ROBERT B. REICH: Investing in the Future

When he ran for President against Jimmy Carter in 1980, Ronald Reagan's rhetorical question to voters, "Are you better off than you were four years ago?" is often credited with helping him win the White House.

The question is coming back this election year, and receiving a thorough examination by economist Robert B. Reich in a two-part, four-hour PBS special, "Made in America?" Reich spoke to writer Robert Koehler from his Harvard office in Boston about his ideas for reversing what he sees as a serious American economic decline.

What is at the heart of your appraisal of the U.S. economy in "Made in America?"?

Human beings--their skills, insights and capacities to work--are what our economic future is all about. That's the essential theme of all four hours. Almost every facet of production--such as companies, money, technology and factory equipment--are fairly mobile internationally. The only things which are not are a nation's people and its infrastructure.

My last book, "The Work of Nations," provided the intellectual framework for this series. I've tried to move the analysis away from looking at simple trade imbalances or deciding whether foreigners are playing fair or being obsessively concerned about deficits. The heart of the matter has to do with what Americans have to bring to the global economy.

Many would argue, though, that long-term economic solutions must begin with attacking the deficit. Do you agree?

There are actually two deficits. One is the deficit caused from borrowing to invest in the future, and that's a good deficit; $121 billion of our total deficit is for investment.

But the second kind of deficit exists to pay off today's bills, in which we borrow from the future to pay off the present. That's a bad deficit, since it passes on the bill to our children. It's an abdication of responsibility. Criminal justice to welfare to parks--all of these have to be paid for today. Though we fail to distinguish between these two deficits, eventually, our leaders will have to educate the public on the difference, since it's critical to comprehend.

In the program, you expand the concept of investment to include education. Have you found examples of this?

The public's willingness to invest in its own learning is crucial. You can see this with aircraft production. The Japanese and, to a lesser extent, the Taiwanese are interested in getting their citizens up to speed on the cutting edges of technology. That's why Japan is putting up money for joint ventures with Boeing, and why the Europeans have been subsidizing Airbus Industrie like mad.

The goal is to bring people to the frontier of aerospace technology via a specific manufacturing project. Airbus isn't just about making a profit in the corporate sense. It's more like an educational investment.

Are U.S. companies at a make-or-break threshold now?

They have a choice to make: They can either choose to automate and replace semi-skilled labor with workers who just push a few buttons for robots in a factory, or they can retrain workers. That's why Chrysler interests me: Here's a top-down organization, with Lee Iacocca as a one-man band. But Chrysler (with the production of its upcoming LH car) is taking responsibility downward, and instead of shipping labor abroad, is trying to enhance productivity by giving the workforce responsibility. Still, the LH has yet to enter the market, and the company remains organizationally top-down.

Aren't U.S. workers at the same threshold?

The well-educated are on an upward escalator, because the demand for their problem-solving skills are in demand worldwide. Problem-solvers will do better and better. The people to worry about are those who aren't graduating from high school. The skills of designers, engineers and managers are in greater demand as the world integrates.

Workers who lack skills, though, are finding themselves competing with millions around the world eager to work for a fraction of American-scale wages. These Americans have seen their take-home pay decline. Blue-collar jobs are declining and those who relied on $18 per hour manufacturing jobs are having to resort to service jobs. With no core manufacturing sector, we've pulled up the ladder for a lot of people. There's no way of entering the middle class without a college degree. Yet, we are making it more and more difficult for kids to go to college. At the same time, our country isn't training workers; there's no equivalent of Germany's apprenticeship programs for future workers.

Isn't there resistance among taxpayers and politicians for the kind of public investments you're talking about?

Many of our past investments were justified by the Soviet threat. After Sputnik, we poured money into science education. Now, how do we justify public investments in our economic future? Many Republicans are starting to talk about public-private partnerships, but when push comes to shove, will these plans be sustainable and will politicians be able to take heat from constituents who want immediate returns, rather than wait for results? Can we be honest with ourselves, and say that we need these investments? This will be a great test, and will compel people to put aside ideology.

What can we learn from such events as the riots in Los Angeles and the recent floods in Chicago?

These crises only seem to point out that the root cause of many of our social problems is structural, an economy without an industrial policy that would provide real living-wage jobs and rebuild our infrastructure.

"Made in America?" airs Tuesday and Wednesday at 7 p.m. on KVCR and 8 p.m. on KCET and KPBS.

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