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Friday, March 12, 2004In 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." 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.
Read the full text of his speech here : http://edworkforce.house.gov/hearings/108th/fc/knowledgeeconomy31104/greenspan.htm
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