Leading Negative Indicator: Robert Reich

Poor Robert Reich. Ronald Bailey at Reason has the goods:

Former Clinton labor secretary and perennial industrial policy hustler, Robert Reich, is a leading negative indicator. Whatever he predicts, the exact opposite occurs. In the 1980s, Reich declared that the U.S. economic growth rates were in a permanent slump and that we needed to adopt the economic model represented by the once famed Japanese Ministry of International Trade and Industry. In 1982, Reich co-authored Minding America’s Business with Ira Magaziner which recommended that the federal government start directing the economy. A few excerpts below:
“U.S. companies and the government [should] develop a coherent and coordinated industrial policy whose aim is to raise the real income of our citizens by improving the pattern of our investments.” According to the two the governments of Japan, France and West Germany “understand that the only real alternative to developing a rational industrial policy that seeks to improve the competitive performance of their economy in world markets is for the government to cede the formation of policy to the politically strongest or most active elements of industry. Industrial policies are necessary to ease society’s adjustment to structural changes in a growing economy.”

The United States was failing because it had “an irrational and uncoordinated industrial policy,” resulting in a “process of economic policy formation [that] remains decentralized and chaotic.” They added: “Perhaps the most striking feature of the U.S. industrial policy apparatus is the absence of a single agency or office with overall responsibility for monitoring changes in world markets or in the competitiveness of American industry, or for easing the adjustment of the domestic economy to these changes.”
They concluded: “The failure of U.S. industrial policy is not simply a failure of organization, of course. It is a failure of substantive strategy. The industrial policies of Japan, West Germany and France have been more successful than U.S. policies because they have explicitly and consciously aimed at improving the international competitiveness of their businesses.”

Total unmitigated flapdoodle.

Ouch. This reminds me of the old saying that economists have predicted 13 of the last five recessions.
My personal favorite goes to John Kenneth Galbraith writing in the New Yorker: “That the Soviet system has made great material progress in recent years is evident both from the statistics and from the general urban scene…One sees it in the appearance of solid well-being of the people on the streets…and the general aspect of restaurants, theaters, and shops…Partly, the Russian system succeeds because, in contrast with the Western industrial economies, it makes full use of its manpower.”

Posted by on September 5th, 2007 at 3:20 pm


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