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Last Updated: Friday, 13 February, 2004, 09:51 GMT
Economist caught in US jobs storm
President George W Bush
Mr Bush wants to defuse public anger over jobs
A top White House economic adviser has issued what amounts to a public apology after appearing to praise the movement of US jobs overseas.

Gregory Mankiw, the president's chief economic adviser, said outsourcing of jobs was "probably a plus for the economy in the long run".

The remark angered Democrats, who see unemployment as a key battleground in this year's presidential election.

And President George W Bush was quick to distance himself from the remarks.

In a letter to House of Representatives Speaker Dennis Hastert, Mr Mankiw said he regretted the way his comments had been interpreted.

"My lack of clarity left the wrong impression that I praised the loss of US jobs," Mr Mankiw wrote.

Labour pains

In expressing cautious support for free movement of labour, Mr Mankiw was following a line supported by many economists.

Allowing lower-skilled jobs to move to economies with low labour costs, many feel, will ultimately bring benefits for rich countries, even at the price of some short-term unemployment.

The long-term benefits include cheaper imports and an economic restructuring that is supposed to create higher-value jobs.

Mr Mankiw, professor of economics at Harvard, is the author of a top-selling economics student textbook and is seen as one of the world's highest authorities on macroeconomics.

But such arguments have cut little ice with politicians.

Senate Democratic leader Tom Daschle called the opinion "Alice in Wonderland economics", while Mr Hastert said Mr Mankiw's theory "fails a basic test of real economics".

Candidates for the Democrat nomination for this year's presidential election have also been strident in their condemnation of the White House's stance on jobs.

Opportunity knocks

The Democrats see the issue as their main chance to win support away from Mr Bush.

"Three millions jobs destroyed on their watch and now they want to export more of our jobs overseas," said John Kerry, the leading candidate for the Democrat nomination.

Millions of jobs have been lost during Mr Bush's term in office, most in blue-collar manufacturing, where US firms have struggled to compete internationally.

Some argue that the government has not done enough to ward off the threat of low-cost economies such as China and India, which have benefited from corporate outsourcing in recent years.

Mr Bush has been at pains to show he is conscious of the issue.

"There are people looking for work because jobs have gone overseas," Mr Bush told students at an event in Pennsylvania, one of the key battleground states this year.

"We need to act to make sure there are more jobs at home"

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