Federal Reserve Chairman Ben S. Bernanke sang the praises of globalization today, noting that benefits resulting from protecting American workers from foreign competition would be outweighed by the benefits of free trade.
Mr. Bernanke spoke at the Montana Economic Development Summit 2007 in Butte.
"Restricting trade by imposing tariffs, quotas, or other barriers is exactly the wrong thing to do," he said in prepared remarks.
"Such solutions might temporarily slow job loss in affected industries, but the benefits would be outweighed, typically many times over, by the costs, which would include higher prices for consumers and increased costs for U.S. firms."
Mr. Bernanke said that trade has little net impact on the number of jobs that are available in the U.S. and firms that emphasize exports are among the most dynamic and productive companies in the country.
"Relative to firms that produce strictly for the domestic market, exporters tend to be more technologically sophisticated and to create better jobs," he said.
He noted that exporters pay higher wages and add jobs more rapidly than non-exporters, adding that a significant portion of U.S. international trade is conducted by multinational firms.
"The broad benefits of trade and the associated economic change may come at a cost to some individuals, firms, and communities," he said. "We need to continue to find ways to minimize the pain of dislocation without standing in the way of economic growth and change."