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The Reich Stuff

A former labor secretary adds his two cents about presidents, jobs and going global


Published October 27, 2004 at 4:00 a.m.

Former U.S. Secretary of Labor Robert Reich vividly remembers the nausea he felt the first time he met Bill Clinton. It was 1968, and Reich and Clinton were both Rhodes Scholars aboard the ocean liner, SS United States, en route to Oxford University. "The Atlantic in the first week of October tends to be fairly turbulent, so halfway across I got dreadfully seasick," Reich recalls. "I retired to my cabin thinking I would die. There was a knock on my door and here was this tall, gangly Southerner holding chicken soup in one hand and crackers in the other and hearing that I wasn't feeling well. My first impulse at seeing the crackers and chicken soup was to vomit."

It would be years before Clinton coined his signature line, "I feel your pain." But that less-than-auspicious introduction was the start of an ongoing dialogue between the two men that would last another 30 years. In 1992, when President-elect Clinton assumed the helm of the ship of state, he brought Reich aboard to lead his economic transition team. In early 1993, Reich was appointed Secretary of Labor, a position he held until 1997. During his tenure, Reich oversaw a number of landmark initiatives to bene- fit American workers, including the Retirement Protection Act, the Family and Medical Leave Act, and the first increase in the minimum wage since 1989. He also launched significant efforts to crack down on sweatshop labor, unsafe workplaces, and pension and health-insurance fraud.

Reich, who is 58, is co-founder and editor of The American Prospect magazine and has written 10 books, including The Work of Nations, which has been translated into at least 22 languages. He is currently the Maurice B. Hexter Professor of Social and Economic Policy at Brandeis University. Last year, Reich was awarded the prestigious Vaclav Havel Prize in Prague for his contributions to global thinking and culture. Over the years, he's served as a consultant to a number of foreign governments and labor unions, and next month heads to Australia at the request of that country's Labor Council.

Reich now serves as an informal advisor to Senator John Kerry. Last week, he spoke at length with Seven Days before this week's Vermont visit, which was sponsored by the Vermont Council on World Affairs.

SEVEN DAYS: There was a time in the not-too-distant past when Vermonters felt like they were shaping the national debate because our former governor was ahead in the polls. At the time, it seemed like Howard Dean was leading a grassroots, populist movement to galvanize the Left and take back America. But once John Kerry became the presumptive nominee, it felt like the Democratic Party lurched back to the center out of fear of alienating swing voters. Do you think that was a wise decision?

ROBERT REICH: First of all, I think Governor Dean played a hugely important role in developing the Democratic message and in inspiring millions of voters, many of them young voters who had not been involved in politics before. And his influence is still felt. So I don't look upon John Kerry's nomination as repudiation in any way of the enormous contributions Governor Dean made. When it comes to nominating a candidate, parties have a tendency to move toward the center ...There are substantial differences between John Kerry and George Bush on foreign policy and domestic policy. But when Democratic voters ultimately came to make a decision, they did what they often do, and that is choose someone they believe has the best chance overall to beat the Republican.

SD: This year, the choice for president couldn't be any more stark. But with all the ammunition the Democrats have at their disposal to challenge Bush's record, are you surprised that the polls show this race as close as it is?

RR: I am a bit, although one learns to be skeptical of the polls, especially these days when it's so difficult for polling organizations to actually get through to people on the telephone, when so many people have cell phones and caller ID. And also when it's so difficult to tell whether someone is a likely voter. This election is going to be decided by turnout, by the people who are sufficiently motivated to go to the polls. So the race may not be nearly as tight as the polls are showing it to be.

SD: But even if it's somewhat close, does that reflect a failure on the part of the Democrats to deliver a clear and consistent message?

RR: Well, you can bet that if Kerry loses, there will be a lot of Monday morning quarterbacks saying the message should have been this or that. On the other hand, if he wins, the campaign will be deemed brilliant. He will be known as the greatest strategist since Bill Clinton. Much in politics is decided in hindsight. So I guess my assessment, honestly, is that, given that right-wing radio and television are so uniformly pro-Bush and so vehemently attacking John Kerry, and given the highly disciplined media machine of this White House, I'm not surprised that much of the public has bought into the deceptions of this administration, ranging from the assertion that Iraq is critical to the War on Terror to the mind-blowing assertion that the Bush tax cut has generated a surging economic recovery. George Orwell understood the principle very well: If you tell a big lie often enough, some people will start believing it.

SD: During the presidential debates, President Bush talked about addressing job loss by promoting better education for American workers. And you yourself have written that we've "underinvested in our people" and need to promote more higher education to create upward mobility. But according to the Bureau of Labor Statistics, seven of the 10 fastest-growing jobs in the next decade will require only a high school diploma and on-the-job training. Is there a point to educating American workers if the jobs being created for them pay low wages, offer no benefits and don't require a college education?

