The MacNeil/Lehrer NewsHour

MR. MAC NEIL: Good evening. I'm Robert MacNeil in New York.

MS. WARNER: And I'm Margaret Warner in Washington. After the News Summary tonight, we first update the situation in Bosnia. Then Paul Solman reports on an increasingly used management tool, corporate downsizing. Next, we debate calls to treat tobacco as an addictive drug, and essayist Richard Rodriguez looks at the public image of private people. NEWS SUMMARY

MS. WARNER: President Clinton today urged France not to pull its peacekeeping troops out of Bosnia. The President made the appeal in a speech before the National Assembly in Paris, the first such appearance by a U.S. President in 75 years. The President and Mrs. Clinton are in France to mark the 50th anniversary of D-Day. The French government has threatened to withdraw its forces from Bosnia unless a peace agreement is reached soon. Mr. Clinton said that would take time.

PRESIDENT CLINTON: We must be patient. We must understand that we do not have total control of events within in every nation, but we have made progress in Bosnia, and we must keep at it working together, firmly together, with patience and firmness and until the job is done. We can do this if we stay together and work together.

MS. WARNER: The President also said today that the U.S. supports a U.N. proposal for a four-month cease-fire throughout Bosnia. The Muslim-led Bosnian government has been reluctant to accept the proposal. We'll have more on the situation in Bosnia right after the News Summary. Robin.

MR. MAC NEIL: Sec. of State Christopher said today the U.S. and other countries might impose sanctions on North Korea if the United Nations failed to. The U.S. is pushing for sanctions over Pyongyang's failure to allow U.N. inspections of its nuclear facilities. The North has denied that it is using the plants to make nuclear weapons and has said sanctions would be an act of war. North Korea today repeated its refusal to allow full inspections. Vietnam turned over the remains of what were believed to be 16 American soldiers killed in war in Indochina. It was the largest repatriation in at least a year. More than 2200 Americans are still listed as missing in action.

MS. WARNER: At least a hundred people were killed in an avalanche that swept down the slopes of a volcano in Columbia yesterday. The slide was triggered by a strong earthquake that hit the southwest portion of the country. The avalanche caused two rivers to overflow, sending mudslides into nearby villages. Two small towns were nearly swept away. The disaster occurred in a valley about 180 miles from Bogota. At least 300 people are reported to be missing.

MR. MAC NEIL: Back in this country, primary elections were held today in eight states, from New Jersey to California. Five states are deciding on candidates for governor. The Democratic race in California has received particular attention. State Treasurer Kathleen Brown, the sister and daughter of former California governors, is running against State Insurance Commissioner John Garamendi and State Senator Tom Hayden. The winner will probably face Gov. Pete Wilson in November, who's expected to defeat his Republican challenger.

MS. WARNER: Three times as many college women drink to get drunk today as did 15 years ago. That was among the findings of a privatecommission's report released today. The survey found that excessive drinking on college campuses was linked to a higher incidence of date rape and unprotected sex. The commission was headed by the president of Notre Dame, Rev. Edward Malloy. He spoke at a Washington news conference.

REV. EDWARD MALLOY, Commission on Substance Abuse at Colleges & Universities: 90 percent of all campus rapes occur when alcohol is being used by either the assailant, the victim, or both. 60 percent of college women who have acquired sexually transmitted diseases, including AIDs, were under the influence of alcohol at the time they had intercourse. 90 percent of violent crime and 53 percent of all injuries on campus are alcohol-related. Alcohol is implicated in some 41 percent of academic problems and 28 percent of all drop-outs.

MS. WARNER: The commission also found that alcohol abuse had risen among all college students but fraternity and sorority members tended to consume three times as much as their peers. The American Medical Association today urged the federal government to regulate cigarettes as an addictive drug. A spokesman for the group said a cigarette is simply a drug delivery device for nicotine. We'll have more on that story later in the program. The AMA also released a study today showing that non-smoking women living with husbands who smoke are 30 percent more likely to develop lung cancer than women whose husbands don't smoke.

MR. MAC NEIL: The federal government today added writing to the list of things American students need to improve. The Education Department released a study based on writing samples from 30,000 students in the fourth, eighth, and twelfth grades. It tested the ability to produce informative, persuasive, and narrative writing, and it found deficiencies in all areas. Education Sec. Richard Riley said the nation's schools will begin placing new emphasis on the teaching of writing skills. That's it for the News Summary. Now it's on to a Bosnia update, downsizing U.S. industry, regulating cigarettes like drugs, and a Richard Rodriguez essay. FOCUS - BOSNIA - STATUS REPORT

MS. WARNER: First tonight, an update on the situation in Bosnia, which President Clinton today described as Europe's most challenging security problem. As the President spoke, the United Nations was trying to arrange a cease-fire between Bosnia's Muslim- led government and the Bosnian Serbs. But those efforts remained deadlocked over the length of the proposed cease-fire. Meanwhile, fighting raged along a contested front line in Northern Bosnia and around the town of Brcko. Mr. Clinton was speaking to the French National Assembly in Paris following his D-Day appearance in Normandy yesterday. France has threatened to pull out some of its peacekeepers from Bosnia unless a political solution is worked out soon. We start with Mr. Clinton's comments on the situation in Bosnia.

