A New Trade Pact, a New Social Contract

THE proposed free-trade pact between the United States and Mexico has burst onto the scene as a bona fide controversy, a real issue with people on both sides yelling. This comes as an immense relief to those observing the slow start of the 1992 presidential-election cycle and wondering whether it would be possible to have a race without a Democratic candidate.

The Bush administration is arguing for the pact as a way to expand the markets of American producers and generally spread prosperity around.

United States House majority leader Richard Gephardt of Missouri is one of many Democrats voicing concerns that the pact would give away American jobs to Mexicans who will work for less.

Mexican President Carlos Salinas de Gortari has been in the United States to make his case for the pact. He told the American Society of Newspaper Editors at Harvard last week, "Every year nearly 2 million more Mexicans are demanding services, jobs, a clean environment, and opportunities to develop their capabilities. They want to have all those things, and to have them in Mexico, not beyond its borders. They want to accomplish this while preserving their traditions, their pride in their culture, and th eir sense of identity."

As free trade is debated, we can expect that Robert B. Reich's new book, "The Work of Nations: Preparing Ourselves for 21st-Century Capitalism," will be a useful part of the discussion.

Professor Reich, who teaches at Harvard's Kennedy School of Government, makes his case fairly simply: "It is not what we own that counts, it is what we do." The important thing for American prosperity, he says, is for American workers to learn to compete better in the world marketplace by enhancing their communications and problem-solving skills.

Today, an "American" company will as likely build its next widget factory in South Korea as in Arkansas, and its shares are likely owned by those outside the United States. And so helping an American company does not necessarily help Americans or their economy.

Reich divides the work force into three sectors: routine production workers, in-person servers, and "symbolic analysts." The jobs of the first group are always subject to disappearance either by automation or management's discovery of a new pool of workers in some far-off land ready to do the work for lower wages. The jobs of the second group are more secure, but their wages tend to be held down when laid-off production workers flood the labor market.

"Symbolic analysts," the fortunate top fifth of the labor force, are good at identifying and solving problems. Some would call them "information workers," but Reich is careful to distinguish those who analyze and synthesize data from those whose work with computers and data is basically assembly-line work.

Reich's book is heartening in its avoidance of zero-sum rhetoric and its lack of gloomy predictions of American decline. But he describes a world - an all-too-recognizable world - in which the "fortunate fifth" secede from the larger community into glass-and-steel enclaves protected by private security guards.

Back in the early 1950s, when it could be said that "what's good for General Motors is good for America," national companies employed the national work force and gave people the prosperity wherewith to realize their ideals of a democratic society. A tacit social contract was in place, according to Reich, not unlike the more explicit arrangements prevailing in Europe.

But national companies no longer have the same agenda as the national work force. The terms of the social contract have changed.

President Salinas, too, is having to work out a new social and economic contract. He surely understands that a country is not just a giant job site; economic life is not the whole of a nation.

A better understanding of whence national prosperity really derives will help on both sides of the border.