RR: Yes. The president was confused -- let's put it generously -- between the issue of the number of jobs created and a very different issue, which is how much jobs pay. This has been an anemic job recovery in terms of jobs. Education has very little to do with generating more jobs. The way you generate more jobs is you have a strong economic recovery. The way you do that is the government stimulates the economy adequately. A tax cut for the rich doesn't stimulate the economy because the rich already buy as much as they want to buy. That's the very definition of being rich. So, the Bush tax cut was a terribly inefficient way of stimulating the economy and had the unfortunate side effect of widening the budget deficit considerably.

Switch gears and focus on the quality of jobs and the amount of money a job earns. The Bureau of Labor Statistics merely extrapo-lates its predictions on the basis of who has what job now. The problem over the long term is not that Americans will lack jobs. The problem is that if you simply extrapolate from the present, most of those jobs are going to be paying very little. We need to rebuild our middle class and create good jobs in this country. You do that by providing people with adequate early childhood education, good schools, access to higher education, research and development for our universities and industries so that new fields can be developed, incentives to train workers on the job, and many other provisions. [On this issue] this administration has done little or nothing.

SD: One of Vermonters' biggest concerns on the jobs front is outsourcing. Obviously, we're living in an increasingly integrated global economy and that's not likely to change. From your perspective, should we simply accept that certain jobs won't be done in the United States anymore and that our economy and workers must adapt to this new reality?

RR: Outsourcing is part of a larger pattern that began decades ago when manufacturing jobs began moving overseas. Many of those jobs would have gone in any event. Others have been automated away. That is, if they didn't go overseas, they would have been replaced by software. The answer isn't to preserve and protect the old jobs. It's to make sure that Americans get a substantial share of the good new jobs. If you look at the Bureau of Labor Statistics' listing of jobs in 1978 and compare it to today's list, you'll see that about a quarter of the jobs today were not even dreamt of in 1978. There's constant job change. But are we preparing enough of our people for the good jobs of the future? I think not.

I'm not saying that outsourcing is not a problem, although it represents only a small fraction of today's high-technology jobs. It should be a warning bell to us that over the next 15 or 20 years, if we don't maintain our lead in research and development at our universities, our high-tech centers, our infrastructure, then we are not going to have a high proportion of the good jobs of the future.

SD: Then why has so much been made of outsourcing in recent years?

RR: When manufacturing drifted abroad over the last 25 years, much was said of it during recessions, but manufacturing workers didn't have nearly the political clout or visibility of professional and high-tech workers. Profession-al and high-tech workers during this last recession took a beating. Naturally, the movement of some of those jobs to India and China has caused a lot of worrying. But the numbers are still pretty small, relative to the total number of professional and high-tech jobs in the United States. College graduates are still earning good wages and, indeed, their median earnings continue to move upward at a rapid clip, both in absolute terms and relative to the median earnings of high school grads. I don't want to suggest that outsourcing isn't a problem at all. But it's not nearly the problem that it may seem to be from the depths of a recession that is slow to fade.

SD: Can you explain what effect the $413 billion federal deficit will have on Vermonters' quality of life?

RR: It's already affecting their lives because Vermonters are paying interest on that debt right now. A portion of the taxes they pay to the federal government goes to pay fairly wealthy Americans and foreigners who have lent the U.S. government money. Those are tax dollars that are not going to schools or roads or job training or homeland security. They're going to interest payments. Eventually, those huge deficits are going to have to be paid and Vermonters will bear part of that burden. So it's not only a tax today in terms of interest payments. It's a tax tomorrow in terms of paying that debt off one way or the other. It means we get back less for our taxes.

SD: Would you describe yourself as a free-trade advocate?

RR: Not exactly. I believe that there needs to be labor and environmental standards in trade treaties. I think we have to vigorously enforce our trade laws. But I don't believe we should provide huge subsidies to American industries in order to keep them competitive. I hope I'm not irking too many Vermonters when I say that big agricultural subsidies to large agribusiness makes very little economic or social sense. One of the problems with the current administration is that so much of the budget has gone toward corporate welfare ...The recent corporate tax bill is a scandal. And all of this means less money for education, job training, social services, low-income housing, homeland security. It's just fiscally irresponsible.

SD: Congressman Bernie Sanders has said that our current trade agreements aren't helping the working class and suggests that we repeal NAFTA and our current trade deals with China and negotiate new ones. Do you agree or disagree?

