‘Reskilling’ and ‘opportunity policy’

‘Reskilling’ and ‘opportunity policy’

Patrick Lynch

In the late 19th and early 20th century, it was commonplace for newspapers in the US and Europe to hire what were known as “stringer” journalists who would work on commission to produce stories about the lives of foreigners in distant la-nds. They might go to Africa or the West Indies, or describe cowboys and Native American tribes on the American frontier. So-me, like the renowned G-erman writer Theodor F-ontane, traveled all over Europe producing colu-mns for the people back home. As literacy and pr-int media grew, so did the demand for exotic stories.
Glenn Hubbard, former chairman of the Council of Economic Advisors (2001-2003) and now a professor at Columbia University, has in some ways copied this older style. Hubbard’s book, The Wall and the Bridge, is a sort of mish-mash of superficial economic history and recycled public policy ideas. But at its core, this book is a form of stringer journalism about the far-off and exotic land of Youngstown, Ohio.
Hubbard bravely takes a group of MBA students into the wild and savage-filled lands west of New York City to encounter that creature all but extinct on the civilized streets of Manhattan or Brooklyn: the Trump voter. His is not the drama-filled tale of JD Vance, nor the fictional account of Claas Relotius. Instead, Hubbard tries, unsuccessfully in this reviewer’s mind, to craft economic policy prescriptions based on his “experience” visiting the once-thriving steel manufacturing city. Hubbard wants to use the example of Youngstown to help salvage the prestige and credibility of East Coast intellectual elites like himself, that was lost with the rise of populism in the US and elsewhere.
What this method reveals about Hubbard and his ilk may be far more interesting than the policies he’s proposing. Hubbard first suggests offering job retraining to American manufacturing workers displaced by growing globalization. He awkwardly labels this “reskilling” and “opportunity policy.” None of this is particularly original except for his tired use of awkward terms from public policy. Politicians have been discussing job retraining and education since the 1980s and little of it has translated into widespread success in the American Rust Belt. Furthermore, it’s obviously self-serving for a college professor to trumpet education as the solution to this problem (let’s help these workers by throwing more money at my profession!). On several occasions, Hub-bard mentions time spent at seminars at Youngstown State University and speaks highly of the institution. Does he seriously believe “reskilling” steel workers to become psychologists a-nd Women’s Studies majors to be a solution? Additio-nally, such education programs can only succeed if those prescribing the “resk-illing” can accurately predict which jobs will be go-od and secure, as well as guarantee that workers in p-laces like Youngstown will be able to get them locally.
Second, he proposes expanding “social insurance.” Anyone familiar with Washington-speak, and skeptical of government programs, can understand what Hubbard is proposing here. He’s arguing for the creation of a new welfare program for Trump-landia to help buy them off. Setting aside for a moment the fiscal implications of such a proposal during an era of high inflation, exploding government spending and debt, it is fanciful to imagine that we can arrest support for populism simply by writing checks to rural America. This proposal grossly oversimplifies what’s going on in areas where President Trump won large majorities in 2016 and 2020.
By way of justifying this approach, Hubbard offers a profoundly superficial review of the work of Adam Smith. He correctly notes that among Smith’s more prominent targets in his writing were the mercantilists who supported protective tariffs and the British colonial system, based on a flawed understanding of the nature of national wealth and prosperity. He also accurately describes Smith’s views on the vital role some government policies, such as rule of law, can play in maintaining the market order.
But from there, things go horribly wrong. Hubbard claims that Smith was writing in response to Hume, which is completely wrong—if anything Smith was replying to Mandeville in much of his work. Hubbard proceeds to discuss “neoliberalism,” a term he seems to use in much the same way as those on the modern left, to describe a heartless anarcho-capitalist system. This “neo-liberal” night watchman state would be completely indifferent to the needs of those displaced by the creative destruction. Hubbard compares two “neoliberals,” Hayek and Friedman, to the more nuanced Smith who, for example, supported universal education and public goods such as national defense. Smith’s broader understanding of a widely-shared prosperity, he claims, is the only reasonable foundation for a free market economy in a representative political system.
Smith was completely silent on the issue of social welfare or “reskilling” and had significant reservations about manufacturing and industrial work. Hayek in fact supported a limited safety net in The Constitution of Liberty for the exact reason that Hubbard cites. Of course, knowing that that would have involved actually reading more of Hayek, rather than casually labeling and caricaturing him. At the very least, Hubbard is playing fast and loose with both thinkers.
