THE WHITE HOUSE
Office of the Press Secretary
PRESS BRIEFING BY DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL BOB RUBIN, CHAIR OF THE COUNCIL OF ECONOMIC ADVISORS LAURA TYSON, SECRETARY OF COMMERCE RON BROWN, SECRETARY OF LABOR BOB REICH, AND SECRETARY OF THE TREASURY LLOYD BENTSEN
The Briefing Room
1:15 P.M. EST
MR. RUBIN: Welcome. As you know, this session is about the G-7 Jobs Conference, which will begin on Monday in Detroit. The genesis for that job conference, the idea came up in a meeting in the Roosevelt Room before the G-7 in Tokyo, when the President said that all the countries in the G-7 face similar problems. They have chronic and stubborn unemployment, and were facing enormous changes -- globalization, technology, reorganization of the work forces.
As he said at the time, every period is a period of change, but this is a period of extraordinary change affecting these economies. He said, why don't we get together the people who are really the policymakers, the people who have to combine politics and policies, to determine how the various countries of the world should deal with these problems which they hold in common -- not the academics, not the experts, but the people who really have to make the decisions. And it was out of that thought that came the idea of having this Jobs Conference, which will now start on Monday.
There will be no communique at the end. What there will be is an exchange of ideas amongst these people who have to deal with these problems on a daily basis. And then, at the end, Secretary Bentsen will deliver a statement that tries to summarize the exchange of views, the various ideas that have been put forth.
The session will begin with a speech by the President. He will also have two events while he's there -- one at Focus Hope and the other at an industrial site that is a high-performance workplace. The Vice President, because of an acute interest in this subject -- the subject of jobs, and because of the expectations; this will be an extremely interesting interchange amongst the people in the world who have this responsibility in the various countries -- is going to be attending all of the sessions, and he'll be speaking Monday night.
Having said that, what we'll do today is each of the Secretaries -- they'll be the leaders of the four sections of this conference -- each of the Secretaries will speak for a few minutes on what they plan to cover in their conference. And then, at the end, we'd be delighted to entertain some questions.
We'll do this in the order in which the sessions will take place in Detroit. We'll start with Laura Tyson, Chairman of the Council of Economic Advisors, who's going to talk on the world economic problem.
DR. TYSON: And I'm going to solve it, that's right -- raise it and solve it.
My role at this conference is really to present some facts and raise some questions and some themes, which I believe will then be addressed during the remaining sessions. The facts that I will focus on are, first of all, this conference exists because we have unemployment rates which are unacceptably high throughout the G- 7 nations. We've had a substantial increase in the number of people who are unemployed, and in unemployment rates, since 1990.
One of the questions that will be before us from the very beginning is the extent to which the development since 1990 are cyclical in nature; that is, having to do with a slowdown throughout the G-7, which has led to an insufficiency in demand and, therefore, to slow growth in output and slow growth in employment and an increase in unemployment. So we'll look at the most recent evidence and try to talk about the roles of business cycle and slowdown, what can be done at the macroeconomic level to reverse those trends.
This problem since 1990, you can look further back and see that certainly in the European case, it was superimposed on a trending upward of the unemployment rate over time. Even in the United States, for example, the unemployment rate over the 1980s was higher than the unemployment rate over the 1970s, but in the U.S. case, it looks like there was just a step up between the 1970s and the 1980s with no gradual trending up. In the European case, it looks like there indeed has been a trending up. So one of the questions we'll want to talk about is why the trending up and what can be done about that.
Another longer-term trend that I think is very important is on the compensation side. One can look at the unemployment-employment record as indicators of the labor market. One can look at the compensation record as an indicator of the labor market. One of the things that's true across the G-7 countries is a slowdown in productivity growth and a slowdown in compensation. That has occurred throughout the G-7 nations. If you compare the 1980s going into the 1990s with the 1960s going into the 1970s, a clear slowdown.
In addition, different countries have had different degrees of income or earnings inequality. So there's been a slowdown in overall compensation. Some countries have seen an increase in earnings inequality. Other countries have not. The U.S. has seen an increase in earnings inequality. And a number of continental European countries have not seen that increase. Japan has barely seen any increase in earnings inequality.
Again, the question is why, why the differences. What's different about how firms behave , what's different about public policy, what's different about the educational system that explains these differences in performance.
I think one thing that we'll be asking ourselves is what are the common challenges and opportunities confronting all of the G-7 nations. And I think here, what we are talking about is the business cycle, the effects of technology in both changing the composition of demand for jobs, and also changing the rate of growth of productivity over time, and the effects of globalization, international trade and competition. The challenges that offers, but also the opportunities that it provides.
