The Coming Revolt of the Middle Classes

January 18, 1994|By RICHARD REEVES

PARIS — Paris.--Traveling through Europe to talk about bombs and boundaries, President Clinton must have wondered why anyone in these parts wants to be a politician.

Not only are European leaders on the front line of multinationalist explosions, but most of the continent seems doomed to continuing economic decline linked to multinational commerce and industry.

Mr. Clinton, the American politician, never had it so good, he read in last Thursday's International Herald Tribune. ''As encouraging evidence of an American economic recovery crowds in almost daily,'' reported Erik Ipsen in the Trib's lead story, ''much of the rest of the industrial world looks impatiently for hopeful signs on home soil.''

''Creeping crisis,'' said the paper of the prospects of the United States' democratic, free-market allies from Western Europe to Japan.

Then the reporters turned to economists and corporate men for advice. Those free-marketeers offered a solution that may make sense to them and for them, but could create an exploding crisis for all democratic politicians, beginning with Mr. Clinton: Just squeeze your middle class until workers are willing to work for the same wages as workers in, say, China!

''Today's investments in China and across the emerging nations are tomorrow's televisions, textiles and toys flooding world markets at hard-to-beat prices,'' preached the Trib and its experts. ''Older, richer rivals face years of remedial tinkering with everything from overly large public sectors to rigid labor markets.''

That's us -- a richer, if not older, country. Then the experts got more specific about their ideas on remedial tinkering:

''We need major cuts in costs and living standards before we can price ourselves back into growth and work. The realization that we must work harder for less money is not there yet,'' said Sipko Hulsmans, president of the British chemical company Courtaulds PLC.

''We have to deregulate, deregulate and deregulate. . . . What is needed is tough, tough leadership. We need leaders to tell the European electorate that they have priced themselves out of a job,'' said David Rosch of Morgan Stanley International.

''We need more flexible labor arrangements in Europe -- larger differentials in wages between regions, between job qualifications and between industrial sectors,'' said Horst Siebert, president of the Kiel Institute of World Economics in Germany.

This is serious stuff. The ideas behind those words amount to ''downscaling'' the middle classes of the developed world. But doing anything like that will eventually breed political warfare in Germany, in France, and finally in the United States. The American president realizes that, which is why, after signing the NAFTA free-trade agreement with Mexico and Canada, Mr. Clinton began calling for higher wages, trade unions and stricter work and safety rules in Third World countries. This time, he meant Mexico.

But the idea that Mexican wages and practices could reach American levels in the next couple of decades (if ever) is patently ridiculous. The thinking of economists and other big shots is that Mexican (or Chinese) earnings will rise as U.S. (and German) earnings decline.

The experts may be right statistically and economically. But politically, those ideas are dynamite. At some point in such a process, middle classes are likely to revolt -- and that revolt will be against politicians first and then free-market political systems.

After seeing some of that in Europe, from Brussels to Moscow, the president of the United States might think that a lot of democratic politicians should begin looking for another line of work before this kind of new economics and politics hits the fan.

Richard Reeves is a syndicated columnist.

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