Tales of a New America

by Robert B. Reich

  Drugs are at least half our problem. A fixation on the evil threatening our shores diverted our attention from this unsettling fact. As we pledged our resources to guarding the gates, we placed less emphasis on controlling our internal drug habit. While we were railing against foreigners, our own Department of Education’s budget for drug-prevention and education programs was reduced from $14 million in 1981—an already paltry sum—to $2.9 million in 1985; over the same period, federal funds for prevention and treatment of drug and alcohol abuse declined 20 percent. (In late 1986, when the problem suddenly became the object of frantic political activity, more money was appropriated for education and treatment, but the sum was still dwarfed by what we spent trying to guard the gates.)4

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  Consider a different sort of import, viewed as a menace by many American workers: cheap foreign goods. Americans employed making textiles, steel, and automobiles are understandably concerned that their jobs may vanish. Many already have. Defense officials worry about the nation’s dependence on foreign sources of materials and technologies. Nearly everyone remains uncomfortable about our dependence on foreigners for oil. But here again, the indictment is delivered to them. Many of us vaguely consider foreigners at fault for shipping us all this stuff and not buying enough of our own exports. Japanese and Third World producers are said to be “stealing our jobs.” They are “flooding our market” with their wares. We are being had, somehow. The apparent solution: Coerce them into holding back their wares to us and buying more of ours, and threaten them that if they won’t, we will put up higher barriers and close our gates more tightly.

  Our attention, accordingly, is focused on enforcement. Sometimes we catch them trying to circumvent our quotas by transshipping goods through a third country.5 Sometimes we catch them “dumping” their goods in America at prices below their costs of production. American trade laws explicitly prohibit this and give the injured American producer an automatic remedy (in the form of fees added on to the price of the imported product).6 This has become a popular avenue of redness for every distressed American industry. American semiconductor manufacturers, onetime champions of freer world trade, joined in during 1985, charging the Japanese with dumping their chips here. The terminology summons the image of a garbage truck pulling up to our shores, tilting its bed, and unloading on us. How dare they!

  There remains, though, the disconcerting facts that Americans want to buy goods cheaply and can’t make them as cheaply as can foreigners. If we did not have such an overwhelming desire for Japanese cars or South Korean steel or Taiwanese shirts, the problem would not exist. Inexpensive goods from abroad may cause some of us to lose our jobs or to feel nervously dependent on foreign producers. But such unpleasantness has not dampened our enthusiasm. Americans are delighted to buy “dumped” goods; we know them under the less pejorative term of “bargains.” Nor is it particularly useful to rail at “them” for failing to buy more of our products, or to threaten them if they don’t start to. There are few things more intransigent than an uninterested consumer. Not even a Japanese prime minister can motivate Japanese consumers to spend more and get less by buying American.

  Our vulnerability to foreign traders is real, and not without costs. But even if it were physically or politically possible to block foreign-made goods from entering the country, the price would be appalling, for we would then have to make everything for ourselves. Robinson Crusoe’s experiment in self-sufficiency entailed obvious inconvenience. Richard Nixon’s “Project Independence,” designed to free us from dependence on foreign oil supplies by 1980, came to nought: In 1980 the United States was importing roughly the same portion of the oil it consumed (37 percent) as it had in 1973. Independence simply was too expensive: There was no going back to the near self-sufficiency of the early postwar years.

  To the extent that there is a problem, then, it exists at home. If foreigners can do something better and more cheaply, then we had best learn to do it as well, or learn to do something else that they cannot so easily rival. If they are willing to sacrifice profits now for the sake of larger profits in the future, then we had better make similar sacrifices if we hope to stay in the game. It is as simple, and as difficult, as that.

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  The problem of illegal immigration is analogous. In the mid-1980s the United States harbored an estimated 4 million illegals, and the number continued to grow at a rapid clip.7 In the popular mind the fault lies with the immigrants and their countries of origin: Many of these nations are destitute, they have not created enough jobs to go around, they are repressive and unstable. So their citizens naturally want to leave there and come here. These people want to take advantage of our open and prosperous society. But, so the story goes, in coming here they exploit us. They take our jobs, use our social services, crowd into our cities, cause crime. The solution follows logically from the diagnosis of the problem: We must raise the walls as high as it takes to stem this human tide.

  Of course as a nation of immigrants we could not object merely to the presence of foreigners. What has always been of concern is the difference between them and us—racially, ethnically, religiously. Thus the limits we have imposed on who can cross our borders and join our ranks has had a great deal to do with how much they have resembled us. In the eighteenth century there were racial restrictions on eligibility for naturalization. In the 1880s and 1890s we excluded the Chinese; in the first decade of this century, the Japanese. Then we instituted a national quota system based on what proportion of “us” were descended from the likes of “them.”8 In the 1970s and 1980s illegal aliens streamed into America from Mexico, the Caribbean Basin, and Latin America—speaking a different language from us, and holding to different customs. The obvious expedient, given our fear of the Mob at the Gates, was to make it tougher to get in illegally.

