This episode of Hub Dialogues features host Sean Speer in conversation with Cato Institute scholar Scott Lincicome about his important new book, Empowering the American Worker: Market-Based Solutions for Today’s Workforce.
They discuss the effects of the so-called “China Shock”, why government intervention in the labour market is often a fool’s errand, and why market-based solutions are actually better for workers in the long run.
You can listen to this episode of Hub Dialogues on Acast, Amazon, Apple, Google, Spotify, or YouTube. The episodes are generously supported by The Ira Gluskin And Maxine Granovsky Gluskin Charitable Foundation.
SEAN SPEER: Welcome to Hub Dialogues. I’m your host, Sean Speer, editor at large at The Hub. I’m honoured to be joined today by Scott Lincicome, the director of general economics and trade at the Cato Institute, a visiting lecturer at Duke University, and author of the must-read newsletter, “Capitolism”, for The Dispatch. He’s also the editor of an important new book, Empowering the American Worker: Market-Based Solutions for Today’s Workforce, which is already generating considerable discussion and debate in U.S. public policy circles. I’m grateful to speak with him about the book, including its case that growing calls to abandon the markets in the name of worker interests are ultimately wrongheaded.
Scott, thanks for joining us at Hub Dialogues, and congratulations on the book.
SCOTT LINCICOME: My pleasure, and thank you, and thanks for having me.
SEAN SPEER: At its core, the book challenges the basic contention of some voices, including on the Right, that a series of policy choices about trade, markets, and globalization have produced poor outcomes for a critical number of American workers and workers in advanced economies more generally. In the introduction, for instance, you make the case that claims about middle-class stagnation are overstated, and in any case, that addressing concerns about the middle class ought not to start from the assumption that market forces are incompatible with their interests. Let’s start big picture. Why do you think these perceptions have taken shape in the world of policy and politics?
SCOTT LINCICOME: Well, leaving, I think, aside the reality that people tend to gravitate towards bad news, unfortunately. You don’t see on the news ever that another plane landed successfully at LaGuardia. I think upon leaving the general pessimistic bias aside, I think there is a nugget of truth in the populist Left and Right critique of the current situation for American workers. The reality is that we do live in incredibly disruptive times, whether it is due to technology or trade, or COVID-19, or whatever. There is a lot of turbulence. At the same time, there are some discrete problems with certain segments of the workforce in certain regions of the country.
I think a little of the Rust Belt nostalgia stuff is overblown here in the United States, but there’s no doubt that whether it’s in the Rust Belt, or elsewhere in the United States, there are some communities, some regions, that are struggling. When you take that, and then you combine that with the fact, cynically or otherwise, that a lot of those people and a lot of those areas are located in very important swing states in the United States, whether it’s Wisconsin and Pennsylvania or elsewhere throughout the United States, that is going to draw even more attention to these issues.
I think those nuggets of truth do tend to drown out, as I wrote about in the introduction, that we really need to first start out with the fact that the general story of the last 30 or 40 years for the median American worker is pretty decent. Yes, there are challenges, whether it’s with rising health-care costs or higher education or the rest, but in general, median inflation-adjusted wages are going up and they have gone up substantially since the hyper-globalization days of the 1990s. That people have found jobs outside of manufacturing—yes, manufacturing jobs have generally declined, but they’ve been declining since basically the 1950s.
Individuals have found jobs outside manufacturing, good-paying jobs, and so forth, and that while manufacturing is fine, it’s a good industry, whatever, the obsession we have over trade manufacturing is overblown. But there are issues in the workforce, like I said, with discrete populations and regions, but also with important things like economic dynamism. Before the pandemic, at least, we saw that workers weren’t changing jobs as frequently. That’s actually a bit of a surprise maybe that individuals, we thought, “Oh, we used to have jobs for 50 years, and now we’re not.” It’s actually the opposite. People were staying put in jobs or not moving to a new place, so geographic mobility was declining.
