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Have I Got a Bridge to Sell You: The Limitations of Econ 101

The Wall and the Bridge:
Fear and Opportunity in Disruption’s Wake
by Glenn Hubbard
Yale University Press, 2022, 248 pages

On what surely was a brisk fall day in November 2017, two professors from the Columbia Business School crossed the his­toric Mill Creek Park Bridge in Youngstown, Ohio, and “remarked about what a useful and attractive connector it was for the city.” They had other bridges on their mind as they walked, though: “economic bridges for Youngstown and similar communities,” the professors mused, might “carry them to renewed opportunity.” The metaphor made such an impression that one of them has now written a book about it.

“Like the one over Mill Creek Park, bridges can take cities like Youngstown to new opportunities while remaining connected to the past,” expounds Professor Glenn Hubbard in The Wall and the Bridge:

A bridge has to have a foundation and a path for crossing it. Not everyone needs the same bridge, but the bridge is a common service and therefore analogous to “we are all in this together.” Figuring out how to build the bridges and get people across them, not a “Build the Wall” soundbite, is our subject here.

Yes, the metaphor becomes that tiresome that quickly. No, dragging it out to book length does not help.

Hubbard warns that “the lack of bridges continues to fan the flames of populist calls for walls.” He celebrates that “bridges can breathe life into the spread of prosperity and mass flourishing that Adam Smith imagined, and avoid walls that can snuff out gains from change.” He observes that, “while bridges push the economic frontier, their flip side actually tears down walls.” The phrase, “walls risk throwing out, not slimming down, the wealth-of-the-nation baby with the disruption bath water,” becomes no clearer when repeated 122 pages later.

Perhaps poking fun at bad writing is pedantic and uncharitable, but at some point the constant mixing and misuse of a muddled metaphor betrays muddled thinking. Any civilization requires both walls and bridges. Far from being mutually exclusive, they address different chal­lenges and are often complementary. The idea that one must choose between them; that one is always right and the other always wrong; and that “the antidote or counterargument to a wall is a bridge,” in Hubbard’s dichotomous formulation, reeks of fundamentalism rather than reasoned analysis.

And indeed, rather than constructing and applying a rigorous frame­work to contemporary problems in economics, Hubbard’s analytical method resembles that of a religious fundamentalist arguing for the infallibility of a prophet named Adam Smith and a holy scripture called Econ 101. No updating or elaboration is required; no counterexample can exist. Those policies that Hubbard likes are bridges, and happen to be precisely what his foundational texts prescribe, even if he can point to no actual quotations. Those policies he does not like are walls, and economic logic compels their rejection, even if they have long track records of success, which shall not be addressed. One finishes the book unsure how to tell a policy wall from a bridge and suspicious that Hubbard himself is at least as confused. Unsurprisingly, then, The Wall and the Bridge fails as a work of economic policy.

As a depiction of the modern economist’s struggle and failure to overcome the limitations of his profession, however, The Wall and the Bridge may be of significant literary value. Hubbard is not only the book’s author, but also its true subject. “This book follows my own journey of noticing the problems and assessing walls and bridges in the light of classical and recent economics,” he explains in the introduction. This journey begins in 2001, when Hubbard has a meeting with Presi­dent George W. Bush about steel tariffs. Then, in the aftermath of President Donald Trump’s election, he takes two groups of business school students on brief junkets to Youngstown, during which “they noticed—they made the connection between economic shifts and the lives of individuals and a community” (emphasis, and the implication that one needs a Youngstown junket to discover this connection, in the original). No one said it would be a long journey.

The intellectual journey, as it were, does not traverse much more ground. In Hubbard’s view, “economics is not the problem and offers many solutions. Such solutions are familiar in spirit both to Smith and the Econ 101 course you may have taken in college.” Economists have “special ways of thinking about most things,” in contrast to the “real people” he repeatedly offers in juxtaposition, often with scare quotes. Rather than needing to revise any principles, “the fundamental problem is that we economists have let the public debate drift,” with unwise policies gaining ground “because of a failure of economists to fully engage.”