Making matters worse, Hubbard appears to have little understanding of Adam Smith the complete scholar. One really can’t understand the Wealth of Nations without tackling Theory of Moral Sentiments and Hubbard in particular could have benefited from spending some time with Smith’s moral theory. Smith was first and foremost a moral philosopher, not merely a cold, calculating economist. Smith’s complex explanation of how human social order evolves and functions would take pages to flesh out, but at its core, the argument is based on what Smith called sympathy, what today we’d refer to as empathy. Sympathy, for Smith, helps explain why we can rein in self-interest and connect with individuals outside of our kinship networks and local communities. Sympathy helps curb the external manifestations of self-interest in our social and personal interactions. We listen and try to understand the plight and position of others when we are not interacting with them in market settings.
Hubbard claims that he and his cadre of MBA students sat down and listened to the stories and concerns of displaced steel workers in Youngstown. But when we consider how Hubbard approaches the “problem” of populism among the people of Youngstown, all we see are Hubbard’s own biases and preferences as a neoclassical economist. We don’t see much Smithian sympathy.
Modern economics, with its reliance on simplified models of human choice, struggles to understand why people don’t simply leave Youngstown, or other areas in which support for populism has been robust. Economists like to view the world strictly in terms of mechanical choices and decisions based on material gains and costs. That perspective provides the kinds of “solutions” that Hubbard is proposing here. He does not tell himself that, “these people are making subjective evaluations to stay in Youngstown and we should try to understand why they want to stay and support folks like Trump.” Instead, he reasons that “these people are materially constrained to make bad choices because they can’t afford to make better decisions.” His solution is to lower the costs of leaving or “reskilling” in their decision-making to allow them to make the “correct” choice.
But is that the solution to the problem, if there really is a problem here? People understand they are materially worse off but choose to stay. Hubbard and his students listened to the people of Youngstown as neoclassical economists. The biases of their training did not allow them to think about their support for populism through a lens of subjective decision making rather than purely materialistic concerns.
A Smithian sympathizer would have gone beyond the economic lens of Hubbard to consider non-pecuniary factors in understanding the people he met. The job losses that Hubbard is addressing here did not just happen in the past few years. Plant closures and steep job cuts began during the Carter administration. The individuals who are still living in Youngstown are not there because they are unable to leave for economic reasons. Like most of the folks living in smaller towns throughout the Rust Belt, they simply prefer to stay. Their world views on topics such as family ties, religion, immigration, sexual norms, social values, and such are as important, if not more so, than economics. They are not trapped by material forces in these areas. They are making choices that a mechanical choice model simply can’t account for.
Noble Laureate James Buchanan explained the limits of the neoclassical approach in his essay “Is Economics a Science of Choice” by noting that economists want to limit choice to the action of “choosing” a lower objective cost. This removes choice from the process and makes it seem purely objective in terms of economic calculation. Buchanan rightly points out that
[i]n the logic of choice, choosing becomes a subjective experience. The alternative for choice as well as the evaluations placed upon them exist only in the mind of the decision maker. Cost, which is the obstacle to choice, is purely subjective, and this consists in the chooser’s evaluation of the alternative that must be sacrificed in order to attain the which is selected. This genuine opportunity cost vanishes once a decision is taken. By relatively sharp contrast with this, in the pure science of economic behavior, choice itself is illusory. In the abstract model the behavior of the actor is predictable by an external observer.
And make no mistake, Hubbard is assuming away non-economic choice for those people in Youngstown. His book focuses exclusively on that approach and completely misses any possible impact social or cultural factors may have had in the election. In explaining his model early in the book he mentions that manufacturing job losses in rural parts of Michigan, Pennsylvania, and Wisconsin were critical in deciding the election. No one doubts that economic changes played a role in those areas, but Hillary Clinton spent little time campaigning in those states and even less time addressing the non-economic policies that were important to those voters. Nor does he, or really any elite, to this day acknowledge that Clinton lost the female vote for non-college-educated white women, few of whom were employed by manufacturing plants in those areas. Economics was part of a larger story, but it alone doesn’t determine the choices made. Social issues did and continue to play a huge role.
It is perhaps too much to expect an explorer in New Guinea to place himself into the mind of tribes that practice cannibalism. It is not too much to ask an intelligent and highly educated academic with significant political experience to take seriously the idea that economics is only part of what is driving the rise of populism. Voters have reasons for rejecting elite control over policy. One gets the sense that Hubbard, observing a group of natives feasting on human brains, might have concluded that “reskilling” the locals towards tofu factories and organic farming would have solved the problem. I for one have my doubts about this approach.

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