PRESIDENT CLINTON: We have not solved that problem, but it is important to recognize what has been done, because France, the United States, Great Britain, and others have worked together through the United Nations and through NATO. Look what has been done. First, a determined and so far successful effort has been made to limit that conflict to Bosnia, rather than having it spread into a wider Balkan war. Second, the most massive humanitarian airlift in history has saved thousands of lives, as the UNPREFOR mission in which France has been the leading contributor of truth. We have prevented the war from moving into the air. We have seen an agreement between the Bosnian Muslims and the Croatians. Progress has been made. What remains to be done? Today the United Nations has put forward the proposal by Mr. Akashi for a cessation of hostilities for a period of several months. The United States supports this program. France supports this proposal. We must do all we can to get both sides to embrace it. Then the contact group is working on a map which can be the basis of a full and final cessation of hostilities there. We must do all we can once all parties have been heard from to secure that agreement. And finally, let us not forget what has happened to make that more likely, and that is that Russia has been brought into the process of attempting to resolve this terrible crisis in what so far has been a very positive way, pointing the way toward a future in which we may all be able to work together to solve problems like this over a period of time. We must be patient. We must understand that we do not have total control of events within every nation, but we have made progress in Bosnia, and we must keep at it, working together, firmly together, with patience and firmness until the job is done.

MS. WARNER: For an assessment now of the situation in Bosnia we're joined by Frederick Cuny, the chairman of Intertect, an emergency management consulting company. Mr. Cuny has lived in Sarajevo since 1983, and he arrived in Washington today from Macedonia. Also with us is Warren Zimmermann, a senior fellow at Rand, a research corporation. He was director of the Bureau of Refugee Programs at the State Department until earlier this year and served as U.S. Ambassador to Yugoslavia from 1989 to 1992. Welcome, gentlemen. Mr. Zimmermann, why is the U.N. having such trouble getting the sides to agree to the cease-fire now?

MR. ZIMMERMANN: I think the reason is because the Bosnian side has not been given nearly enough of a guarantee that their interests will be protected during a cease-fire.

MS. WARNER: Meaning what?

MR. ZIMMERMANN: Cease-fire usually is advantageous to the aggressor. The Serbs turned the cease-fire in Croatia into a permanent occupation of 25 percent of the country, so the Bosnians are naturally suspicious about a cease-fire that lasts as long as four months.

MS. WARNER: Do you agree, Mr. Cuny, and what impact do you think it might have that the President has come out in support of this cease-fire?

MR. CUNY: Well, first of all, I'm not sure that the sides agree on, at all on what this cease-fire is supposed to be doing. I don't think that the Bosnians favor any cease-fire at this point. The situation in their eyes is favorable at the present time. Despite the fact that they've been on the defensive in many areas, they are getting stronger, and they would like to reclaim a lot of that territory. And they're very fearful that a cease-fire would stop them from doing that. A short-term pause followed by diplomatic efforts to regain territory, yes, they would accept that probably for a limited time, maybe two months, but certainly not a six-month cease-fire like the Serbs are asking for and not even four months that the U.N. would like to see imposed. I think that the dangers for them are quite real, and they realize that and are not likely to try and establish any kind of cease-fire line now which would go against them.

MS. WARNER: Well, do you think, Mr. Zimmermann, that the President -- I mean, the U.S. has always stood behind the Bosnian government, if anybody has -- do you think it's going to have an effect on their ability to hold out against this now that the President's for it and the administration seems to be behind it?

MR. ZIMMERMANN: You see, what I think the President needs to do and hasn't done since February is give the Bosnians the kind of trust in our resolve that will take the risk of a cease-fire and go on to take the risk of a division of the country which would leave them with maybe only 50 or 51 percent. In February, we faced the Serbs down over Sarajevo, then we faced them down over Gorazde. It looked as if we were going to be very tough. And then the Serbs, as they have done so often in the past, ran rings around us. They left a military force in Gorazde. The U.N. did nothing about it.

MS. WARNER: And violating the ultimatum which had been to get the troops out.

MR. ZIMMERMANN: Absolutely. Absolutely. The U.N. did nothing, NATO did nothing, and the U.S. did nothing. So now I think the Bosnians have some reason to doubt our resolve yet again.

MS. WARNER: Well, let's talk about these last three or four months or really two and a half months since I think the world started not paying attention to Bosnia, and that was when this ultimatum was declared in Gorazde. Since then, NATO has asked several times for air strikes but the U.N. officials on the ground have declined, or they've warned the Serbs. Why? Why has this problem developed, Mr. Cuny?

MR. CUNY: Well, there's a tremendous amount of disagreement within the U.N. structure and also a growing divergence between NATO and the U.N. over the use of air power. The United Nations has taken the stance that if a particular gun is not immediately offending or threatening anyone that they should let it go. Gen. Rose is reluctant to call an air strike on what he considers to be misguided boys who are just out in the area. The problem with that is it's led to a whole pattern of abuses that have taken part [place] on the part of the Serbs in those areas, and they've moved guns in and out of the area. They've established a real challenge to the U.N. force, and in a way that what's happened is that the ultimatum that NATO has given has been negotiated away on a case by case basis with perpetual violations now not only in the Sarajevo exclusion zone but also in the TEZ, or the total-- the tactical exclusion zone around Gorazde.

MS. WARNER: Gorazde.

MR. CUNY: And I think what we're seeing is that as far as the Bosnians are concerned the total loss of confidence in the ability of the U.N. and, unfortunately, NATO to live up to any kind of instructions or support, promises that they made to the Bosnian government.

MS. WARNER: Mr. Zimmermann, is the U.S. powerless, the U.S. administration powerless to stop this kind of a problem that's developed on the ground? I mean, couldn't the U.S. administration try to put its foot down with the U.N., or say, you know, NATO believes in this ultimatum. You've agreed that you would help carry it out. I don't -- it's hard to explain to the American people why this continues to go on when NATO's given an ultimatum and then, as you said, it's negotiated away.

