March 18, 2004 • Volume 12 Number 13

Federal Reserve Chairman Alan Greenspan gives his keynote speech at last week's Boston College Finance Conference. (Photo by Rose Lincoln)

Greenspan Touts US Role in Global Economy

Fed chairman leads call for education, training, not protectionism

By Mark Sullivan
Staff Writer
Federal Reserve Chairman Alan Greenspan told last week's Boston College Finance Conference that the key to preserving US jobs is not protectionism but a commitment to education and job training to ensure Americans thrive in a global economy.

"As history clearly shows, our economy is best served by full and vigorous engagement in the global economy," Greenspan said. "Consequently, we need to increase our efforts to ensure that as many of our citizens as possible have the opportunity to capture the benefits that flow from that engagement."

The Fed chief delivered a keynote address to the March 12 conference that drew more than 2,500 business leaders to Conte Forum for presentations by a founder of Yahoo!, the chief of cable giant Comcast, and other prominent figures in technology, business and labor.

Greenspan was presented with an honorary Doctor of Laws degree by Boston College during the conference hosted by the Carroll School of Management in conjunction with US Rep. Edward Markey '68 JD '72 (D-Mass.), ranking Democrat on the House Subcommittee on Telecommunications and the Internet.

The out-sourcing or "off-shoring" of American jobs, a top issue in the current presidential race, was also atop the agenda at the conference, at which AFL-CIO President John Sweeney and US Chamber of Commerce President and CEO Thomas Donohue debated the effect of globalization on trade and jobs [see accompanying story on page 5].

The importance of ideas and creative passion to US economic growth was another recurring theme sounded by Yahoo! co-founder Jerry Yang and cellphone industry pioneer Craig McCaw, among other speakers, who said America retains a competitive advantage globally on the strength of its intellectual capital.

"The theme I heard was that of the importance of ideas and creativity and passion in this new economy," said Assoc. Prof. Harold Petersen (Economics).

Assoc. Prof. John Gallaugher (CSOM) said: "Jobs and innovation were front and center. A major theme of the Finance Conference remains technology innovation and its impact on the world economy."

Greenspan, echoing remarks he had made in a congressional appearance the day before, argued against protectionism as a policy for preserving US jobs.

"We do have a choice," he said. "We can erect walls to foreign trade and even discourage job-displacing innovation. 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."

Greenspan urged a renewed national commitment to education and ongoing training for all citizens to ensure as many Americans as possible have the opportunity to benefit from engagement in the global economy.

After receiving an honorary Doctor of Laws degree, Alan Greenspan stands with University President William P. Leahy, SJ (at left), and Boston College trustees John M. Connors (center) and Rev. Edward Flaherty, SJ. (Photo by Rose Lincoln)

Two-year community colleges have assumed a significant role in providing job-related training, and the American system of higher education as a whole bears an important responsibility for "unleashing the creative thinking that moves our economy forward," he said.

"A hallmark of our market-based economy has been that we have placed much greater emphasis on the need to provide equality of opportunity than on equality of outcomes," he said. "But equal opportunity requires equal access to knowledge. We cannot expect everyone to be equally skilled. But we need to pursue equal access to knowledge to ensure that our economic system works at maximum efficiency and is perceived as just in its distribution of rewards."

BC economists followed the Fed chairman's remarks with interest.

While Prof. Frank Gollop (Economics) credited Greenspan's education prescription, Assoc. Prof. Robert Murphy (Economics) said Greenspan's focus on upgraded worker skills is not the solution to sluggish job growth.

"Our problem today is that demand for workers, even high-skilled ones, has slowed sharply, even as the economy appears to have rebounded," Murphy said. "A more sensible tax cut targeted toward low and middle income folks along with financial assistance to state and local governments would have stimulated the economy in a way that might have helped create more jobs than the dividend-capital gains tax cut pushed through by the Bush Administration last year."

Keynote speeches were given by Yahoo! Director Yang and by Brian Roberts, president and CEO of Comcast Corp., the cable giant that is the nation's largest provider of broadband service, and which recently made a $55-billion bid for the Walt Disney Co.

Roberts predicted the coming innovation in digital services will be "video on demand," which allows subscribers to watch a movie or television show at any time by calling it up from a menu on the screen. "VOD will bring a sea change in the way people use television," he said.

Yang, a native of Taiwan, was a doctoral student at Stanford 10 years ago when he co-founded the Internet navigational guide that is now the world's largest Web portal.

He expressed confidence in America as a place where creativity and innovation are rewarded. "We have a true meritocracy," Yang said. "You have the ability to take an idea no one believes in and, if you have passion and drive and can get others to believe in you, you can create an industry."

Markey asked: "You are not afraid of the technology threat posed by India or by China?" Yang replied: "Fear is not the word. Competition is a fact of life."

The conference was co-presented by University President William P. Leahy, SJ, who offered a welcome from BC to those attending the conference. Senior Vice President James McIntyre, who chaired the event, also gave brief remarks at the beginning.

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