- The Washington Times - Tuesday, September 24, 2002

Before becoming secretary of labor in the Clinton administration, Robert Reich fancied himself as a management and industrial-policy guru. He spent years at Harvard University singing the praises of the German and Japanese economic models, while heaping scorn on what he considered to be the vastly inferior U.S. model, which placed much greater emphasis on the free-market system. In 1982, at the depths of the worst postwar U.S. recession, Mr. Reich explained his views in "Minding America's Business," which he co-wrote with Ira Magaziner, who would later become famous as the author of the 1,400-page Clinton health-care plan.
Perhaps wanting to put some of his ideas into practice as an executive, Mr. Reich pursued the Massachusetts Democratic gubernatorial nomination this year. However, at a time when corporate scandals are playing quite well within the liberal political establishment, Mr. Reich somehow failed to defeat a candidate married to a former Enron lobbyist.
What can account for such a development? Well, maybe even Massachusetts Democrats have managed to figure out that the past two decades have essentially demonstrated that the industrial policies of Germany and Japan were not nearly as awe-inspiring as Messrs. Reich and Magaziner perceived them to be. In fact, time itself has proven that the central thesis in "Minding America's Business" "Industrial policies are necessary to ease society's to structural changes in a growing economy" is fatally flawed. Nor was Mr. Reich's predictive power any better. Having asserted in 1982 that "there is every reason to suspect that [the German and Japanese models] will be even more successful in the decade ahead," Mr. Reich must be amazed by the fact that the bursting of Japan's stock-market and real-estate bubbles at the end of the 1980s ushered in more than a decade of economic stagnation. Meanwhile, Germany's current unemployment rate is 9.9 percent, much of it long-term and structural; and its average annual economic growth rate for the past 10 years has been a minuscule 1.4 percent.
Maybe Massachusetts Democrats feared that Mr. Reich would do to them what the policies he espoused have done to the Japanese and Germans.

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