The Deindustrialization of America/Minding America's Business:
Bensman, David
Books: PULLING THE PLUG ON INDUSTRY THE DEINDUSTRIALIZATION OF AMERICA Barry Bluestone and Bennett Harrison Basic Books, $19.95, 323 pp. MINDING AMERICA'S BUSINESS Ira C. Magaziner and Robert B....
...help get us started...
...David Bensman A GREAT DEBATE is now occurring about the shape of America's future...
...They charge U.S...
...As the depression deepens, Americans are going to have to debate and choose - "free trade" or "fair trade...
...the cost is intolerable...
...But there's no shortage of Democrats here, including presidential hopeful Sen...
...Paul Tsongas...
...regulations for their problems...
...When a government helps workers adjust to rapid economic change, pressures to preserve outmoded factories are less...
...America must move on...
...Unlike the cruel apostles of the free market,, Magaziner and Reich propose detailed and humane aid for the victims of capitalism's creative destruction...
...if old trees don't die, there won't be sunlight enough for new ones...
...Advocates of the "high tech" road regard the demise of "sunset industries" as necessary and inevitable...
...Magaziner and Reich come down between the free marketeers and the protectionists...
...Infant industries" should be sheltered until they're able to stand on their own...
...the auto industry may deserve support until it develops new technologies...
...free market forces or government planning...
...But there is hope for industrial workers, and for the communities built around the smokestacks...
...Both books argue that a strong government role is needed to preserve and create jobs, healthy neighborhoods, and national wealth...
...Take the steel industry for example...
...Eventually American producers recognized the need to introduce the advanced manufacturing processes Japanese steelmakers favored, but when they did so, their shortsightedness undermined their competitive efforts...
...Their survey of the industrial policies of America's competitors suggests that our federal government must abandon its piecemeal non-policy - a subsidy here, a tariff there, with tax cuts thrown in in accordance with the lobbyists' power - in favor of a comprehensive plan...
...but in the long run, all will have to compete in global markets...
...Bluestone and Harrison argue persuasively that U.S...
...Gary Hart and neo-liberal Sen...
...businessmen with a short-term profit orientation that blinded them to the strategic problems they faced...
...Conglomerates have taken over industrial corporations, and treated them as absentee landlords treat tenants...
...Bluestone and Harrison's analysis of deindustrialization's causes differs from Magaziner and Reich's, and their solution differs as well...
...labor-intensive industries or high technology...
...Magaziner and Reich advocate some protection of American industries, but emphasize that it can only be temporary...
...These are new debates for Americans used to operating within the framework of free enterprise assumptions...
...The reason is not profitability, they argue - the New England plants are profitable - it was a matter of profit maximization: the conglomerates maintain only those subsidiaries racking up rates of return exceeding 20 percent or 25 percent...
...Vigorous debate and careful thought are needed before we can usefully embark in new directions...
...investment tax credits or planned social investment...
...ever since, they've blamed foreign "dumping" and U.S...
...Indeed, The Deindustrializa-tion of America argues that the costs of industrial decline, measured in lost jobs, dislocated communities, distressed people, and disrupted local institutions, are far higher than the free marketeers acknowledge...
...Through a careful study of plant closings in New England, Bluestone and Harrison demonstrate that American-based multinationals drain profits from their Snowbelt facilities to finance expansion in the South and overseas where there are no bothersome unions to contend with, and where taxes are low...
...Steel and au-tos, textiles and electrical appliances - these are labor-intensive industries, best-suited for developing economies with poor and unskilled labor forces...
...that makes it easier to pursue industrial growth...
...It may strike some readers as dangerous to create a planning technocracy with the power to target some industries for subsidy and others for extinction, but let's not forget that today, faceless conglomerates make these decisions...
...As a result, steel manufacturers ignored the fact of their declining competitiveness until the trickle of imports had reached their knees...
...When Japanese manufacturers began exporting cheap steel to the U.S...
...Magaziner and Reich document how steelmakers introduced new facilities piece by piece, constructing a " continuous caster here or a basic oxygen furnace there whenever corporate accountants certified that the projected rate of return on that particular investment was satisfactory...
...And what if the market decrees death to the steel industry, to Youngstown, Gary, and South Chicago...
...Maverick socialist Lester Thurow adds left-wing luster to the arguments for free markets...
...Most of big business is in this corner, as are its Republican spokesmen...
...Magaziner and Reich emphasize a different cause of the decline of industries where America once stood tall...
...Their survey of social democratic programs in Western Europe prompts them to advocate job retraining, regional development programs, and wage subsidies for workers displaced from their jobs in declining industries...
...Because they believe that if U. S. corporations pursue their profits, mass unemployment will persist and social inequalities will widen, Bluestone and Harrison believe that union, church, and community activists must press for government intervention to stop corporate disinvestment, protect basic industries, and stabilize American communities...
...market in the early 1960s, American corporations shrugged...
...Their vision is democratic and profoundly radical...
...Creative destruction," they argue, echoing Joseph Schumpeter, is capitalism's way...
...They didn't make much money on low-grade steel anyway, and it seemed inconceivable that the Japanese could compete in the lucrative specialty-steel and alloy markets...
...They see the problem as more technical than ideological: businessmen must develop effective strategies for international competition, and government must learn how to support and encourage business efforts...
...Neither Barry Blue-stone and Bennett Harrison, nor Robert Reich and Ira Magaziner agree that America should pull the plug on its industrial base...
...manufacturing is in trouble because corporate behavior has changed in the postwar era...
...MINDING AMERICA'S BUSINESS Ira C. Magaziner and Robert B. Reich Harcourt Brace Jovanovich, $25, 390 pp...
...In one corner, garbed in elegant economic theory, is a mixed assortment of conservatives, liberals, and radicals convinced that our nation must take the "fast track" of "high technology," if it is to resume the rapid economic growth of the Golden Age, 1948-68...
...To begin with, neither set of authors agrees that the decline of American industry is the fruit of inevitable growth processes...
...Minding America's Business and The Deindustrialization of America will help get us started...
Vol. 110 • March 1983 • No. 5