MR. ZIMMERMANN: Well, of course, it's hard, Margaret, and I don't think we're powerless. When President Clinton decided to face the Serbs down over Sarajevo, he brought NATO along, he brought the U.N. along, and the Serbs backed down, because they really felt we were going to attack them with air power if they kept the artillery where it was, threatening the city. This could happen again. This could happen in smaller areas, in areas where the Serbs are violating, as Fred Cuny says. If we're prepared to use air power and we're prepared to convince our NATO allies, I think they will go along, then I don't think the U.N. is going to have much choice. But we haven't taken that leadership role.

MS. WARNER: I see. All right. Now let's go back to the situation on the ground. The Bosnian Muslim led government believes it's making gains. Do they really think they could reclaim most of their territory now that they are getting some weapons and so on? Do you think they can, or do you think they're deluding themselves?

MR. CUNY: The Bosnians look at the conflict in a very long-term time frame. They're not looking at a solution in the next two months, in the next five months, next year, or the next two or three years. They're looking at it in terms of the generational recovery of their territory, if that's what they have to do. And they recognize that it will take a long time to get the strength they need. What they want to do is to hold as much territory as they can. They're going to wait for the winter months to come when the Serbian tanks are not able to move freely through the areas and to use their infantry, which they have a numerical advantage to go after smaller areas that they can claim and adjust the lines, and to position themselves to be able to push across and get the main areas that they want back. And, of course, the Serbs recognize this as well, so what they have to do is either get a cease-fire in place, get institutionalized, and claim that area like they do in Croatia, and then they've got to try and consolidate the power in those areas and if they can't do that, they'll have to go after certain areas in Bosnia that will destroy the economic ability of the state to survive, possibly try to segment the country into two or more pieces, try and drive a wedge between the Croat and the Muslim alliance attacking Mostar and other areas to try and break that alliance down. And I think that they're very close to, to making that decision to do that.

MS. WARNER: How do you rate the Bosnian prospect militarily?

MR. ZIMMERMANN: I think the Bosnians have come very close to evening the conflict, but it will take the Bosnians a long time to get from the 28 percent or so land that they control with the Croats up to the 51 percent that is being offered them by, by the West. And one of the reasons they seem prepared to fight rather than take the 51 percent outcome, which is not bad from their point of view, I think, is because even with 51 percent, the Serbs are going to have to give up something like 20 percent. That means territory that the Serbs have taken from the Bosnians, that they've moved Serbian settlers in, into the ethnically cleansed territory. Somebody is going to have to force those Serbs to leave so that the Muslims and the Croats can take over. And I think the Bosnians have lost all faith in NATO and in the United States as having the muscle to do that. And certainly, the Serbs are not going to police their own areas, themselves. They're not going to drive -- the Serbian leadership is not going to drive these people away.

MR. CUNY: I would agree with that. I think that certainly talking to the Bosnian leadership, the 51 percent is certainly nothing that's carved in stone for them. They did talk at one time about 58 percent, and somehow, magically, it was changed to a 51/49 split. But I think that as far as the United States right now, we're in a very peculiar position. We're -- after, you know, saying that we do not agree to a forced settlement, we're not going to impose any kind of division -- that this will have to be something worked out -- suddenly we've reversed course once again, and we're now saying that we're going to support this effort, we're going to support Mr. Akashi at a time when Mr. Akashi's stock's not very high, by the way, within the Bosnian community.

MS. WARNER: What impact do you think the greater U.S. involvement over the last three months or so has had?

MR. ZIMMERMANN: I think when we, when we threatened air power over Sarajevo and over Gorazde, that had a tremendous effect. It let the Serbs know that we were serious. It gave the Bosnians the kind of trust that they will ultimately need to make an agreement, and I'm afraid we have frittered a lot of that trust away in the last couple of months.

MS. WARNER: And do you think the French threat to withdraw troops is serious? Do you think they may withdraw their peacekeeping troops if this sort of stalemate continues?

MR. ZIMMERMANN: I think it is serious, and I'm not sure it's necessarily bad either, although I would support the President in arguing that the French troops should stay. But if the French troops leave, if the peacekeepers leave in general, that would make more credible a resolute American position that we would be prepared to use air power, because there will be no U.N. hostages to be taken.

MS. WARNER: What do you think would be the impact if French troops left?

MR. CUNY: Well, I think that as far as the French troops going, it probably would not be a major impact. We're talking about 2500 to be removed sometime in the immediate future. I don't think they will withdraw them all. I think that they'd lose their humanitarian alibi. Right now, the European countries would much rather throw troops into a peacekeeping operation, take a few casualties, you know, every month and keep it at a low level, rather than having to make the hard commitments to do something dramatic and to resolve this.

MS. WARNER: So you think it was kind of an empty threat just designed to prod the U.S. into joining with the European plan or something like that?

MR. CUNY: Well, they have probably a number of motivations. One is to try and get the United States to commit troops on the ground, which I think at this point would be a real dangerous thing to do. The second thing is that they obviously want to streamline their forces there and they want to cut back, and the number of casualties, the French have alone among the forces have taken the most casualties. Every month they're losing somebody. They're in the areas that are the most insecure, and there's a lot of pressure back home for the government to remove those troops.

MS. WARNER: Quickly, before we leave, the President today counseled patience. Do you think that's the prescription, or do you think we're headed into a situation in which it's almost going to be like Northern Ireland, we're just going to see a lot of low grade fighting for years maybe?

