THE WORK OF NATIONS:
PREPARING OURSELVES FOR
21ST CENTURY CAPITALISM.
Robert B. Reich.
331 pages. $24.
Now that patriotism is resurging, two leading automakers are boasting that their cars are built in the U.S.A. Honda's ads promote its new Accord wagon as "the amazing new car from Ohio," while Nissan's praises the "all-new, American-built Sentra."
If you're puzzled by Japanese-owned companies waving the red, white and blue, read Robert Reich's insightful analysis of a global economy where a car with an American nameplate might have an engine built in Japan, styling designed in West Germany, smaller components made in Taiwan and advertising written in Britain.
As Mr. Reich entertainingly explains, new information technologies and global competition have reshaped the world economy as thoroughly as the industrial revolution two centuries ago. By entitling this book "The Work of Nations," he recalls Adam Smith's "The Wealth of Nations," which advocated free trade and free markets at the dawning of the industrial age.
Just as Adam Smith attacked the mercantilist view that prosperity depended upon accumulating gold and silver, Mr. Reich debunks what he considers an outmoded economic nationalism that holds that a country's prosperity depends upon the success of corporations headquartered within its borders. In fact, he argues persuasively, today's transnational corporations have no national loyalties -- just bottom lines.
In proving his case, he has no more convincing witnesses than corporate executives themselves. Almost four decades ago, General Motors chairman Charles Wilson made the famous declaration, "What's good for General Motors is good for the United States and vice versa." Now, the president of NCR Corporation says, "I was asked the other day about United States competitiveness and I replied that I don't think about it at all. We at NCR think of ourselves as a globally competitive com
pany that happens to be headquartered in the United States."
A Harvard political economist who has advised leading national Democrats, Mr. Reich rejects the view, prevalent in both parties, that public policy should favor U.S.-owned companies against foreign-owned firms through import quotas, anti-trust exceptions and tax reductions. After all, "American" companies now conduct routine manufacturing, data processing and even research and development overseas, while "foreign" companies employ U.S. assembly-line workers, scientists and engineers to make products for sale not only in the United States but in markets all over the world. On today's global playing field, it's tougher than ever to figure out who, if anyone, is the home team.
Posing the question "So who is us?", Mr. Reich offers this answer: "The only aspect of a national economy that is relatively immobile internationally: the American work force." Seeking to translate this insight into public policy, he opposes some traditional remedies of the right and left, from tax cuts for the wealthy (who might invest their savings overseas) to "industrial policy" promoting U.S. companies (which might be American in name only). He concludes this wonderfully iconoclastic book with the reasonable, familiar and entirely uncontroversial recommendation that America should invest more in education, job training and "infrastructure," such as highways and mass transit.
Investing in human and physical capital would help "us," but Americans no longer are an "us" with anything resembling a common economic destiny. Displaying the phrase maker's flair for pinning new labels on familiar phenomena, Mr. Reich divides the work force into three parts. "Routine producers" make things sold on the world and domestic markets and suffer from international competition. Providers of "in-person services," from health-care workers to clerical employees, depend upon the prosperity of the rest of the population, so their living standards are stagnating. Finally, there are "symbolic analysts" -- manipulators of words, numbers and ideas, ranging from research scientists and software engineers to lawyers, advertisers and film producers. At a time when America remains a world leader in entertainment, finance and the management of multinational corporations, these fortunate folks -- about 20 percent of the population -- are doing very well, thank you.
In fact, members of the fortunate fifth are faring so well that they're "seceding" from the national community, moving to exclusive "techno-burbs," sending their children to elite schools and hiring security guards as private police forces. And they're not eager to pay higher taxes to invest in the less fortunate 80 percent of our society.
So what happens to a country whose non-wealthy majority has turned off on politics and whose most privileged have abandoned the very idea of community? Mr. Reich warns that we may face a future of growing inequality, increasing alienation and social disorder, but he concludes with the hope that "we can, if we choose, assert that our mutual obligations as citizens extend beyond our economic usefulness to one another." His readers may conclude that, if anything, he's too optimistic, for, in the words of the president who defeated an earlier secession, a house divided against itself cannot stand.
Mr. Kusnet was a speech writer for Democratic presidential candidates Walter Mondale and Michael Dukakis.