Word: reiche
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...Rhodes scholar and a graduate of Yale Law School, Reich is a relative newcomer to economic debates. Despite his growing professional stature, he is self-effacing and unimposing. Standing only 4 ft. 11 in. tall, he jokes, "When I started studying economics, I was 6 ft. 2." During the Carter Administration, Reich was policy planning director at the Federal Trade Commission, an agency often criticized for imposing oppressive rules on businesses. He rejects the Reaganomic notion that Government regulation and high taxation are the root causes of U.S. economic problems. Instead, Reich heaps most of the blame on the executives...
...succeed at selling customized products, firms need skilled work forces able to adapt rapidly to changing customer needs. Instead of sharpening workers' skills, Reich says, many big companies have laid off employees in the U.S. and set up assembly lines overseas. Rather than push hard for retraining, most blue-collar unions have clung to rigid job classifications and inefficient work rules...
...Reich charges that too many American managers have become "paper entrepreneurs," more concerned with manipulating short-term profits than with developing new products. He laments the rush of conglomerate building through mergers and acquisitions. U.S. Steel paid about $6 billion to buy Marathon Oil last year, Reich notes, even as the steel company's own plants were becoming increasingly obsolete. Says Reich: "Ours is becoming an economy in which resources circulate endlessly among giant corporations, investment bankers and their lawyers, but little new is produced...
...Harvard professor offers several prescriptions for the problems he sees. The Government, he says, should give tax breaks and subsidies to companies that upgrade their workers' skills and offer training to the unemployed. Reich would discourage takeovers by disqualifying from normal tax deductions any interest on loans to finance mergers. He would replace the personal income tax with a consumption tax to enlarge the pool of capital for investment. Under this scheme, all earnings that individuals save or invest, rather than spend, would be taxexempt...
Aside from these specific proposals, Reich's outline for a national industrial policy is vague. He calls for the establishment of Government-financed "regional development banks" that would offer low-interest loans to companies promising to retool their factories...