Bernanke Discourages Protectionist Sentiment

Federal Reserve Chairman Ben S. Bernanke on Friday cautioned U.S. lawmakers to avoid the temptation to impose protectionist trade policies in reaction to fierce international competition.

Globalization has made countries increasingly connected economically, Bernanke told a conference that explored the forces of globalization. The opportunities for companies to sell their goods to more countries can generate wealth and boost living standards, he said. But as some workers have benefited, others have been left behind in the changing landscape, he said.

“Further progress in global economic integration should not be taken for granted,” Bernanke said.

“Geopolitical concerns, including international tensions and the risks of terrorism, already constrain the pace of worldwide economic integration and may do so even more in the future,” he told the gathering, which was organized by the Federal Reserve Bank of Kansas City.

Bernanke avoided discussion of the future course of interest rates in the United States. With his guidance, the Fed this month halted the longest unbroken stretch of interest rate increases in recent history. It had steadily boosted rates since June 2004 to fend off inflation.

Bernanke’s remarks came amid worsening trade tensions between the U.S. and China and as global trade talks have stalled. Americans also are increasingly anxious about the possibility of losing their jobs to workers in China and India, two emerging economic giants.

Against that backdrop, U.S. lawmakers -- as they have through the years -- may be tempted to enact protectionist measures to try to slow globalization.

Bernanke said that would be unwise.

“The challenge for policymakers is to ensure that the benefits of global economic integration are sufficiently widely shared -- for example, by helping displaced workers get the necessary training to take advantage of new opportunities,” he said.

New technologies and faster communication make it easier for companies to look beyond national borders for lower-paid workers. In the U.S., factory jobs have been lost to overseas competition or moved offshore, and some service-sector jobs have moved overseas.

Bernanke’s speech marked his first address to a high-profile economics conference as chairman of the central bank.

Allan H. Meltzer, a professor at Carnegie Mellon University, viewed Bernanke’s speech as “making a good case for free trade.”