  But again, what has been left out of the calculation—the internal factor—is perhaps the most important. Foreigners are attracted to America for many reasons, but the likelihood of a good job has always ranked high on the list, and still does. If no jobs were available, there would be little point to enduring the costs and anxieties of uprooting oneself and traveling to a strange land. The jobs awaiting illegal aliens are not, in general, prized by our own work force (picking perishable crops, sewing garments, assembling toys, caring for others’ children), but they pay considerably more than their options at home. Much of the money these immigrants have earned is sent back home, to prop up their families’ meager incomes. Of equal importance is the information conveyed about where such jobs can be had and how much they pay; brothers and sisters then join the northward march, to fill the available demand. In this, too, the present pattern resembles the past.

  The reason that illegal aliens can find jobs in America so easily is that we are eager to buy their labor. Employers are happy to hire illegals because they cannot find citizens to do the work they need done, as cheaply or at all. And the American customers of these employers are happy to pay less for goods and services than they would had the employers been forced to hire American workers. If American employers were unwilling to hire illegal aliens, and American consumers unwilling to purchase their labors directly or indirectly, the flood across our borders would slow to a trickle.

  Do we want foreigners to work for us, to do the jobs we are unwilling to pay each other enough to do? It is an awkward question, analogous to—indeed, in some ways a version of—the question of whether we want access to foreign goods made with cheap labor. It is fundamentally a decision about whether we wish to discipline ourselves, but the choice is muddied by casting the issue as one of controlling “them.” Our inability to come to terms with this issue has repeatedly undercut attempts to reform the immigration laws. We have not settled on what we want the laws to do; we do not know what “reform” would look like.9

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  In seeking to ensure our national security, there is an even greater temptation to build the walls higher and lock the gates tighter, rather than to t
ake joint responsibility with “them” for managing a relationship capable of yielding devastating losses on all sides. Before the Reagan administration launched its Strategic Defense Initiative, no real defense against intercontinental ballistic missiles was thought to be possible. No nation could dream of invulnerability; indeed, the policy of deterrence that kept an uneasy peace for decades was based on precisely this premise. So long as both superpowers were vulnerable to the other, neither would be tempted to start a war. Peace was enforced by the threat of—in the deadpan lingo of nuclear strategists—“mutual assured destruction.” The principle was codified in a treaty signed by Richard Nixon and Leonid Brezhnev at the Moscow Summit of May 1972, the high-water mark of détente.10 Both nations agreed to limit their antimissile defenses, conceding openly what everyone already knew: We were hostages to one another.

  But the policy of deterrence, and the principle of mutual vulnerability on which it was founded, never sat well with Americans. The Russians could get at us, and all we could do was obliterate them in turn. The arrangement was painfully discordant with the American mythology. How could we ever find security in vulnerability? The Star Wars proposal resurrected the metaphor of a fortress. It reconnected security with the ideal of invulnerability. An impenetrable shield in space would put our fate back into our own hands. In mythic terms, defense (even if it would not work) was immensely more satisfying than deterrence (even if it would).

  There was the danger that in substituting the comforting myth of invulnerability from the Mob at the Gates for the reality of mutual vulnerability and interdependence, we would lose interest in the more basic problem: how to ensure our mutual security at least cost, when each of us deeply distrusted the other. So long as we had no defense for their incoming missiles, and they had no defense for ours, the clearest and most pressing problem was how to reduce the risk that we would blow each other apart. Reciprocal responsibility was a necessity. Neither side could want to try a preemptive strike, for fear that it would elicit an immediate and devastating response. Because there was always the chance of miscalculation or simple error—a chance that presumably increased with the number and complexity of weapons—it was imperative that each side agree to limit and then reduce the number of missiles and nuclear warheads directed at the other, and stop testing new devices. Both American conservatives and liberals saw the wisdom of this goal; disputes centered on how we could be sure that they would fulfill their part of the bargain without gaining an advantage over us. (And from all accounts, they worried about us in the same terms).11 But once the agenda turned toward creating a foolproof defensive shield in space, the problem of controlling nuclear arms seemed somehow less compelling. Before March 1983, when Ronald Reagan announced the Star Wars plan, significant pressure had been building for arms control. After the announcement, public interest in arms control appeared to wane. Our long-term security no longer seemed to depend on their willingness to agree to control armaments, or even to play the game by the rules. Through Star Wars, it seemed, we could escape from the grim reality of mutual vulnerability and dependence. We would no longer be their hostage. Reagan offered something superior to arms control—a method for making the United States impregnable.

  In reality, we would remain vulnerable to the Soviets, and they to us. The two of us are locked in a deadly and yet delicate embrace. Whatever we do, they can do too; whatever action we take that increases their sense of vulnerability to us, they will respond in a way that increases our vulnerability to them. We are dependent on one another for our mutual safety. And yet it is more comforting to put up walls, to cling to a cherished myth. As with the other problems I have described, it seems easier to contain and control “them” than to take responsibility for dependencies that run in both directions.