There are some issues with just income mobility and wealth mobility as well for people, by generationally moving up the income ladder. And we’ve seen some problems with business formation, business entrepreneurship, and the rest. There are these discreet issues. Like I said at the beginning, we do face challenges with respect to certain essential goods and services, particularly health care and higher education, childcare, which have all seen pretty dramatic price increases. Those things are all real. That’s, again, what the book then tries to go after.
Let’s look at what’s causing those things. Is it a failure of the free market? Do we have these pervasive market failures in all these areas, or is it something else? And how can we help the vast majority of the American workforce have better and fuller lives and better jobs and the rest of that?
SEAN SPEER: That’s a comprehensive answer, Scott. I do want to pursue some of the lines of analysis that you outlined, including with respect to mobility and business formation, and so on. Before we get there, though, I just want to pick up your point about some of the nuggets in the diagnosis that we’re seeing from some of these different voices, if not their specific solutions. Take, for instance, the so-called “China Shock”, which refers to the impact of Chinese import penetration on American industry and American workers. In hindsight, were there mistakes in the way that the American strategy engagement with China was carried out as it relates to the interest of the working class?
SCOTT LINCICOME: I think it’s best if we can start a little bit with what the China Shock was, and I think where basically everybody can agree is that throughout the late 1990s, and then through the first decade of the 2000s, so for about a 15-year period, there was a pretty substantial increase in Chinese imports into the United States. A trend that was already accelerating but was further accelerated by China’s entry into the World Trade Organization and the United States granting what we call “permanent normal trade relations” to China that lowered certain trade barriers. Or at least locked in certain lower trade barriers.
The general view is that that resulted in at least temporary job loss for certain workers and regions to the tune of about a million manufacturing jobs and then about a million non-manufacturing jobs. Again, though, over a 15-year period or so. I think that the general approach to China in the 1990s and 2000s was actually about the best we could plausibly hope. The reality—and I’ve written a paper on the China Shock, I recommend anybody go Google it and read, but as I argue there, there are a lot of myths about how much negotiating leverage the United States really had when it came to China’s entry into the World Trade Organization and its participation in the global economy.
We did not have some sort of magical veto that was going to keep China out of WTO, keep China isolated. Really, the United States was left with a very pragmatic choice in the 1990s, and that was accept China’s entry, which every other country in the world had agreed to, or be the lone dissenter and thus lose out on any benefits that China’s WTO membership would give the United States. For example, you couldn’t bring disputes in the WTO dispute settlement system, which actually turned out to be pretty effective later on. Not perfect, but pretty effective.
Meanwhile, big U.S. exporters, whether they’re farmers or Boeing, were going to lose a chance to enter China’s market, which was growing, and of course huge, and they were going to lose that to their European competitors or their Latin American competitors for agriculture. Finally, the United States was going to lose the ability to use soft power to potentially encourage reforms in China. Or simply, studies show that countries that trade together tend not to go to war with each other, so maybe have some diplomatic and geopolitical benefits too. That was really the choice that we had and really there wasn’t a better alternative.
Had the United States stayed out, the fact is that Chinese imports would probably have still continued to increase into the United States because most of China’s export competitiveness came—and this is kind of wonky, but it’s pretty important—but most of China’s export competitiveness didn’t come from the United States flipping a switch with PNTR to WTO. It actually came from all of these internal economic reforms that China had committed to in the 1990s and 1980s.
Granting property rights, lowering their own tariff barriers, reforming their legal system, and the rest to move from a real communist country to this hybrid capitalist-communist or state-capitalist model. So studies show, even by the China shock guys, that more than two-thirds of China’s export power came from those internal reforms. Now, the United States could have been granting China annual normal trade relations since the 1980s. We didn’t even deny it when the Tiananmen Square protests happened, so there was very little chance of that, of rejecting the normal trade relations.
And, to be really wonky, Chinese inputs were still going to be able to enter the United States as finished goods from other places because that’s how good old U.S. customs law works. For example, you could take Chinese steel, you could process it in Mexico, and it’s going to come in as a Mexican product. Again, the reality is that there wasn’t this grand alternative that was going to keep China small and weak, that was going to somehow promote democracy in China.
