From remarks by Federal Reserve Chairman Alan Greenspan to the Alliance for the Commonwealth Conference on International Business in Boston yesterday:
While major advances in standards of living are evident among virtually all nations that have opened their borders to increased competition, the adjustment trauma has also distressed those who once thrived in companies that were then at the cutting edge of technology. . . . Economists will say that workers should move from the steel districts of western Pennsylvania to a vibrant Silicon Valley. And eventually they -- or, more likely, their children -- will. But the adjustment process is wrenching to an existing work force made redundant largely through no fault of their own. It may be argued that all workers should have the foresight to recognize long-term job opportunity shifts and move in advance of obsolescence. This regrettably is a skill not in great abundance. . . . .
Yet the protectionist propensity to thwart the process of the competitive flow of capital, from failing technologies to the more productive, is unwise and surely self-defeating. History tells us that not only is it unwise to try to hold back innovations, it is also not possible over the longer run. Generation after generation has experienced episodes in which the technologically obsolescent endeavored to undermine progress, often appealing to the very real short-term costs of adjusting to a changing economic environment. . . . In the end they did not prevail, and long-term advances in standards of living resumed.