The Reagan administration yesterday stood firm in its opposition to helping failing industries as part of its new trade policy, but it may assist workers who have lost their jobs because of a flood of imports, a high-ranking government official said.
Murray Weidenbaum, chairman of the Council of Economic Advisers, told a joint Senate subcommittee that although he doesn't "carry a cavalier attitude toward industry," the administration "needs to learn to say 'No'" to declining industries with their hands out.
"We should recognize that any form of trade restraint to help a specific industry really is an internal transfer of income and wealth to that industry from U.S. consumers and from American workers and owners of our export industries," Weidenbaum said. "The emphasis in trade adjustment policies should be just that -- adjustment -- not preservation of an uncompetitive industrial structure.
"Government assistance to individual workers who have lost employment because of import dislocations should be temporary and oriented toward helping them find new jobs," Weidenbaum continued. "The general rule in trade adjustment situations should be to help individuals, not industries per se."
Weidenbaum also said persons laid-off because of an influx of foreign goods shouldn't be treated differently from workers unemployed for other reasons, such as the government canceling a defense contract.
Weidenbaum testified about the administration's new white paper on trade that was released Tuesday. That white paper describes a survival-of-the-fittest attitude toward business, and is the first attempt at trade guidelines since the administration pressed for voluntary quotas on imports of Japanese cars to help U.S. automakers. On the other hand, the administration refused import relief to the domestic shoe industry.
Weidenbaum said the president's general economic recovery program is a key part of trade policy, and that the administration is opposed to refundable tax credits or other aid targeted for specific industries. Sen. John C. Danforth (R-Mo.), said the Japanese government targets potential growth industries for special help to make them more competitive world-wide.
But Weidenbaum said the U.S. government "has no great capability to make that decision. The government can't pinpoint which markets will be growth markets in the years ahead."
The U.S. economy is strong, Weidenbaum continued, because "we allow market forces to pinpoint growth industries."
Danforth asked Weidenbaum what U.S. officials would do if other countries targeted industries for special help. Weidenbaum said he would suggest that they stop doing it.
Weidenbaum said he wouldn't exactly label the White House's trade policy as survival-of-the-fittest, but he said, "There are winners and losers."
In other testimony, John H. Gibbons, director of the Office of Technology Assessment, discussed the agency's report on the decline of competitiveness within the U.S. auto, steel and consumer-electronics industries.
The report said even if the government corrected problems many industries complain about, such as burdensome government regulation, high tax rates and lax enforcement of unfair trade practices, those industries would still be in trouble. For example, a major problem with the steel industry is that wages have increased faster than productivity, the report said.
Government regulations have diverted some funds from capital expenditures by the steel industry. "But the money spent in meeting regulatory standards would have been insufficient to maintain U.S. competitiveness even if directed entirely at modernization and productivity improvement," the report said.
Employment in the steel, automobile and consumer-electronics industries is likely to continue to decline, because domestic consumption has slowed and large export sales are unlikely, the report said.
The report suggested that the government avoid ad hoc industrial policies that support some sectors and not others. "In industries facing stagnant or slowly growing markets, the United States may have to choose between maintaining competitiveness at the sacrifice of employment opportunities or maintaining employment at the sacrifice of competitiveness," the report said.