MR. ZIMMERMANN: With all due respect, I think patience is the last thing we need. I think this issue is approaching a denouement. I think Bosnia may be heading for a turning point, and if it doesn't turn, then we're going to have a war that goes on and on for years with far greater casualties than Northern Ireland. The Northern Ireland casualties from 1969 until now are about four weeks' worth of casualties in Bosnia. This is big stuff.

MS. WARNER: Mr. Cuny.

MR. CUNY: I would agree entirely. The situation there is very dangerous. I think there's a hope that we're nearing the end, but I think in reality, we're sort of at the bottom of the fourth, and we haven't even hit the stretch yet. This war is going to take a long time to resolve unless we have leadership from the United States and a very solid leadership with a plan of where we're going and how we're going to resolve this, what we're going to do in terms of motivating our allies to get involved, and what the outcome is going to be.

MS. WARNER: Thank you both very much. I'm sure we'll be back to discuss this again. Robin.

MR. MAC NEIL: Still ahead on the NewsHour, downsizing American industry, regulating cigarettes like drugs, and creating an image. FOCUS - DOWN AND OUT?

MR. MAC NEIL: Next tonight, downsizing. It's the current buzzword of corporate America. It happened against yesterday when the Sara Lee Company announced plans to shut down several factories and lay off more than 8,000 people. A spokeswoman said the move was necessary to make the company more efficient and competitive. Are big corporations a thing of the past, and lean and mean the wave of the future? The answer is not as simple as that, as Business Correspondent Paul Solman of public station WGBH reports.

MR. SOLMAN: They're downsizing corporate America and creating a new company in the process. These people used to work for America's premier corporate giant, IBM, but a year ago, bleeding billions, the behemoth announced it was closing this inner city factory in Brooklyn, New York. Workers, managers, and the city bought the plant from IBM and created ATS [Advanced Technological Solutions, Inc.], a stripped-down company owned by its employees. Now some say that corporate giants are dinosaurs, that small firms are simply more flexible and motivated, better adapted to the 1990s. But in the era of downsizing, do small firms, especially worker owned ones like ATS, really have a decisive advantage over big ones? Well, the experience of mammoth IBM, with a work force of more than 250,000, and relatively minute ATS, with a work force of around 250, suggests that while size has its problems, so does the lack of it and that for everyone it's a tough adjustment going from fat and happy to lean and mean. Wes Ratcliff, for example, learned that his very first day as president of ATS.

WES RATCLIFF, CEO, Advanced Technological Solutions: When we announced that we were going to open on October 1st, October 1st was a Friday, the employees said, ah, that means we don't have to work that Friday, we can take off. And I said, wait, the first day we're open, and you want to close? Something is wrong there. Now you open and then you close. I said, what type of impression do you think -- yeah, but we're the owners, and we don't want to work that day.

MR. SOLMAN: Such complacency may have been a product of corporate America's salad days, when IBM's Brooklyn plant was built. After all, for 25 years here, they repaired computer monitors and circuit boards for IBM, long considered the greatest company on earth. By the 1930s, IBM was making history. Corporate events were held at the IBM Country Club, entertainment courtesy of the IBM band. By 1938, founder Thomas Watson, Sr., was already taking the long view.

THOMAS WATSON, SR.: A long time ago, we ceased to think of IBM as a business, and we look upon it as a great world institution that is going to go on giving service to the business people of the world for all time.

MR. SOLMAN: Almost 50 years later, IBM was still being touted as the colossus that worked. Now, throughout the IBM era, big was beautiful. One reason, size provided security to ever more nervous customers. You see, office technology was changing so fast -- especially once computers were introduced -- that managers were always afraidof buying the wrong machine even if it was loaded with bells and whistles and promised better performance for the price. But big famous IBM offered brand name protection to its customers. No one ever got fired, they used to say, for buying an IBM. Bigness provided another advantage as well. Because of its size, IBM saved a fortune by purchasing its parts and raw materials in bulk, getting huge volume discounts. It then used the savings to invest in the company. Economist Bennett Harrison.

BENNETT HARRISON, Carnegie Mellon: It used its enormous buying power to be able to get a break on the prices and the costs of components that were delivered to it and software and services. And on the other side of the equation, IBM was able to charge very, very high prices for its products, because it really had no competition. It was able then to translate that leadership into investment and training for its workers, building up the quality of its suppliers, and as a result of all this, its stockholders prospered, its workers prospered, and the towns where its factories were located prospered.

MR. SOLMAN: Of all the benefits of bigness, however, perhaps the most fabled was IBM's no layoff policy. When Big Blue gave you a job, it was cradle to grave. And as the company grew, more and more people, whole families in some communities, came to rely on the company that guaranteed them a job for life. But IBM's promises were only as solid as the company, itself, and by the early 90's, Big Blue was beginning to crack. Among the reasons says the man IBM brought in to manage personnel were the policies of the past, including full employment.

JERRY CZARNECKI, IBM: One of the biggest problems with a full employment policy, in my judgment, is that the -- that the people who are in the organization are much more focused on their retirement than they are on their achievement.

MR. SOLMAN: So the benefits of bigness, according to Jerry Czarnecki, were turning to liabilities. Job security had become job stagnation.

JERRY CZARNECKI: People came in, stayed with the company, and moved up, and the only place you got people at the top was from within because that was the commitment, we are going to grow our own.

MR. SOLMAN: And because you didn't lay anybody off.

