Moving with Greenspan

Alan Greenspan expressed puzzlement and frustration recently over the reluctance of some members of Congress to continue the expansion of free trade. He could not, he said, understand their preference for protectionist policies. The answer is simple. Mr. Greenspan has tenure as the nation’s economic guru. Members of Congress, on the other hand, are elected by constituents who may or may not have decent jobs.

That makes their role more complicated. They not only have to recognize the omnipresence of global trade, they feel obliged to shield workers in their states from some of its negative effects, even if that puts the nation in a weaker position economically.

Free trade is not about jobs, Mr. Greenspan told business executives and foreign ambassadors in Dallas last week. It is about becoming more competitive by using the resources of people, technology and money in more productive ways. Probably, though, he would agree that it is easier to theorize about such things when you are fully employed.

Maine may have led the region in job growth last year, but there is little doubt that some of its mature industries are in for a difficult time. Shoe jobs, for instance, are leaving the state and more will be lost as the tarrifs for shoes under Nafta are removed. The King administration recently put together a commission to look at opportunities for Maine under Nafta, but at least one thing, according to state economist Laurie Lachance, already is clear: “If we try to compete on the low end — apparel, textiles, food, lumber — we will get killed by countries with low labor rates. The only future for states like Maine is to take the high road with a strong education. We have to compete on higher values” for products.

Knowing what a huge change that means to this and similar economies, Mr. Greenspan would have a much easier time coaxing Congress over to his position if he could offer identify incentives for states like Maine to compete both internationally and with the 49 other states. In his new book, “The Lexus and the Olive Tree: Understanding Globalization,” journalist Thomas L. Friedman says the Clinton administration should pass what he calls the “Rapid Change Opportunity Act,” which would reflect that “globalization spreads its blessings unevenly, and therefore the government is constantly going to be adjusting its safety nets and trampolines to get as many people as possible up to speed for the Fast World.”

If such an act is created, it should contain the following provision passed along by Ms. Lachance. Rather than hand out tax breaks to industries that could, in turn, downsize its workforce or move out altogether, she suggests, why not use that same amount of money to invest in worker training?

Tailored education programs would make companies more productive and more profitable, but if a company leaves, Maine is not scrambling to help the workers — they’re already trained to do something else. In addition, by investing in people rather than something that can be packed up and shipped out of state in a weekend, Maine would be providing a strong incentive for companies to stay and grow here.

Congress may not move as fast as Mr. Greenspan would like but it eventually move in his direction. How much better it would be, however, if workers did not get run over in the process.