U.S. central bank chief Alan Greenspan told a congressional committee Thursday that the United States must resist protectionism, and improve its educational system to stay competitive in the world economy.
Mr. Greenspan told the House Education Committee that the U.S. economy is best served by full and vigorous engagement in the global economy. Trade protectionism, he said, would hurt America by inviting retaliation from foreign countries.
Mr. Greenspan said he expects the economy will soon begin creating jobs at a faster pace. Last month, only 2,100 jobs were created, far fewer than had been expected. The loss of U.S. jobs to lower wage countries has become a major issue in the presidential election campaign.
Mr. Greenspan called for improvements in the U.S. educational system, a change he said is essential to assuring future economic success. "Clearly, we are not doing enough to move students through the educational system with a faster level of skill accretion," he said. "Because, as I point out in my prepared remarks, it is reflected in these very dramatic changes in the so-called college-high-school skill spreads, which have opened up quite materially."
The central bank chief was referring to falling international rankings of U.S. high school students in science and mathematics.
Mr. Greenspan said the U.S. labor market is flexible and that other countries are trying to emulate the U.S. model. He mentioned France, where a reduction in the work week to 35 hours has eroded the competitiveness of French workers.
"The work-week in France, which was expected to have some considerable difficulty in maintaining a flexible labor market, is being recognized as such [a problem]," he said.
Mr. Greenspan said both France and Germany are seeking to cut back the strict work rules and generous unemployment benefits that have contributed to work place rigidities.