Greenspan urges education

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Federal Reserve Chairman Alan Greenspan yesterday criticized the "alleged cures" that political candidates are proposing for joblessness -- including limits on moving jobs offshore -- saying they will erode America's living standards and do little to reduce unemployment.

Although "new-job creation is lagging badly" for the moment, he said, the best way for Congress to help Americans get and keep good-paying jobs is to improve their math and technical skills so companies won't be tempted to outsource to better-trained workers in China and India.The Fed chairman said he continues to think the economy is on the verge of faster job growth. But he acknowledged that the extraordinary dearth of jobs in the past three years has been a hardship to millions of people who cannot find work.

He endorsed for the first time an extension of federal unemployment benefits for those workers, which Congress had allowed to expire in December.

"There is a palpable unease that businesses and jobs are being drained from the United States," particularly white-collar jobs that Americans previously thought were secure, he said in an unusual appearance before the House Education and the Workforce Committee.

"Job insecurity is understandably significant when nearly two million members of our work force have been unemployed for more than six months," he said.

But erecting barriers to force employers to keep jobs in the United States would be counterproductive and could lead to the kind of trade war that turned a recession in the 1930s into the Great Depression, he said.

"What has made the American economy great is that we allow ourselves to be exposed to more competition than virtually anyone else in the world," he said.

This has forced Americans to hone their skills in a way that promoted technological innovation and raised living standards, he said.

"A new round of protectionist steps is being proposed" that threatens the progress, he said, referring to legislation that would restrict outsourcing jobs. That legislation was approved in the Senate last week as part of a bill to repeal tax provisions deemed prejudicial to trade.