Alan Greenspan on offshoring: take the long-term view

[Declan McCullagh <declan () well com>]

http://www.federalreserve.gov/boarddocs/speeches/2004/200402202/default.htm

...

Although in recent years the proportion of our labor force made up of those 
with at least some college has continued to grow, we appear, nonetheless, 
to be graduating too few skilled workers to address the apparent imbalance 
between the supply of such workers and the burgeoning demand for them. 
Perhaps the accelerated pace of high-tech equipment installations 
associated with the large increases in productivity growth in recent years 
is placing unachievable demands for skilled graduates over the short run. 
If the apparent acceleration in the demand for skilled workers to staff our 
high-tech capital stock is temporary as many presume, the pressure on our 
schools would ease as would the upward pressure on high-skilled wages.

...

Those who have lost jobs, I know, are not readily consoled by the fact that 
current job insecurity concerns are not new. But keeping the current period 
in context is instructive. Jobs in the United States were perceived as 
migrating to low-wage Japan in the 1950s and 1960s, to low-wage Mexico in 
the 1990s, and most recently to low-wage China. Japan, of course, is no 
longer characterized by a low-wage workforce, and many in Mexico are now 
complaining of job losses to low-wage China.

To be sure, many of our fellow citizens have experienced real hardships in 
our economic environment, which is becoming ever more internationally 
competitive. But the protectionist cures being advanced to address these 
hardships will make matters worse rather than better.

The loss of jobs over the past three years is attributable largely to rapid 
declines in the demand for industrial goods and to outsized gains in 
productivity that have caused effective supply to outstrip demand. 
Protectionism will do little to create jobs; and if foreigners retaliate, 
we will surely lose jobs. We need instead to discover the means to enhance 
the skills of our workforce and to further open markets here and abroad to 
allow our workers to compete effectively in the global marketplace.

...
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