We hear that a lot, “Oh these foolish free traders thought they could get the communists to turn democratic.” And look, there was some rhetoric like that, but it’s not like the alternative was going to have this some magic bullet either. The alternative was probably very likely going to be worse. When you take that counterfactual then I think it’s pretty obvious that they made the best choice available.
Then I think the other thing to really know and then, sorry, we can go on, is that the job loss totals you hear about, 2 million jobs. That sounds like a lot, but again, that was spread over 15 years. It was offset by a lot of job gains in export-related industries, in companies that exported China, or in the same companies that lost some manufacturing jobs and gained jobs and services as comparative advantage did its thing . And importantly, I think most importantly, really was a tiny fraction of the total job churn that the U.S. economy generates over that 15-year period.
The fact is that in a single month, in a normal healthy U.S. economy, we destroy about 5 million jobs in a single month. So a 2 million job churn over a 15-year period, really it’s important to those people of course. For humans, your own job matters, but as a matter of national and global economic policy, that context is essential as well. That doesn’t even mention all the consumer benefits that we got from having tons of cheap stuff, because that’s a benefit too and those gains have been found to be quite significant.
Hundreds of dollars a year for the average family for the rest of their lives based on trade liberalization with China. So all the bad stuff aside, certainly there were things and, certainly, China’s regime has engaged in a lot of backsliding since 2000. There are plenty of problems in human rights and foreign policy, but the idea that this was some terrible decision that has fueled the rise of Chinese autocracy and could have been avoided easily by flipping a policy switch is I think pretty nonsensical.
SEAN SPEER: Again, a comprehensive answer, Scott, and you need not apologize for being wonky on this podcast. Let me apologize to you though for indulging in some of these big-picture questions. I just have so much respect for your thinking on these subjects. I can’t give up the opportunity to put them to you, but I promise we will get to the book and some of the specific policy areas that you tackle.
If I can put another contextual question to you, in broad terms, over this period of globalization, we’ve seen a significant convergence in terms of global inequality, but some divergence in income inequality within Western countries. Do you agree with that characterization and if so, do you have a sense of the extent to which it’s a function of policy choices versus some of the broader economic and technological forces that you’ve just described? In other words, was this outcome inevitable?
SCOTT LINCICOME: Yes, I think for the most part it was inevitable. When we talk about the hyper-globalization period, when we talk about this period of rising inequality in say from basically the 1980s on, it is always essential to note how freakishly unique the 1950s and ’60s were for the U.S. economy, and for economies like in Canada and elsewhere that were tied to the U.S. economy. In the sense of after World War II, you had about half the world was destroyed from world war.
Then you had another world war, 40 percent of the world was punching itself in the face by embracing communism, then you had the United States and a few other places that were essentially the manufacturer for the world and the world’s workforce, the world’s bread basket. That period was truly unique. A lot of what we saw after countries wisely abandoned communism, after Europe rebuilt itself, after there was some reform outside of the big ones like China and India and Latin American elsewhere. A lot of this was, I think, reversion to the mean in some ways, and to the extent globalization was occurring, it’s important to remember that a lot of globalization had nothing to do with policy.
Surely the World Trade Organization and trade agreements and tariff and trade policy mattered, but so did simple things like the creation of containerized shipping, which was a massive technological improvement in the 1950s and 1960s. Then the information technology revolution, which allowed global manufacturers like Apple to track their supply chains in almost real time. When you combine a lot of those technological improvements with, again, that global reversion to mean, policy certainly played a role, but I think the vast majority of it is this type of inevitable outcome.
The other thing I would note that’s really important is that we always have to, when we talk about these big arcs of history, it’s always essential to keep updating our priors. Branko Milanovic who talked about the whole elephant chart with global inequality has just published new research showing that a lot of the issues with developed world inequality have actually disappeared or have moderated in the last few years.
