'Rethinking America': is more really better?


"Rethinking America," by Hedrick Smith. 445 pages. New York: Random House. $25 How would you react to a diet that proposed heavy doses of ice cream and other calorie-filled delectables, but still promised significant weight loss? You'd love to believe such a regimen possible, but you'd be awfully hard to convince.

The ice-cream diet scenario is a crude analogy for Hedrick Smith's wide-ranging new book, "Rethinking America." The former New York Times foreign correspondent offers a vision of how we can have our cake (economic growth, high-paying jobs) and still keep our competitive trim in the ever nastier global economy.

The answer is people. By abandoning the "downsizing" fad and instead giving employees a secure and flexible environment that pushes teams and knocks down traditional corporate hierarchies, Mr. Smith thinks enough productivity and innovation will flow. He presents a familiar litany that includes emphasizing quality and truly listening to customers.

We also need more government-sponsored research, better job-oriented public education and greater corporate democracy. Much of this stuff is hard to argue with and much of it has been reported elsewhere. Who's against better education and more fulfilling work?

The problem is that government policy and public attitudes are headed in the opposite direction from which Mr. Smith wants to go. If the last congressional election was a guide, we're headed for less federal government involvement in business and education.

Mr. Smith's reshaped America would cost a lot of money. How does this fit in with headlines about corporate belt-tightening, eliminating the budget deficit and cutting taxes?

Much of the book consists of profiles of large industrial companies that have thrived or stumbled or both in the 1980s and 1990s (General Motors and Motorola, to name two). Mr. Smith writes clearly, and he cogently argues that trust and innovative work relationships were at the heart of Motorola's successes and GM's problems. But the service sector, which the author ignores, is where most of the economy's growth has recently come from. And most new jobs are being created by smaller companies, likely to lack the wherewithal to support ongoing employee education.

The most intriguing part of the book focuses on education. Mr. Smith offers concrete examples of how to better prepare the majority of American students who won't finish college for jobs that demand technical knowledge and the ability to make decisions. He brings flesh and blood to this by comparing individual students at schools in the U.S., Japan and Germany.

Mr. Smith is quite adept at chronicling what market forces can't do (teach children, tolerate a lot of long-term research). But he underplays what the market can achieve, and correct. The "innovators" he trumpets often were pushed against a wall by global competition before they started innovating. Survival depended on it.

Of course, not all survive, and there is real suffering by those who lose jobs and in regions that lose industries. But many American companies have adapted or are still trying to adapt to a less friendly world. And our economic rivals have shown that they too are not immune to such economic maladies as high labor costs and recession.

L It appears a painless diet is still somewhere in our future.

* Neal Lipschutz is deputy managing editor at Dow Jones News Service. His articles have appeared in The Sun, the Wall Street Journal, the New York Times and Barron's, among others.

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