Newsgroups: alt.rush-limbaugh
Date: Tue, 12 Jan 1993 12:05:35 -0500 
From: James William Stepanek <js43+@andrew.cmu.edu>
Subject: Reich's Cultural Revolution

From Investor's Business Daily, Monday January 11, 1993

"What are Clinton's Good Jobs?"
"Labor Reich Thinks They're in Manufacturing"

by Paul Sperry
In Houston

Like his future boss, Labor Secretary-designate Robert Reich has a soft
spot for manual Laborers.
    Reich argues that real work- the kind performed by assembly workers,
retail clerks and waiters- is monotonous and "causes muscles to tie and
weaken"
   Much of the effort of employees who primarily exert their brains to
earn a living "does not count as work at all" he says. They, in
contrast, engage in puzzle-solving and "significant amount of chatter" .
    Among such non workers, Reich claims, are "research scientists,
design engineers, management consultants, advertising and marketing
specialists, film producers, directors, editors and publishers, software
engineers, writers, architects, or -even if the world really needed
them-investment bankers and lawyers".
    That said, Reich appears to discount his own profession as a lawyer,
Harvard lecturer and writer.
    Reich made these comments in his 1991 book "The Work of Nations"
which advocates redistributing the earnings of the growing number of
brain-workers, or "symbolic analysts," to the ever-shrinking class of
brawn-workers, whom he paints as victims of corporations "global
web-spinning."
    President-elect Clinton, meanwhile, bemoans the hundreds of
thousands of manufacturing jobs lost during the last two recessions. He
says he won't rest until blue-collar workers are moving back into those
industrial jobs.
    To that end, he and Reich have proposed a kind of job-preservation
plan, which includes mandatory worker retraining.
    But labor economists say that most of the manufacturing job cuts are
permanent. They aren't lay-offs that can hitchhike back on the next big
demand cycle.
    Rather, much of the reduction in the work force is the result of
productivity gains. Thanks to upgraded plants and equipment-the steel
industry alone invested more that $12 billion in the 1980s - and
downsizing, manufacturers are doing much more with one tactile worker.
    "When you go into a steel mill today, you don't even see vats
pouring molten steel anymore" said Audrey Freedman, president of
Manpower Plus, a New York labor consulting firm. "You see hard-hats,
yes. But you see them at a control panel."
    "Now," she added,"one worker can control a whole mill"
    According to the National Association of Manufacturers,
manufacturing productivity rose at an average slip of 3.1% a year from
1979 to 1990- eclipsing gains during the 1948-1973 period of rapid
economic expansion.
U.S. manufacturers are now more productive than their Japanese and
German counterparts. The average U.S. factory worker, in fact, is 20%
more productive than Japan's according to Commerce Department data.
    In his book, Reich fails to mention such productivity gains, which
have made many manual jobs obsolete, as a factor in shrinking industrial
payrolls.
    Instead, he inveighs against corporate executives - whom he contends
are trying to preserve their inflated salaries - for handing over U.S.
manufacturing jobs to cheaper workers in Taiwan, Singapore, Mexico and
elsewhere.
Advantages Outside U.S.
    Indeed, heavy industries, as well as light manufacturers such as
computer makers, have taken advantage of much lower, nonunion labor
rates available abroad. But Reich fails to recognize, as do
protectionist critics of the North American Free Trade Agreement, the
benefits of setting up shop in other countries.
    If jobs are lost to Mexican laborers under NAFTA, for example, even
more jobs will be created on this side of the border as U.S. companies
step up exports to Mexico, most trade economists assert.
    Americans also have lost menial jobs to new inventions-voice
processors, ATMs, scanners and mail-sorting machines - at home. This
also troubles Reich.
    But he doesn't address the argument at more efficient machinery
increases profits, which are then plowed back into other industries. In
turn, those new investments in other industries absorb the workers
displaced by the new technology.
    Reich and Clinton, moreover, have characterized U.S. manufacturing
as a dying sector of the economy that needs to be saved. That may be
both inaccurate and unduly alarmist.
    Their mistake, some labor economists assert, is confusing shrinking
employment with shrinking output. The much reported deindustrialization
of the U.S. economy has not occurred, as many other pundits insist, they
say.
    In fact, National Association of Manufacturers says that
manufacturing constitutes the same percentage of GDP as it has since the
postwar years of the late 1940s - between 19% and 23%.
    This is good news for manufacturers, who are doing more with fewer
workers. But it's bad news for displaced workers.
    Removing a worker - and his or her earnings - from the capital cycle
diminishes the economy's dynamism. Reich is right to propose that
displaced  workers be reintegrated into the labor market through
intensified education and retraining.
    His proposals for doing that, however, concern some labor economists.
    Reich - who says he's abandoned his earlier industrial policy ideas
- advocates requiring employers to spend 1.5% of payroll for continuing
education and training of all employees.
    Though trained as a lawyer, Reich was Clinton's chief economic
adviser during the campaign. And his mandatory training idea was a major
plank in Clinton's platform.
    At his Senate confirmation hearing last Thursday, Reich testified he
would not back down from his proposal, calling it "not unreasonable."
    But some argue such a plan amounts to another type of responsibility
that the government would shift to business, which amounts to federal
industrial policy that Reich says he now opposes. And such policies,
while well-intentioned, have backfired in the past.
    "Increasingly over the last 30 years, we've asked private employers
to supply social welfare," Freedman said."And now we're realizing it's
diminishing new job creation" by taking investment capital out of the
economy.
    Before, government shifted such burdens to big business when they
