“Despite what seems to economists to be a compelling case for trade, non-economists are far more skeptical. A perennial public concern, from the emergence of the “Rust Belt” in the 1980s, to the days of Ross Perot’s “giant sucking sound,” to the more recent debate about the effects of international outsourcing, is that the expansion of trade will cause production to move abroad, at the expense of domestic employment.” While conceding that some jobs will be lost and some jobs created, he states that “the workings of a competitive labor market, assisted perhaps by appropriate economic policies, ensure that jobs will be created that are commensurate with the size of the labor force and the available mix of worker skills. Thus, in the long run, factors such as population growth, education and training, labor force participation rates, and labor market institutions determine the level and composition of aggregate employment.” Finally he wraps up by stressing the importance of assistance for displaced workers because it “is the right and fair thing to do. Second, helping workers who have lost jobs find new productive work is good for the economy as well as for the affected workers and their families. Finally, if workers are less fearful of change, less pressure will be exerted on politicians to erect trade barriers or to take other actions that would reduce the flexibility and dynamism of the U.S. economy. In the long run, avoiding economic isolationism and maintaining economic dynamism will pay big dividends for everybody.” BRAVO! [FinanceProfessor.com Annotation]
Author: Ben S. Bernanke
Source: The Federal Reserver Board
Subjects: Economics, International
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