JERRY CZARNECKI: And so we ended up with no ability to bring people in from here and, in fact, people who, who were in the company never exited, so when you came into the company, you went up, and the only way you got up was from within. So there was no exiting, no renewal at various levels from new people coming in.

MR. SOLMAN: In short, IBM began to discover that in a big, safe organization a certain slackness tends to set in, a classic problem at large, successful companies. At small enterprises, by contrast, everyone can see that their welfare depends on the fate of the firm. The more circuit boards ATS can turn out, for example, the more likely it is to survive. Moreover, if the workers at the small company also own it, they have an even greater stake in its productivity. In fact, in the era of downsizing, many small firms are using the motivational tool of worker ownership, which at ATS seems to be making the difference. On the factory floor, for instance, employees finally have a personal incentive to save money, salvaging very old circuit boards, for example, or components from them.

SPOKESMAN: Part of IBM, this would go in the garbage right away, because we don't have to pay for it. IBM pays the costs. Now we have to absorb some of these costs.

MR. SOLMAN: These are the circuit boards ATS repaired as a money losing division of IBM. The little company still has a contract with the big one, but if ATS can't do the same work cheaper, IBM will simply take its business to some place that can. Life was a lot cushier in the days before downsizing.

SPOKESMAN: They would say to you, I don't care, throw anything out. Now we can tell them we found a better way to do this business, we can help you make money, because that's what we're here for, to make money. At the employee-owned company that's what you want to do.

MR. SOLMAN: No, that's now what you have to do. And so at the first employee meeting last December, chief financial officer Leroy Stratford made some very un-IBM suggestions from less xeroxing to taking out the trash.

LEROY STRATFORD: I don't know if everyone realizes this, but we're paying over or near $100,000 just to keep this place clean. That's 100,000 of your dollars that are going out the door, rather than remaining inside, within the family, as I like to call it.

WES RATCLIFF: One of our managers said, when we're at home, we don't have anybody to clean up behind us, so why do we have to have it here? I said, that sounds good to me. And so we approached employees with that idea, and they said, sure, I don't mind cleaning up what I mess up. I don't want to clean his up, and so now employees have their own clean-ups. That cut about $6,000 a month just with that one little act of us starting to do some of the cleaning up.

MR. SOLMAN: So being small can save you money, and there's another advantage. Smallness affords flexibility which allows you to adapt more quickly in our presto chango economy.

WES RATCLIFF: I can go and I can hire six employees overnight to turn around a job that somebody needs, and I can shed 'em overnight in the same fashion if I need to, whereas, in a large company, due to the way in which we intertwine things, you can't necessarily do that.

MR. SOLMAN: Okay, so small be nimble, small be quick, while by contrast, if you're big, you're bloated, almost inevitably slow to change. IBM made the bulk of its profits off its huge mainframe. It could see that computers were getting much smaller and faster, but it couldn't refocus the entire company on making smaller and smaller machines, as did young competitors with nothing to lose. If it followed suit, IBM would wind up cannibalizing, i.e., eating away its most profitable lines of business. Again, this is a classic problem, according to Bennett Harrison.

BENNETT HARRISON: Big companies that are tremendously successful are doing a particular thing -- in this case making big computers and leasing them or selling them to big customers all over the world. Naturally enough gets stuck in that framework. That's where big profits came from. That's where their reputation came from. So it's very hard to give that up. It's expensive. Some people are going to lose their jobs.

MR. SOLMAN: And you could argue the whole incredibly successful culture of the company would be threatened. When Apple introduced its Macintosh personal computer with this ad in 1984, it took dead aim at IBM's white shirt dress code, its uniform culture, and in general, the arrogance of Big Blue, who was now Big Brother. The ad was on target, says IBM's Czarnecki.

JERRY CZARNECKI: You can't have a stultifying bureaucracy that makes everybody conform to the same behavior pattern. If a company does have such an established culture that stifles new thought, new renewal processes, then it will end up in trouble. And I would suggest that part of the thing that happenedin IBM is that the culture of IBM was a successful culture that reinforced itself and prevented new cultural impacts from occurring. That happens all the time in companies, and IBM experienced it.

MR. SOLMAN: But small, new companies have problems too. They aren't cushioned by past successes. Just to work for ATS, for example, you had to be interviewed for the same job you'd been doing for years and if rehired, you took a pay cut of up to 20 percent. As for job security, you can forget about it.

EMPLOYEE: Quite recently, we received an employee handbook, and there's a statement in there that I think is very counterproductive, and that statement deals with the fact that you can be fired for cause or no cause. What's your comment on that?

WES RATCLIFF: There are a lot of companies that are downsizing today, and what we had to do was spell it out loud and clear if we have to do downsizing, we don't have to have a cause, except the fact that we're doing downsizing, and we need to cut back on the number of people that we have.

SECOND EMPLOYEE: Now, what's he going to do downsizing? That's a cause for firing.

WES RATCLIFF: Okay. It is a cause.

SECOND EMPLOYEE: So there is a cause for every action.

WES RATCLIFF: But why were you selected versus Joe Blow, who's still in Westchester County? They were downsizing. They had to cut 10,000 people, and it is a legal statement, and I didn't know a better way to word it.

MR. SOLMAN: In other words, downsizing means the ax can fall on the innocent, but ATS must be able to downsize to survive. Don't the worker-owners understand this?

WORKER-OWNER: I don't feel like an owner.

MR. SOLMAN: Yet.

WORKER-OWNER: Yet, because in other words, all the labor I put in, in other words, my shares, my stock, in other words, that's gone out the window.

MR. SOLMAN: You mean, they --

WORKER-OWNER: It's good up to that point, and then it's gone.

