Manufacturing Matters / Rusted Dreams

...The cram course Professors Cohen and Zysman offer for casualties of international competition has established them as hot properties in the intense intercampus competition for corporate favor...

...domestic difficulties...

...Rusted Dreams is a bitter, poignant post- mortem on the fate of "the City of the Big Shoulder" Carl Sandburg saw dominated by the steel mill smokestacks of South Chicago...

...It describes a bare 25 percent of their ambitious text...

...Cohen and Zysman speak with the authority derived from their ownership of this invaluable franchise...

...World trade competition is a mirage...

...Politicians have learned to campaign by putting their economists in favor on display, as the mad monarchs of yore once did their jesters and magicians...

...that is, buying their exports by financing their customers...

...Never mind the high cost of capital intensivity recommended, at present and prospective interest rates, presumably supported by present and prospective operating profit margins...

...Never more so than in our enlightened era of professional management, deeper in MBAs than in thought...

...Where Cohen and Zysman bet their blueprints on hair-brained imperatives they decree to politicians, Bensman and Lynch base their tragic, gripping tale on commonsensical subsidies that politicians, impressed by people power, delivered at their own risk to major corporations for promised tradeoffs...

...Bureau of Labor Statistics...

...Eliot Janeway Professors of economics have come a long way since 1936, when Keynes directed his inimitable satire to the invisible influence that "defunct academic scribblers" exert over "madmen in authority...

...That's how Japan and Germany are doing it today...

...More sloganizing covering up shrinkage...

...Cohen and Zysman demonstrate that manufacturing matters decisively for any and every national economy, and no other form of economic activity can substitute...

...The countries which do best at exporting goods are the countries which do most in exporting capital...

...Economists bear a cruel responsibility, not merely for the fortunes of the governments whose policies they engineer, but for the plight of the people left in the lurch when those policies boomerang...

...But ignorant and hypocritical managements practiced sordid political treachery by grabbing the welfare benefits and damning the welfare clients to living deaths...

...Or how politicians, serving at the pleasure of the voters, "must" subordinate realities to blueprints to launch this high-cost, zero-return technocratic wild-goose chase...

...Massive capital imports will not support export competitiveness...

...The authors' description of "the American system" is definitive: "volume production of standard products sold to a mass market on the basis of price...

...Layoffs nowadays do not translate into new hirings...

...Their title, however, is misleading...

...A case of the tiger squeezing into traps too small to bait mice...

...Instead, they call for the retooling of American industry to exploit ' 'the economies of scope.'' Their definition of scope — "economies gained in the volume production of a set of goods'' — is too clear for comfort, and too logical as well...

...Cohen and Zysman show that high rates of employment, classified in a vacuum as "services," "depend directly on manufacturing...

...In the wake of the subsidized import flood that has devastated industrial America, talk about regaining export competitiveness is a snare and a delusion — not least because all potential American export markets, beginning with Japan, can be seen shrinking and freezing into protectionism and barter in lockstep with U.S...

...This rational insanity drives them to advocate America's surrender of the decisive advantage of the economies of scale, which is the envy of the world, for no trade-off...

...Rusted Dreams will be more helpful than financial punditry to readers wondering whether October's Black Monday in the stock market was a reversal or just a correction inviting investors to reaffirm their faith in management...

...Add that to the 6 percent officially admitted to be unemployed, and America's economy is seen to be losing full human participation at the same admitted 11-12 percent rate as Europe's, still also pictured in the media as enjoying a "slower rate of growth...

...Academic tunnel-vision inhibits Cohen and Zysman, however, from going further to equate this latter phenomenon with the stubborn failure of consumer spending to confirm the employment dynamism claimed by the U.S...

...On the contrary, our disemployed are flung onto the human scrapheap of industrial America, left to wither away, as Lenin once promised the Soviet state would, without dignity or even subsistence — America's statistical equivalent of Russia's damned ' 'non-persons.'' Those no longer looking for work number 6 million...

...They envision the restructuring of American industry to fit its products into all the smaller, more or less open, more or less liquid markets around the world...

...Rusted Dreams, by David Bensman and Roberta Lynch, is an unpretentious, blood-chilling, down- tocurbstone account of communities blighted, lives wrecked, and trust betrayed by impractical policies and incompetent managements retreating from insecurity into outright trickery...