If Hubbard has changed his own mind even once in the past three decades, or can think of any problem where “Econ 101” does not have the solution, he declines to mention it. To the contrary, recalling his failure at the journey’s start to persuade President George W. Bush against imposing steel tariffs, he reflects, “It hit me only later: I had used good suggestions from Econ 101, but had I used all the good suggestions? No, I hadn’t. And that’s what this book is about.”

On Bridges

More specifically, the book is about how “economists, since the dawn of their discipline, have emphasized bridges, helping individuals prepare for change and celebrating the economic gains from change and disruption.” Adam Smith, according to Hubbard, argued that “mass prosperity and flourishing required bridges—paths for connection and reconnection to the dynamic economy—not walls.”

In Hubbard’s parlance, bridges of “connection” (or, sometimes, “preparation”) are training programs—he proposes a $20 billion per year federal block grant to boost community college funding. Bridges of “reconnection” are social insurance programs to support workers during said preparation. Suggestions here include “personal reemployment accounts” (as proposed by President George W. Bush), wage insurance, Earned Income Tax Credit expansion, flexible block grants to distressed communities, and health care tax reform to promote insurance portability. “As Smith desired,” apparently, “[Econ 101] has answers.”

Of course, Smith was not a “bridges” man by any meaningful defini­tion of the term. Hubbard provides a useful corrective to the free market caricature of Smith, highlighting his work as a moral philosopher and his focus on raising the common man’s living standard. But Smith had no concept of the modern labor market. Hubbard allows that he must make “bridge-policy twist[s]” to contort The Wealth of Nations into a wall-and-bridge framework, but the moves are less twists and more just saying something else entirely. For instance, Smith did not worry about unemployment from trade shocks, writing:

To the greater part of manufactures besides, it has already been observed, there are other collateral manufactures of so similar a nature, that a workman can easily transfer his industry from one of them to another. The greater part of such workmen too are occasionally employed in country labour. The stock which employed them in a particular manufacture before, will still remain in the country to employ an equal number of people in some other way (vol. I, bk. IV, ch. II).

Nor did Smith offer a brief for public investment in job training. His argument for public education was not that it would prepare citizens for productive employment but, quite the contrary, that the specialization of industrial employment required so little knowledge that the education necessary to a virtuous society would be pursued only if provided via public program. He wrote:

In the progress of the division of labour, the employment of the far greater part of those who live by labour, that is, of the great body of the people, comes to be confined to a few very simple operations; frequently to one or two. . . . His dexterity at his own particular trade seems, in this manner, to be acquired at the expence of his intellectual, social, and martial virtues. But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it (vol. II, bk. V, ch. I).

Econ 101’s support for Hubbard’s agenda is no stronger. He wishes it were, and hopes that saying so with enough conclusory force will persuade readers. “Econ 101 suggests a focus on skill development and more modern social insurance,” he insists at one point; later, “these steps of preparation (developing skills) and reconnection (redesigning social insurance) are also in Econ 101 and have a long lineage.” But how could this be true? Econ 101 provides tools for analyzing such concepts; it does not make policy recommendations. Skill development is “in” Econ 101 the same way that aggressive investment in new manufacturing technology is “in” Econ 101. Either could spur productivity growth and new jobs at high wages. Then again, either could fail, or generate returns insufficient to justify the cost. The outcome would depend on any number of factors, including the capacity of policymakers to design and implement sound policy. Expansive social insurance is “in” Econ 101, but so are the higher taxes needed to fund it.

To be clear, skill development and social insurance are good ideas on their own merits. What’s fascinating is Hubbard’s instinctive desire to claim the support of an introductory college course and an eighteenth-century philosopher, as if he must have their permission before proceed­ing, and as if his readers will surely be persuaded by naked appeals to such feeble authority. This makes sense only in reverse: the ideology of Adam Smith and Econ 101 are not validating the policies; the policies are validating the ideology.

