Mr. Clinton, Economic Miracles Aren’t Breaking Out Across Europe : Industrial policy: His advisers mistakenly think the answers to the recession can be found on the Continent. But they aren’t even working there.

As President, Bill Clinton’s fatal attraction may not be his pandering or his passion for cheeseburgers, but his longing for European-style industrial policies. Highly statist and, at best, ill-suited to American reali ties, these European models could lead a Clinton Administration onto a dangerous course at a time when the opportunity to reverse our economic stagnation is greatest.

Whether Clinton takes the European road will depend, in part, on his faith in such advisers as Harvard’s Robert B. Reich and business consultant Ira Magaziner. They advocate importing European, especially German, economic models to America. With their powerful central bureaucracies, industrial strategies and tough regulatory regimes, certain European countries, as Reich puts it, seem “organized for economic adaptation,” while America is not.

Although Japan’s economy is frequently mentioned as also enviable, few Clinton economic advisers prefer its reliance on relatively low levels of government taxation and spending, as well as its government’s focus on small-enterprise development. Equally important, their intellectual roots lie in the European economic experience, not in East Asia.

Due largely to the incompetence or ignorance of his primary opponents and, later, to the economic ineptitude of George Bush, Clinton’s European fixation has rarely been scrutinized. Yet, his Europhilia largely rests on false economic assumptions and simple neglect of the enormous social and historical differences between America and the Continent.

During the primary campaign, Clinton often proclaimed that America needed to catch up with “the high-growth economies of Europe.” Implicit in this message is the suggestion that America must shape its industrial policies along European lines if it wants to achieve Europe’s levels of manufacturing productivity and technology. Over the past 15 years, however, Europe’s major economies--with the exception of a brief period in the late 1980s--have generally lagged behind not only Japan’s but America’s, both in terms of rates of economic output and business investment. Germany ranks near or at the bottom in each category.

Even now, most of Europe’s economies are growing slower than ours, with higher rates of unemployment and of job losses in manufacturing. Things are so bad that, compared with German Chancellor Helmut Kohl and British Prime Minister John Major, Bush would seem a wildly popular guy.

More to Clinton’s point, the strategies of European governments, in general, to steer capital and technical resources into manufacturing industries have failed to keep their producers ahead of competitors in either East Asia or the United States. During the 1980s, West Germany suffered the lowest rate of growth in manufacturing productivity among the industrialized countries, barely half the United States.

Equally revealing, the two European countries that kept pace in the industrial-productivity race were Great Britain, whose regime loathed government direction, and Italy, which may well have benefited from having no effective government at all. In contrast, dirigiste France, whose industrial policy is toasted by outfits like the Berkeley Roundtable on the International Economy, has not only lagged but has seen its manufacturing trade balance dive since 1987.

Another approach likely to be pushed by Clinton’s Europe-oriented brain trust is the idea of establishing high-technology consortia between local high-tech companies and government. Yet, for nearly a decade, these high-tech consortia--BRITE, Esprit, Race, BEP, BAP and Comett, to name a few--have flopped in their stated mission to bolster Europe’s flagging technological power. Europe’s share of the world’s high-technology market, including Germany’s, has skidded since 1980; in some key sectors, such as semiconductors and personal computers, Europe struggles to stay out of fourth place behind not only the United States and Japan, but nations of East Asia.

Even in aerospace, where huge government subsidies have helped expand Europe’s presence, much of the critical technology originates in North America, particularly from parts producers in regions such as Southern California. By some estimates, in fact, up to 40% to 50% of the value added to recent Airbuses comes from U.S. companies and their subsidiaries. Meantime, some Airbus partners are undergoing restructuring and laying off workers.

Indeed, all the best-laid plans of Europe’s bureaucrats have not halted the erosion, since the 1970s, of Germany’s share of world markets in chemicals, machine tools and telecommunications equipment, sectors representative of its strengths. Although German exports per capita are far higher than ours, the United States overtook Germany last year as the world’s leading exporter, in dollars, and has enjoyed a steady, overall trade surplus with Europe, including a nearly $4-billion edge in electronics.

Statistics aside, the more difficult question seemingly ignored by Clinton’s Europhiliacs is whether the enormous differences in Europe’s and America’s social, demographic and political realities impede the successful importation of their economic models. Even the importation of such a seemingly innocent idea as Germany’s highly praised apprenticeship training program may be problematic. By providing rigid training for the non-college bound, the German system, its advocates argue, creates an alternative path for working-class and poor youths.

The Clinton advisers who want to adopt this kind of program overlook the fact that the German system enjoyed its greatest success during the 1950s and 1960s, when labor shortages were severe and the technical environment was far less sophisticated. Such conditions all but guaranteed jobs for graduates. Even so, the German system may be too cumbersome and highly structured for today’ U.S. economy, where relevant skills are constantly in flux.

Another proposal with a European imprimatur favored by some Clinton advisers is a mandatory training system financed by a 1.5% payroll tax. Again, this idea seems more suitable to an economy of corporate behemoths than one of small companies dependent on flexibility for survival. Japan, it may be noted, has no such government-imposed system and the lowest per capita government expenditures on training, which is principally done by private companies.

Moreover, the German and class-based European education systems, with their emphasis on sifting out non-academic youths as early as possible, have not succeeded in dramatically boosting the critical science and engineering skills of their work forces. Today, virtually all the European nations suffer from shortages of scientific talent--France graduates barely half the engineers needed by its industry. Combined, European nations produce fewer technologists per capita than either the United States or Japan.

Finally, Europe and America face radically divergent demographic realities. Throughout the last two decades, continental Europe’s highly socialized economies have produced few new net jobs, a reality somewhat ameliorated by slow growth in their labor force and the strong welfare net. Immigrant populations, welcomed during periods of economic expansion, are kept on the margins of society in harder times, subjected to often brutal anti-immigrant sentiment as is now commonplace in Germany and France.

By contrast, the United States remains, in a profound sense, an immigrant society, with the most rapidly increasing population in the advanced industrial world. During the 1990s, for example, Western Europe’s labor force is not expected to grow, while America’s potential employment base will probably expand by nearly 10%. Europe’s demography makes the prospect of economic stagnation, if not pleasant, somewhat tolerable; America’s diversity and growing population require a more rapidly expanding economy that assures far greater avenues for social mobility.

By rallying to Clinton, voters seem to be signaling their desire for a government more involved in promoting economic growth. But before adopting any blueprint, a Clinton Administration should look to the economic models that have worked here, like the Agricultural Extension Service, Civilian Conservation Corps, GI Bill and land-grant colleges. Looking to Europe for ideas that have produced slow economic, industrial and job growth is a non-starter.