THE PARADOX OF PROSPERITY

By NANCY GIBBS

The world as we knew it has changed forever, and the American Century looks to conclude with a huge party, a cancan line of irrepressible bankers and impossibly rich computer nerds dancing on the grave of the business cycle, while politicians of all kinds sing the praises of a new economy that might let them be re-elected forever and ever, as long as people keep voting their pocketbook. So now what?

In real life, the big, bright, global, wired economy means that offices in Washington that once skimped on holiday decorations have hired a singing harpist for the lobby. There are 50 kinds of mustard at the supermarket, and at the Tops in Buffalo, N.Y., sales of shiitake mushrooms have doubled this year. Clinique is marketing a perfume called Happy, and Levi Strauss sells custom-fit riveted jeans based on customers' computer-detailed specifications. The youngest donors ever to endow a chair at Stanford are the founders of Internet browser Yahoo!--even the chair comes with an exclamation point.

All of which begs the question, If we are so rich, how come we're not happy? The marketers and sociologists whose job it is to measure consumer fears and lusts find that people are still wary of this crunchy economy. If there is such a thing as a national mood, it contradicts itself so much that even the pollsters are confused. "The country is just euphoric," says G.O.P. pollster Robert Teeter; his latest figures show that 78% of Americans are not worried about their job security. "There is not a lot of euphoria out there," says Tom Smith of the National Opinion Research Center at the University of Chicago, whose survey finds that job satisfaction, financial satisfaction and overall happiness are all lower now than the average for the past 20 years.

But Americans don't listen to pollsters and economists. They listen to neighbors, to friends, to family; they look at their own situation and say yes, we have a little more money, but new cars are expensive, and while microwaves may be cheaper, the utility bill hasn't gone down. "Even those who say they're doing O.K. now think that other people are losing ground," says Susan Mitchell, author of The Official Guide to American Attitudes. "They all know people who were laid off. Even if it was distant cousin Billy Bob, just knowing someone who was laid off shakes your faith."

What's new about the new economy is that it's scary all the time, not just in cycles. Globalization, for example, may be essential and inevitable and highly profitable, when free-trade policies push the share of exports and imports from 17% of our economy to nearly 25% over the past 20 years. Last week GM, which has lost market share to the Japanese, produced the first right-hand-drive Cadillac to be sold in Japan. But because the market is global, there is no longer even the illusion of control, of national boundaries, and that's what really frightens people. Factories in Karachi, Pakistan, can now produce shorts as quickly and cheaply as an American company in Quitman, Ga. U.S. manufacturers have hooked up computerized counters to sewing machines so they can monitor how quickly each seamstress joins two pieces of fabric. Not only does that give instant feedback on productivity, but the new, networked plant also cuts down on the number of supervisors on the cutting-room floor.

New technology may be fueling gains in productivity, but that means many people are working harder than before, especially since their laptops and cell phones stretch the office all the way home. Car repairmen are carrying beepers; husbands and wives rise in the morning and log on to read their E-mail before they make the coffee; the TV in the neighborhood sports bar is tuned to CNBC, because the trading never stops. Americans are working 160 hours more each year than they did 20 years ago, moonlighting is on the rise and nearly half the respondents in one survey said they have less time for lunch. They stop at the back-rub store for five minutes to get some quick relief. They stop at the supermarket to pick up a precooked "home-meal replacement." Anxiety disorders affect more people than depression or substance abuse. "People were saying, 'As soon as things get good, I'm going to take some time off,'" says pollster Celinda Lake. "And now they say, 'Oh, my God, things have gotten as good as they can get, and I can't take time off or stop that second job.'"

The National Association of Colleges and Employers reports that the class of '98 has the rosiest economic prospects in a decade; but even graduating seniors at the most prestigious universities are risk averse, very conservative in their career choices, as though the ground could shift at any minute. "There used to be much more willingness to take chances in choosing what to major in or what profession to pursue," says Yale historian Stephen Lassonde. "Now everyone wants to go straight into a consulting job the day after graduation. That way they know they'll have a job and can start paying off their loans, and their parents won't accuse them of wasting their time after spending all this money on this credential."

As college becomes harder to afford, students realize they can't afford not to go: this economy pries open the gap in prospects for those with a college degree and those without. The average CEO of a large company now earns 200 times more than the average worker, up from a 40-fold difference in the 1970s, according to trend watcher and author Gerald Celente. And for those who drop out, the options for unskilled workers keep shrinking, as does the safety net beneath them if they fall out of the economy altogether.

