March 12, 2004 3:31 PM PST

Greenspan: Offshoring laws could harm U.S.

BOSTON--Federal Reserve Chairman Alan Greenspan said here Friday that efforts to stem the tide of overseas outsourcing could damage the U.S. economy instead of help protect American workers.

Greenspan detailed his views on the politically charged topic at Boston College's Finance Conference 2004, where he was awarded an honorary degree by the school. Measures such as the U.S. Workers Protection Act might do more harm than good, he said.

"In response to these strains and the dislocations (outsourcing could) cause, a new round of protectionist steps is being proposed," Greenspan said. "These alleged cures would make matters worse rather than better. They would do little to create jobs; and if foreigners were to retaliate, we would surely lose jobs."

The Workers Protection Act, proposed by Sen. Christopher Dodd, D-Conn., aims to ban offshore outsourcing in three areas of government work: privatization of federal work; federal purchase of goods and services; and state government procurements using federal funds. The senator contends that the United States is losing jobs at an "alarming" rate. The country has lost 2.7 million manufacturing posts since 2001, according to Dodd, and as many as 3.3 million jobs may be sent overseas in the next 15 years.

Other legislators have publicly bandied about the idea of creating laws that would financially punish U.S. companies found to be shipping jobs out of the country.

Greenspan blamed the movement of jobs overseas on a number of factors, including U.S. consumers' drive to push down prices through comparison shopping and breakthroughs in productivity.

He also compared the current trend of companies sending employment overseas to similar situations in the 1950s, 1960s and 1990s, when foreign economic powers such as Japan and Mexico were considered threats to U.S. job security.

Given this background, protectionism might end up stalling and not encouraging job growth in the long term, Greenspan warned.

"We can erect walls to foreign trade and even discourage job-displacing innovation," Greenspan said. "The pace of competition would surely slow, and tensions might appear to ease--but only for a short while. Our standard of living would soon begin to stagnate and perhaps even decline as a consequence.

"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," he said.

Overall, Greenspan said he believes that job losses may slow, as the economy shows signs of a recovery. He also predicted that employment would soon rebound, despite a current dearth of job creation.

Among the recommendations the Federal Reserve chairman made for improving the American job market was to increase emphasis on math and science among school children and to offer more retraining programs for career changers.

"We are growing more aware that in the current intensely competitive economy, the pace of job creation and destruction implies that the average work life will span many jobs and even more than one profession," Greenspan said.


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Alan Greenspan isn't worried!
Federal Reserve Chairman Alan Greenspan isn't worried about his job and he is a republican.
Posted by tbeckner (56 comments )
Reply Link Flag
Outsource Gov't
'Greenspan blamed the movement of jobs overseas on a
number of factors, including U.S. consumers' drive to
push down prices through comparison shopping and
breakthroughs in productivity.'

Well no sh--, this is what is called a M-A-R-K-E-T and
the US economics is based on it. Where did this guy go to
school at? Very interesting, Greenspan is blaming the
consumers and not the American CEOs (who make
millions by the way) who are the decision makers to

We need to outsource the President's job, the House and
Senate's jobs, the CEOs' jobs, and Greenspan's job. We
need to streamline, bring down the cost, and get rid of
some of those simply useless jobs in US Government.
Posted by LinuxRules (222 comments )
Reply Link Flag
Redistribution by Concentration of Wealth / Follow the Money!
You cannot discuss/explain/understand state offshoring of state sponsored jobs (direct vs. contracted) in a vacuum, that is, without understanding the general business model (and I conclude - false economic savings, and erosion/destruction of the US social fabric) driving this process; redistribution by concentration of wealth and power.

America, and her associated States, reached it's status as a strong, vibrant and wealthy society MOSTLY due to a strong, vibrant and wealthy middle-class. Offshoring, one of many forms of wealth concentration policies, THREATENS the middle-class, and by that, threatens the health and welfare of the States and the Union.

It benefits only a few, at the expense of the vast majority. "All that glitters is not Gold"

This is no outside threat as in a supplier "competing" for work; this is a case of shooting ourselves in the foot, or better yet, our brain!

Were do these savings in labor cost go? Why is the CPI continuing to rise? What of the latest alarm over the rise of the Wholesale Price Index?

Follow the money!

Not all of corporate America behaves in this dangerous manner. COSTCO is one shining example of corporate responsibility.

Eight months ago, 3 1/2 years from retirement eligibilty, my job was offshored and I was laid-off by IBM.

So, after years of "sounding the alarm" on this issue (Lou Dobbs, TV, Print, Political Activism), it has come to my front door.

Protect and defend the Union, or, God help us all.
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