Greenspan seems to be "summing up" in his speech today...
He expounds on basic economic history; and then comes down four-square in favor of CREATIVE DESTRUCTION.
And what does CREATIVE DESTRUCTION give you? FLEXABILITY ACCORDING TO GREENSPAN.
Greenspan notes that failed capital ventures morph into new ventures that take advantage of "new technologies." And perhaps this is true...
On protectionism he says:
"Protectionism in all its guises, both domestic and international, does not contribute to the welfare of American workers. At best, it is a short-term fix at a cost of lower standards of living for the nation as a whole. We need increased education and training for those displaced by creative destruction, not a stifling of competition."
BUT THE ONE BIG FALLACY IN HIS ARGUMENT JUMPS OUT AT YOU CLEARLY:
GREENSPAN ASSUMES THAT LABOR IS AS FLEXIBLE AS CAPITAL...BUT WORKERS TO NOT MIGRATE AS EASILY AS CAPITAL!!
THAT IS GREENSPANS FALLACY!
IF LABOR IS "INELASTIC" IN IT'S ABILITY TO MIGRATE...THEN SOME NATIONS WILL BE LOSERS AND OTHERS WILL BE WINNERS... AND THE WINNERS WILL BE THOSE ECONOMIES WITH THE CHEAPEST AND/OR BEST SKILLED LABOR.
HERE'S THE PROBLEM: THAT ISN'T THE US...AND IT WILL NEVER BE!
Greenspan thus DOOMS AMERICAN to a life in the economic shadowlands...SOLELY SO CAPITAL CAN DO ITS THING...ie MIGRATE TO CHEAP LABOR ECONOMIES!
If you read Greenspan's speech critically that is the only conclusion you can draw.
Greenspan also never mentions the DIFUSION OF TECHNOLOGY and the "evils" that arise when China and India are allowed to "skip a generation or two" to compete with the Western industrial powers. THIS ONLY INCREASES THE DANGER OF GREENSPAN'S FALLACY.
TAKEN IN IT'S BEST LIGHT GREENSPAN HAS TOLD AMERICANS TODAY QUITE SIMPLY: "YOU'RE DOOMED."
AND THAT, GENTLE READER, IS AN UNACCEPTABLE CONCLUSION IN MY BOOK.
