Robert Reich - former Labor Secretary on globalization and the future economy

04/23/07 Seán Kinane
Alan Watts

 This morning at the Tampa Convention Center, former Secretary of Labor under Bill Clinton, Robert Reich (pronounced "Rysh") addressed more than 1300 representatives of business schools. They were gathered for the International Conference and Annual Meeting of The Association to Advance Collegiate Schools of Business. Reich spoke on "China, India, and the Future of Everything," which focused on globalization and what the economy might be like in the future. WMNF Seán Kinane reports. 


Reich said that he thinks there are three major vectors propelling the economy of the United States and propelling the global economy. Those are globalization, technological change, and demographics. Due to the effects of globalization, every product has components that are built all over the world. Because of this, Reich believes that where companies have their headquarters matters less than the value that their employees add to an economy.



“The standard of living of people depends and is going to depend less and less on the profitability of companies headquartered where they live, in their country or in their state. And more and more on the value that these people add to an internationally integrated system of global commerce.”


 At the end of this June, Fast Track trade authority runs out for the President of the United States. This authority allows the president to negotiate trade deals with other countries while legislators and states are excluded from the process with the exception of a yes or no vote on the un-amended agreement in Congress. Reich thinks that Fast Track should be reauthorized but it probably won’t be.



“That’s the only reason that any other country would sign a trade treaty with the United States. You’re not going to sign a trade treaty with the United States if it can be amended all the way through Congress because you don’t know what you’re going to end up with. That Fast Track trade promoting authority is vitally important. But in June that runs out for this president and all the people I know in Washington DC on Capitol Hill tell me the chances that trade authority, fast track trade authority being renewed are very low. Why? Because the pendulum of popular opinion in the United States has turned against international trade and against globalization. “


 Reich said that the range of opposition to so-called “free trade” spanned the ideological spectrum from Lou Dobbs to Patrick Buchanan and was due to xenophobia and fears about declining wages.


 Eric Rubin is the former director of the Florida Fair Trade Coalition. He told WMNF that by narrowly framing the opposition to globalization in that manner, Reich ignored the concerns of many who feel that so-called “free trade” does not take into account environmental protection or workers’ rights.



“The workers, the religious organizations, the environmental groups have opposed them unilaterally in every single country. So it’s hard to argue xenophobia on that. In fact, it’s just the opposite. These trade agreements are undemocratic. They’re put forward by the large corporations. It’s corporate welfare and it’s almost universal in almost every country in the world. There is opposition among these groups opposed to these trade agreements, specifically because it is a transnational corporate-led movement to basically destroy any democratic rights of people in various countries and also the environment and democracy in general.”


 Rubin said that it does not make sense why Reich supports maintaining President Bush’s authority to Fast Track trade agreements.



“Well, very simply, Fast Track is a bad idea all the way down the line. It fundamentally goes against any of the rules of discussion and or democracy. In fact we’ve seen in many of the trade bills that have come forward where they’re submitted in the middle of the night, two hours before it’s supposed to be voted on. Very many of the folks in Congress do not have an idea what the bill is. The fact that he [Reich] is doing this and giving Bush a carte blanche to vote on additional trade bills is ludicrous and makes absolutely no sense at all.”


 After globalization, the second vector that Reich’s thinks will play a role in the future economy is technology. Reich said that more of an emphasis is needed on education because there are not enough people who have the skills needed to take advantage of new technologies.



“There is a mismatch between the demand for technicians and the number of people who have the technical skills. That’s probably the biggest mismatch in our economy right now. And so technological change and the management of human resources with regard to technological change is as important a determiner of the next economy, of the emerging economy, as is globalization and they go together. And the common denominator of both are skills.”


 The third vector that Reich predicts will influence the economy in the future is demographics. The American population, like that of most developed, industrialized countries is aging while most developing countries are getting younger. Reich predicts that this will inevitably lead to immigration, especially of poorly educated and unskilled workers.



“Now when you have huge populations of young people over here, and you have here in post-industrial societies and countries, huge populations of graying people. What’s the almost inevitable consequence of that? It’s called immigration. Immigration: it’s happening it is going to continue to happen.” 


Reich says that today any company can compete with the mega-companies like Wal-Mart.  According to Reich, oligarchies, or small groups of companies that dominate an industry because of economies of scale, are not as important today as they once were.



 “In an economy in which globalization and technological change, including digitalization and the Internet, allow anybody to get into anybody’s business, where economies of scale are no longer the preeminent business strategy. Where does sustainable competitive advantage come from? Well, one place it comes from is your people.” 


But Florida Fair Trade Coalition’s Reuben disagrees that oligarchies are less powerful today than they used to be.



“It’s worse than it used to be. What we see right now is consolidation of capitalism. Transnational corporations have absolutely no allegiance to any country. They have allegiance to the bottom line and profits. Workers in the United States are upset with the fact that their jobs are leaving for other countries, workers in China are upset of the fact that they’re working 12-14 hour days 7 days a week and there are no unions. These are both products of the consolidation of capital. You look at the media, you look at the auto industry; you look at the insurance industry; you look at the finance industry and all you see is the consolidation into a handful of transnational corporations. It’s antithetical to what he [Reich] says.”


 Reich stated that social security was not in trouble because projections of its solvency were based on much less than the long-term average growth rate of 3%. However, he said that the rising cost of medical care is threatening the Medicare program that Reich claims won’t get fixed until this country’s health care system is fixed.


 To learn more about former Secretary of Labor Robert Reich, visit his website, robertreich – dot- org and Reich is spelled r-e-i-c-h. 


 For WMNF News, I'm Seán Kinane 




 Robert Reich


 Robert Reich’s blog



Public Citizen on Fast Track 

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