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994 FROZEN MARGARITA IRISH COFFEE 9 AM UNTIL MIDNIGHT HOT DOGS HAMBURGERS STEAKS CHICKEN RESTAURANT 511 RIVERWALK ACROSS FROM KANGAROO COURT SAN ANTONIO. TEXAS 225-4098 Good books in every field JENKINS PUBLISHING CO. The Pemberton Press John H. Jenkins, Publisher Box 2085 6 Austin 78768 ginny COPYING SERVICE Copying Binding Printing Color Copying Graphics Word Professing Austin Lubbock Son Marcos phy of Reagan, Meese, and Watt to the seductive powers of Rohatyn’s vision? Perhaps it is because the vision is so tantalizing and the alternatives so distasteful that few advocates of a bank and cooperation council have bothered to ask whether an industrial development bank makes any sense. Will it create an industrial renaissance that will have Japanese executives cowering with fear? Even more important, if it does work, is it the sort of political model that Democrats should advocate? The answer to both questions is no. And yet for their own reasons, each of the major participants in this drama unions, Rohatyn, and the Democratic Party has a vested interest in refusing to admit that there might be more democratic, progressive ways to break political stalemates and get the economy moving again. A good place to start is with the unions. Why should they have any interest in endorsing, not to mention participating in formulating, Rohatyn’s plan? From their perspective the invisible hand has been doing a rather efficient job of extracting labor concessions. Why bother to institutionalize the process? For labor, the issue is not so much the concessions it will be making as it is the privileges it will be gaining. Simply put, unions have nothing to lose and everything to gain by supporting Rohatyn. They know that all the bargaining rights in the world and all the financial resources of an industrial development bank will not alter the simple fact that a more productive, internationally competitive steel industry, for example, is going to require fewer workers to produce a ton of steel. It is probably also going to be paying lower wages. The choice, therefore, is not between making concessions and resisting concessions. It is between concessions and unemployment wrested by a free market and a negotiated bargain in which labor relinquishes its hostility to change in exchange for some power to influence the pace and direction of economic development. With negotiations, unions believe they just might be able to strike a better bargain, especially when an industrial development bank will have $50 billion worth of public capital which could replace some labor concessions. Add to this the fact that Rohatyn is giving unions the right to discuss a whole range of important issues for the first time since the 1930s, and you have a deal which labor cannot and will not refuse. Most labor contracts contain a management clause stipulating that investment decisions are the sole province of management. Unions are restricted to bargaining over wages, hours, work rules, and shop floor conditions. As long as American smokestack industries were not seriously threatened by foreign competition, this arrangement worked rather well. Workers demanded, and received, higher wages, and management was free to do as it pleased with the firm’s assets. But the rise of multinational corporations in an era of free trade changed all that. Now management has a wider choice of where to invest. It can build a new factory in the U.S. or, with little additional effort, it can go to Europe or Latin America where “moderately authoritarian” regimes have a decidedly anti-union cast. The sole purpose of a bank and a cooperation council is to create top-down institutions. . . . With increasing frequency, high tech firms like Atari and old line industries making steel and autos have been choosing the overseas option, and labor has not been able to stanch the flow or influence the decision. Under the aegis of a bank and cooperation council, however, Rohatyn is offering labor a say over corporate investment policy. Imagine the outcry if Lane Kirkland, were to demand that unions be given some power to determine how much a corporation invests in new plants and equipment and where it locates its factories. In his own way, Rohatyn is doing just that. He is offering labor a voice, albeit a minority one, in the counsels of management. He is giving workers an implicit guarantee that any wage and benefit concessions will be plowed back into productivity-enhancing investments at home, not runaway shops or mergers. In view of all these benefits, why should labor care if an industrial development bank is feasible? It has nothing to lose if it isn’t and everything to gain if it is. For management, on the other hand, Rohatyn’s proposal would appear to have much less allure. Unions are already on the defensive. The prospect that a bank and cooperation council will transform the rout into an orderly retreat is hardly the sort of calculation that will drive multinational corporations into Rohatyn’s net. In fact, for all his articles and detailed legislative proposals, Rohatyn has yet to explain what the bank will do and who its customers will be. 16 AUGUST 3, 1984