Prestowitz

A note to Penny Pritzker

A note to Penny Pritzker

Dear Ms. Pritzker,

Rumor has it that you are going to be the new secretary of commerce. Let me be the first to congratulate you. You apparently have been seeking this position for some time, a very interesting quest. Perhaps you have glimpsed a possibility to which all secretaries of commerce over the past quarter century have been blind. That is, the potential for the secretary of commerce to be a power in the government equal to and perhaps even more significant than the secretaries of defense, state, and treasury.

You, of course, are aware that Commerce is generally considered a second or even third rate department, the management of which Presidents usually entrust to former business executives or operatives who have been top campaign fund raisers and political organizers — think Robert Mosbacher for George H.W. Bush or Ron Brown and Bill Daley for Bill Clinton or Don Evans for W. — as a payoff for their help in getting the President elected. Indeed, Commerce has often been denigrated, even by some of its own secretaries, as nothing but a "grab bag" of agencies thrown together with no rhyme or reason. Perhaps you have some inkling that nothing could be further from the truth. Let me, as the former counselor to Reagan administration Secretary of Commerce Malcolm (Mac) Baldrige, try to expand your insight.

The secretary of commerce has the authority to initiate investigations of key industries with regard to the impact of their loss of competitiveness on national security; the authority to initiate anti-dumping and countervailing duty investigations; the authority, under circumstances of the temporary provision of relief from import competition, to direct corporations and industries to restructure for revitalization; the authority constantly to analyze the competitiveness of industries and to recommend improvement actions; the authority to convene industry leaders and to give then anti-trust immunity if they work together on certain prescribed projects to improve the entire industry. Additionally, the secretary oversees an entire corps of commercial diplomats who staff U.S. embassies and promote U.S. exports while gathering information on foreign industries, economies, and technologies. For someone who knows how to use them, these authorities can be the levers by which the secretary of commerce can rise to a position of great power. Here’s why.

The future power, welfare, and security of the United States do not depend primarily upon its military, diplomatic, and financial capabilities. Rather, they depend mainly on its productive capacities and its ability to compete in the global economy. America’s main challenge is not how to deal with al Qaeda or North Korea or the People’s Liberation Army (PLA). It’s how to compete with the Chinese, South Korean, Singaporean, Japanese, Indian, and EU economies. America is not losing influence around the world or suffering stagnation of household income at home because it doesn’t have enough weapons or soldiers or diplomats or Wall Street investment banks. Its influence and general welfare are waning because it increasingly doesn’t produce competitively. Just look at the high technology fields in which Americans pride themselves on being leaders. Yet the United States has a more than $100 billion trade deficit in high technology. Reversing that trend is what being secretary of commerce is all about, or should be.

There aren’t many secretaries of commerce who have genuinely made it into the history books. But any secretary who leads the charge to regain American competitiveness will surely be remembered. But here’s the hard part.

I’ve been looking over your resume. I don’t have to tell you that it’s very impressive. But I do have to tell you that it’s mostly a hindrance and irrelevant to what you have to do to make Commerce into a front line agency and to become a great secretary of commerce and public servant. Sorry, but it’s totally an establishment background, and it’s the establishment that’s our problem.

For nearly the past seventy years, our establishment has embraced policies that emphasize geo-politics while subordinating national economic competitiveness. In particular, it has adopted a doctrine of unilateral free trade globalization that has been totally rejected by our main competitors like South Korea, China, Taiwan, Germany, and France. Our establishment believes the argument that while companies may compete economically, countries do not. Their establishments consider that notion to be total nonsense, pointing out that the Soviets did not lose the Cold War for lack of soldiers, tanks, or missiles. Rather, the cause was lack of competitiveness.

So I’m pulling for you and hoping you can overcome your background, as they say in the rehabilitation business. I want you to be a great secretary. As the first step in that direction, I suggest that the first thing you should do after confirmation is a world tour during which you visit South Korea, Taiwan, China, Singapore, Brazil, Germany, and Sweden, and study carefully what they do to be competitive and then start doing what they do. It isn’t rocket science. Just good old fashioned blocking and tackling.

Good luck.

Clyde