Peter Coy explains.
Hubbard makes the standard Econ 101 argument for free trade, which can be tailored for defenses of all kinds of markets. First, assert that trade increases prosperity by allowing each country to specialize in what it’s best at. (Generally true.) Second, acknowledge that not everyone wins from free trade; for example, some jobs are displaced by cheap imports. (Certainly true.) Third, state that this problem can be easily solved: Everyone in society can be made better off if the winners share some of their gains with the losers.
The flaw in this sequence is the third part: In reality, the winners from trade rarely share much of their gains with the losers. The losers remain losers, and they often vote for candidates who put up tariff walls.
But when it comes to proposed solutions, Hubbard’s are bound to strike skeptics of free trade as lukewarm. They include block grants for community colleges, personal re-employment accounts to help displaced workers acquire marketable skills, wage insurance, an expanded earned-income tax credit, “place-based” aid that creates jobs where people live so they don’t have to move and changed tax subsidies for health insurance that make it easier for people to change jobs without losing coverage. He proposes a task force on economic engagement that would issue scorecards on bills and regulations based on whether they promote economic engagement. (Surprisingly for a Republican economist, he also suggests a “modest” increase in the corporate income tax and is open to getting rid of a provision in the estate tax that allows heirs to avoid taxation on capital gains made before their inheritance.)
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