Book Review: The Wall and The Bridge
Glenn Hubbard’s new book, “The Wall and The Bridge: Fear and Opportunity in Disruption’s Wake,” is promoted as “an informed argument for an economic policy based on bridges of preparation and adaptation rather than walls of protection and exclusion.”
Hubbard is an economist and a professor of finance and economics at Columbia Business School. He formerly served as chair of the U.S. Council of Economic Advisers in the President George W. Bush Administration, 2001 – 2003.
Hubbard explains the history of economic policy starting with mercantilism, in which the policy goal was to erect trade barriers in order to increase exports and decrease imports. He explains how mercantilism lost favor in the 18th century as the economic ideas of free market theorists like Adam Smith displaced mercantilist ideas. Ultimately, Hubbard explains, mercantilist policies shrink the economic “pie” or wealth of a nation. Thus, trade barriers shrink the possibility that a nation’s people might enjoy “mass flourishing.”
The answer to increasing the wealth of a nation, Hubbard explains, lies in the consumption abilities and living standards of its people. The consumption abilities and living standards of a nation’s people, in turn, lie in competition to provide increasingly better and less expensive products and services—a competition that involves lower costs of production and also production efficiencies. Those production efficiencies often lead to traumatic economic disruption for the people holding jobs in categories that are shrinking or disappearing altogether.
Hubbard argues that the lure of walls in policy are extremely strong because traumatic job disruptions and eliminations are politically difficult to endure. Policymakers feel compelled to make things better for workers who are affected by plant closures, job function obsolescence, and industry shrinkage. He says, “Economists have lost ground in public debate because we haven’t explained what companies and governments can do to support dislocated workers and communities.”
Hubbard then turns to articulating a number of measures that public and private entities can and should take to help workers to retool and retrain in order to fill in-demand job categories. He notes that “even Milton Friedman, in his famous full-throated defense of corporations’ focus on shareholder value maximization, expected profit-maximizing firms to invest in workers’ skills and training to increase the value of employees’ contributions to the firm.” Still, Hubbard’s recommendations extend beyond private enterprise to include government programs.
Overall, Hubbard makes a compelling argument for avoiding walls altogether and for spending public resources on helping displaced workers to make themselves relevant to current economic realities. He explains the benefits and machinations of “bridges of preparation and adaptation” from community college block grants to personal reemployment accounts to wage insurance to tax reforms and more. In his view, the costs of not helping workers to adapt would outweigh the costs of helping them transition into new job categories.
This is a practical defense of free trade that anyone interested in growing the economic “pie” instead of shrinking it—and thus anyone interested in fostering mass flourishing in our nation—should read. Therefore, TAPP recommends it.