Greenspan's solution for income inequalities

Date: Wednesday, March 21, 2007 1:46 AM

<<<<< JOB DESTRUCTION NEWSLETTER No. 1660 -- 3/21/2007 >>>>>

Alan Greenspan is worried about income inequalities in the U.S., but before
you jump up with joy that Greenspan is finally speaking out against the
skyrocketing salaries of CEOs, hold your celebrations for another time!
Greenspan's big worry is that "skilled workers" get paid way too much
compared to the rest of our population. Judging by Greenspan's comments,
when he talks about "skilled workers" he isn't talking about CEOs and other
assorted corporate fat-cats that earn multi-million dollar salaries -- he
is probably talking about you.

Give Greenspan credit for one thing -- he not only identifies our national
problems he offers solutions! Of course if you happen to be a skilled
worker, Greenspan's solution won't sound too appealing. The hero of the
corporatocrats and plutocrats wants to distribute your income into the
hands of needy billionaires by using H-1B to knock you off your haughty
middle-class pedestal. Clever, huh?

"Our skilled wages are higher than anywhere in the world," he said.
"If we open up a significant window for skilled workers, that
would suppress the skilled-wage level and end the concentration
of income."

Greenspan sure understands how H-1B works. Almost every politician says
that H-1Bs aren't cheaper because they get paid prevailing wages. Good ol'
Greenspan cuts right through all the B.S. and gives the honest reason why
employers love H-1Bs -- THEY ARE CHEAPER! He even explains why they are
cheaper -- it's due to an affect that almost no politician, reporter, or
union leader seems to acknowledge -- the law of supply and demand in the
labor market.

The former Fed chief said that increasing the number of immigrants
with sought-after skills would increase the labor supply of these
workers in the United States and hold down the wage gains of all
workers with these skills.

For those of you who are activists who speak to the media, politicians, or
pundits, I highly recommend quoting Alan Greenspan whenever somebody says
that H-1B isn't used to cut salaries.

Materials included

http://www.boston.com/business/globe/articles/2007/03/14/greenspan_let_more_skilled_immigrants_in/
Greenspan: Let more skilled immigrants in

http://www.usnews.com/usnews/biztech/capitalcommerce/070316/greenspans_inequality_fix_free_1.htm
Greenspan's Inequality Fix: Free Trade for Lawyers and Doctors

http://corner.nationalreview.com/post/?q=ZjM2ZDk1NGFjNTg5YjNiNzljOGE3YTM1NzU5MWM2M2Q=
The Dismal Science

http://www.chippewa.com/articles/2007/03/14/news/business/biz980h.txt
Greenspan talks and the markets don't tumble

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.boston.com/business/globe/articles/2007/03/14/greenspan_let_more_skilled_immigrants_in/

Greenspan: Let more skilled immigrants in
By Bloomberg News | March 14, 2007

WASHINGTON -- Former Federal Reserve chairman Alan Greenspan said allowing
more skilled immigrants to work in the United States would help keep the
income gap from widening.

Inequality of incomes is the "critical area where capitalist systems are
most vulnerable," Greenspan said yesterday in Washington at a conference on
maintaining the competitiveness of US capital markets convened by Treasury
Secretary Henry Paulson. "You cannot have a system that we have unless the
people who participate in it believe it is just."

Allowing more skilled workers into the country would bring down the
salaries of top earners in the United States, easing tensions over the
mounting wage gap, Greenspan said.

"Our skilled wages are higher than anywhere in the world," he said. "If we
open up a significant window for skilled workers, that would suppress the
skilled-wage level and end the concentration of income."

Income inequality has risen in the past three decades.

Kathleen Newland, director of the Migration Policy Institute, a Washington
think tank, said she was skeptical of Greenspan's proposal. "In theory,
increased skilled immigration should help contain wage rises at higher
levels, but there is little empirical evidence," she said. "If you want to
reduce political concern, it would be better to deal with the problem by
helping to raise the wages of the lowest earners, by helping to improve
productivity and raising the minimum wage."

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.usnews.com/usnews/biztech/capitalcommerce/070316/greenspans_inequality_fix_free_1.htm

Greenspan's Inequality Fix: Free Trade for Lawyers and Doctors

Tell you one thing, Alan Greenspan is way more fun now that he's no longer
helming the Federal Reserve. One day he's telling rapt audiences that a
recession is possible -- helping roil global financial markets in the
process -- the next day he's actually giving odds. (About 33 percent, if
you're keeping track.)

Then there are these comments on solving perceived income inequality
offered up by The Maestro at the Treasury Department's competitiveness
conference earlier this week. Greenspan's solution to America's wage
disparity is thus: "Our skilled wages are higher than anywhere in the
world. If we open up a significant window for skilled workers, that would
suppress the skilled-wage level and end the concentration of income."

Now this may seem like a wacky solution, but if you are a free trader, it
makes sense. After all, less-skilled and less-educated workers, primarily
in the manufacturing industry, have been subjected to direct competition
with lower-paid workers overseas. In return, the United States has received
less-expensive goods at big box stores like Wal-Mart and Costco.
(Eventually, of course, displaced workers should be retrained for
higher-value-added work.)

