Greenspan Warns U.S. Lawmakers About Protectionism
U.S. lawmakers should avoid protectionist policies as labor markets pass through a realignment that is causing a “high degree of pain” for some workers, Federal Reserve Chairman Alan Greenspan said.
“Competition from abroad has risen to a point at which developed countries’ lowest skilled workers are being priced out of the global labor market,” Greenspan said via satellite to the HM Treasury Enterprise Conference in London. “The diminishing of opportunities for such workers is why retraining for new job skills that meet the evolving opportunities created by our economies has become so urgent a priority.”
Greenspan urged lawmakers to avoid tariffs and let markets adjust to changes in the countries supplying labor and goods. Low levels of job creation have become a yardstick of economic performance for President Bush. The U.S. has levied or threatened tariffs on products including steel and brassieres in the last two years, saying some industries were unfairly hurt by partners’ policies.
Greenspan has spoken against protectionism on several occasions in recent months, noting the result would be declining living standards and less of the “flexibility” that allows economies to absorb shocks such as terrorist attacks. In a “far more globalized world,” any movement toward protectionism “could be unexpectedly destabilizing,” Greenspan said.
Greenspan is “right on target -- being priced out of low-skilled jobs is clearly what’s going on right now,” said Donald Straszheim, president of Straszheim Global Advisors Inc. in Santa Monica. “It’s not clear yet how many of these jobs we’re going to lose, or whether, if we do end up losing them, we’d be able to reinvent ourselves and get them back.”
Greenspan’s comments came on the eve of the U.S. central bank’s meeting to discuss interest rates. Members of the Federal Open Market Committee, which sets interest rates, are expected to leave the benchmark overnight lending rate at 1%, the lowest since 1958, when the meeting ends Wednesday, according to all 84 economists surveyed by Bloomberg News.
The U.S. economy is creating few jobs relative to its rate of economic growth. The U.S. economy added 144,000 jobs in the final quarter of the year. Manufacturing jobs have fallen for 41 consecutive months, bringing total jobs lost since August 2000 to 2.8 million.
The Bush team has already acted to limit imports of Chinese bras, knit fabric and robes, drawing a threat of retaliation from China. U.S. pipe makers, furniture makers and other industries have all petitioned the Commerce Department to levy tariffs against China, saying that surging imports from that nation threaten their survival.