This impression is confirmed by the low caliber of the policies them­selves. Most of Hubbard’s bridges fall under the heading of “reconnec­tion” or social insurance and “offer only temporary support, aimed at bringing people to the point where they can flourish on their own.” They hinge on Hubbard’s ideas for “preparation” to facilitate that flourishing. But he only emphasizes one such idea: give community colleges more money. Could that possibly be the bold bridge-building agenda that has been missing in recent decades and that will put America back on the path to mass flourishing? It seems rather more pretextual, aimed not at rescuing the embattled American worker so much as the embattled American economist eager to prove that his beliefs remain relevant.

Hubbard’s bridge pitch is, to be blunt, entirely predictable and unoriginal. So much so that, three years before The Wall and the Bridge’s publication, this reviewer described and critiqued it precisely:

The standard response is that this openness must be paired with a renewed commitment to helping those left behind, as if only a lack of focus and resources has prevented government programs from transforming people’s prospects. Invariably, the suggested solution is education. . . .

The vision is supposed to be an inspiring one, in which people are lifted upward to greater opportunity. Its real implications are less exalted: if the economy no longer works for the average worker, it is he who needs to transform into something it likes better. If government programs could change human capabilities to match whatever the market might compensate highly, public policy would become rather easy. But the insufficiency of this as a response to the nation’s challenges recalls the joke about the economist’s solution to finding himself shipwrecked among boxes of canned goods: “First, assume a can opener”. . . .

Without education as a deus ex machina, a commitment to openness turns out to mean little more than merging together and doubling down on existing programs of growth and redistribution, offering a veritable buffet of warmed-over policies—all served with a heaping side of self-righteousness. “I’m for global­ization and a strong safety net” seems likely to become for the next generation of insulated but determinedly respectable pro­fessionals what “I’m socially liberal and fiscally conservative” was for the last.

On Walls

For all its weaknesses, Hubbard’s advocacy for bridges at least has the benefit of being basically correct. A well-functioning economy does need public investment in workforce training; sound policy should entail both skill development and social insurance; and government must get involved. That this follows from neither Adam Smith nor Econ 101, and indeed underscores the limitations of a fundamentalist ap­proach to eco­nomics, is Hubbard’s problem more so than the reader’s.

The same cannot be said for his discussion of walls. Hubbard has a clear zero-tolerance policy for this alternative structure, and no com­punction about disparaging anyone who might speak favorably of one. “Erecting even a small wall in the interest of social protection is short-sighted,” he warns. Mere arguments for walls are “dangerously wrong because they distract us from the hard work necessary to build bridges to the future.” But what is a wall?

Among the policies that constitute walls in Hubbard’s telling are “steel tariffs,” “transfer payments,” “quotas on Japanese cars,” “special-interest tinkering,” “change [to] corporate governance,” “requiring an innovative firm or entrepreneur to share with its own stakeholders,” “protection . . . of workers and communities at the expense of suppliers of business capital,” and “conventional taxes on competitive businesses.” On the other hand, he launches his case against walls with the story of Massachusetts’s response to the decline of its textiles industry: when “leaders worked to funnel capital into existing and new firms” in “a tiny but promising electronics sector.” Yet far from courting economic ruin, “public-private partnerships and stewardship by business leaders elevat­ed the electronics industry to a critical mass.” Hubbard applauds this as a “bridge-based approach.”

One could occupy a rainy afternoon with this game of “wall or bridge?” For instance, “governments can fund and facilitate a great deal of place-based bridges: business incubators, customized preparation for jobs by community colleges, and extension services for smaller manufacturers.” But “larger-scale state tinkering through subsidies” is a wall. China’s practice of “state ownership in some industries” receives approval as consistent with an “‘inside-out’ approach, to assist people in preparing for and reconnecting to the dynamic economy.” But Airbus, “born of European industrial policy” and soon “winning big globally” is a cautionary tale due to low profitability. “Guardrails to minimize the adverse effects from technological change and globalization” are not walls, and insufficient focus on them is an example of “elites’ neglect.”

One wall is notable for its absence from the analysis: an actual wall. “A wall can be physical (from Hadrian’s ancient structure in Britain to President Donald Trump’s border barrier), but it is generally a metaphor for barriers against change—like changes in technology or global mar­kets,” explains Hubbard, in hopes of just leaving the matter there. But his efforts at avoiding any mention of the I-word devolve toward farce. “President Donald Trump famously called on walls—both physical and metaphorical—to protect the nation’s workers against disruptive struc­tural changes brought about by [wait for it . . . ] trade or technology,” he tries at one point. The “Build the Wall” slogan, he suggests at another, calls for “barriers to trade, to automation and technological advance.” Not once does he address immigration.

