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David Gergen, editor at large of U.S. News & World Report, engages William Greider, national editor for Rolling Stone Magazine and author of One World, Ready or Not: The Manic Logic of Global Capitalism.

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ELIZABETH FARNSWORTH: Finally tonight, a Gergen dialogue. David Gergen, editor at large of U.S. News & World Report, engages William Greider, national editor for Rolling Stone Magazine and author of One World, Ready or Not: The Manic Logic of Global Capitalism.

DAVID GERGEN: Bill, in your new book, you quote the Motorola general manager in Malaysia, James Burtleson, saying, "Americans don’t have the foggiest understanding of what’s happening to them and why." You’ve been all over the world writing this book. What is happening to Americans and why?

WILLIAM GREIDER, Author, "One World, Ready or Not": The starting point for people is to understand that we’re in the middle of an industrial revolution. And a lot of what’s happening now--the upheavals and dislocations, and the wondrous new inventions--is typical I think of an industrial revolution. You go from that to the action both firms, multinational corporations, not just American, but around the world, driven themselves by a kind of desperate edge in the competition, doing lots of different things, not just because they’re powerful and able to do things but because they feel if they don’t, they, themselves, won’t survive, or they’ll fall a step or two behind.

DAVID GERGEN: Let’s talk about it a little more precisely. One of the major trends of what’s happening to producers, the Boeings and the IBMs and others. What’s happened to them?

WILLIAM GREIDER: Well, I should say first most of my reporting was with the managers of those companies.

DAVID GERGEN: Sure.

WILLIAM GREIDER: Strategists and managers on the ground, like the guy in Motorola in Malaysia. The big cloud hanging over their lives, over their companies, their sectors, is a paradox. They close a lot of old factories. They build new factories. They modernize their production systems. And they still wind up with more production capacity than the marketplace can absorb. A quick example is the global car industry. And the numbers I got from one of the American companies estimate that in the year 2000 new producers from Korea and China and elsewhere coming on, the global industry will be able to produce about 80 million vehicles for a marketplace that won’t buy more than 58 million vehicles. Now, that’s a gap bigger than the North American car market.

DAVID GERGEN: Bigger than the North American car market. In other words--

WILLIAM GREIDER: We have to find--the excess capacity is more than all of North America will purchase, so obviously at a minimum that means a lot of factories are going to be closed. Whether they’re here or in Europe or in Japan, looking at the global system almost doesn’t matter because the problem will be pushed around. If this were just cars, you could shrug it off, or if it were just a temporary condition, you could shrug it off, but the fact is this is steel, chemicals, electronics across most of the major industrial sectors, and not in perfect uniformity but on the whole this imbalance has been growing wider over the last 20 years, not getting narrower as economists have predicted.

DAVID GERGEN: Your argument is not the familiar one of a big company with middle class workers here moving to a lower wage country. It is that when it moves, it not only depresses wages but creates this huge excess capacity.

WILLIAM GREIDER: Yes. And you have to understand from the point of view of a multinational that’s one of the moves they make. And they don’t do it just because they’re disloyal to the home folks or because they’re black-hearted. They do it because that’s a way of staying in the cost-price competition for market share. There are a lot of things they do. For instance, you look at Boeing, which is the world’s premier aircraft maker--no argument with that--and yet, it’s moving production work and technology to places like China and lots of other countries. Why would it do that? Because in this marketplace glutted with overcapacity, the hot markets like China have the leverage, and so the Chinese government, like lots of other countries before it, say we’ll buy your airplanes for our airlines, but you’ve got to move some of the work here. So I was in a factory in China, which is an amazing place, the Jian Aircraft Company, military run, makes everything from diving boards to video discs to ferris wheels. It also makes Chinese nuclear bombers. And now it makes the tail section of the Boeing 737. It makes buses for Volvo, et cetera, et cetera. That exchange for China is the beginning of developing an industrial capacity of its own, and they’re very candid about that. They’re going to try someday soon to make their own 737's or something similar, and then export ‘em into the world market. And you’ve got a wage exchange here between say a worker in Seattle or Wichita. The machinists in that factory make--in China make $50 a month.

DAVID GERGEN: We need to look at also the financial aspects of this. The financiers are driving more of this than people--

WILLIAM GREIDER: Yes. And really my subtitle is "The Manic Logic," I mean, that’s really where the manic behavior is in finance and they’re now deregulated and able to roam around the world very quickly in and out of markets, and they discipline the companies. And we see that in the business pages, the CEO, if he isn’t willing to shed, downsize, shed the workers, move the production, whatever, he gets blamed by the markets, he’s gone, and the new management is in place.

DAVID GERGEN: Do you think the financial community is also holding down growth in the United States, among other countries?

WILLIAM GREIDER: Well, they have an interest which is not synonymous with the broad interest of most wage earners in America, which is slow growth, absolutely ideal for them. It’s not ideal for an economy as a whole of real producers because you’re working now at way below the potential to the society, and that’s not--again, that’s not just true of the United States but true of lots advanced--

DAVID GERGEN: You pay a pretty cataclysmic picture where all this is leading.

WILLIAM GREIDER: I put it in the historical framework which makes the observation in lots of different ways that, contrary to the sort of standard economic assurances, history doesn’t move in a straight line. It didn’t in the last industrial revolution. It wound up in a couple of world wars an overcapacity problem in the 1920's very similar to what we’re seeing develop now, and that can lead to some kind of collapse. I’m not predicting 1929 again, or the rise in fascism, but I think we are literally flirting with some of those same dangers.

DAVID GERGEN: There are orthodox economists who obviously disagree with your analysis, but I want to turn to your solutions and what you think we need to do. You’re, in effect, making the argument that the world economy on automatic pilot will just drive us right over the cliff as one of your critics have said. What do you think we need to do to stop ourselves?

WILLIAM GREIDER: Well, I obviously think we need to shift our attention to the other side of the equation, the demand side, and that means addressing the inequities, wages, and not just in this country but on the other end of the global economy. And that, I think, probably upsets some self-interested, insular Americans who don’t want to think about those people on the other end, but we’re connected to them now, both morally and economically. They make the stuff we buy and in their working conditions and wages I think are central to the solution of these problems. That means, in short, addressing human rights really as a question of labor rights. And that’s about basic freedoms--free speech, free assembly, and so forth--not just in China, not just in Indonesia, but try to rebuild the terms of trade so that--so that there really is--the bottom comes up more rapidly, instead of pulling the top down. One other dimension is the moral dimension. And here I may sound utopian. I don’t think I am. But I think this era has opened a new vista for us if we have the nerve to pursue it, and that is a kind of sense of global interconnectedness across race and religion and all the rest that really hasn’t been possible in the past. And that’s what I’m--I’m inviting people to explore that.

DAVID GERGEN: Well, Bill Greider, thank you very much.

WILLIAM GREIDER: Thanks, David.

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