MR. SOLMAN: If you get fired?

WORKER-OWNER: If you get fired, yeah.

MR. SOLMAN: So it's precisely that you're an owner that you care even more --

WORKER-OWNER: That's right.

MR. SOLMAN: Wes Ratcliff's job then is not just to run the show but to educate the worker-owners to the hard realities of lean and mean.

WES RATCLIFF: The point that I've made to some people already is I own shares of IBM stock. IBM chose to terminate me. I couldn't go in and say, hey, I have a hundred shares of stock, you can't fire me. That's the same posture that we have to do with our employees to get them to understand a little bit more what it means to be an owner.

MR. SOLMAN: So small companies like ATS are doing whatever they can to adapt in the era of downsizing, and big firms are doing the same. IBM has reduced its work force by 150,000 people in the last seven years. For the first time ever, IBM brought in a new top management team from outside the company, led by Lou Gerstner, the gritty ex-head of American Express and R.J.R./Nabisco. And finally, fully half of IBM's top ten managers' income now depends on the prosperity of the company.

JERRY CZARNECKI: We've put the top management of this organization into the shoes of the shareholder. We said you have to perform in ways that satisfy the shareholders' expectations. And we're not making any bones about that. That change has been made. It's been communicated, and the people in this organization understand how serious we are about it.

MR. SOLMAN: IBM has been losing money since 1991. But if its suddenly profitable last quarter is any indication, top management may finally be putting itself in the shoes of the shareholders. Real estate has been sold off, operations consolidated. Lean and mean appears to be for real. But that doesn't prove that big companies are history according to a new book [Lean and Mean] by economist Bennett Harrison.

BENNETT HARRISON: The future clearly lies not in big firms alone, certainly not in, in lots and lots of small, independent companies, however clever and entrepreneurial, but in networks that connect the two, networks of big companies and small companies working together in supplier chains, developing new products, doing things together that no one of them can any longer profitably do by themselves.

MR. SOLMAN: So, says Harrison, big and small can both work so long as they work together. Indeed, IBM has been networking and formed an alliance with Apple Computer, for instance, that would have been unthinkable in the good old days. In general, this big company has been trying to act like a small one while retaining the advantages of size.

JERRY CZARNECKI: Where size helps an individual unit have a competitive advantage, size is good. Where size does not, then size should be ignored. We should use the small competitiveness of the small unit as the power.

MR. SOLMAN: So that's a very tricky balancing act.

JERRY CZARNECKI: It's a tough balancing act, but the companies who are doing it are the companies that are succeeding, and we will use that core principle as, as the way we build a new IBM.

MR. SOLMAN: It's a tough balancing act, indeed, so much so, in fact, that Jerry Czarnecki, himself, left IBM this past April, apparently unable to lay off enough people quickly enough to meet company targets. Big Blue was harder to slim down, said Czarnecki, than he thought. At ATS, meanwhile, they're also struggling to balance big and small, hitching themselves to the giants like IBM and now Phillips to piggyback on the benefits of size, while trying to remain as small as possible in the age of lean and mean.

WES RATCLIFF: Is it better to have survival of the fittest? I think so. This is a competitive world. One has to be ready to compete. I played sports when I was in high school. I enjoyed winning. I was a good loser, but I didn't like being a good loser. I was always graceful whenever I lost. But the way you were successful at sports was to win, and it's similar in business. You have to compete. We have to get competitive. We have to be competitive. We have to stay competitive. And that's something that I preach every day.

MR. SOLMAN: Like it or not?

WES RATCLIFF: Like it or not, that's reality. FOCUS - BUTT OUT

MR. MAC NEIL: Doctors have been telling their patients to quit smoking for years, but today American Medical Association told the government to regulate cigarettes the same way it regulates certain addictive drugs. The doctors' organization did so at the same time it released a study on the effects of secondhand smoke on non- smokers. That study concluded that women who live for years in a household with a smoker have a 30 percent greater chance of developing lung cancer than those in a smoke-free home. The doctor who called for regulating cigarettes is Dr. Randolph Smoak of the American Medical Association. He's a surgeon in South Carolina and a member of the board of trustees of the AMA. Walker Merryman is the vice president and director of communications for the Tobacco Institute, a trade and lobbying group of cigarette manufacturers. Dr. Smoak, spelled S-m-o-a-k, no relation, I presume, you used very strong language today in your statement. You said, "Cigarettes are not different than syringes. They're a drug delivery device for nicotine. They should be regulated just as we regulate morphine and heroine." How do you rationalize such a comparison?

DR. SMOAK: Because we know that there's a tremendous addictive effect from nicotine. We know that people don't have the control, themselves, when they have nicotine addiction. When you take something like a syringe and you inject morphine or some controlled substance into the body, you get a direct effect. When you take a cigarette and you smoke it, it just becomes a vehicle then to carry that nicotine right on into the body, itself. In some seven seconds, that effect will be seen as far as the response of those individuals who are addicted to that deadly substance.

MR. MAC NEIL: Mr. Merryman, what do you make of that comparison?