The United States also has gained like 2 million manufacturing jobs since 2010. And I should note, the Congressional Budget Office just released its latest look at U.S. inequality, showing that inequality has been relatively stable now for going on like 25 years or so. That goes with some of the wage gains I mentioned before. I have written about this before in my newsletter. The timing of the whole anti-globalization and inequality and wage stagnation stuff doesn’t really line up because if you look at it, most of the inequality and wage stagnation actually occurred before NAFTA, before the WTO. It was in the late ’70s and 1980s.
When we actually got into these agreements, when there was all this hyper-globalization, actually, we started seeing inequality moderate, we started seeing wage gains improve. Now, I’m not going to be some sort of cheerleader and see it as causal thing, but there is a basic temporal problem where the complaints don’t align with the policy.
SEAN SPEER: As you mentioned earlier, Scott, the book cites a decline in labour mobility—that is, the share of workers who are prepared to move jobs or even move places for work—and attributes it to a policy failure, including stringent land use regulations which have driven up the cost of housing in dynamic job creating places. I’m sympathetic to the argument, but a case from conservatives would be that that line of argument undervalues the sense of place and belonging that people ascribe to where they live. Just because particular communities have experienced deindustrialization and job losses, they don’t want to follow market signals to relocate.
What, if any, policy-making onus do we collectively have to those people? Is there a role for place-based policy, which may involve distortions to try to push the market to create economic opportunities in those distressed communities, or is it your view that these people are free to choose to stay, but that we don’t have a policy responsibility to them?
SCOTT LINCICOME: I’m far more in the latter category, at least when it comes to federal policy, because I think— and I wrote a long piece about this—most of the places that were hit hard by these big disruptions have moved on and have evolved and are now thriving. The Brookings Institution put out a report a few years ago looking at declining industrial cities. Exactly what you think about when we talk about Trumpism in the Rust Belt and all that this is in the report, and they found that in the vast majority of these places, places like Pittsburgh or whatever, that were industrial towns in the 1970s have moved on, and now they’re either doing okay, or they’re thriving. It’s only a handful of places that are still really struggling.
Now, I think that is a really strong indicator that the problem is less—because all these places were all hit by the same stuff, and I’ll give you a direct example in just a second. But I think that because the others moved on and evolved, I think that’s a strong indicator that the problem isn’t federal policy or international economic policy and whatnot, its state and local policy primarily. This is about places. Some places did the right thing, some towns did the right things to get their acts together, and others didn’t. Now, for the ones that didn’t, I do think that it is essential that foot voting occur, that these places be punished for their bad decisions.
I now will give you an example. Youngstown, Ohio is a classic case. It is the poster child for industrial decline in the United States. Every presidential candidate for the last something like 40 years has gone down Youngstown and promised to bring back Youngstown steel and revive the Rust Belt, the industrial might of the United States economy, blah, blah, blah. Meanwhile, Greenville, South Carolina was a big textile town. Greenville was hit by the exact same shocks in terms of trade and globalization and technological change. Instead of steel, it was textiles. Greenville had an almost identical population as Youngstown in the 1970s when all this was going on.
The difference was, or one of the differences, was that Greenville looked around and said, “We can’t be a textile town. We need to embrace foreign direct investment. We need to embrace services. We need to adopt better policies at the state level as well, the government of South Carolina as well, and we need to be something other than a textile town, or we’re going down.” They did all these things. Greenville is now the home to BMW, it’s the home to Michelin, it’s got a thriving financial services sector, it’s voted one of the best places to live, and its population has grown dramatically over the last 30-plus years. Youngstown today is still talking about reviving the old Youngstown steel plant.
They are still trying to embrace this kind of nostalgic view of the U.S. economy. They are the recipient of more federal aid than almost any town in the United States, and they slowly but surely lost population, and they are the place that we read about in the newspaper all of the time. I think that that’s a really good example of a place that did adopt better policies at the state and the local level, that did embrace change, and has thrived, and then a place that did the exact opposite. Ohio did not have great state policy for a long period. They’re doing better now. Its population has declined. Quite frankly, I think it’s perfectly fine for the residents of Youngstown after 40 years of utility to say, “To heck with this. I’m out.”
