The 'Economics of Dignity' Shows a Right That's Gone Corny
The U.S. is the world’s richest country, and it’s also one of the most open countries to the world’s plenty. There’s an obvious correlation, and it explains why the economy contracted after President Hoover signed the Smoot-Hawley tariff into law in 1930. With it placing record taxes on 20,000 different foreign goods, it was naturally going to slow the division of labor that powers wealth creation.
That’s the good news about Columbia Business School dean Glenn Hubbard’s recent Wall Street Journal interview. While more and more Republicans and conservatives find themselves defending protectionist trade policies that they would be vilifying if President Hillary Clinton were the one proposing them, Hubbard made clear that “I’m for it [free trade]” even though “it” is presently “a minority view.”
So while Hubbard lightly defended free trade, he embraced the increasingly common view held by conservatives that says government has a role when it comes to helping those who have allegedly “been left behind” by free trade. Conservatism has become so corny.
Interesting about Hubbard’s call for more government is that he inadvertently explained why the state is wholly unnecessary as a fix for the economically troubled. As he noted in his call for policy answers to the presumed “left behind” problem, “It used to be that when you lost your job in a city, you packed the kids up in the station wagon and you moved somewhere else.” Exactly.
While job loss is brutal, as is reduced opportunity in one’s chosen city or state, the latter in particular doesn’t mean much in the U.S. It doesn’t because prosperity in the U.S. is never very far from where there’s a lack of it. Even better, Americans are free to migrate to where the opportunity is greatest. There are no borders, no taxes, and no limits to their movement within these fifty states.
That there are no limits calls into question Hubbard’s non sequitur about the supposedly “forgotten.” If so, as in if opportunity doesn’t exist where one lives, move elsewhere. Lest we forget, we Americans descend from people who risked their lives crossing oceans and borders in pursuit of economic freedom. Once here many of these ancestors lacked the English language, not to mention that transportation was rather primitive. If our ancestors could migrate toward opportunity under the most difficult of conditions, we modern Americans can surely buy a ticket on an air-conditioned Greyhound bus.
And if readers think the above sounds elitist, they should think again. What’s elitist is this notion that those lucky enough to be citizens of the most prosperous, opportunity laden country on earth can’t be bothered to freely move to where work options are more robust.
Disappointing about all this is that Hubbard, though a professed free trader, actually suspects that free exchange and technology are factors in the economic struggles of certain Americans. Since he does, Hubbard sees a role for government to “address problems that technological change and globalization have brought right to their [the forgotten heartland] front door.” Eager to divine policies meant to help those in the supposedly abandoned middle, Hubbard recently participated in a trip taken by Columbia MBAs not to China or India, but to depressed Youngstown, OH. It seems he learned the wrong lessons while away.
Indeed, technology and division of labor don’t set cities or towns back. How could they? The former saves us from wasted effort, while the latter enables individual specialization. In that case, Youngstown and other supposedly forgotten locales weren’t harmed by technology and globalization as much as not enough of each plainly set them back.
After that, no city or country ever dies because a factory or business shuts down; rather each dies because the talented people who are always and everywhere the drivers of progress depart. Important here is that talented people don’t want to be where work and technology are stuck in the past. The latter is a statement of the screamingly obvious. And it’s been the American truth for as long as the U.S. has existed. Workers of all race, gender and educational attainment nearly always journey to the most globally connected and technologically advanced cities and states. They do given their desire for remunerative work options. Companies and jobs are an effect of investment, and investment invariably flows to the locales where the potential for profitable innovation is greatest. Technology and globalization don’t set people back as much as they make it possible for more and more people to participate in the progress.
So while a drive through Middletown or Youngstown will no doubt bring out the humanitarian within even the hardest of hearts, it can’t be forgotten that the former is but 50 miles from booming Columbus, OH, while the latter is 150 miles. Prosperity isn’t far away for those willing to lightly mimic their ancestors’ intrepid ways. Except that some aren’t. There's a problem of mobility in the "forgotten" parts of the U.S., and enlightened policy from business school deans won't alter this truth.
That’s why Hubbard’s call for policy fixes like “wage subsidies, direct support for training,” and “re-employment accounts” was so deflating. Can he really believe the answer is more in the way of government solutions after the trillions already spent by governments fighting poverty over the decades? In Hubbard’s case, yes. As he put it, his proposals “would require a government role and, frankly, the taxes to pay for them.” It’s almost not fair.
It’s not fair mainly because we know Hubbard’s limp policy ideas won’t work. If abundant opportunity just a bus ride away isn’t causing people to depart Middletown and Youngstown, the notion that “wage subsidies” will unseat them is just not serious. As for “direct support for training,” oh dear. Actual, for-profit companies will always provide the training necessary for those who want to advance themselves. On the other hand, government training programs will just teach workers – not very well – the skills of the past.
Hubbard’s economics are said to be those of “dignity,” but it’s more realistic to say they’re insulting. They insult the vast majority of Americans working feverishly to advance themselves, and they insult our ancestors who managed despite coming to a much less advanced country. A conservative ideology based on ideas has become trite, and worse, boring. To read Hubbard’s interview is to wonder not just if the person interviewing him fell asleep, but if Hubbard himself had dozed off by interview’s end.