, another was a mortician.
Once we found that phone calls to The Sun were not being answered because the switchboard team was watching Wimbledon on television. When asked to stop (or at least turn down the sound), they threatened industrial action. Another night, a big news story broke in the U.S., but failed to reach The Sun press room because our telex operator, surrounded by yards of copy churning out of the machine, was asleep. We complained, but in the end we had to apologize for disturbing him.
Naturally, we got pretty tired of this kind of thing. But what actually touched off the Battle of Wapping was News Corp.s attempt to start a new plant to provide excess capacity for The Sun. The unions response was typical. Among other things they insisted that we pay three men, one from each union, to supervise the button to stop a press in an emergency, a function that the new automatic system performed for itself. So we brought in computers from New Hampshire, printers from Australia, and truckers from outside London, and secretly began building a system to print and distribute all of our 35 million newspapers a week from that one site.
This was what you might call betting the company. Fleet Street unions had not lost a fight in living memory. But we were encouraged by Mrs. Thatchers victory in the miners strike and by signs that authorities were prepared to protect private property from the actions of massed pickets. The London police were not necessarily on our side. One morning, they even threatened to arrest the editor of The Sun for making an impolite gesture at the pickets. But sympathetic or unsympathetic, the police would not let the picketers block our trucks. An appalling number of officers were injured during the Battle of Wapping; on one night, after 300 mounted police faced 11,000 demonstrators, 162 officers (and 33 demonstrators) were injured. But the trucks rolled. And in the end we won.
The immediate result of our victory was greater freedom and flexibility, and higher profits, for News Corp. But the Battle of Wapping also ushered in a silver age of British newspaper journalism. Suddenly, thanks to the new technology, it became a lot cheaper to start a newspaper. The result is that, since 1986, a number of completely new national newspapers have sprouted up. Now of course, we did not fight the Battle of Wapping because we wanted to bring a silver age to British journalism. When the beaver gnaws down a tree, he is not thinking of his vital ecological role either. Nevertheless, he has one.
Now that Fleet Street has been cleaned up, New York City newspaper unions can proudly claim first place as the most intractable in the world. New York City unions do not provide the comic relief that Fleet Street unions used to, but there are certain items of anthropological interest. For example, when I came to New York I found that the paper handlers union is largely composed of Irish families tracing their recent ancestry to County Kerry. If a union member retires or dies, within days the union produces a young replacement fresh from Ireland. I dont know how they get the visas, but they do. It is a charming facet of New Yorks colorful ethnic heritage, except that they are being paid $1,000 a week to do a job that could easily be mechanized. The New York unions also enjoy an extraordinary amount of local political clout. Let me put it bluntly: I am confident the police here would not protect paper trucks from violence as the police in London—reluctantly, but valiantly—did.
What is the lesson to be drawn from the Battle of Wapping? What happened at Wapping is a microcosm of the changes taking place in many other industries, as outmoded social institutions attempt to suppress new technology. On the one hand, new technology opens up new possibilities, not only for business but for labor. Technological progress raises wages, and makes the workplace safer, cleaner, and more humane. On the other hand, the framework of social institutions (in this case labor unions and labor law) resists the change. Technological change and social institutions interact continually, and the technology does not necessarily win. Society can soar, or it can stall.
I am not speaking Norwegian tonight because when the Vikings tried to settle North America, they didnt have guns to deter the enraged inhabitants. Several centuries later, the Pilgrim Fathers did. On the other hand, social institutions sometimes successfully stifle technological change. The classic example is the economic revolution that almost, but did not quite occur in the low countries of Europe in the 1300s. A remarkable upswing of economic activity occurred, which in many ways presaged the Industrial Revolution. But the legal structure at the time was inappropriate; property rights were not protected. So the economic boom stalled, and then dissipated. Then the Black Death came along, and that was that.
Today the pace of technological change is quickening, while the direction of change remains unpredictable. Technology is unpredictable partly because it depends upon the act of invention, and partly because even inventors cannot accurately imagine the place which their inventions will find in our lives. When Thomas Edison invented the phonograph, he imagined that voice recordings would be sent through the mail to replace written letters. The classic recent example is the fax machine. Many experts saw no place for it because they thought transmitting information by modem was more efficient. The funny thing is, they were right; modems are more efficient, but they are apparently not as effective, given the way we are organized right now. The history of invention is riddled with such tales.
The only thing we can be sure of is that, while technology adapts quickly, governments do not, which is why government policy is so dangerous in this field. Placing ones faith in the thousands of voluntary decisions that together constitute a free market is not easy. One finds that faith only in highly developed societies, and even then it is a fragile late-season blossom, easily dashed by war or other crises. The decision to rely on market forces is the essence of modernization. Yet technological change often provokes atavistic, authoritarian responses. The real danger of the present technological revolution is that we may be panicked by future shock into regressive schemes of regulation.
The U.S. faces the 21st century in better shape than any other country in the world. America coped with the future shock of the early 20th century without reverting to extreme government control, as Europe did. The hallmarks of the modern world, which the Eastern Bloc is now striving for, are free speech, free movements, free elections, free markets. These are all things that America has had for over 200 years. The great truth, which being an immigrant perhaps I can see more clearly than the average citizen, is this: Modernization is Americanization. It is the American way of organizing society that is prevailing in the world.
The U.S. has been extremely lucky in its continental size, its natural resources, its hard-working population, its magnificent diversity. But the ultimate American resource is more intangible. The Economist magazine, in a 1988 survey of Japan, put it very well. Many Japanese think that the gap in economic performance between their country and America will continue to widen for a while—but will then narrow, as Japans natural disadvantages (especially its aging population) and Americas inherent advantages (the suppleness of its society, its inventiveness, its ability to attract the best people from all over the globe) reassert themselves. As an aide to former Japanese Prime Minister Nakasone put it—The 20th century was the American century. The 21st century will be the American century.
I think he was right. Whatever the human race is going to achieve will probably be achieved here first. But this will remain true only as long as American institutions remain supple, which means as long as American policymakers respect open communications and free markets. The war between new technology and outmoded social institutions continues. At stake is the very idea of human progress.
Perhaps I could end on a personal note. In the 18th century, Voltaire said that every man had two countries: his own and France. In the 20th century that has come to be true of the U.S., particularly for the English-speaking world. All of the English-speaking countries are in some sense members of each other, to borrow language the Bible uses somewhere.
My own family exemplifies this truth. My mother, now 80, is an Australian. One of my daughters lives in Britain. My other daughter will soon graduate from Vassar. And of course my wife and I are American citizens and we live in New York with our two boys.
Now obviously I dont think American institutions should be made more supple just to make life easier for the Murdoch family. But I do want to say, with more feeling than usual, the traditional closing words of a speech: Thank you very much.