Federal Reserve Chairman Alan Greenspan said he expects the number of US jobs “outsourced” to low-wage countries to climb in the next few years, but that will not be a “bad” thing for the US economy.
“While it’s certainly the case, (the number) as estimated in the current period is quite small, I think it’s going to be rising,” Greenspan told the Senate Banking Committee. “And I don’t think that’s bad. I think that’s going to be part of a broader expansion which will lead to higher standards of living in this country.”
The remarks echoed those of President George W. Bush’s top economic adviser, N. Gregory Mankiw, who triggered a firestorm on Capitol Hill by describing the practice of outsourcing as “just a new way of doing international trade,” and “a good thing” for the economy. Mankiw has kept a low public profile ever since.
Greenspan’s assessment prompted one lawmaker, Sen. Robert Bennett, R-Utah, to recall Mankiw’s fate. “It’s a good thing (Greenspan’s) not chairman of the Council of Economic Advisers, because if he were, tomorrow morning there would be calls for his resignation and attempts on the part of the political arm of the White House to distance themselves from the testimony,” Bennett told his colleagues on the banking committee.
The controversy over the outsourcing of jobs recently spurred the Labor Department to start measuring the number of jobs that are shifted to lower-wage countries. Some analysts have estimated the number at 300,000 or so a year, but the Labor Department said the number in the first quarter of 2004 was just 4,633.
Greenspan said he was surprised that outsourcing has aroused so much public consternation given the measured job losses.
“I’m really quite surprised at how big an issue this has become,” he said. “I fully understand the real serious problems that individuals have who lose their jobs in this process. And indeed we should do whatever is required to make their lives better. But shutting off international trade as a means of doing that is very counterproductive to everybody’s standard of living,” Greenspan said. (Dow Jones)