I think the federal government has a role in the sense of maintaining a vibrant economy, a stable monetary policy, and tax policy and all that, but directing specific aid to specific places, I think, tends to paper over the failures of state and local economies, state and local leaders and the rest, and it doesn’t strike me as necessary in any way. Then the last point I think that’s critical is that, as we talked about in the book, there is a laundry list of state and local policies that could be adopted to help these places. It’s not merely about abandoning them and not only about lowering the cost of housing in New York City or whatever so that people can move to New York City, but there are a lot of other policies, whether it is occupational licensing, or welfare policy, or child care policy, home-based business reforms, and others like zoning deregulation.
There are a ton of things that state, local, and federal policymakers could be doing to make it easier to work and live in these places. It’s not merely easier to abandon them. I think that where there are failures, it’s not market failures as much as it is government failures.
SEAN SPEER: You mentioned the negative effects of a nostalgic perspective in forming public policy. Let me take up that point because it’s a major critique laid out in the introduction to the book. In particular, you make the case, Scott, that a lot of working-class discourse has a poorly conceived understanding of who the working class actually is. That is to say, they’re no longer principally in the goods-producing economy, they’re oftentimes more female than male, and the list goes on and on. Do you want to talk a bit about who comprises the working class and what the implications are for the working-class policy agenda?
SCOTT LINCICOME: You’re right. A big focus of the book is to expand the definition of working class, because so much of Washington policy is directed towards the stereotypes of the American worker that are just not backed by the data. We talk about manufacturing jobs. That’s about 9 percent of the entire workforce is in manufacturing, even after the millions of jobs we’ve gained since 2010. The vast majority of us work in services. Another big point is that a lot of our job growth and a lot of our jobs are globalized. We talk about trade being a bad thing. Well, trade is actually a very good thing for a lot of jobs, whether it’s working in an Amazon warehouse or driving a truck, or you name it.
There’s a great study that showed that more than half of our job growth since 2010 has been in goods trading companies. Companies that are in some way related to global trade. We’re not really manufacturing jobs. We are more globalized. We are working in services. As you said, a lot of breadwinner families are now headed by women. A lot of stable families have a female breadwinner, the dad might work too or whatever, but that’s, I think a big difference.
We also increasingly value, particularly since the pandemic, we increasingly value flexibility and independence over job protection. There’re studies show that, for example, for remote work, people are willing to take pay cuts to be able to work remotely. They increasingly cite flexibility and autonomy over basic wages. Then finally, the studies show, and I think there’s the chapter on employee benefits that really hits this, but people are just diverse. We have a lot of different wants and desires from our job, from our lives.
Federal policy doesn’t really think about these things. It’s like, “Okay we’re going to get paid family leave now.” Well, there are a lot of people who might not want paid family leave. Or, “We’re going to demand that employers provide health insurance.” Well, a lot of people don’t want their employer to provide health insurance. They don’t like the health insurance their employer is providing. You go on and on through the list where federal policy just kind of assumes everybody is in this cookie-cutter model of a worker drone and that’s what we need to do for a labour policy. Whether it’s, like I said, mandated benefits or trade protectionism or whatever, and it just doesn’t really fit the reality of today’s workforce.
SEAN SPEER: The book cites a number of policy areas, including many that you’ve mentioned through our conversation, housing, health care, child care, et cetera. Given the state of American politics, are there ones that you see signs of potential progress? Are there bipartisan solutions or at least bipartisan opportunities in some of these issues to produce policy reform?
SCOTT LINCICOME: Fortunately, I do see a few areas where, especially at the state level, we’re already seeing some. A big one is occupational licensing. Unfortunately, occupational licensing in the United States, so essentially requiring a license to engage in a certain profession, has exploded in the last 30-plus years. Going from about 5 percent of all jobs to anywhere between 25 percent and 30 percent of all jobs now requiring a license. It is not only costly to obtain a license and maintain your license, but it also does all sorts of things in terms of restricting mobility between jobs and between places. It, of course, imposes big costs for consumers and it doesn’t even improve the quality of the services for the most part.