So those are the general questions and general facts I'll be putting forward to set the stage for the discussion.
MR. RUBIN: The next session will be creating employment opportunities in the global economy, and that will be led by Secretary Bentsen.
SECRETARY BENTSEN: Out of the G-7 meeting in Tokyo, it was obvious that we had a shared concern amongst the G-7 countries, and that was the problem of unemployment and trying to create more jobs across the world; the understanding that open markets and increased trade benefitted all of us.
One of the things that the President made a comment on, he said, I don't look on this as something that's resolved just by coming up with an agreement on macroeconomic policies, or the question of inflation, the question of cutting the deficits, the question of interest rates; but in addition to that, the teaching of skills, the transfer of people from schools into the work at the factory, which nation does a better job of that, and how do they accomplish it? The creation of small business and exploding growth of small business instead of depending just on major industries.
I think it's the height of arrogance to think that we cannot learn from each other; that each of these nations, to an extent, does something better than the other one. And where we come together in this kind of a learning process and consultation process, we can all benefit by it.
We're not going to have a formal communique. My experience with many of those is you spend half your time deciding which verb or which adjective to use, and then you end up with a consensus that hardly is a directive to the nations that are involved of what we're trying to accomplish and what we're trying to do. But in it, a very informal meeting, with a candid exchange of ideas how each can help the other in this regard. And I think that we're going to see, from what I've seen, an increasing interest in it by the countries of Europe and by Japan. And, hopefully, we're going to see something that will be productive for all of us.
MR. RUBIN: You know, one of the very few things about this conference is it brings the ministers of labor, finance -- the equivalent of our Commerce and CEA -- all together in the same place, which is -- I think, as far as I know -- at least unique with respect to international conference -- to bring this interdisciplinary group together to exchange views across the bounds of their various areas.
Having said that, the next session will be technology, innovation of the private sector -- Ron Brown.
SECRETARY BROWN: Thanks, Bob.
We are looking forward to Detroit. We think we have much to learn from each other; much to share with each other. We have different factors that drive our economies. We have all done some things right, and all done some things that we wish we could do better.
We're going to focus my session on technology. There is no question that technology is having a massive impact on our economy in the United States and on economies around the world. The fact that we now live in an information age has been driven by a technological innovation. The fact that the economies of all of our countries are becoming more globalized. We are inextricably tied together in many ways.
The fact that we have learned in the United States that the actions, innovative actions, dynamic actions, sometimes heroic actions of small firms which grow rapidly and create new jobs can be a factor. And that gets us to the relationship between the public and private sector, between government and business and industry. We
are clearly in the midst of redefining that relationship in America. Some of those who will be there at the conference with us did that redefinition many years ago. I think we can have a significant learning experience from that.
In talking about technology, we want to talk about the commercialization of technology, the transfer of technology, how you do that effectively, how you get new technology in the hands of small and medium-sized businesses so that they can become more productive and more competitive so that they can employ more people. We also want to look at some of these ratio differences as far as investment is concerned, investment in R&D as compared to gross domestic product. We know that we are behind some of our G-7 partners in that over a percentage point of GNP behind Japan and German, for example. What kind of impact does that have? How does what a Secretary of Labor like Bob Reich does to come up with a creative and innovative training and apprenticeship and school-to-work programs fit into what we do with micro and macroeconomic policy? All of those things, we think, can come together in this dialogue, and we're looking forward to it.
MR. RUBIN: The final session will be -- well, let's see what it is -- labor markets, investment in human capital and the social safety net, and Secretary Bob Reich will be the host for that session.
SECRETARY REICH: Thank you, Bob.
Not too many years ago, the conventional wisdom was that Europe and Japan did it all right, and the United States did it all wrong. And everything that could be learned, we could learn from them, and indeed, they had nothing to learn from us. Now, the new conventional wisdom is just the opposite; we're doing everything right, and Europe and Japan are doing everything wrong. Neither of those positions is correct. In point of fact, as we are going to be emphasizing throughout the conference, and I think especially when we talk about labor markets, investments in human capital and also the social safety net, there's a great deal to learn from one another.
Their job growth has not been very healthy. Although, in terms of wages, those who have jobs have seen wage increases of a very healthy proportions. The United States is almost the mirror image. Over the past 15 years, we have created a lot of new jobs, but for many of our people, in fact, a majority of Americans have seen their wages stagnate or decline, and many of their benefits disappear.
The question is, and the underlying question is are we condemned -- advanced industrial nations -- are we condemned to choose between these two alternatives, neither of which is very appealing? Are there more jobs, but declining real incomes and a widening gap between the rich and the poor; or fewer jobs, although they are better jobs with a bigger and bigger social safety net catching more and more people in them?