MR. MERRYMAN: Well, I think it's irresponsible to try to equate smoking with true addiction to things like heroin or other hard drugs. I think it trivializes the war on drugs. I think it sends a lot of wrong messages. It sends the message to youngsters that smoking is just like doing crack or heroin so you may as well do them all. I think it sends a wrong message in that it tells kids that their parents are drug addicts if they're smokers. I think it sends a wrong message to people who are smokers and may be thinking of quitting by telling them, well, you really can't quit, it's too difficult, it's just like trying to kick heroin, you're going to have to be hospitalized, you're going to have to go through de-tox. And everybody who's studied the subject knows that 90 percent or more of those who try to quit and do quit do so on their own without any outside assistance. Forty million people have quit smoking in the last 25 years. 90 percent of those according to the Surgeon General do so on their own. Four years ago, almost to the day, the day, the AMA issued a news release which said that most people who quit smoking do so on their own without the use of any gimmick. Now, that does not seem to me to be an addiction. Obviously, it can be difficult, but I think it's in the same category as maintaining a diet and exercise program, which a lot of people, including myself, have found very difficult to do.

MR. MAC NEIL: Dr. Smoak, how do you respond to this charge that what you're sending is a lot of bad messages or wrong messages?

DR. SMOAK: I think that the irresponsibility is in those who are not willing to accept the huge body of scientific information that will show that nicotine is the most addictive substance we know. If one is not satisfied with that, just take some patients, for example, and talk to them. In my work every day as a surgeon when I talk with people who have poor circulation and tell them that they need to stop smoking because it's scientifically known that nicotine adversely affects their circulation in the lower extremities, for instance, and they say, "Well, Dr. Smoak, I'd like to, but I can't quit," you hear that time and time again, when you talk to the patient who unfortunately has turned up after many years of smoking from say age 15, now with a cancer of the lung, and it's too late to try to do something about smoking at that point in time, and they will tell you time and time again, "I was told by the doctors I should stop smoking, but I just could not quit." So that in itself should substantiate that in anybody's mind.

MR. MAC NEIL: So in other words, the statement of four years ago that was just referred to by the AMA was too optimistic, was it?

DR. SMOAK: Well, I'm not sure how we would classify that, except that it was a statement that perhaps was made with information available at the time. We know how addictive this whole substance, nicotine, is. We know that it's necessary to do something to try and bring those people who are addicted to it into a better state of health, and that means a lot of help by physicians, by any other source available. As far as the number of people who are addicted, we know that some 50 million people are smokers, and they are addicted. True, there are some who are able to stop smoking, but there are just millions of those who can't smoke [quit]. They know it's detrimental to their health, but they know also that in spite of all their efforts that they cannot control that, and so ultimately, we're losing 1/2 million people every single year from the effects of tobacco, whether it's in the form of cancer of the lung, heart disease, or lung disease, or other diseases.

MR. MAC NEIL: Mr. Merryman, how does the tobacco industry equate the health effects of cigarette smoking as compared with the effect on the health of this population of hard drugs?

MR. MERRYMAN: Well, I'm not sure that you can make such a comparison but I'm really astonished that a physician would in all seriousness equate cigarette smoking with the use of hard drugs. If you look at, at a common sense evaluation of cigarette smoking and then a heroin addict, all you have to do is compare the behavior patterns. A heroin addict is totally out of control. Someone who smokes crack and becomes addicted to it is totally out of control. They are intoxicated. They will do anything to get that high. They will rob. They will steal. They will murder. They will abuse their spouses and children. The cigarette smokers, obviously, don't behave in that manner. And I think to equate the two is ludicrous. I think it destroys the meaning of the word "addiction," and I think there is some design in doing that. But I think if you open up the definition of the word "addiction," enough to include smoking, then obviously you've got to include things like caffeine. So you're going to have to include coffee and cola drinks and chocolate and other things that have caffeine in them, and say that people are chocolate addicts or coffee addicts. I think that if you -- if you include cigarettes in that wide net, as some do, you've got to include caffeine as well, and if you ask the FDA to regulate cigarettes, as they do prescription drugs, then what you're calling for is a ban on the product, because the FDA cannot do that under present law.

MR. MAC NEIL: Dr. Smoak, that's -- in fact -- that's what Dr. Kessler, the head of the FDA said when he asked Congress for some guidance on the FDA's authority to regulate nicotine. He said regulation would probably mean banning. Now you said today you did not mean banning. Now, how do you square those two things?

DR. SMOAK: Well, first of all, Dr. Kessler made a strong statement, I believe, in his testimony in Congress indicating the addiction -- addictive nature of nicotine and tobacco products. I think that he also would call upon some intermediate position from where we are in today's scenario as opposed to a total abolition of smoking, because, after all, if we did that, we'd have 50 million people out there who are addicted, and they would need tremendous amount of help, so our call is to be reasonable in this whole approach and to in some fashion, by means of FDA and Congress, to bring a more meaningful regulation to this deadly addictive product.

MR. MAC NEIL: Tell me what practical effects you think that suchregulation would be. I mean, how would smokers obtain regulated cigarettes, for example?

DR. SMOAK: Well, certainly the regulation could be in the form of actually putting on the product what all it contains. Also, just as the pharmaceutical companies are required to put in what the side effects are, the ill effects of a product, that the tobacco industry do the same thing for cigarettes. In other words, they would have to show cause for their product, not just have it out there unregulated and killing people on a daily basis.

MR. MAC NEIL: What about advertising?

DR. SMOAK: We think advertising is certainly very detrimental to the teenagers, the minorities, and the women. If you look at the old Joe Camel ads, you can tell that those are directed toward the young people. And, after all, adult smokers, 90 percent of those began as teenagers, when you're most vulnerable. The adolescents who need help are going through a tremendous transition in their lives, and they need all the support they can get.

MR. MAC NEIL: So are you saying that all advertising of tobacco would be banned under regulated -- under regulation?