Occupational licensing, outside of a few professions that all states can agree on, like doctors, for example, is pretty bad stuff. Fortunately, a lot of states are starting to revisit their occupational licensing regimes and undertaking good reforms. That’s on the Right and on the Left. Colorado, which is pretty blue these days, Arizona, pretty red these days, Florida, definitely red these days, have all started to look at this. We’ve also seen the Obama administration, the Trump administration, and the Biden administration all come out in opposition to certain onerous occupational licensing systems. I think licensing is a good area where we’re seeing some movement.
Another area is criminal justice. Now, people might be like, “How does criminal justice affect the labour market?” Well, it turns out that first of all, we’ve seen an explosion in the United States of people with a criminal record. Now, tens of millions of Americans are walking around with some type of criminal record. Not merely a felony conviction, but like in arrest rep or whatever. Research shows that that depresses labour participation, whether it’s due to stigma or whatever.
Well, states are finally realizing that having a 20-year-old pot conviction is a pretty meaningless thing and yet is affecting the labour market and keeping people out of the labour market or harming their job prospects. Places like Pennsylvania have embraced automatic expungement to essentially clear people’s records automatically after a few years of good behaviour. You don’t commit a crime, you don’t get arrested, that’s it. Or they have automatic expungement, go back to a place like Colorado, for crimes that are no longer crimes. Colorado legalized marijuana possession. Well, you shouldn’t have to deal with a conviction for marijuana possession if it’s now legal. And sports gambling’s another area. We’ve seen a bipartisan movement at the federal level to do some similar stuff there. I think that’s another potential area.
Then finally I think housing deregulation is finally getting some bipartisan support as well. Again, we go from Obama to Trump to Biden, you’re seeing HUD and other agencies starting to look at the costs of zoning. Not merely for the price of housing but for worker mobility and other important parts of the economy.
You’re seeing movements, in blue states and red states, that are looking at this. Now, I would be lying if I said that this is an easy thing because housing deregulation and housing development generate massive opposition from incumbent homeowners, what we call NIMBYs. NIMBYs unfortunately are very powerful. I will say I think they’re mostly well-intentioned but they’re very misguided, but because they have such powerful interests and votes, they can push back on a lot of these reforms. I don’t think it’s going to be easy. Again, that’s another area where the red team and blue team both seem to agree that we need to do something and they’ve targeted the right policy.
One of the problems is that red team and blue team a lot of times will agree on stuff, but at least from a libertarian perspective, they are agreeing on the terrible policy response. At least in these areas, they seem to have also targeted the right policy.
SEAN SPEER: Let me put a penultimate question to you. You’re optimistic in later chapters of the book that there are growing market conditions for better outcomes for workers. Namely the potential for remote work as well as the broader trend of a slowing labour supply, which ought to grant greater bargaining power to workers. Are we seeing signs, Scott, that workers are leveraging these conditions for better work outcomes? What should be looking forward to see if the theory plays itself out in practice?
SCOTT LINCICOME: The pandemic has, for better or worse, been a really fascinating experiment in jolting labour dynamism, so getting people to move jobs or move places or whatever, and increased worker bargaining power. It does appear that people are taking advantage. I mentioned that we had this decades-long decline in economic dynamism. Well, suddenly the pandemic hits and now you saw an explosion in business formation. It appears to have stuck. It was not merely people side hustling for a few months while they’re waiter job, they’re bartender job, was made illegal for a bit because restaurants were closed.
Increase in entrepreneurship appears to have stuck. Remote work has definitely stuck. We are now at the point where 30 percent, give or take, of all working days are performed remotely.
That’s again been pretty stable, and so individuals have appeared to really like remote work. They appear to be exerting again some power and pushing back because employers for whatever reasons, a lot of employers, don’t like remote work. I think they’re mostly misguided but not entirely, but it doesn’t matter. The workers seem to be getting their way on remote work right now.
Then finally, simply with job change and wages, the numbers here are really incredible. Wage growth among job switchers is, I mean it’s like almost at 10 percent which is massive for a short period of time. That again is reflecting a very tight label market and individuals’ willingness to jump ship and try something different. I think that’s again because the labour situation’s so tight right now.