That too represents an enormous psychological change from the 1950s. In the postwar boom, there was general agreement about shoring up the New Deal institutions that promised to protect people if there were another economic earthquake. That consensus was carried into the expansion of the 1960s but then rolled back in the 1980s. "Most people may want to see welfare reformed," says Mitchell, "but a by-product of that is the widespread notion now that you're on your own. The old social contract that there will be help in bad times is disappearing."

The politicians who are dismantling that social contract have had to find cheaper ways to address the insecurity that voters express. Bill Clinton is a master at playing to people's fear of losing control. He offers cell phones to citizen patrols and television ratings for absent parents. As more and more corporations shovel workers into managed-care programs, Clinton unveils a new patient "bill of rights": "I think it's fair to say that almost every family feels some insecurity at the scope and pace of change in the world," he said. "There are so many people in this country that, because of these changes, feel like they're always going to be on the losing end of cost-cutting and quality issues in every sector of life." Much of the legislation that has passed--with bipartisan support--has been designed to soothe a country in flux: Kassebaum-Kennedy health-care portability, so that when you switch from one job to the next, your benefits are secure; minimum-wage increases to fight off the market's pressure on the working poor; and tax credits for families with children.

All this stress has inspired corporations like AT&T and Boeing to recruit poets and other spiritual gurus to help managers cope creatively. "I teach people to find a special, still place inside themselves," purrs Richard Sandore, an obstetrician turned Andean shaman healer who founded a company called Soaring Spirit Inc. As a practitioner of "energy healing," Sandore works with Chicago-area businesses to tap the intuition and wholeness "that produced the works of Shakespeare and turned Microsoft into a billion-dollar giant within a decade."

Decisions that were never easy have become even harder: Sue Medrano, an information-systems analyst for a large brokerage firm in San Francisco, is thrilled to be making $70,000 a year but can't figure out when to take a vacation, let alone have a baby. Lynn Andel, an advertising writer in Crestwood, Mo., isn't sure whether to buy life insurance to protect her kids or invest in stocks for her retirement. In this climate, it is easy to find people like the Jorjorians in affluent Wilmette, Ill., who are raising two children and finding it tough to get by on their $170,000 joint income. Their life-style is comfortable but hardly extravagant. They drive a '93 Ford Taurus and a '91 minivan. Vacations are almost always limited to visits with relatives in Michigan. "I earn more in a month than my dad did in a year," says Greg, 52, managing director for a chemical-sales company. "But I feel my life is more difficult," he says, sounding as baffled as discouraged. "I don't gamble. I don't have season tickets to the Bulls. How can I earn this much but not have anything left over?"

Spending patterns suggest that a certain amount of modern stress arises from a struggle to keep up with ever growing expectations. "What we consider a middle-class standard of living now was considered rich 30 years ago," says Mitchell. "My neighbor lives with his young daughter, and he has three cars. Does he really need three cars? He can only drive one at a time." Children are especially absorbent of discretionary income: the obvious equation is that the less time parents have to spend on their children, the more money they spend, on dance lessons and soccer uniforms and the tutors hired for $250 an hour to help prepare for the SATs. This year, helping make Christmas shopping a little less arduous for stressed-out parents, Toys "R" Us is offering a computerized registry so children can roam the aisles making their selections and the store can spit out a list for Santa.

This complex chemistry of means, needs and expectations makes for some contradictory behavior. This Christmas, high-end stores and discount outlets are having the best season: stores in the middle are struggling. It seems that most consumers are engaged in a constant, personalized cost-benefit analysis. If they feel they got a good enough bargain at the Price Club on toilet paper or dog food, they allow themselves the Starbucks confection that costs four times as much as a regular cup of coffee.

On the other hand, maybe these reflexes aren't so surprising. Everyone has heard stories of the Depression-era parents or grandparents who were still recycling string and splitting two-ply toilet paper long after their portfolios had reached seven figures. There is something about even a glimpse of poverty, much less the experience of it, that leaves scars, of humiliation and terror and resolve not ever to live there again. In a restless age, when the days are long and dense and full of surprises, when industries change overnight, it's little wonder that it's harder to dream, easier to toss and turn till morning comes again.

--Reported by Wendy Cole/Chicago, John F. Dickerson/Washington and Aisha Labi/New York

With reporting by WENDY COLE/CHICAGO, JOHN F. DICKERSON/ WASHINGTON AND AISHA LABI/NEW YORK