Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 16, 1994 TAG: 9401260017
SECTION: EDITORIAL PAGE: D3 EDITION: METRO
SOURCE: Alan Sorensen Editorial Page Editor
DATELINE: LENGTH: Long
Reich was a Harvard lecturer when he wrote it. Now he's President Clinton's secretary of labor. The book has its critics, its flaws. The argument is a bit overdrawn.
But it is still insightful and suggestive - nowhere more so than when Reich observes that many of our debates about political economy, and even the terms of the debates, have grown obsolete.
We continue to discuss America's economic "competitiveness," for example, as if it were equivalent to the profitability of the nation's core corporations and industries. We still think of these as owners and controllers of vast resources, permanent employers of armies of Americans, cranking out things for the mass consumption that sustains the country's economy.
In fact, the businesses still bear the old names and logos - Ford, General Motors, IBM, General Electric, AT&T, etc. - but they have changed. The core corporation, says Reich, is no longer a sure gateway to the middle class for American production workers and middle managers. It is no longer even American.
"It is, increasingly, a facade, behind which teems an array of decentralized groups and subgroups continuously contracting with similarly diffuse working units all over the world."
Nissan designs a new light truck at its San Diego design center. At Ford's Ohio plant, the trucks are assembled using parts fabricated by Nissan at its Tennessee factory. Whereupon they are marketed by Ford and Nissan in both Japan and the United States. Who is Nissan? Who is Ford? What does it mean to "Buy American"?
Similarly, we continue to talk about (and lament) the shift of jobs from manufacturing to services. But, as Reich points out, this discussion obscures the fact that manufacturing itself is being transformed into an activity more closely resembling services.
In a globalized economy, Americans can't compete with low-cost Third World producers by making standardized products. (Unless we're prepared to reduce our incomes and living standards.) Fortunately, most industries have begun emphasizing value over volume. They more flexibly make things tailored to customers' needs, for which the market will pay a premium.
Thus does profit derive from discovering new links between needs and solutions. Who you going to call? Consulting or marketing services to identify problems. Research, engineering or design services to solve problems. Management, strategic and financial services to broker the problem-identifying and -solving.
Services all, in other words, and all as necessary to successful manufacturing as to any enterprise.
Finally, says Reich, we continue to talk about the economy itself as if it were a national phenomenon. Economists and journalists constantly report and speculate about America's gross national product, its trade balance, its savings and unemployment and productivity growth rates, the profitability of its corporations, and so on.
Yet, "as almost every factor of production - money, technology, factories, equipment - moves effortlessly across borders, the very idea of an American economy is becoming meaningless."
Investors and corporations, scouring the world for profitable opportunities, are increasingly disconnected from their home nations. Americans' standard of living, in turn, depends ever less on the success of the country's core corporations and industries, on the so-called national economy, and ever more on whether one's skills and insights are valued in the global marketplace. This is the true measure of competitiveness, and the core of Reich's argument.
It's also important stuff, I believe. None of Reich's observations is really new, but neither are they embedded yet in the nation's awareness. We certainly haven't come to grips with a vital question they evoke:
If Americans no longer constitute an economy, are we still a society?
Are we still bound by something other than gross national product? If the latter recedes into irrelevance, can we avoid losing all sense of collective responsibility for our mutual well-being?
We can and should stay a society, Reich argues, by striving to do two things:
Concentrate on the one aspect of the economy that is less mobile internationally - the work force, the people. America's challenge, he says, "is to increase the potential value of what its citizens can add to the global economy, by enhancing their skills and capacities and by improving their means of linking those skills and capacities to the world market."
Resist, and compensate for, the globalizing economy's tendency to widen the gap between haves and have-nots. Those who can sell their insights in the world marketplace will naturally enjoy rising incomes. But they ought to care, for practical and moral reasons, whether their fellow Americans go down the tubes.
A practical consideration is noted by NationsBank chairman Hugh McColl in the article above. Leave aside the fact that the quality of a work force depends on its members. A growing underclass, lacking education and training, "is sure to become only more hopeless, more desperate and more dangerous." Among the borders losing relevance may be those behind which the affluent try to retreat into protected enclaves.
A moral consideration can be found in the American Dream itself, according to which hard and honest work is supposed to offer upward mobility.
If skilled problem-solvers connected to the global economy recognize only the community of their high-income peers - if they secede from the masses and provide only for their own kids the child care, the excellent schools, the communications infrastructure and health care that they depended on to become, in Reich's words, "symbolic analysts" - then the link between worth and wealth will be severed. All will depend on whether one was reared in a family and enclave of symbolic analysts.
Academic and economic success already is too closely correlated with parental income. Let this correlation grow rigid, and the consequences will be as harmful and immoral as they are un-American.
by CNB