How did this happen? It seems unlikely that Hubbard forgot about immigration absentmindedly, or that no one in the editorial process noticed and mentioned it. A discussion must have occurred, in which the participants concluded that the glaring omission would be less embarrassing than trying to incorporate the issue coherently. They may have been right. Hubbard’s fundamentalist framework, in which more dyna­mism is always better and impediments are always self-defeating, implies rejection of borders entirely. On one hand, adopting that position would badly undermine the framework’s credibility. On the other hand, offering borders as an exception to the no-walls thesis would raise some rather thorny questions: Why is this an exception? And why can’t other walls be exceptions too, once tradeoffs are acknowledged and values beyond short-run dynamism earn consideration? The Wall and the Bridge demurs.

When Hubbard does try to confront an awkward example, the result is not pretty. It is rather inconvenient for open-economy enthusiasts that the United States prospered for nearly two centuries behind some of the world’s most aggressively protectionist walls. Here is how Hubbard tells the story:

The new federal government in 1789 established a tariff both to protect newly starting domestic industries and to generate revenue for itself. After the Civil War, the government relied heavily on tariffs to protect domestic industries, ranging from iron and steel to wool.

He then offers what may be the book’s most bizarre argument:

At that time, these were industries of the present and future that were nascent in the United States compared to the United Kingdom, the world’s nineteenth-century industrial behemoth. So the tariffs were not protecting fading industries.

It’s hard to know what to make of this. Is Hubbard saying that walls are okay if they protect “industries of the present and future” rather than ones that are “fading”? That’s impossible to square with his warn­ing that “a little bit of special-interest tinkering is hard to contain. If policy­makers assist the automobile industry and its workers, why not the steel industry, or textiles, or even computer chips?” It’s also impossible to square with his definition of trade-barrier “walls” as those that “protect particular industries or products to promote domestic production and employment.” What would Adam Smith do?

Smith would probably prefer to talk about wine and wool, as would Hubbard. And that is the book’s ultimate tragedy. The Wall and the Bridge steps squarely into one of the most lively and important debates roiling economic policy today. But that debate is not the one classical economists were having about mercantilism hundreds of years ago. Yes, Smith had an important insight in the 1700s: that, as Hubbard says, it is “better to trade good Scottish wool for a French claret.” And yes, David Ricardo was right in the 1800s to show that, again in Hubbard’s words, with “specialization in Portugal in wine and in England in cloth, then trading could improve the lot of both.” But even in those days, policymakers like Alexander Hamilton and Henry Clay recognized that such logic had its limits, and America is grateful that they did.

Today’s debates concern how comparative advantage is created, rather than discovered, for industries where a nation’s natural endowments do not dictate its competitive position. Serious analysts consider the importance of diversification, scale, and spillovers alongside simple specialization. They grapple with the implications of enormous cross-border flows of labor, capital, and goods that allow the emergence of massive, long-term imbalances. They at least acknowledge that unprecedented openness has coincided not with the predicted economic gains but rather a stalling of investment and growth. The Wall and the Bridge does not tread here. If Adam Smith and Econ 101 are silent about such things, it seems Glenn Hubbard will be too.

The Mill Creek Park Bridge in Youngstown is known locally by another name: the Cinderella Bridge. “With its lacy arches and soaring spires,” says park management, the bridge “has provided romantic imagery for countless artists,” in keeping with the park founder’s wishes “to create fanciful park entrances.” Far from being the useful connector for the city described by Hubbard, it is one of several spans across a narrow creek in the middle of a park, accessible only by a winding back road. Rather than facilitate the daily commerce of the city’s people, it exists mainly for the aesthetic enjoyment of passing visitors, like a pro­fessor from New York. Perhaps the metaphor’s not so bad after all.

This article originally appeared in American Affairs Volume V, Number 4 (Winter 2021): 53–61.