Likewise, liberalizing trade for professional services -- such as medicine
and law -- might not only suppress the dramatic income increases in those
professions, as Greenspan suggests, but also make them more affordable. As
economist Dean Baker, co-director of the Center for Economic and Policy
Research, writes in The Conservative Nanny State:

"Trade pacts have done little or nothing to remove the extensive licensing
and professional barriers that prevent foreign doctors, lawyers,
economists, and journalists from competing on an equal footing with their
counterparts in the United States ... If U.S. trade negotiators approached
the highly paid professions in the same way they approached the auto
industry ... they would also be asking the trade negotiators from Mexico,
India, or China what obstacles prevent them from sending hundreds of
thousands of highly skilled professionals to the United States ...
In fact, the exact opposite happens. In 1997, Congress tightened the
licensing rules for foreign doctors entering the country because of
concerns by the American Medical Association and other doctors'
organizations that the inflow of foreign doctors was driving down their
salaries. As a result, the number of foreign medical residents allowed to
enter the country each year was cut in half.
... If free trade in physicians brought doctors' salaries down to European
levels, the savings would be close to $100,000 per doctor, approximately
$80 billion a year. This is 10 times as large as standard estimates of the
gains from NAFTA."
And just think of the productivity benefits to the American economy if all
those generations of future lawyers instead became engineers or industrial
designers or some such. Of course, not everyone is thrilled with this
possible solution. Here is what Mark Krikorian, executive director of the
Center for Immigration Studies had to say about Greenspan's solution in The
Corner, National Review magazine's group blog today:

"So, what's [Greenspan's] solution? Flood the skilled labor market with
immigrants! You see, since immigration lowers wages, massive importation of
skilled workers would drive down their wages and, presto, no more income
gap! In his words ... Anyone want to run for office on that platform?
Anyone? Anyone? Instead, how about reducing inequality by cutting
immigration overall, so we stop flooding the low-skilled labor market, and
let blue-collar wages increase? Think that would be a better way to shore
up political support for capitalism among the poor?"

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://corner.nationalreview.com/post/?q=ZjM2ZDk1NGFjNTg5YjNiNzljOGE3YTM1NzU5MWM2M2Q=

The Dismal Science [Mark Krikorian]

Now here's something only an economist could come up with. Alan Greenspan
said at a conference this week that high levels of economic inequality are
political problem, and he's right: "You cannot have a system that we have
unless the people who participate in it believe it is just." Too much
concentration of income at the top undermines political support for the
market and thus strengthens the hand of the socialists -- er, the
Democrats.

So, what's his solution? Flood the skilled labor market with immigrants!
You see, since immigration lowers wages, massive importation of skilled
workers would drive down their wages and, presto, no more income gap! In
his words: "Our skilled wages are higher than anywhere in the world. If we
open up a significant window for skilled workers, that would suppress the
skilled-wage level and end the concentration of income."

Anyone want to run for office on that platform? Anyone? Anyone? Instead,
how about reducing inequality by cutting immigration overall, so we stop
flooding the low-skilled labor market, and let blue-collar wages increase?
Think that would be a better way to shore up political support for
capitalism among the poor?

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.chippewa.com/articles/2007/03/14/news/business/biz980h.txt

WEDNESDAY MARCH 21, 2007
Last modified: Wednesday, March 14, 2007 12:25 PM CDT

Greenspan talks and the markets don't tumble

By MARTIN CRUTSINGER / AP Economics Writer

WASHINGTON Alan Greenspan had a lot to say Tuesday about financial
market turmoil, but by confining his observations to past crises, he made
sure he didn't roil markets like he did two weeks ago.

Greenspan was one of a galaxy of financial superstars appearing at a
Treasury Department conference to discuss whether the regulations passed in
the wake of the 2000 market scandals had gone too far.

In his comments, Greenspan stressed the need to make sure that whatever was
done did not take away market flexibility.

He said it was this flexibility that allowed the economy to withstand the
big shocks of the 1987 market crash and the turbulence that occurred
following the terrorist attacks in Sept. 11, 2001.

``We went through the 1987 stock market crash ... and GDP never went
down,'' Greenspan said, referring to the huge plunge in stock values that
occurred in October 1987 just weeks after Greenspan had taken over as
chairman at the Fed.

He said the market problems from the 2001 attacks in New York were over in
a matter of weeks because of the increased flexibility markets have now.
``Thirty years ago, that never would have happened,'' he said.

Two weeks ago, Greenspan's comments about the possibility of a recession
occurring at the end of this year contributed to a 416-point fall in the
Dow Jones industrial average.

The Dow had another big losing day on Tuesday, falling by 242.66 points,
the second biggest drop of the year. But this decline was not driven by
anything Greenspan said but rather investors worries about the subprime
mortgage market.

During his appearance Tuesday, Greenspan talked about past market crises
but not the most recent turmoil and he made no forecasts about the
possibility of a recession.

Greenspan did put forward a proposal on how to reduce the growing
inequality of incomes in the United States admit more skilled
immigrants into the country.

The former Fed chief said that increasing the number of immigrants with
sought-after skills would increase the labor supply of these workers in the
United States and hold down the wage gains of all workers with these
skills.

In that way, Greenspan said, the gap between skilled and unskilled workers
would be lowered. He said it was critical to find ways to address growing
income inequality in the United States.

Income inequality ``is where the capitalist system is most vulnerable,''
Greenspan said. ``You can't have the capitalist system if an increasing
number of people think it is unjust.''

Newsletter Homepage:
http://www.JobDestruction.com/shameh1b/JobDestructionNews.htm

Support this Newsletter and www.JobDestruction.com by donating:
www.zazona.com/Donations.htm

To Be removed from this mailing list, reply to this
email with UNSUbSCRIBE in the subject window

Back to archives