Bernanke’s got it right

Marketplace Staff May 1, 2007
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Bernanke’s got it right

Marketplace Staff May 1, 2007
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KAI RYSSDAL: Ben Bernanke took a swing through Big Sky country today. The great state of Montana’s hosting an economic development summit. The Fed Chairman took the opportunity to talk free trade. He cautioned against tariffs and quotas to protect American industry. He said that would only hurt the U.S. economy.

That’s a tough sell in an country that’s lost millions of jobs to foreign competition already — and might lose millions more. But commentator Steve Moore says the Fed Chairman’s right on the mark.


STEPHEN MOORE: American workers say they are now more worried about job losses and pay cuts than ever before.

One word explains these worker anxieties: globalization. Economist Alan Blinder of Princeton warns that over the next 20 years, 40 million jobs may be shipped overseas due to free trade and new labor-saving technologies.

Scary stuff, but there’s another side to this story. America gains at least as many jobs as it loses from trade. The jobs we do lose tend to be low-skilled and low-wage. The jobs we gain require talent and productivity, and thus command higher pay.

Today, about one of every three new jobs in America is related to international trade.

About 57 million Americans work for businesses engaged in export or import. It’s a well-kept secret that America’s exports have soared by nearly half since 2001. Meanwhile, low-cost imports make products — ranging from flat-screen TVs to cars — a lot more affordable to the poor and middle class.

Yes, America will probably lose some 40 million jobs due to technology and trade in coming decades. We will also create far more than that in fields we can hardly conceive of today.

Millions of Americans now work in technology, financial services, telecommunications, and other knowledge-based occupations that didn’t even exist 40 years ago. Steel mills have given way to computer labs and Internet highways.

History teaches us that the best way for America to lose jobs is to try to protect them. The infamous Smoot Hawley tariffs in the late 1920s helped trigger the Great Depression when one of every four Americans lost his job.

President Bill Clinton said it best: In a 21st century global marketplace, America must compete, not retreat.

RYSSDAL: Stephen Moore is senior economics writer for the Wall Street Journal’s editorial page.

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