...In America's industrial-financialeducational complex today, no "think tank" power center exercises more magnetic power than the BRIE, the University of California Roundtable on International Economy at Berkeley...

...Today, their fraternal assertiveness by rote has elevated them to the status of the madmen in authority, all the nuttier because contemptuous of the real world in which markets are people and politics institutionalize popular habits, if not necessarily needs...

...629 he once betrayed a labor union he headed...

...and that's how America did it before she gave away her lead role and became a debtor nation...

...Under the direction of Professors Stephen S. Cohen and John Zysman, Berkeley is still the war-torn campus it was twenty years ago with rebellious campus youths...

...Their vision of America's industrial future is an exercise in national policy insanity...

...In Manufacturing Matters, Cohen and Zysman have indeed made a provocative polemical case which no serious student of the economic realities behind statistical appearances and media ballyhoo can afford to ignore...

...628 Its muscular, axiomatic ring sounds a bipartisan chorus, echoed by the elders of the liberal left and the persuasive Secretary Baker holding forth on the responsible right...

...On the contrary, the insanity they advocate is based on a premise already adopted as the consensus slogan of establishment American economic thought: America's need to recapture her lost export competitiveness in world markets...

...They go further, explaining that manufacturing is the main source of skilled, well-paying service jobs...

...The trouble starts after Cohen and Zysman prove that manufacturing matters, when they unveil their model of how it will continue to...

...So is their identification of its prototype: "Ford's Model T, in which a single company produced a single product in a single color...

...So much for the timely and definitive contribution the book makes to sanity...

...But they ignore the unique built-in, low-cost advantages that America's own limitless free market offers, as well as the unique ability of "the American system" to take advantage of these low costs...

...Like so many calls to recapture lost glory, this latest American outbreak of rational insanity reveals only one flaw: its disoriented governing premise...

...RUSTED DREAMS HARD TIMES IN A STEEL COMMUNITY David Bensman and Roberta Lynch McGraw Hill, $17.95, 249 pp...

...But today it is dedicated to on-the-job retraining for the endangered species occupying mega-corporate executive suites and searching for ultimate weapons to sport in international market combat...

...Instead, they complain that "the label of 'Fordist' production has been hung on the whole system...

...Their case histories are Dickensian enough to remind Ronald Reagan that he once betrayed a labor union he headed...

...They have done their homework...

...Lunacy, as Rousseau said of romance, has a logic of its own, which it pursues with zeal and consistency...

...and, that the decline in manufacturing employment has downgraded the quality of much service employment to unskilled, low-paying temps, enjoying no fringe benefits, yet smuggled into the employment statistics as bona fide fulltime workers...

...Or the cost to people trapped where their mortgages are, fearing the worst...

...Cohen and Zysman are hardly eccentrics or even doctrinaires...

...Difficulties which are currently shocking the stock market out of its euphoria...

...Bensman is the Director of the Graduate Program in Labor Studies at Rutgers...

...Now comes more insanity, based deceptively upon flawless professional observation...

...This portion of the book renders a serious definitional service, long overdue (if overdone by the authors' analytical virtuosity), in debunking media hype celebrating growth in service employment at the expense of shrinkage in direct manufacturing employment...

...Nor do they contrast the fate reserved for our older, higher-paid victims of manufacturing unemployment with the "opportunities" opening to our younger, lower-paid beneficiaries of service employment...

...Industrial America's overriding need is to regain competitiveness inside America's domestic markets, incomparably larger and more lucrative for American industry to tap than the world's various economic mega-ghettos...

...Neither voices the pretentiousness of the economic establishment...

...In its introductory portion, described by its title, they set up a popular strawman ("the economy of services" in our "informational society"), which their expert exercise in overkill demolishes...

...Lynch is a community worker with a labor background in Chicago...

...Once its premises are accepted, its conclusion looms as irrefutable...

...Historically, the non-political technocratic center commands a vantage point in American debate...

...At the turn of the century, at the University of Chicago, Thorstein Veblen developed his thesis that the "trained ignorance" of America's "captains of industry" is responsible for their wrong turns and recurrent crises...