By James Pethokoukis and R. Glenn Hubbard

Over the past half century,
globalization and automation have pushed America’s GDP higher and higher, but
the gains haven’t been distributed equally. Economic disruption has left behind
manufacturing communities in the rust belt, leading some politicians on the
right to question open, free market economics. We should build walls — physical
and metaphorical — to protect American jobs, they say. On a recent “Political
Economy” episode I was joined by Glenn Hubbard, who argues that we should build
economic bridges rather than walls.

Glenn is a nonresident senior fellow at the American Enterprise Institute. From 2001 until 2003, he was chairman of the US Council of Economic Advisers. He is also Dean Emeritus of Columbia Business School and author of “The Wall and the Bridge: Fear and Opportunity in Disruption’s Wake,” released in January.

Below is an abbreviated transcript of our conversation. You can read our full discussion here. You can also subscribe to my podcast on Apple Podcasts or Stitcher, or download the podcast on Ricochet.

Pethokoukis: What does it mean to have a bridge-based approach to
economics as opposed to a wall-based approach?

Hubbard: The things we love about our
economy — growth, innovism, dynamism — are like the head side of a coin. The
tail of that is disruption. You can’t have one without the other. And
disruption brings a demand for helping people adapt. And there’s two ways to do
it. One is walls: literal or, more likely in today’s world, figurative ideas
from politicians. “Let’s protect you from this,” or “Let’s restore you to the
past.” Another is bridges to what is and can be. Franklin Roosevelt’s GI Bill
is a classic example of a bridge. Policy falls into those two camps. And the
book is really exactly about that.

What does wall building look like on the left and on the
right?

Let’s
start with the right. Walls could be physical, like at the Texas-Mexican border.
They could be anti-immigrant. They could be anti-trade. They could be slowing
down technology’s effect on disruption. All of those really slow down all the
possibilities for our economy and the very people they claim to protect. The
left is no better. So the left has walls of protection saying, “You know what,
I’m just going to pension you off. You don’t need to be connected to the
economy from work.”

The
book I write is a love letter to Adam Smith across the centuries. And Smith and
other Enlightenment thinkers had a view that being connected to the economy,
participating in the economy, is an important part of dignity. The left misses
that and the right forgets it, too.

What do proponents of building walls get wrong?

I
think the wall proponents — physical or metaphorical — have a view that protection
is really the goal. I don’t know about you, but I don’t want to be pensioned
off. I wouldn’t want somebody to tell me, “You have nothing of value to offer,
so I’ll simply offer you a check to live.” That’s not very meaningful. On the
other hand, it’s not very meaningful if nobody helps invest in me so that I can
participate in the modern economy.

Wall
builders are about closed economies instead of open ones. And they’re about
protecting firms and industries instead of people and places. And so I think
it’s fundamentally wrong thinking. And the part of the problem is that the very
people that wall builders claim they’re trying to protect will be the losers of
the walls, not the openness champions. But openness champions, economists,
business people, think tank folks, too, need to step up and explain this and
explain what the value of openness is rather than just running away from it.

Has America become more risk-averse and fond of building walls over the decades?

I think there’s a good chance of that. You certainly see it in declines in geographic mobility, of people moving to opportunity. And the way I would explain it is that for too long economic elites and policy elites have forgotten about disruption. The structural changes that have brought us growth miracles since the Second World War have also brought phenomenal destruction of some kinds of jobs in some places. And we’re simply not paying attention to it. That feeds the demand for walls and feeds the demand for protection. And I think it’s time for business people and economists to realize social support for the economic system isn’t given. When Adam Smith talked about competition, that was 1776 and it was a simpler time. But if he were here today, I think he would also talk about the ability to compete. We once invested in making people able to compete. I think a lot of Americans are skeptical today that we still care.

I’ve heard this argument that if you’re thinking about the
economic good of a nation, you can’t measure it in consumption — how much stuff
we can buy, how many services we can consume — but rather you should measure it
in something called “good jobs.” What do you think of that?

We
have to remember that Smith wrote “The Wealth of Nations” in response to
mercantilism, which is a warmed-over version of that kind of argument that we
need to protect certain kinds of jobs and industries and certain kinds of trade
patterns. Smith believed (and virtually any serious economist since has
believed) that the consumption of average people is the standard by which an
economy gets measured, not the mercantilist reverence for guilds or for the
sovereign.

We
want an economy that’s dynamic. Many jobs that are great today didn’t even
exist 30 or 40 years ago. So if we’d had a goal 30 or 40 years ago to protect
current jobs against new jobs, we wouldn’t even have them. And it raises the
classic question: Who gets to decide which job is a good job, or which wage is
a good wage, or which condition is a good condition? So I think it’s wrongheaded.
A better alternative to that well-meaning goal is to give people and communities
the skills they need — à la what we used to do in the land-grant colleges or
the GI bill — to succeed today. That is better than protecting jobs.

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