Reich Addresses Globalization, Economic Growth

By Duvall, Cherie | Nation's Cities Weekly, December 19, 2005 | Go to article overview

Reich Addresses Globalization, Economic Growth


Duvall, Cherie, Nation's Cities Weekly


When pondering the definition of "globalization," a former secretary of labor says Americans' "cartoon image" of the term is wrong.

During the opening general session at the Congress of Cities in Charlotte, N.C., Robert B. Reich, professor of social and economic policy at Brandeis University's Heller Graduate School, who served as secretary of labor during the Clinton administration, stressed that long-term economic trends in the United States rely heavily on globalization.

This is especially true since "there is almost no such thing, any longer, as a purely American product"--from the foreign-made car parts found in Reich's American-made automobile to his "French designer" artificial hips.

But Reich said, to many people's dismay, globalization is hindering, not adding to the economic growth in their communities. However, local financial growth is achievable. He believes the first step is to get your facts straight.

"A lot of us, when we think about globalization, we have a cartoon image in our heads," he said. "The assumption is, the more our companies export and the more [foreign] companies have to take what our companies export, the better we'll do and the more jobs we'll have."

Not so, according to Reich. He believes the key to economic growth is creating a competitive position by integrating a system of global production in your municipality instead of turning to people who work from out of the country. As a result of people making more money in the community, earnings should spread into the local economy.

"If you and your constituencies, cities and towns don't have the skills and infrastructure around you, then we will not be having the best jobs or even the good jobs of the future," he said. "Our place in the economy comes back to the value that we add."

How should city officials add value to their municipalities? According to Reich, the answer lies in choosing between taking the low road or taking the high road.

He explained that by taking the low road, you're saying to global capital "'come here to my town because we're so cheap.'" Meaning, with the city's low wages, taxes, environmental requirements and cost of living combined with global capital, investing in the city will generate a return that's competitive and profitable in the world economy.

However, Reich said this choice can lead to one problem: By relying exclusively on the low road, there will always be another place in the world that's cheaper in terms of property, infrastructure, taxes and environmental rules and laws. …

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