WHAT TODAY`S GLOBAL ECONOMY REALLY MEANS FOR AMERICANS

Robert B. Reich, professor of management at the John F. Kennedy School of Government at Harvard University, has been in the forefront of political economists urging American corporations to become ”globally competitive.”

But what does that mean for most Americans?

For U.S. corporations, the answer is clear. Today`s corporate leaders realize their firms must become globally competitive or face economic extinction.

But for the average American, the answer is less clear. An assembly line worker for General Motors Corp. might see Japanese cars as a problem. But what does a worker at Honda Motor Corp.`s Marysville, Ohio, plant think?

The hostile takeover bid by a French conglomerate may send Square D Corp.`s management into a tizzy, but what do the stockholders think? And would a takeover be good or bad for Square D`s workers?

Over the last decade Reich has been closely associated with Democratic presidential candidates pushing an activist government policy to help U.S. companies compete. But in a new book, ”The Work of Nations: Preparing Ourselves for 21st-Century Capitalism,” Reich argues that the global economy has divorced the fate of U.S. workers from the fate of U.S.-based companies. He says government policy should change to reflect that fact.

In a recent interview, Tribune reporter Merrill Goozner explored Reich`s provocative thesis.

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In your new book, you state that the strength of the American economy is no longer synonymous with the profitability of our major corporations. Why?

American corporations have not lost their shares of world markets over the last decade or so. But America as a nation has lost out. This may seem like a paradox. It`s explained by the fact that American corporations are now exporting like mad from locations outside the U.S.

Such as?

The largest employer in Singapore is General Electric. Among the major exporters of computers from Japan is IBM. IBM has just moved the headquarters of its $10 billion-per-year communications business to Europe.

Today, corporate decisions about production and location are driven by the dictates of global competition rather than national allegiance. Even the shareholders of major American corporations are becoming multinational. It is no longer the case that dividends necessarily flow back to the U.S.

Does that mean you no longer believe the government should help industry compete?

I still believe the government has a crucial role to play in helping its work force become more competitive. But I`ve given up the ideal of a strategic alliance between government and American business for the simple reason that during this decade American corporations have begun to lose their connection with the American economy.

American businesses are going global. Their future success has less and less to do with the standard of living of most Americans.

How should we judge when a company, whether foreign- or U.S.-owned, is benefiting our society?

It all depends on the quality of jobs here in America. A foreign-owned company that sites complex fabrication or complex design and production in the U.S. is far more valuable to us than an American-owned company that sites these important jobs abroad.

Consider the television industry. Many gloom-and-doomers bewail the fact that there is only one American television manufacturer, Zenith. They fail to understand or even acknowledge that tens of thousands of Americans are working in the television industry in the U.S., many of them doing quite sophisticated things and getting good pay for their work. That they are working for Thomson (French owned) or Philips (Dutch owned) or Matsushita (Japanese owned) is quite beside the point. Zenith sites many of its production jobs in Mexico.

But isn`t foreign ownership of U.S. assets a problem? In wartime, for instance?

Ultimately, the strength of the American economy depends upon the value that Americans add to the world regardless of the nationality of the corporation that Americans are working for.

You raise the issue of national security. Our national security is threatened to a far greater extent by an American company producing a strategic technology abroad than by a foreign company producing that same technology here in the U.S.

Should hostilities break out, there`s a danger that the American facility abroad would be expropriated. But whatever activities are taking place on American soil are indubitably within our control.

Is protectionism vs. free trade any longer a meaningful distinction or debate? What should our approach be to the GATT talks or the Mexico-U.S. free- trade pact.

Trade protection is almost never the way to build skills in the U.S. The more important objective is to lure global capital and global corporations to America to do complex things here. With regard to international trade, our objective should be to open foreign markets to the work products of Americans, regardless of the nationality of the firm they work for.

This is emphatically not the objective of the U.S. trade representative today. The trade representative seeks to open foreign markets to the products of American corporations, wherever that corporation produces its products. As a result, we place a high priority on getting Toys ”R” Us into Japan, even though few if any of its products that it sells in Japan are produced by American workers.

What will be the economic fate of most Americans in the new global economy?

I see essentially three job categories in the future within most countries where private sectors are becoming parts of global webs. The most lucrative jobs will go to people who solve, identify and broker new problems. These are the conceptualizers of the new global economy.