RR: I disagree. I think we do have to have labor and environmental standards in our trade agreements, but no one has shown that NAFTA is responsible for our manufacturing decline. Most of the new manufacturing jobs are occurring in China, not in Mexico. And many of those manufacturing losses are due to technology. NAFTA has had very little effect relative to these other forces.

As to China, we do need to enforce our trade agreements. So I'm not a raving free-trader by any stretch. I think protectionism is dangerous and ill-advised. It doesn't deal with the fundamental problem, which is that too many our workers are not prepared for the jobs of the future.

SD: NAFTA has been around for over a decade. Do you think it's delivered on its promises?

RR: No. NAFTA was grossly oversold. Neither the benefits its proponents projected nor the costs its opponents feared have nearly come to pass. China became a much larger manufacturing center much sooner than anyone anticipated. Partly, it's because trade doesn't either create or destroy jobs, it reallocates them. And those who said that NAFTA would create a lot of new jobs in the United States were as wrong as those who said NAFTA would destroy a lot of jobs.

SD: Besides the economic impact of outsourcing, do you have other concerns about jobs going to other countries?

RR: We used to worry a great deal about the loss of our technological edge. But if you examine the issue closely, you'll see that our technological edge depends on our own public investments in everything ranging from basic research and development to public higher education. It's not a zero-sum game, in which there's a certain number of high technologies to be parceled out around the world. There's no necessary limit on the ingenuity of the human mind. The question is, where are innovative things done around the world? If you look to the future economy of Vermont, the question is, what are Ver-monters able to do that contributes to an increasingly integrated global economy? What's the value that Vermonters will be adding to that economy?

SD: In the last four years, Vermont has lost about 10,000 manufacturing jobs, and many of the jobs we're creating in the service sector pay significantly less than the jobs we've lost.

RR: Yes, and that's a huge problem. But that's not necessarily because we've gone from manufacturing to services. There are many, many high-paying service jobs in the United States, ranging from advertising to design, marketing, people services, financial services, engineering. These are all service jobs, but they tend to pay very well. The most important distinction is not between manufacturing and service. It's between high-wage service and low-wage service.

SD: As our economy becomes more globalized and decisions about wages and working conditions are increasingly made at the international level, where do you see unions fitting in?

RR: Unions are critically important in the local service sector, and I say that because in the local service sector, workers need more bargaining leverage. At the same time, they're not competing with workers from other countries. Nor are they, in general, competing with technology. Two of the most successful unions nationally have been the SEIU (Service Employees International Union) and HERE (Hotel Employees and Restaurant Employees). Construction trades have also been quite successful in unionizing. Again, this is one very important way that local service sector workers can improve their wages.

SD: So, do you see unions becoming more or less relevant in the global economy?

RR: The trend has been downward. In 1955, 35 percent of American workers were unionized. Today, fewer than 8 percent of private-sector workers are unionized. So, if you're only looking at the trend lines, you would have to conclude that they are having less influence. But, if you look more closely at the areas where they have gained bargaining leverage, those tend to be in local service industries: Las Vegas hotels, Los Angeles hospitals, custodial and janitor services in New York. These are jobs that in the past paid very low wages and these people need more bargaining leverage. So in these sectors, unionization has been a big success story.

SD: There's been some talk in Vermont recently about the issue of corporate personhood, the ability of corporations to claim the same constitutional rights as living, breathing human beings. Do you think this is a problem that needs to be addressed?

RR: Yes. Corporations are not people. People are people. Workers and managers and investors in corporations are people. But corporations themselves should not have the rights of people. I think that we get into trouble as a country when we assign personhood rights to entities that are legal fictions. For example, the idea that corporations have a free-speech right is a mischievous one. The Supreme Court decided that they did, but that conclusion ought to be challenged ...One of the large and growing problems we have in this country is with the great concentrations of economic power. The large corporation represents one such example. Another example is the media conglomerate. If we're not careful, we could lose our democracy.

SD: As you travel internationally, have you noticed a difference in attitudes towards the United States compared to the Clinton years?

RR: Yes, a big difference. Most people I met abroad were very fond of Bill Clinton, and still are. They liked the Clinton administration. Most of the people I come in contact with outside the United States today are quite negative about the United States, and in particular, the Bush administration ...It's like night and day. Immediately after 9/11 there was a great outpouring of world support and commiseration with the United States. After the invasion of Iraq, world opinion turned very sour, and it's still very sour.

SD: Has it affected their willingness to do business with us?

RR: To some extent, yes. I've encountered a number of business executives who are involved in international business deals of various sorts who tell me they play down their American citizenship and play up their international credentials. And it's also true with several retail products. I ran into a business executive recently from a big apparel manufacturer who told me that they've changed their advertising and marketing strategy to minimize any connection with the United States ...It's going to take a very long time to undo the damage that's been done over the last four years.