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Rohatyn’s New Corporatism Offers No Real Solutions By Al Watkins Washington, D.C. IF FELIX ROHATYN did not exist, the Democrats would be hardpressed to invent someone like him. As one of Wall Street’s most successful investment bankers and merger brokers, he is at home in the boardrooms of most major multinational corporations. As a political philosopher of sorts and architect of a program which some Democrats hope to ride to victory this November, he is feted in the Georgetown parlors of Washington’s liberal Democratic establishment. Nine years ago, during the darkest days of New York City’s fiscal crisis, many prominent liberals argued that bankruptcy would be preferable to letting the city fall into his clutches. Today, when he suggests that the national and even the international arena could use a dose of the same medicine he administered to New York City, such pillars of the Democratic Party’s progressive wing as Douglas Fraser, Ted Kennedy, and Eleanor Holmes Norton stand in line to embrace his recommendations. At first glance, Rohatyn’s allure is not difficult to understand. Simply put, Democrats from all points on the ideological spectrum believe he is a fresh voice in the economic wilderness who can reconcile the Republican theme of renewed economic vigor with the Democratic vision of activist government and social justice. What is surprising is that, at a time when Ronald Reagan cloaks his policies in the mantle of FDR and the New Deal, Rohatyn plans to revive the Democratic Party by resurrecting Herbert Hoover. Even more incongruous is the fact that labor and its allies in the liberal wing of the Democratic Party see Rohatyn’s call to revive Hoover’s depression-era Recona golden opportunity to put a democratic socialist program on the political agenda. It may be that labor believes Al Watkins is the Observer ‘s Washington correspondent. 1 4 AUGUST 3, 1984 that just as Richard Nixon’s unimpeachable anti-communist credentials enabled him to establish diplomatic relations with mainland China, so Felix Rohatyn, a senior partner in Lazard Freres, one of Wall Street’s most prestigious investment banking firms, may be the only one who could put what the unions see as a democratic socialist agenda on the political front burner and have it seriously debated. Rohatyn’s agility, both ideologically and personally, should not be underestimated. His recent burst of popularity is a far cry from his days as an investment banker, when he was tagged with the nickname, “Felix the Fixer,” in a notso-subtle reference to some of his more questionable financial dealings. Just one of his many deals, the merger of ITT with the Hartford Fire and Casualty Company, led to the indictment of Richard Kleindienst for perjury, the publication of Jack Anderson’s nowfamous Dita Beard memo linking a favorable Justice Department anti-trust ruling to ITT’s $400,000 contribution to the 1972 Republican National Convention, and an adverse tax ruling costing his clients $100 million. Apparently all is now forgotten and forgiven. Today, as one of the Democratic Party’s premier domestic policy advisors, Rohatyn is courted by senators, TV anchors, and presidential hopefuls. He is asked to testify before Congressional committees, not grand juries. He is asked for his ideas, not his whereabouts. Put this way, it is easy to understand why Rohatyn would prefer to trade the sordid life of an investment banker for the genteel respectability of being the Democratic Party’s philosopher King. With the recent publication of The Twenty Year Century \(New York: to cement his claim to leadership of an emerging brain trust. The title of this collection of essays, most of which were previously published between 1978 and 1983, is a scathing commentary on Henry Luce’s optimistic belief that the one hundred years following World War II would be “The American Century.” In Rohatyn’s opinion, the halcyon days when the world looked to the U.S. for intellectual, political, moral, economic, and technological leadership lasted a mere twenty years. America’s preeminence began to fade as far back as the mid-1960s and, Rohatyn asserts, nothing less than a bold program of economic revival and civic renewal will arrest the decay. The Twenty Year Century is Rohatyn’s attempt to explain how a national development bank and a tripartite cooperation council, composed of labor, management, and government representatives, will create the sort of political environment that will help to unleash a new burst of economic growth and prosperity. Restoring America’s Competitiveness: Proposals for an Industrial Policy \(Washington, D.C.: prepared by Rohatyn in collaboration with the AFL-CIO’s Lane Kirkland and Dupont’s former chairman of the board, Irving Shapiro, spells out in greater detail how these new institutions can be expected to revitalize American industry. The fact that the head of American labor and the former chairman of one of the world’s largest corporations have joined Rohatyn in issuing this pamphlet only adds to his luster as someone who can unite the Democratic Party’s fractious constituents behind a common policy of growth, reform, and prosperity. Because he first advocated the establishment of a national development bank in 1974, long before Democrats were even remotely aware that they might need fresh economic ideas, Rohatyn is mistakenly thought of as an economic policy innovator. However, even though a national development bank is frequently discussed in the context of industrial policy, Rohatyn’s main emphasis is on devising ways to overcome what he sees as a possibly fatal political stalemate, not repairing a stalled economic engine. He believes that the