We may call them management consultants, engineers, designers, advertisers, lawyers, investment bankers, marketing specialists, script writers. Whatever their formal job titles, they will in all likelihood become wealthier over time because the global economy is placing a greater and greater value on such conceptual skills. I call these people ”symbolic analysts” because in reality they spend most of their working lives analyzing symbolic representations of reality.

The second category of worker won`t fare so well. These are the people who used to be at the bottom rungs of the old pyramidal corporate structure. The blue collar workers of yore, the pink collar workers as well. They are now competing in a world economy with literally millions of people eager to work at their jobs for a fraction of their wages.

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Twelve thousand people enter the world economy every hour, the vast majority of whom are relatively unskilled and desperately desirous of a routine factory or data-processing job. The law of supply and demand suggests, therefore, that our routine production workers are destined to lose their jobs or settle for much lower pay.

That leaves a third category of worker: the in-person service worker. These are the people who provide their services person to person. They populate Main Street. Retail sales workers, restaurant workers, taxi drivers, beauticians, hospital orderlies.

Most of these jobs are sheltered from international competition because they are local in nature. But few of them will ever summon very high wages because they tend to be rather low-skilled and easily replaceable by automated equipment.

Their fate is precarious. They will hobble along near the minimum wage. We will be facing the baby bust, but they can`t look forward to substantially higher wages.

The corporation today is very different than in 1950. What are the hallmarks of those changes?

In the `50s, a time not incidentally when the 500 largest companies in the U.S. accounted for half of our gross national product and for a quarter of the non-communist world`s product, the dominant organization was hierarchical. Companies were engaged in high-volume standardized mass production. Profits derived from economies of scale. A few people at the top made all the decisions. Large numbers of people at the bottom did the same routine tasks over and over again.

In the last decade of the 20th Century, all that has changed. The company names may be the same. But the organization is fundamentally different. Today`s companies, if they are to remain profitable, have to be able to respond quickly to new technologies and new markets. Information has to travel rapidly between designers, engineers, fabricators, marketers and sales people. There`s no time for hierarchy and no space for bureaucracy.

The company is also likely to be operating globally, undertaking complex activities wherever around the world it can find talented people. It will do its routine production in places around the world where it can find the cheapest labor.

The hierarchy is flattened. There is more outsourcing and subcontracting. Fewer assets are formally owned by the company. Its structure is more like a web. Gone is the company town. In its place is likely to be found a complex global web of enterprise.

What are appropriate national policies to foster competitiveness?

It`s no longer a question of national competitiveness. It`s more accurately described as the competitiveness of Americans, some of whom are becoming more competitive worldwide because they have the right skills and can add substantial value to the world economy, but some of whom are becoming less competitive because they lack such skills.

It`s unrealistic to assume we can make everyone into a symbolic analyst. There will necessarily be a large number of our citizens in in-person services. But surely we can do a much better job than we are now doing to ensure that any child with the potential to become a highly valued

conceptualizer in the new world economy does, in fact, get the opportunity.

Here we come to the great political challenge before us. We know for a fact that public investments in prenatal and post-natal care, early education like Head Start, and smaller classes and better-paid teachers all have a direct bearing on a child`s future chances. We also know that public investments in infrastructure like transportation, communication and sewage-treatment facilities also have an important bearing on the capacities of people to add value to the new world economy.

There`s no secret to the kinds of public investments we ought to be making. The more interesting question is why we have not been.

OK. Why?

Largely because the fortunate fifth, the symbolic analysts, who are now pulling in more income than the bottom four-fifths of Americans put together, have gradually been seceding from the rest of society into their own enclaves of good schools and good infrastructure. They are linked to the rest of the world but not necessarily to the rest of America.

For the first time in our history, it has become possible to earn a high income without necessarily joining forces with a lot of your compatriots.

It sounds like you`ve become pessimistic about the long-term economic fate of most Americans.

Ultimately, I`m really quite optimistic. If you look at the history of this country, you see that when Americans finally understand the nature of a problem, they roll up their sleeves and get on with solving it.

There`s enormous energy in this country and capacity for innovation. There`s also a deep wellspring of patriotism, which we witnessed over the last months. There`s no reason to suppose we couldn`t build on the same sentiments to ensure that the bottom four-fifths of Americans lead full and productive lives in the new world economy.