S+B: Why has it taken Detroit so long to get this message, when it’s so obvious to so many people?
REICH: The culture at the Big Three is very insular, for one thing. The invasion of Japanese carmakers into the U.S. to make vehicles shook up Detroit, and in response, the Big Three have made substantial improvements in quality. But management and labor are still living in a different age. They haven’t been shaken up nearly enough. Labor understands the situation probably better than management. The new UAW contract recognizes the need for substantial changes. Young workers will be coming into the Big Three with wage and benefit packages not all that different from what American workers are getting from the Japanese automakers. But there’s still a long way to go on the management side.
S+B: You were one of the earliest supporters of President Obama during the primary season, a somewhat unexpected move considering your connections to the Clinton administration. And you have served Obama as an advisor on economic matters. Why do you believe that the Obama administration has a chance to make a difference in a very difficult time?
REICH: The economy stinks, and the country is fed up with the old order. We’ve gotten ourselves into a terrible mess, and it’s not going to be easy to get out of it. But no president runs the economy. Not even the head of the Federal Reserve runs the economy. There are limits to what monetary policy can do. Having said that, I have high hopes for the changing of the guard. Obama is exceedingly capable, and I have great faith in him and the new administration to do what is necessary to at least put the brakes on supercapitalism and begin the remaking of a sustainable economy that serves Main Street as well as Wall Street.
Edward H. Baker, former editor of CIO Insight magazine, is a contributing editor at strategy+business.