Magazine article The American Prospect

As I Predicted, Only Worse: 1992

Magazine article The American Prospect

As I Predicted, Only Worse: 1992

Article excerpt

In December 1992, according to Bob Woodward's The Agenda, President-elect Bill Clinton was about to announce Laura Tyson's appointment as chair of the Council of Economic Advisors, when Tyson mentioned she and Robert Reich had debated in The American Prospect whether the nationality of a firm was important. Suddenly recalling the debate, Clinton said, "You know what? You were right, and [Reich] was wrong." So we decided to ask them now: Bob Reich, were you wrong? Laura Tyson, were you right?

FOURTEEN YEARS AGO, IN AN ARTICLE in the Harvard Business Review and a subsequent debate with Laura Tyson in these pages [see "Who Do We Think They Are?" and "They Are Not Us: Why American Ownership Still Matters" Winter 1991], I contended that large American corporations were losing their national identity by employing people and attracting capital globally. Because we couldn't count on American companies to invest in the productivity of American citizens, we had to rely increasingly on public investment.

Tyson thought the trend wouldn't occur nearly as quickly as I claimed. Besides, she argued, we needed American-based companies to keep America's lead in technology and national defense.

With all due respect to my colleague in the Clinton administration, I think my prediction, if anything, was understated. Toyota is now the second-largest car manufacturer in the United States. Chinese factories account for a large and growing percentage of the manufacturing for American companies, whose back-office work and software design are increasingly done in India. The Commerce Department says 48 percent of U.S. imports are from U.S. companies' operations abroad.

None of this is a serious problem for professional, college-educated Americans--yet. But a majority of the American workforce is stuck in the local service economy as retail and restaurant workers, hotel and hospital assistants, janitors, cab drivers, child- or elder-care workers, and other low-wage laborers with scant health benefits. …

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