Don't blame job losses on off-shoring to India: Alan Greenspan

Friday, 12 March 2004, 20:30 IST
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WASHINGTON: US financial wizard Alan Greenspan, who is the Federal Reserve chairman, says a ban on outsourcing to India, trade barriers or new protectionist measures won't bring back American jobs. He said it would "surely" result in more job losses if other countries were to retaliate to such measures. "Don't blame off-shoring, and don't erect trade barriers. Neither is the right answer," the head of the US central bank said in a testimony before the House of Representatives' Education and the Workforce Committee Thursday. He said erecting barriers to foreign trade and discouraging innovation that brings about job displacement could somehow temporarily ease tensions on the job market. However, he said, that kind of easing would be short-lived and "our standard of living would soon begin to stagnate and perhaps even decline as a consequence". Calls for trade protectionism and a flood of anti-off-shoring legislation are the hallmarks of this year's political debate. This loss and more recent "outsourcing" of white-collar jobs to countries such as India and China have become a recurring theme among Democrats competing for their party's nomination to oppose President George W. Bush in the November presidential election. Greenspan said he understands the concerns, given the nation's net loss of about 2.2 million jobs since 2001. Yet, he held out hope that "in all likelihood" job growth will pick up "before long". That wasn't very definitive, but it was the best Greenspan could do. His main point was to warn that trade protectionism "would make matters worse rather than better". Rather, he said, the nation should focus on the Bush administration's commitment to upgrade investment in US education, especially community colleges, where American workers can learn or retrain themselves to fill the jobs of the future. That's how American workers will compete in the global marketplace, Greenspan said. He argued that trade barriers would remove some of the pressure that American businesses need to compete globally. "Time and again through our history, we have discovered that attempting merely to preserve the comfortable features of the present rather than reaching for new levels of prosperity is a sure path to stagnation," Greenspan said. He said US job loss continues to diminish and employment, "in all likelihood", will begin to increase more quickly as output continues to expand and new jobs replace old ones. But Greenspan cautioned that job turnovers will never be painless and that the country needs to be prepared to deal with unwanted consequences of economic change. The US Chamber of Commerce has warned lawmakers that misguided attempts to counter perceived outsourcing or off-shoring trends through amendments to the Workforce Adjustment and Retraining Notification Act (WARN) would "destroy the underpinnings of the original Act". In a letter to members of the US Senate, the executive president of the chamber, Bruce Josten, said: "The amendment (would impose) new significant obligations on the employer community without even the remotest pretence of careful review by the relevant committees of jurisdiction." He said: "The lack of any careful review in the legislation is clearly reflected in the poorly constructed and unworkable provisions related to outsourcing."
Source: IANS
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