There may be another alternative, and I hope that in this session and throughout the conference we can explore, perhaps, even a synthesis -- some would say that in Europe and Japan they've done a much better job bringing the bottom two-thirds of their populations in socio-economic terms up to a high minimal level of competence, in terms of education and training and skills. Some would say that in the United States, our great strength is our labor market mobility. The dynamism and change that our markets allow may be that kind of synthesis encased within macro-economic policies that are oriented toward growth.
I say maybe because these are all outstanding questions that we want to explore. Undoubtedly, there has been a shift in
demand, in all industrialized nations, in favor of those with skills and against those without skills. And we can see this -- I was looking at some data this morning showing that in every G-7 nation, those occupations and industries that show the greatest growth in numbers of jobs are those that are most education- and skillintensive, where the education and skill levels are highest. Those that show the lowest growth in jobs, in fact, negative growth, there have been job loss, are where the education and skill demands are least.
Again, because of technology, because of other factors like globalization, a shift in demand in favor of those with education and skills, against those without them.
MR. RUBIN: Okay, why don't we do this? We would be delighted to any questions you might have.
Q With unemployment at a level in many American cities that it's regarded still as somewhat as a crisis, is this kind of conference -- which has kind of an academic tone to it, perhaps not in the context of crisis -- really the appropriate thing?
MR. RUBIN: Well, let me make one comment and then ask Bob to respond. This is certainly not going to be an academic conference. These are ministers who are politicians, and this will be people -- these are all people who combine policy and politics. So I think you'll find it an exceedingly pragmatic exchange of views.
Bob, do you have any comment? It relates to the innercity question you're asking, I guess.
SECRETARY REICH: You made a disparaging remark about academics, did you? (Laughter.) I must have misunderstood what you said. (Laughter.)
SECRETARY BENTSEN: I rather enjoyed being included. (Laughter.)
SECRETARY REICH: No, quite seriously, the purpose of this conference is to roll up our sleeves and talk about what's really going on in our countries. What are the common problems? What are the common solutions? Detroit -- the city of Detroit has tremendous problems. One-third of the adults there are unemployed -- again underscoring the point that I tried to make that the United States, although we are back on the jobs track -- the great American jobs machine is rolling again -- we still have enormous jobs problems, both in quantity and quality. And we're going to be dealing in a very, very pragmatic way; rolling up our sleeves and seeing what we can learn from each other and what the facts are.
Q Secretary Bentsen, I wanted to ask you a trade question. Can you give me the administration's reaction to Mr. Gephardt's suggestion that the GATT implementing legislation be put off until next year because of the financing problem? Is there a way to keep the legislation on track for this year? And, if so, what are the suggestions to get it paid for?
SECRETARY BENTSEN: Well, we've been conferring with the House and the Senate leadership insofar as how to pay for it. We have not come down with an agreement on that one yet. We're still exploring it, we have not given up on that objective. I must tell you it's exceedingly difficult to do because even though we're talking about replacing a tax cut -- in effect, that's what it is for the consumers in this country as we go into GATT and cut those tariffs -- getting that sold and making them understand we're just replacing one, is not an easy process.
So as you look at it and think about trying to accomplish it, we recognize very much the difficulties. We have not come to any conclusion on it. We'd much prefer to get it done this year. Mr. Gephardt, when he says there's a possibility -- well, certainly, there's a possibility it will go into next year. So we'll just continue to work to see if we can get a consensus and come up with a way that we think is politically acceptable to pay for it.
Q Mr. Secretary, while we have you, the Treasury Department sent over 3,200 pages of documents to the special counsel, Mr. Fiske, earlier today. That's three times as many pages that were sent over by the White House. Does that mean there were more extensive contacts between the Treasury and the White House than previously disclosed?
SECRETARY BENTSEN: No, I would see that as the determination at all. I think I would add, I requested that we have the IRS specialists in going through documents coming over and they've done an extensive job as they should have and we want to be sure that, through any stretch of the imagination, we've complied.
Q Mr. Secretary, if I could follow up -- yesterday, in your testimony, you repeated of course that you had not attended any of those meetings but you did not repeat your March 3rd statement that you didn't know of those meetings. Did you mean to back off?
SECRETARY BENTSEN: You know, I've been around here a while and I've seen these types of occurrences in the past in previous administrations. And we have a situation here where the special counsel has asked us not to try this in public and do anything that might interfere with his process. And we're making certain that we comply with that. And, therefore, I will limit any responses in concern to it.
Q Mr. Brown, do you have any report on the progress of the Motorola negotiations? Good news to report?
