WORLD

CLINTON’S TEACH-IN

A TWO-DAY SEMINAR ON WHAT AILS AMERICA LEAVES TOUGH CHOICES FOR THE NEW PRESIDENT

CHRIS WOOD December 28 1992
WORLD

CLINTON’S TEACH-IN

A TWO-DAY SEMINAR ON WHAT AILS AMERICA LEAVES TOUGH CHOICES FOR THE NEW PRESIDENT

CHRIS WOOD December 28 1992

CLINTON’S TEACH-IN

WORLD

A TWO-DAY SEMINAR ON WHAT AILS AMERICA LEAVES TOUGH CHOICES FOR THE NEW PRESIDENT

CHRIS WOOD

As a movie, it might have been called Revenge of the Policy Wonks. For two days last week, U.S. presidentelect Bill Clinton assembled more than 300 of the brightest and best-informed minds in America for an intensive televised seminar on the state of the union. Joining Clinton, who himself has earned a reputation as someone who loves grappling with policy minutiae, were two Nobel laureates, several prominent economists and financiers, and the captains of half a dozen giant corporations. The live coverage of the economic summit in Little Rock, Ark., never threatened to top the television ratings—even the patrons at the Sports Page bar just down the street from the Robinson conference centre opted instead to tune in Jeopardy. But the gathering did serve Clinton’s political ends as he strives to build support for his program of government investment aimed at strengthening the U.S. economy. The twoday presidential teach-in on the ills affecting the American economy held important lessons for Canadians as well. Most unsettling of those may be that, so far, Canada has created scarcely a blip on the economic radar of the incoming U.S. administration.

Although the $200 billion Canada-U.S. trade relationship makes each country the other’s largest customer, that association was not mentioned during any of the summit’s five working sessions. Instead, leading American academics and corporate chief executives sketched a future in which the United States draws closer to Asia, while at the same time expands its network of free-trade partners to include much of South America. Both prospects may bode poorly for the future of what Canadian leaders have long cherished as a “special relationship” with Washington. “We haven’t lost sight of it,” insisted Clinton spokesman George Stephanopoulos of the

long-standing Canada-U.S. partnership.

But the evidence indicated otherwise. For one thing, Clinton aides suggested that the new President would quickly meet with Mexican President Carlos Salinas de Gortari after the inauguration instead of following the longstanding practice whereby American presidents make their first foreign trip to Canada. And the Little Rock summit’s clear message was that Clinton faces his most urgent challenges closer to home: from overhauling America’s collapsing health-care system to the rising cost, both human and economic, of

increasingly uncontrollable urban violence.

When the participants did discuss the global economy, they painted a gloomy picture of sluggish growth in several major countries. Noted Massachusetts Institute of Technology economist Rudiger Dornbusch: “Europe is going to have zero growth, maybe a recession. Japan is just as bad: the banks are all bankrupt and the government is helpless.”

For Clinton, who wrested the White House from the Republicans by insisting that government can play a role in improving the economy, the enormity of that task was mapped out by

several speakers. They insisted that American workers must be retrained to contend with the dramatic shift in how and where wealth is created: from factories and fields to the more fleeting currency of information-based industries. Noting that natural resources are less critical to industry than in the past, and that investors can easily move money from country to country, Princeton University economist Alan Blinder told Clinton that the only way to attract future business to the United States would be to develop a more skilled workforce.

Said Blinder: “Capital and technology flicker around the world. American labor stays in America.”

Blinder is not alone. Numerous economic studies and Western politicians of all stripes have advocated similar measures. Prime Minister Brian Mulroney pointedly observed last week that Clinton’s emerging economic agenda “closely resembles the one that we’ve talked about for eight years”—although his critics maintain that the Tory government’s actions have never matched its rhetoric on improved job-training and public investment. In fact, the Tories have shown a preference for deficit-cutting over new spending programs on

roads or education, the sort of infrastructure investments that Clinton and his economic advisers have forcefully promoted.

Clinton did not back away from those pledges last week. And he was told by several speakers that he has great resources at his disposal if he chooses to tap them. By one estimate, redirecting even one-third of Washington’s spending on military research could pump $8.8 billion into new commercial technologies. And several experts told Clinton that he could spend as much as $73 billion to stimulate the U.S. economy next year without fuelling inflation or raising interest rates.

But Clinton kept his specific intentions to himself. He told reporters that he had not decided whether the U.S. economy, which grew at an annualized rate of 3.9 per cent in the past three months, needed any short-term stimulus at all. He also heard competing views on whether his administration should endorse the proposed North American Free Trade Agreement, expand it to include Chile and Argentina, or abandon it outright. Clinton has said he supports the agreement in principle.

But several speakers urged the presidentelect not to conclude any trade agreement that would limit the protectionist reach of U.S. law, a clear sign that while Clinton’s administration may seek the proverbial level playing field in international trade, it may fry to retain control over the referees. And he also speculated about increasing U.S. agricultural export subsidies, which are a long-standing irritant to farmers in other countries, including Canada.

Still, Canadians could take at least a degree of comfort in what the summit made clear they do not share with Americans. One example is the looming bank crisis in the United States. According to one largely overlooked summit assessment, Washington will need to spend up to $125 billion a year over the next half decade to bail out depositors in failed banks. Another is the shattered state of most large American cities. “We have underestimated the extent to which poverty drags us down,” observed Brooklyn, N.Y., businessman Bruce Ratner, who gauged the annual cost of providing everything from additional police to welfare at $250 billion.

Indeed, high crime rates also weigh on what is likely to be Clinton’s most difficult challenge: reforming a health system that leaves 37 million people unable to afford medical care, even as the cost of insurance for the rest skyrockets. It was the only issue on which Clinton showed a flash of passion last week, pounding his fist on the table as he declared: “We’ve got six months to do something about health care.” Even with reforms, Clinton conceded that American health costs are likely to stay high, in part because of inner city violence. “We have a lot more people showing up at emergency centres on Friday and Saturday night,” said the president-elect. It was a gloomy statement that warned Americans, while they have elected a President who is eager to act, their problems are deeply rooted and maddeningly complex.

CHRIS WOOD in Little Rock