must also be concerned with unemployment.nIf they are not, the right will suffernpolitically as the public mms to the leftnfor “solutions.” The economy will alsonsuffer because leftist solutions do notnwork.nAn example of the left’s attempt toncapture the reindustrialization issue isnBluestone and Harrison’s The Deindus-npiece of business is to re-establish a publicncommitment to the maintenancen(and indeed the expansion) of the socialnwage.” In other words, they recommendnthe same Great Society approachnthat caused the mess in the first place.nThe elements of their plan include expandingnwelfare programs across thenboard, increasing the level and progres-n”Thi.s is :iii inU’iiM-l irriLilin}> hut iinporuni Ixiok …. I oinitiK’ncI |l!lui’M()ni.- uiiilnI luiTiM)n’.s| tiicssiifji- to ;iii>’>>iK’ iintTL-siiTLl in WIKTI- .IIH.TJI-;I is unci whciv il i.s j^oinjj.”n—.Alfred !•. Kalinniir York Times Httrtk Reriewn”Hhifslonc ;uid Ilarrison pniviclt-a cijnincinj;anti };rapliic cast.”n—The .%<•»«• Repiihlicntrialization of America Both men areneconomics professors but with specialtiesnin social welfare and urban policiesnrather than in areas concerned withnproblems of business and industry. Theirnbasic theme is that America is decliningnbecause private corporations are reallocatingncapital investments away fromntraditional industrial communities innthe U.S. They are concerned both withnforeign investment and with shifts fromn”frost-belt” to “sun-belt” production.nThey are correct to worry about capitalninvestment since it is the key to modemnindustry. However, they fail to understandnit. Capital is a scarce resource asnwell as a vital one, and its ovraers naturallynseek to invest it where it will earnnthe highest return. This promotes efficiency.nThe obvious implication is that ifnmore investment is desired in a certainnlocale, the returns need to be more attractiventhere. If the U.S. is not as attractivenas it used to be, as the authors concede,nthen reforms need to be institutednto restore that attractiveness. Bluestonenand Harrison reject this because it is ancapitalist concept and conflicts v^^thntheir distributionist orientation.nAfter spending 230 pages blaming thenplight of the unemployed and the problemsnof declining communities on greedyncorporate plaimers, the authors presentntheir plan for “reindustrialization with anhuman face.” Their solution: “The firstnsivity of the tax system, enacting legislationnto prohibit capital mobility and, asnseems mandatory for the left, cutting defensenspending.nFrom authors who start out emphasizingnthe importance of capital investment,nthis conclusion is inexplicable. The welfarenstate has been fueled by deficits andnhigh taxes. Deficits are a direct raid onnthe capital pool, converting savings intonconsumption rather than investment.nThe amount of privately held Federalndebt rose from $222.8 billion in 1969 ton«736.9 billion by mid-1982. This representsna diversion of 1514.1 billion fromnprivate investment. And social programsnhave taken a disproportionate share ofnnot only this but other public moneys asnwell.nThe progressive income tax penalizesnthe very people who furnish the bulk ofnpersonal saving. This redistribution systemnagain converts potential capital intonspending. The U.S. continues to burdenncorporations more heavily than mostnother industrial nations with both ancorporate-profits tax and a capital-gainsntax. When Bluestone and Harrison callnfor heavier taxes they are talking ideology,nnot economics.nBluestone and Harrison also rejectnthe “corporatist” and “Japanese” approachesnto reindustrialization. Theyncarmot effectively dispute the economicngains of these plans which have attractednnnso many adherents. What they fear isnthat cooperation between labor, business,nand government will be made forneconomic reasons, which means to themnreasons associated with business. Onenresult they fear is that high-technology,ncapital-intensive industries will benefitnmore than labor-intensive industries.nThis would be a necessary restructuringnfor the U.S. to become competitive innworld markets. Evidently the authorsnfeel workers will be better off in nonproductivenrather than productive jobs. Butnlabor-intensive jobs will not survive innthe fece of competition from Asian workersnwho are willing to labor at a fractionnof U.S. wage scales. If workers are tonmaintain high wages in the U.S. they mustnlearn to work “smarter” with more advancedntools. Productivity is essentialnboth to jobs and wages, but Bluestonenand Harrison act as if they have nevernheard of the term.nThe authors are also afraid that cooperationnbetween labor and managementnwill undercut the unions since unionsnsubsist on the notion of class conflict. Anconstant theme rutming through thenbook is that all current theories of industrialnrenewal are aimed at destroying thenunions. This is not true. However, manynabuses of union power are being rightlynattacked as destructive of economic activitynand jobs. Unions have pushed wagesnup at three times the rate of productivity.nSince 1977, unit-labor costs have risennover 57 percent. Unions are pricing theirnmembers out of jobs and companies outnof business. Capital and labor are cooperativenfactors of production. Americannworkers have traditionally been thenhighest paid in the world because theynhave been the most productive. Whennthat link is broken, both capital and labornsuffer. The heresy of the class-conflictnmodel is that it calls for the severance ofnthis link. If unions are to remain viableninstitutions, they will have to reformntheir philosophy and support economicnprogress.nllnergy ••k.^JL.l.X^.1. «• * is •.LJ a tA. vital T M.K’t^A. component ^.V/J.J.XL’V^.I.Jt«^JlJ.t, of v.*. advancednproduction methods. The m-nJuly 1983n