SECRETARY BROWN: Well, there's no good news to report yet. The progress has been positive, and we're pleased with that. There certainly is no final report to be made yet. There's been progress made from the very outset. We would like to think that that progress has gained impetus because of the polices of this administration. We've taken a very firm position. We have indicated that our trade, our commercial relationship with Japan needs to be changed. We've been very consistent in articulating that policy.
I happen to believe that the results of that policy are now coming to fruition. And I believe that the negotiations around the Motorola case are a clear signal of that.
Q Secretary Bentsen, does that mean we will not have to take any action in that sector?
SECRETARY BENTSEN: I don't think we've arrived at that conclusion yet. Let's get a further definition of what's been accomplished. And I think the Secretary has stated it well. I've been involved in that one for a long time. This is not really a new issue. This concern when I was Chairman of the Finance Committee, and I had Bob Galvin, head of Motorola, testify before us a number of times. But obviously, we're making progress and I'm pleased with that.
Q Do you think we might have an announcement this weekend?
SECRETARY BENTSEN: What time is it? I have no idea.
Q Secretary Bentsen? Mr. Secretary? As I understand it, six of the seven finance ministers are coming to this jobs conference. The seventh country that's not sending their finance minister is Japan. What's your reaction to that? Is that -- considering the importance of this conference, why are the Japanese only sending one minister? And is this sort of a snub?
SECRETARY BENTSEN: I must say -- no, I don't think so, and I've had repeated meetings with Mr. Fujii and conversations by telephone. The exchanges have been candid and I think they've been friendly.
MR. RUBIN: In addition, the Diet has procedures going right now with respect to the budget which has kept ministers there. They will actually have two ministers here.
Q Mr. Rubin, since this is just an exchange of ideas, it's not going to have a diplomatic communique, why not open this exchange to the public so that the public might benefit from the exchange of ideas?
MR. RUBIN: As I understand it, it is G-7 practice not to have these meetings open to the press, number one; and number two, this was the desire of the members, of the G-7 members. We would have been happy to go either way, but, number one, practice; and number two, this is what they wanted to do.
But let me say, the Secretaries, in addition to the ministers of the other countries, will have plenty of time to be available to talk with the press.
Q What can you do about people like Germany at this summit who won't seemingly speed up their economy, which is hurting our exports to them, and so forth? I mean, if you're just going to talk -- can you do anything effectively against people like that?
SECRETARY BENTSEN: I've learned not to make a public confrontation with the Bundesbank. (Laughter.) But, obviously, we will be discussing monetary policy. And we have their economics minister who will be attending in this situation. So those discussions will go on. We had them at the Frankfurt meeting of the G-7, and I had dinner in the home of Dr. Tietmeyer and we had a good and candid expression. They know that we feel that there should be a further reduction in Europe of interest rates. But those determinations, no one dictates them to them, they make them themselves.
Q Secretary Bentsen, in the agenda of the G-7 Jobs Summit Conference, which I'm certain you will be hosting, there is one other -- unemployment and protectionism, there's the item of public -- taxes and reemployment. Do you have any particular country in mind when you draft up this agenda?
SECRETARY BENTSEN: What you see in all these countries are concerns, and our own. And we see some things that, frankly, Japan does better than we do insofar as those people of lower incomes in raising those wages. On the other hand, we think we do some things that they could learn from. And that's true across all seven of those nations.
Q Secretary Brown, would you clarify the situation with Motorola? Are the remaining hang-ups serious, or are they small details? And also, are the remaining problems primarily government to government or are there problems that Motorola has --
SECRETARY BROWN: We are in the process of negotiations. It wouldn't make much sense when it appears that they are coming to successful completion to talk about the specifics of those
negotiations. We've indicated that we're pleased with the way they are progressing. We think consistent progress has been made since the beginning, and we're hoping that it can be concluded in a very short time.
Q If there's not going to be any communique, what is the tangible benefit of this conference?
SECRETARY REICH: I could say that this conference marks the first time, to our knowledge, that labor ministers, economics finance ministers, ministers in charge of commerce or the equivalent, have had a chance to come together, roll up our sleeves and have a very candid, frank discussions about the problems. We don't expect, as has been said, a communique, an agreement, there is not magic bullet. There is no single solution. But we want to share diagnoses and prospectives.
This is very, very important. We think very, very valuable. It may lead to other discussions, but for the point of view of the present, we simply want to get everything on the table and understand the nature of these problems so that we can avoid what mathematicians sometimes call zero-sum solutions. That is, where one country gains at the expense of another. You can't do that in the modern economy. Protectionism doesn't work; we want to open up markets. Rigidities don't work; we want to make sure that we are all moving in the same direction to improve the number and the quality of jobs for every country.
THE PRESS: Thank you.
END1:40 P.M. EST