|Greenspan Warns Against 'Protectionist Cures'
By Martin Crutsinger
AP Economics Writer
Friday, February 20, 2004
WASHINGTON -- Federal Reserve Chairman Alan Greenspan warned on Friday
that "protectionist cures" being advanced to deal with the country's job
insecurities would make the situation worse.
Entering the politically charged debate over U.S. service jobs being
shipped overseas, Greenspan said that it was a lack of adequate
educational training rather "outsourcing" which posed the greatest threat
to future American prosperity.
Greenspan, speaking to the annual meeting of the Omaha Chamber of
Commerce, said that it was not surprising that there was a high level of
job insecurity in the country at present when more than 2 million people
in the work force have been unemployed for more than a year.
He predicted, as he did in congressional testimony last week, that the
strengthening economy should lead to stronger employment growth in the
"We have reason to be confident that new jobs will displace old ones as
they always have," Greenspan said, "but America's job-turnover process is
never without pain for those in the job-losing portion."
The issue of how -- how to create them, find them and keep them -- has
dominated the Campaign 2004 early primary season talk. Sen. John Edwards,
now the chief challenger to front-runner Sen. John Kerry, has sought to
highlight the issue repeatedly at various stops.
The Bush White House has backtracked on a forecast in the president's
economic report to Congress which said 2.6 million jobs should be created
Greenspan, without referring directly to the political campaign or the
individual candidates, said that the current anxiety about losing jobs to
other countries is not new. There were fears about losing jobs to low-wage
Japan in the 1950s and 1960s and to low-wage Mexico in the 1990s and more
recently to low-wage China, he said.
However, Greenspan also said the recent migration of service sector jobs,
such as employees working in telephone call centers, to India is a new
phenomenon. But he cautioned that any answer that involved erecting trade
barriers in this country would be wrong.
"The protectionist cures being advanced to address these hardships will
make matters worse rather than better," he said.