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                                                                                THE TRANSITION, Page 29

CLINTON'S PEOPLE

Clinton's Economic Idea Man


Since their Oxford days, ROBERT REICH has been teaching economics
to his friend

By DAN GOODGAME/CAMBRIDGE


    Robert Reich wrote and directed his first play in the
ninth grade, and since then he has seldom strayed from the
footlights: as a 26-year-old lawyer arguing before the U.S.
Supreme Court; as a popular lecturer in political economy at
Harvard; as a best-selling and prolific author and essayist,
television commentator and corporate consultant. Built like a
jockey (4 ft. 10 in. and wiry) and bursting with humor and
energy, Reich could always attract and hold an audience, even
when playing honky-tonk piano for friends on weekends. And for
the past 24 years, he has won some of his loudest applause from
a friend named Bill Clinton, who campaigned for the White House
on an economic plan framed around Reich's ideas for creating
good American jobs in the new global economy.

    Clinton's election to the presidency offers Reich the
biggest stage yet on which to audition both his ideas and his
clever showmanship. The President-elect last week summoned Reich
from Cambridge, Massachusetts, to Little Rock, Arkansas, to
lead the transition team that will help him choose his economic
personnel, organization and policies. In an interview Reich
insisted that it would be "wrong to presume" that he would have
any position in the new Administration. But other Clinton
advisers fully expect that the new President will want Reich --
probably as domestic-policy adviser or head of a new Economic
Security Council.

    Clinton and Reich met on an ocean liner in 1968, when they
were on their way to study at Oxford University as Rhodes
scholars. They grew closer after Reich, miserably seasick,
opened his stateroom door to find Clinton standing there with
chicken soup and crackers, determined to nurse him back to
health. Ever since, the two, along with mutual friends from
Oxford, have participated in an on-and-off, two-decade
"conversation" about how America and its economy should be
governed. "Bill has had all of my books inflicted on him," Reich
says, "and has done me the honor of actually reading and
commenting on them."

    Reich's latest book, The Work of Nations, published last
year, was particularly influential on Clinton and other
Democrats who wanted not only to divide the economic pie more
equitably but also to get the pie growing again. In a reversal
from his earlier writings, which favored federal aid to emerging
industries, Reich now writes that in the new global economy --
where capital, factories and technology move freely across
international borders -- it makes little sense for Washington
to aid particular industries or to shower tax breaks on wealthy
investors. Businesses only take their government favors and use
them in countries where labor is cheaper or where stock-market
returns are more attractive.

    In this new global economy, Reich writes, it matters
little whether a company is based in London or Los Angeles. A
Honda built in Ohio may have more "domestic content" than an
Oldsmobile. The only policy that will benefit all Americans,
Reich writes, is for Washington to "invest" in the two assets
that won't leave the country: "human capital," such as education
and job training; and physical infrastructure, from roads and
bridges to high-speed railroads and fiber-optic communications.
Such public investments, Reich argues, will encourage both U.S.
and foreign firms to create jobs in America. How would Reich
finance these expensive new investments? By raising taxes on the
wealthiest Americans and cutting defense spending.

    These themes are familiar, of course, to anyone who heard
even a snatch of a Clinton campaign speech. While other
economic advisers, particularly Robert Shapiro of the
Progressive Policy Institute and corporate consultant Ira
Magaziner, contributed heavily to the lyrics of the Clinton
economic plan, most agree that the music came straight from
Reich. Says John Isaacson, founder of an executive-search firm
in Boston, and a friend of both Clinton's and Reich's: "The Work
of Nations provided a conceptual framework for the whole
campaign." Gene Sperling, economic-issues director for the
campaign (and a former research assistant for Reich), goes
further: "Bob is the person most responsible for how progressive
Democrats talk about economic growth today."

    Reich attracts both admirers and critics across the
political spectrum. Andrew Kopkind writes in The Nation that the
Reich-Clinton plan "does not touch the problem of a powerless,
alienated and potentially disruptive work force." Conservatives,
meanwhile, see Reich's call for more federal "investment" in
education and infrastructure as merely an attractive new label
for a bigger, more wasteful, more intrusive bureaucracy. Milton
Friedman, the Nobel-prizewinning economist, predicts that the
Reich-Clinton program "would destroy far more productive jobs
than it would create, because it relies on more government
spending and taxing." Jim Pinkerton, an iconoclastic Republican
thinker who until recently worked in the Bush campaign and White
House, says, "I agree with three-fourths of what Reich writes."
But Pinkerton doubts that simply throwing more money at poorly
run public schools will produce results, when neither Clinton
nor Reich has embraced market-oriented reforms such as school
vouchers.

    The Reich-Clinton plan would also throw billions of
dollars at new public-works projects without persuasively dehow
it would keep the money from being wasted by lawmakers such as
Senate Appropriations chairman Robert Byrd, who has made it his
mission in life to pave his home state of West Virginia with
federal office buildings and roads. Reich holds that "there is
nothing wrong with being indebted so long as the borrowings are
invested in means of enhancing our future wealth." But he agrees
that some way must be found to "guard against pork-barrel
spending."

    Some of Reich's critics target him personally as a
"self-promoter" and "pamphleteer" -- in part, no doubt, out of
resentment of his productivity and fame. These chafe many
economics professors because Reich, often described as an
economist, does not hold a degree in that subject. He received
his degrees at both Dartmouth and Oxford in interdisciplinary
studies -- history, philosophy, politics, economics -- and
earned a law degree from Yale. Despite his decade of teaching
at Harvard's Kennedy School of Government, Reich is not a
tenured professor; nor, friends say, has he sought that title.
With characteristic wit, he pens some of his correspondence
under a letterhead proclaiming himself the "Thorstein Veblen
Wizard of Political Economy." To the criticism that few of the
insights in his books are original, friends say Reich considers
synthesis as important as discovery. As he once wrote in
another context, "Often, greater rewards flow to quick and
clever followers than to brilliant and original inventors."

    Reich was born in 1946 with a rare condition later
diagnosed as Fairbank's disease, in which the lower spine fuses
and the upper legs don't grow properly. In June he had to
undergo painful surgery on his hip joints; when he was a child,
the condition and his size kept him from participating in
sports. But he compensated by writing and illustrating his own
books (starting at age six) and with music and humor and
theater. He grew up in South Salem, New York, about 40 miles
north of Manhattan, the son of Republican parents who owned a
pair of women's clothing stores.

    A quick study and natural leader, Reich was elected
student-government president at Dartmouth College. During the
summers, he worked with inner-city youngsters, as an intern to
Senator Robert Kennedy, as a campaign volunteer for Senator
Eugene McCarthy. He met his future wife Clare Dalton, a Briton
who now teaches law at Northeastern University in Boston, on his
first day at Oxford. After returning from England and earning
his law degree at Yale, Reich clerked for a federal appeals
judge in Boston. He then worked for seven years in Washington,
first as an assistant to Solicitor General Robert Bork, then at
the Federal Trade Commission during the Carter Administration.

    Reich and Dalton moved to Cambridge in 1981 and reared two
lively boys, now 11 and 8. They also began swapping visits with
their friends Bill and Hillary. The last time Bill Clinton
stayed with Reich was in the spring of 1991, when President Bush
was winning 80% approval ratings. Yet Clinton, chatting on the
porch of Reich's big old Victorian home, nonetheless seemed
determined to run against Bush. One reason, Clinton said, was
to promote the ideas of investment in the future that were
contained in The Work of Nations, which had just been published.
A mutual friend, playing devil's advocate, raised several
arguments why Clinton should not run, but Reich recalls with a
grin, "I just sat there wagging my tail."