DR. SMOAK: We would feel like that that would be appropriate if the FDA saw fit to do that, because right now, you can't walk into a stadium and see a baseball game, which is America's great pastime, without seeing some ad for cigarettes. Now, we don't think that's appropriate for our young people to be exposed to. Many other opportunities of a similar nature would also be addressed in terms of how advertising should be utilized and how it could be managed. For instance, the people who are the entertainers of the world, the great athletes of the world, they are utilized by the tobacco industry to show this is a wonderful thing influencing them as decision makers, as teenagers, when they are not at a point in their life they can rate a mature, adult decision to smoke or not to smoke.

MR. MAC NEIL: Mr. Merryman, do you at the Tobacco Institute, with all the arrows that have been aimed at your product recently, do you begin to feel that the writing is on the wall for some kind of regulation?

MR. MERRYMAN: Well, I must say that what I've heard tonight represents more misguided zealotry than anything else. I don't see how a reasonable person could take much of what the AMA has proposed very seriously. I think that anyone who listens to what the AMA is proposing would have to conclude that they're trying to make hard drugs seem as respectable as tobacco, because they're putting them in the same category. I think that's irresponsible. I think anyone who's observed at all would not say that we've had a tremendous success over the past several years in the war on drugs. Why would you want to put that burden on the FDA to continue to expand its regulation when --

MR. MAC NEIL: I have to interrupt --

MR. MERRYMAN: -- clearly it's not necessary?

MR. MAC NEIL: I'm sorry, but that is our time this evening.

DR. SMOAK: If we have a moment --

MR. MAC NEIL: No.

DR. SMOAK: -- we would like to say that it's the health --

MR. MAC NEIL: I'm afraid we don't.

DR. SMOAK: -- and lives of the people that we are trying to talk about, not --

MR. MAC NEIL: All right.

DR. SMOAK: -- just whether it's a drug.

MR. MAC NEIL: Thank you gentlemen both. ESSAY - TWO-FACED

MS. WARNER: Finally tonight, essayist Richard Rodriguez at the Pacific News Service on public people and private image.

RICHARD RODRIGUEZ: On the day when Richard Nixon died, Hillary Clinton met reporters in the White House to answer questions about her personal finances and the Whitewater controversy. The First Lady appeared cool and composed. She sat under a painting of President Lincoln answering questions in an outfit that was color- coordinated with a nearby bowl of spring flowers. Richard Nixon, on the other hand, was notoriously awkward on television. His career almost ended that far ago night when the entire nation saw him perspire during his debate with the smooth, the handsome, the affable Kennedy. How much do you trust, or for that matter distrust, what I am saying to you now based upon how I look? How much of what I'm saying to you now is communicated by my face or my stance, or the clothes I have chosen to wear? Does Hillary Clinton need to wear an outfit color-coordinated with a bowl of spring flowers? Would you vote for a politician who perspired in front of the unblinking eye of the television camera? In Western art, the oldest prejudice has been platonic. External appearance mirrors the inner life. In her medieval portraits, for example, the Virgin Mary could only be beautiful, must always be beautiful, as girl, as mother, because her soul was beautiful. This aesthetic notion trusted the public life, for if the eye was to be trusted, then external behavior how a person, a king, a prince appeared in public was all telling. But during the Renaissance something changes. By the 16th, the 17th century, the ancient faith in the areas called into question. John Milton writes "Paradise Lost," an epic poem in which Satan appears heroically beautiful. And then there is Shakespeare. There comes a moment in Hamlet when Hamlet, the character, steps out of the play, speaks directly to the audience. The play literally stops.

HAMLET: To be or not to be, that is the question. Whether tis nobler in the mind to suffer the slings and arrows of outrageous fortune, or to take arms against the sea of troubles, and by opposing, end them, to die.

RICHARD RODRIGUEZ: The old confidence in public life gives way to a modern skepticism. Hamlet has secrets. He has a life that has hidden from anyone around him. The ancient assumption of theater was that everything we needed to know about a character we learn in his puppet behavior. With his monologue, Hamlet becomes a character in a novel, and so it happens. By the 18th century, the play gives way to the novel. Literature and novels are still filled with beautiful heroes and heroines. But the voice of the novel becomes starkly solitary. Modern skepticism about public life is extended in this century to a post modern skepticism about one's own private life. Psychoanalysis provides us with the means to uncover secrets we have kept from ourselves. Here on Green Street in San Francisco, in a district of interior designers and advertising agencies you can find this plaque honoring Philo Taylor Farnsworth for having invented television. Television flickered to life in a building at this corner of San Francisco in 1927. Television's invention led us to believe in the eye with a faith almost as strong as that of our medieval ancestors. Television returned us to the world where the Virgin Mary was always beautiful and where villains were as physically repellant as demonic gargoyles outside a cathedral. In the age of television, we become medieval people again. We become public people again. We trust the evidence of our eyes. But at war with our medieval faith in television is a modern skepticism about our public life. And something within us doubts what we see all around us. If something within us responds positively to Hillary Clinton's color- coordinated outfit, something within us also wonders if we ever knew who Richard Nixon was, or if even he knew. I'm Richard Rodriguez. RECAP

MS. WARNER: Again, the major stories of this Tuesday, President Clinton called on France to keep its peacekeeping forces in Bosnia. He told the French National Assembly that it will take time to forge a lasting peace there. And Sec. of State Christopher said the U.S. and other countries might impose their own sanctions on North Korea if the United Nations fails to do so. Good night, Robin.

MR. MAC NEIL: Good night, Margaret. That's the NewsHour for tonight. And we'll see you again tomorrow night. I'm Robert MacNeil. Good night.