American workers must face reality - need for an industrial policy

USA Today (Society for the Advancement of Education), March, 1994 by Robert Reich

THE U.S. ECONOMY stubbornly resists conforming to its old patterns. Unemployment remains high. Many individuals who hope for full-time jobs are forced to work part time. An ever-growing number are temporary workers, with no benefits or job security. The comfortable landscape of steady, sturdy mass production and rock-solid corporations has been altered irrevocably. At the same time, two all-American growth industries have gone into decline. The paper entrepreneurialism that sustained the swelling ranks of lawyers and investment bankers throughout the 1970s and 1980s - the seemingly endless opportunities for reshuffling assets through mergers and takeovers - is a bubble that appears to have burst. Nor can the U.S. continue to dedicate much of its economy to defense spending when the communist menace has faded.

The nation's economy is undergoing a transformation of unparalleled depth and scope. Corporations are downsizing and retooling. Even among the highly skilled who serve these businesses, the changes are felt. Executive positions are becoming less and less secure today.

What of those further down the economic ladder? Secure, high-wage jobs in routine manufacturing - the traditional gateway to the middle class for those without college educations - are becoming scarcer. Americans without high skills can not command high wages when hundreds of millions around the world are able to do such jobs and willing to do them cheaper. Even if the revolutions in transportation and communications never had happened, even if the ranks of industrialized countries had not expanded enormously in the past three decades, the transformation of technology still would have set in motion pressures that squeeze aside the unskilled. Even without the tectonic shifts in trade and technology, the end of the Cold War means wrenching realignments in the nation's economic priorities.

Economic change on this scale causes pain, which, in turn, inspires resistance. What is being witnessed today is an alarming epidemic of what might be called the political pathologies of economic change. One of these is a misplaced nostalgia for the good old economy of the 1950s or 1960s - forgetting, in the haze of fond remembrance, the narrowness and insularity of a more self-sufficient national economy, the gross waste of human spirit and intellect when men and women still did the routine jobs better suited to machines, and when women and minorities had virtually no hope of acceding to positions of corporate leadership. Also forgotten is the ultimate absurdity of dedicating so much of the economy - so much of the best of American physical, technological, and human resources - to the sterile rearranging of assets and preparing for an apocalyptic military confrontation that all prayed never would come.

A second political pathology of changing times can be called reservationism. The dynamics of international competition and new technologies, decreased defense spending, and corporate down-sizing severely have shaken the economic ground under Americans' feet. Considering these circumstances, it is not surprising that those who stand to lose will struggle fiercely to stay in place. Hence the spectacle of anxious individuals seeking shelter against workplace transformations caused by new technologies, demanding protection from foreign competitors, and resisting the contraction of defense industries and closure of military bases.

The third political pathology - and by far the most dangerous - is blame-casting. It often is tempting, and far easier than coming to terms with a changing world, to define oneself as victim and launch a search for villains. Some Americans, buffeted by economic turmoil, cast blame on foreign producers in Japan, Europe, or developing nations. Energies better spent on adaptation are squandered on efforts to shut out the perceived menaces from beyond the nation's borders.

Creating adversaries and fostering enmities to maintain the old machinery, whether military or economic, will keep the U.S. neither safe nor prosperous. National economies have a way of spilling over their country's boundaries. The reality is that the economies of Japan, Europe, and a great many newly industrialized nations now are entwined intricately with America's. The U.S. can not achieve prosperity through denying this interdependence.

The world is not a vast zero-sum game, wherein either they win or we do. Japan or Europe develops some innovative product, and Americans benefit right away from the option of buying it. Americans benefit even more long-term as they scramble to do better and get smarter in the process - and so it goes, continually. The human imagination, the source of innovations, is the world's most infinitely renewable resource.

While many workers in the U.S. are apprehensive about greater economic openness to low-wage nations such as Mexico, the reality is that trade-expanding policies like the North American Free Trade Agreement offer more to hope for than to fear. The U.S. market for Mexican products largely is open already. What NAFTA does is not so much open the U.S. to Mexican exports as it further opens Mexico to American exports. Resistance to world trade denies U.S. companies - and their employees - access to markets that will grow far faster than their counterparts in the U.S.