alan greenspan : trade policy testimony of mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the committee on finance, us senate, on 4 april 2001. * * * i am pleased to be invited to discuss some of the important issues concerning international trade and the attendant implications for the u. s. economy and the world economy more generally. in doing so, i want to emphasize that i speak for myself and not necessarily for the federal reserve. one of the most impressive and persistent trends of the last several decades is the expansion of international trade. trade across national borders has increased far faster than world gdp. as a consequence, imports of goods and services as a percentage of gross domestic products worldwide, on average, have risen from approximately 12 percent forty years ago to 24 percent today. to most economists, the evidence is impressively persuasive that the dramatic increase in world competition - a consequence of broadening trade flows - has fostered markedly higher standards of living for almost all countries that have participated in cross - border trade. i include most especially the united states. globalization as generally understood involves the increasing interaction of national economic systems. of necessity, these systems are reasonably compatible and, in at least some important respects, market oriented. certainly, market - directed capitalism has become the paradigm for most of the world, as central - planning regimes have fallen into disfavor since their undisputed failures around the world in the four decades following world war ii. globalization, in turn, has been driven importantly by advances in technology. by lowering the costs of gathering information and conducting transactions, new technologies have reduced market frictions and provided significant impetus to the process of broadening world markets. expanding markets, in turn, have both increased competition and rendered many forms of government intervention either ineffective or perverse. the recognition of this prosperity - enhancing sea - change in world markets and, in that context, of the counterproductive consequences of pervasive intervention has led many governments to reduce tariffs and trade barriers and, where necessary, to deregulate markets. these actions themselves have further promoted the very globalization that, interacting with advancing technology, spurred the deregulatory initiatives in the first place. the result of this process has been an advance and diffusion of technical change that has raised living standards in much of the world. the international trading system that evolved has enhanced competition and nurtured what joseph schumpeter a number of decades ago called “

touch on other possible reasons for this decline in upward mobility and relative income, such as changes in the prospects for career advancement that vary by occupation and location. the second observation is the widening gap in economic status and prospects between those with a college degree and those without one. in the 1960s, well over 90 percent of working - age men held a job, and there was very little difference in employment between those with or without a college degree. while the share of college - educated working - age men with a job has fallen from more than 95 percent in 1967 to around 90 percent in 2017, it has plunged for others. ninety - five percent of male high school graduates were working in 1967, but only about 80 percent of them were working as of 2017. among working - age men without a high school diploma, about 90 percent had a job in 1967 versus a bit more than 70 percent in 2017. for women of working age, the trends are less clear, but those without a college degree are also less likely to work today. research presented this morning will discuss some possible 1 / 2 bis central bankers'speeches explanations for the divergence in employment, income, and other economic prospects between college grads and others. the third observation is that the prospect of moving up the economic ladder depends on factors beyond effort and talent, including your family, the neighborhood you grow up in, and the quality of the primary and secondary schools you attend. your chances for attending college are much better if you are raised in a higher - income household, and that advantage has increased substantially since the 1980s. another factor is geography. some research indicates that economic prospects are better for those who grow up in neighborhoods with less income inequality, less concentrated poverty, and better performing schools. finally, across so many dimensions, we continue to see disparities in economic outcomes by race and ethnicity. these issues are crucial. sound public policies can support families and businesses and help more americans reach and remain in the middle class. i look forward to hearing about your discussions over the next two days, and thank you, again, for your contributions. 12 1 see pew research center ( 2016 ), “ what americans say it takes to be middle class, ” fact tank ( washington : prc, may 6 ). 2 see congressional budget office ( 2018 ), the distribution of national income, 2015 ( pdf ) ( washington : cbo, november ). 2 / 2 bis central bankers'speeches