100 Events That Changed Business: 1900-2000
40. The OPEC oil shock: 1973-74.
Angered at the West's support of Israel in the Arab-Israeli War, King Faisal of Saudi Arabia in October 1973 sanctions an oil embargo by the powerful Organization of Petroleum Exporting Countries. The countries, including pals like Iran, Iraq, Kuwait and Nigeria, keep much of the world at their mercy for five months, with effects stretching well beyond. Among the most significant: Sammy Hagar's I Can't Drive 55.
The quadrupling of oil prices that would result from the embargo sends inflation soaring, throwing the U.S. and much of the West into a gas-line-laden recession. Vast Detroit land boats are relegated to history's scrapheap and the extremely useful Department of Energy is created a few years later.
39. The Marshall Plan: June 5, 1947.Two years after the end of World War II, Europe teeters on the brink of chaos. While the U.S. booms, Europeans face rationing for basics like bread. In Britain, fishing fleets are kept in port for lack of fuel. In Germany, the economy seems to slide toward subsistence farming and the Middle Ages. Threats of starvation and Communism loom over Western Europe. So Secretary of State George C. Marshall gives a speech. But not just any speech. Marshall offers "substantial" U.S. assistance to help Europe rebuild after World War II. "The remedy lies in ... restoring the confidence of the European people in the economic future of their own countries and of Europe as a whole." With more than its usual foresight, Congress rapidly agrees, and from mid-1948 to 1951, the U.S. pours $13 billion worth of economic support and technical expertise into Europe. (That's almost $100 billion in 1999 dollars.) The aid gives Europe an immediate boost, spurring new investment and pulling the Continent out of its slump.
38. The Berlin Wall falls, heralding the triumph of market capitalism: 1989.Just as the "shot heard round the world" initiated the Revolutionary War that eventually freed America from British control (and taxes), the fall of the Berlin Wall in 1989 ignites a revolution for American business. With the end of the Cold War, huge potential markets emerge from the yoke of Soviet domination, eager to embrace Western-style capitalism, even including Taco Bells. In other words, the Rapture comes 11 years earlier than expected. U.S. companies such as Coca-Cola, McDonald's, General Electric and Microsoft would bum-rush into the new "emerging" markets of Eastern Europe and the former Soviet Union hoping to tap new reservoirs of customers. For better and worse, American (and capitalistic) values would follow.
37. Wage stagnation starts: 1970s.The U.S. economy has grown strongly over the last two decades, but the prosperity hasn't been shared equally. The statistics are unequivocal: While the income of the richest Americans would soar beginning in 1979, the poor would actually see their earnings decline. In fact, between 1979 and 1997, the average inflation-adjusted income of the richest 5% of Americans would rise to $235,000 from $148,000, a 58% increase, while the average income earned by the poorest 20% of Americans would fall to $12,000 from $13,000. Wage stagnation is more an effect than a cause of broader trends in the economy, from the decline of unions to increased immigration of unskilled workers to technological advances that have eliminated low-skill (but decent-paying) jobs. Still, attention must be paid; overwhelming economic gaps tend to cause widespread social unrest. (See Russia, circa 1918, or Indonesia, circa 1999.) Fortunately, in the late 1990s, this trend would begin to turn, as an ultratight job market finally would lift wages at the bottom of the ladder.
36. The Supreme Court orders the breakup of Standard Oil: May 15, 1911.In an 8-1 ruling, the Supreme Court affirms the government's right to limit corporate power, ordering everyone's favorite monopoly split into 34 different companies. But shed no tears for Roc-a-fella, who would grow even richer after the breakup when shares in Standard Oil's newly traded subsidiaries doubled and tripled in their first days of trading.
35. New York's WEAF broadcasts the first radio ad: 1922Though there's vague evidence of some program sponsorship before this, the first ad on a commercial radio station (then called toll broadcasting) is on WEAF in New York -- a 15-minute spot for a Queens real estate development. In the years to come, broadcast ads would evolve in sophistication and cleverness, culminating in the groundbreaking "Swedish Bikini Team" TV commercials for Old Milwaukee in 1991.
34. President Ford signs ERISA into law: Sept. 2, 1974.The bill introduces the trippingly memorable phrase "401(k)" to the lexicon. Before President Gerald Ford signs the Employee Retirement Income Security Act into law, most workers have their money in company-managed pension plans that focus on stable, conservative investments. The plans offer predefined benefits, but many workers who leave companies before age 65 -- regardless of their years of toil -- forfeit their pensions entirely. ERISA creates safeguards to retirement plans and opens the door to the 401(k) plan, created in 1980 by R. Theodore Benna, a benefits consultant and probably not the ideal dinner-party guest. The 401(k) is a defined contribution plan. You put in the dough and you get the returns when you retire, or you take it with you when you leave one company for another. Defined contribution plans would lead to a massive flow of money into stock mutual funds and the market, pushing up demand for stocks and contributing to the bull market of the '80s and '90s. Until 2010 or so, that is, when the baby boomers all cash out their retirement plans and the market cracks like the transaxle on a '79 Chevette.
33. The Supreme Court allows gene patenting: 1980.In 1980, the Supreme Court rules that an oil-eating micro-organism from Exxon could be patented. Before that it wasn't clear whether genetically altered life forms could be owned. Owned. That means, for one, that our friends Cohen and Boyer (see No. 67) can get a patent on their recombinant DNA techniques. Gene therapy, all sorts of genetic engineering -- verily, the biotech industry -- rise like Frankenstein's monster.
32. Xerox founds its Palo Alto Research Center: 1970.Xerox, flush with photocopier gilt, sets up PARC to research electronic materials and devices. The center gives rise to innovations like early personal computers, the Ethernet connectivity standard (which helps computers talk to one another), flat-panel displays and advances in laser printing and computer languages. PARC's inventions and improvements touch virtually every corner of technology but, incredibly, Xerox manages to not capitalize on most of them.
31. The Civil Rights Act: 1964.Among its other antibias provisions, this landmark legislation (proposed by Lyndon Johnson as a tribute to the slain JFK) outlaws race- and gender-based employment discrimination at any business with more than 25 employees. It also establishes the Equal Employment Opportunities Commission to review complaints, giving the federal government a new role in the hiring and firing process. In theory, this means minorities and women will get a better shot at the corner office. Though the legislation removes important barriers, more than 30 years later, the Fortune 500 would include just two female CEOs ( Mattel's Jill Barad and Golden West Financial's Marion Sandler) and one black CEO ( Fannie Mae's Franklin Raines). But the debate would only continue and expand, as discrimination against homosexuals and the disabled as well as sexual harassment become issues for businesses to grapple with.
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