Then the last thing I think is really fascinating, something to keep an eye on, is independent work, independent contracting. There’s brand new data out just a few weeks ago from a consulting firm called MBO Partners that said that now, something like 16 million Americans are engaged in some form of independent work. That’s like more than a third of the labour force is either working independently full-time or part-time. That’s an incredible increase, it’s about double what it was pre-pandemic. I think it indicates again, that people are feeling pretty confident about going out on their own and not because they have to. The complaint against gig work in say, 2015, was that people didn’t have any choice.
The labour market stunk and there were no jobs so people had to go drive an Uber. That’s most definitely not the case now. Even after several rounds of Fed tightening, we have like 800,000 manufacturing job openings in the United States right now. If you want a manufacturing job, and you’re not barred from it for physical reasons or whatever, you can go into manufacturing. People don’t really want to do that. Increasingly they want services jobs, independent jobs, and these types of careers. That I think, again, is a reflection of this hot labour market.
It’s also, again, a reflection of why labour policy really needs to focus on maximizing autonomy and flexibility and adaptation, because the trends of a few years ago are not going to be the trends in a few years. A few years ago, we thought everybody was moving to New York and San Francisco. Now those places are struggling to find commercial tenants. We thought that everybody wanted a nine-to-five job with health insurance or whatever. Now we’re seeing this explosion in independent work.
Policy needs to be better about figuring out, well, how do we hedge our bets? The way to do that is to have benefits follow workers; it shouldn’t be tied to your job. Have a regulatory policy that allows people to move from job to job or place to place. Or that doesn’t necessarily promote remote work, but doesn’t discriminate against it, and so forth and so on. That’s really what the book is about: trying to really maximize individual worker autonomy. Not one size fits all view of labour policy, education policy, whatever.
SEAN SPEER: It’s a great answer. Let me end with a political economy question. It seems to me, Scott, one disadvantage that you and your collaborators on this project may face in the political arena, is the political economy issue of on one side an active, visible interventionist set of policy prescriptions, and on the other hand, your policy prescriptions, which oftentimes involve policymakers actually retrenching or withdrawing from the marketplace as opposed to actively intervening. Do you want to talk a bit about that challenge and how will you and your colleagues think about overcoming it?
SCOTT LINCICOME: Right. I’ll add to you the political economy problem is even worse than you just described because whenever you withdraw, you’re inevitably going to harm someone that was benefiting from the previous policy status quo. No matter how bad that status quo was. When we think about occupational licensing, certainly. There are licensed florists—yes, we licensed florists in certain states—that are going to be harmed, so to speak, from new competition, if you unregulated florists. Heaven forbid that you can get a flower arrangement from somebody who wasn’t licensed by the state.
That’s I think an additional political economy problem. It is very difficult. Like you said, there is the inevitable issue of looking like doing nothing versus doing something, right? Giving people money, banning stuff, that’s government action and of course, that sells. I think the way that it has to be overcome is as a package deal. That’s why the book is packaged the way it’s packaged. I come from a world talking about trade policy, as if my China Shock answer didn’t give that away. I hated being just a trade guy because trade isn’t just about trade, right? It’s about labour policy and tax policy and regulatory policy and the rest.
We have to start thinking about policy as packages of policies to attack things that people really care about. People really care about housing. Well, we need to not just attack that from well, we have a lot of tariffs on construction materials. We need to talk about zoning. We need to talk about federal ownership of federal lands and the rest, and those policies need to be put together and coherent packages. “This is my housing plan.” Then that way, I think that offsets some of your special interest issues and offset some of the doing nothing issues. “This is my plan for housing and it’s a litany of things”, rather than just, “I’m going to not do it. I’ll do nothing.”
SEAN SPEER: Well, this has been a fascinating conversation with Scott Lincicome, director of general economics and trade at the Cato Institute, among other affiliations, about the important book, Empowering the American Worker: Market-Based Solutions for Today’s Workforce. Scott, thank you so much for joining us at Hub Dialogues.
SCOTT LINCICOME: My pleasure. Thanks for having me.