enjoyed oligopolistic profits - profits derived from having only a
handful of suppliers in a given industry with large barriers to entry by
other firms -  and could absorb additional labor costs.
Communal Responsibility
    But market shares have shrunk while union wage demands, government
regulation and taxes have grown.
    The combination has prompted big companies such as International
Business Machines Corp. and General Motors Corp. to shed whole layers of
employees, including managers and other white-collar workers.
    "When Clinton talks about worker education and training, he's
talking about social programming,"Freedman said."But we need to say, '
Hey, wait a minute, this is a communal responsibility.'"
    But government hasn't been able to handle it.
    U.S. primary and secondary public schools don't do as good a job as
public systems in other countries, such as Germany and Japan, whose
industrial workers compete against U.S. workers.
    U.S. manufacturers have been forced to allocate money to in-house
education programs to tech even factory workers with high school degrees
such fundamental skills as reading and writing.
    Unfortunately, many shop workers - particularly those protected by
organized labor contracts - don't bother to continue their education on
their own.
    "They have no immediate sense of needing to upgrade their
qualifications" until it's too late, said Ben Fischer, a labor relations
professor at Carnegie Mellon University in Pittsburgh. "When it finally
dawns on you is when you lose your job."
    More than an individual problem, the failure of individuals to
pursue further education and training affects society as a whole. A
displaces worker who fails to re-enter the work force becomes dependent
on government aid and turns into an economic liability instead of a
productive asset.
    But who should take responsibility for unmotivated workers? Reich
argues that private employers should.
    In his latest book, Reich expresses longing for the days when
management had a patriarchal relationship with labor. He also laments
withering union membership.
    "As the old corporate bureaucracies have flattened into global webs,
bargaining leverage has been lost," he wrote.
    Since the market for their products and services is no longer
limited to U.S. borders, executives cannot only pocket savings from
cheaper foreign labor but even broker themselves out as consultants for
additional earnings, Reich grouses.
    Thirty years ago, he added,"It would be unseemly for executives ...
to take home wages and benefits wildly in excess of what other Americans
earned."
    In other words, Reich faults ambitious Americans for using their
brains instead of their hands and getting paid more for it, especially
by developing nations whose people want to stop using their hands so
much.
Exploitive Relationship
    Regardless, manufacturers can no longer afford to be benevolent. By
the same token, workers can no longer afford to be complacent.
    "There's an arm's-length relationship to employment now," Freedman
said. "It's no longer paternalistic. It's become more exploitive on both
sides. The employer asks what he can get out of a worker right now,
because he may not need him tomorrow. And the employee asks what he can
get out of this job for the next job.
    "It's neither good or bad," she added."It just orients people to
take care of themselves."
    But Reich wants to spread a safety net below those who don't. Only
its cost - 1.5% of payroll - may be out of reach for most small
companies.
    "Small companies don't have the resources to afford" a retraining
tax or a proposed hike in the minimum wage, Fischer said. Many "can't
even afford all the (labor ) consultants that are milling around."
    Reich's notion that government can save private jobs by telling a
company how to retrain its work force has been "woefully ineffective" in
the past, he added. 
    "The trouble is he (Reich) doesn't have any money invested" and
can't empathize with the tough choices management has to make, Fischer
said."He writes books" for a living.
    Freedman agrees, adding that Reich is "extremely doctrinaire" in his
beliefs.
    His new "public investment" spin, which he insists is aligned with
free-market ideals, is really part of the "old baggage that old
academics sometimes carry" maintained Freedman.
    Some detractors question whether a untenured professor at Harvard's
Kennedy School of Government will full understand the deleterious
effects his proposals might have.
    "The constantly heard mantra of 'worker as victim who needs to be
retrained in order to create jobs' is sheer economic nonsense," Lawrence
A. Kudlow, Bear, Stears &Co. chief economist, said recently."Workers do
not create jobs. Businesses create jobs
    Elsewhere in his book, Reich implied that his so-called symbolic
analysts - white collar workers - should foot the bill for others. Reich
backs Clinton's proposed tax hike to 36% on the top income bracket, and
advocates in his book raising the tax rate on short-term capital gains.
    In Reich's view, the U.S. Economy is two-tiered.
    On the upper level are the symbolic analysts who pool their private
resources to live better at the expense of others. On the lower tier are
the in-person servers who wait on the symbolic analysts, and the
security guards - mentioned repeatedly as one of the fastest growing
occupations in the so-called rapacious 1980s - who protect their
trappings.
Service Wages Growing
    But Reich fails to note that many of those symbolic analysts were
once waiters or manual laborers while struggling through college to earn
their higher positions.
    He also avoids the fact that many of the so-called second-citizen
jobs he broods over pay well.
    Wages for the service sector jobs that Reich derides as too low have
actually been growing at a faster rate than those for manufacturing. As
workers get more skill and more education, their value to employers
increases - giving them the ability to bargain for higher wages.
    If current trends continue, data from the Coalition of Service
Industries show that sometime in the mid-1990s service-sector jobs will
actually pay more than those jobs in manufacturing that Clinton and
Reich want to protect.

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