  The visceral appeal of the Star Wars proposal—to Reagan as much or even more than the rest of us—had nothing whatsoever to do with the cold logic of national defense. That it would very likely never work, that it would almost certainly be a hideously expensive approach to security, were quite irrelevant cavils. Star Wars was cast as a crusade—a national goal, like sending men to the moon—that Americans would find inherently attractive because it resonated with the stories we told ourselves about our life together and about the menace lurking beyond.

  CHAPTER 8

  REPRISE: THE ECOLOGY OF THE WORLD ECONOMY

  A summary is in order. The preceding chapters have examined the myth of the Mob at the Gates and suggested how flawed a guide to reality it has become. The notion of a pristine nation, separate and apart from the rest of the world, which can either assert its will unilaterally upon the world or withdraw from it, has little relevance to the situation in which America finds itself. We cannot act alone. If we try to stimulate our economy while other nations opt for restraint, we summon a flood of imports and risk inflation and unemployment. If we raise our interest rates unilaterally to cover our investment gap, we ravage debtor nations, provoke worldwide interest rate increases, and invite a global recession. If we close our borders to foreign goods, we cripple our debtors’ efforts to pay us back and invite retaliation from major trading partners, while we cut our own standard of living. If we develop dramatically new and more elaborate defensive systems, we can expect that the Soviets will do whatever they must to eliminate any strategic advantage we might otherwise gain. If we lend our support to any dictator or revolutionary distasteful to the Soviets, we come to represent little more to the majority of mankind than just the other one of “them.”

  We cannot keep things out. Our borders are permeable to anything for which Americans are willing to pay, as well as to indisputably unwelcome cargoes: sulfur dioxide emanating from Mexican smelters, which causes acid rain in the Rocky Mountains; carbon dioxide and methane from all industrialized nations, which block the escape of heat from earth and threaten to alter the world’s climate; airborne radiation from a far off nuclear-power plant gone awry.

  Nor can we keep things in: Our borders cannot fully contain technology, whether as trade secrets or military intelligence. Regardless of how determined our efforts to embargo trade, our goods will often reach Libya or the Soviets or other proscribed destinations. It is impossible to keep hold of profits earned within our borders but transferred elsewhere within multinational corporations seeking to avoid taxation.

  It is becoming less clear who “we” are anyway. “American” corporations build factories abroad from which they ship goods to destinations around the globe. Foreign corporations establish operations here, employing American workers. “American” banks readily lend abroad; by 1985 the foreign exposure of our top ten banks was over 100 percent of their capital base. Many of us employ illegal aliens; most of us eagerly buy cheap and reliable foreign goods. We hold millions of dollars’ worth of shares in foreign-based companies. And when foreign currencies begin rising against the dollar, we are just as likely as foreign speculators to turn our dollars into Japanese yen or German marks. Who is “us”? Who is “them”?

  Faced with these awkward realities, there is a temptation to lash out—to be ever more assertive toward the rest of the world, or to build even higher walls around us. Nothing prompts a show of force as readily as a suggestion of frailty. Yet we are far from lacking in strength; perhaps we are too strong. Prizefighters are rarely masters of negotiation. We cast our relations with “them” as a series of tests of our “credibility,” “determination,” or “resolve”; we win or they win. But in truth many of our most troubling problems stem from our chronic failure to acknowledge the subtle interdependencies that bind us to the rest of the species.

  The delicately balanced, complexly connected world system makes it difficult for us to impose a loss on them without enduring pain ourselves, or to achieve a benefit without conferring benefits all around. Sheer assertion or sharp withdrawal redound to our detriment. Opportunistic ploys on one side invite the same on the other, until trust declines and dangers escalate. But a policy of passive acquiescence also
invites exploitative maneuver. A clear-eyed view of our interests and options as they are conditioned by our ties to the rest of the world—which is not the same as the romance that our interests are simply the same as those of others—would render more fruitful our efforts to advance our goals.

  There is evil abroad in the world, to be sure. But there is no mob. And there are no gates.

  CHAPTER 9

  OF ENTREPRENEURS AND DRONES

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  The myth of the Triumphant Individual colors the prevailing view of how our economy works. He is the entrepreneurial hero, whose daring and imagination fuel America’s growth. He personifies freedom, unencumbered by yesterday’s assumptions and arrangements. He creates the new and carries his culture forward. And there is definitely something to this. Our degree of entrepreneurial drive and the social legitimacy it enjoys have long distinguished America from other cultures. Generations of wide-eyed inventors and investors have kept us on the technological frontier. We are born mavericks and fixers. In a world of naysayers and traditionalists, the American personality has stood out—cheerfully optimistic, willing to run risks, ready to try anything. It was the American GI who could fix the jeep in Normandy while the French regiment only looked on.

  But here too, as with the parable of the Mob at the Gates, we risk that a simple and satisfying mythology will blind us to the new challenge our culture faces. The global transformation that we have examined in earlier chapters requires of us a different and more subtle form of entrepreneurialism, which builds upon joint effort rather than individual conquest.