Naming Reich, Clinton chooses advocate of large federal role in economy

November 13, 1992|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Washington Bureau

WASHINGTON -- President-elect Bill Clinton's choice of Harvard professor Robert B. Reich to head his economic transition team gives the initiative to a political economist who advocates pump-priming, federal industrial planning, educational reform and reducing income disparity.

Mr. Reich, 46, who is considered likely to fill one of the next administration's key economic appointments, is a prolific writer with a reputation of being an innovative thinker. He has recently concentrated on analyzing how the United States should fit into the post-Cold War global economy.

He has influenced Mr. Clinton's economic outlook for 24 years, since the two men met on a ship to England, where both were Rhodes scholars at Oxford University.

Mr. Reich, who had never been on a ship before, was seasick throughout the voyage, and Mr. Clinton called at his cabin to comfort him. It was the start of a friendship that ran through Yale University's law school and eventually helped shape the economic platform on which the Arkansas governor won the election Nov. 3.

Mr. Clinton called Mr. Reich at his Cambridge, Mass., home Wednesday night to ask him to join the transition effort and help select the economic team that will be charged with jump-starting the sputtering economy immediately after the new administration takes power in January.

Mr. Reich later told a Harvard colleague, John Donahue, that he was going to Little Rock, Ark., as "a process manager" to handle "a complex set of issues with a lot of powerful forces and personalities involved."

Mr. Donahue, who has taken over teaching Mr. Reich's class at Harvard University's John F. Kennedy School of Government on the relationship between business and government in the United States, said of Mr. Reich, "He specifically intends to put his own priorities on hold. He has had 25 years of letting Bill Clinton know what he thinks is important. That is not what he is going to try to be doing now.

"People are going to look at Bob's selection and Bob's books and say, 'Ah, this is exactly what Bill Clinton wants to do.' That would be a mistake. What they don't know is he is a superb manager, empathetic, and a competent organizational player, and I think that is the Bob Reich that Clinton called and said he needed."

Mr. Reich's selection came as no surprise at the conservative Heritage Foundation, the Washington think-tank that influenced the introduction of supply-side economics during the early years of the Ronald Reagan administration and where the Clinton economic approach is generally viewed as wrong-minded.

Daniel Mitchell, a foundation fellow in political economy, said, "Bill Clinton basically promised the voter he was going to increase taxes, spending and regulation. That he appoints someone who favors more taxes, spending and regulation is not terribly surprising.

"Reich thinks he and his assorted friends are smart enough to plan the economy, and I don't think that is going to bode very well. The only good thing I would say is that he is not explicitly [trade] protectionist. But on the negative side, he is a planning type."

Among major points Mr. Reich has made in recent writings are that economic growth should take priority over the deficit, public spending should be increased, the education system should be reformed, and the growing income disparity between the rich and poor should be reduced.

In his latest book, "The Work of Nations," he argues that equating the strength of the U.S. economy with U.S. corporate profitability and productivity is "an axiom on the brink of anachronism"; that the nation's economic emphasis has to shift from "who owns what" to who "learns to do what"; that "government abdication of its market-creating responsibilities" can be expensive; and that the growing income gap is undermining social cohesion.

He laments "the docility of the less advantaged" and says, "There has been no significant demand that the nation return to a more progressive system of taxation; no organized insistence that large sums of money, so raised, be dedicated to the education, training, transport and general well-being of the rest of the population."

In an increasingly interdependent world, he advocates "positive economic nationalism," saying, "It seeks to encourage new learning within the nation, to smooth the transition of the labor force from older industries, to educate and train the nation's workers, to improve the nation's infrastructure and to create international rules of fair play for accomplishing all these things. The objectives of such investments are unambiguously public."

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