How the free-market approach lost its grip on economic policy

January 24, 2022, 11:45 AM UTC

Good morning.

Glenn Hubbard, former dean of Columbia Business School and former economic adviser to George W. Bush, has a new book out tomorrow entitled The Wall and the Bridge: Fear and Opportunity in Disruption’s Wake, published by Yale University Press. Hubbard is an advocate of the global free-market approach to economic policy that ruled during most of the last half century but now has been abandoned by populists and nationalists of the right and the left. 

I spoke to Hubbard Friday, and asked him: What went wrong? How did the mainstream economic orthodoxy that united Democratic and Republican economic policy makers in the U.S. for four decades, and was widely adopted around the world, lose its grip? His response:

“The reason I did the book is to remind people that growth and disruption is a coin with two sides. If you want growth, dynamism, innovation, you are going to have disruption…

“What we have to do is help people more who suffer that disruption… That’s what we really didn’t do well enough. This book talks about conceptually how to do that. Massive transformation requires massive help.”

Hubbard said A.I. and climate change will cause even more disruption than that resulting from globalization. And he favors government programs that cushion the effects of disruption without trying to stop it—“bridges,” not “walls.” It’s a sound approach but requires compromise between ideologues on one side rejecting government aid and those on the other embracing an outsized grab bag of programs that lack focus. The book could be a useful guide to those in Congress as they work to negotiate a more balanced bill. Here’s a clear goal they should keep in mind: help workers gain the skills and training they will need to survive the coming technology-and-climate-fed disruption.

By the way, I was amused by a headline in the New York Times this weekend on the “debate” over whether the U.S. government’s past spending policies are feeding inflation. Is this really a debate? Jason Furman, who held the same position as Hubbard in President Obama’s cabinet, writes in Project Syndicate:

“The extraordinary $2.5 trillion in fiscal support for the U.S. economy in 2021, amounting to 11% of GDP, was far larger than any previous fiscal package since World War II. A simple fiscal multiplier would have predicted that average output in the last three quarters of 2021 would be 2-5% above pre-pandemic estimates of potential. To think that a stimulus of this magnitude would not cause inflation…(was) implausible.”

More news below.

Alan Murray



With the U.S. now starting to pull personnel from Ukraine, it could well be that the Russian invasion is nigh. Here's an explainer on how that could seriously hit Europe's already-stretched energy supply. (It could also rain on China's Olympic parade.) Fortune

Crypto crumble

The crypto crash is intensifying, and it's taking the publicly-listed exchange Coinbase with it. The U.S. firm's share price has now lost around a quarter of its value since Thursday. (Bonus read: BlackRock seems to see now as a good time to launch a blockchain ETF.) Fortune

Peloton activist

Activist investor Blackwells Capital is reportedly set to demand the firing of Peloton CEO John Foley. The investor would also like Peloton, whose share price is down 80% since its peak a year ago, to find a buyer. Fortune

Unilever activist

Nelson Peltz's Trian activist hedge fund has reportedly bought a stake in Unilever, though the size remains a mystery. The consumer goods giant is underperforming at the moment, and investors strongly opposed its abortive plan to buy GSK's health care business. Wall Street Journal


Publishers vs Google

Germany's biggest publishers and advertisers have complained to the European Commission that Google's plan to phase out third-party cookies in Chrome is illegal on competition grounds. Google is of course already the EU's most successful antitrust-fine magnet, but on the other hand, what it's doing is a pro-privacy move, and the EU likes privacy. Either way, the Commission is already looking into the issue. Financial Times

Omicron peak

White House chief medical adviser Anthony Fauci is "as confident as you can be" that the U.S.'s Omicron peak is coming in February, and has outlined four defenses the U.S. must adopt to keep the virus at bay. Meanwhile, the WHO's Hans Kluge says Europe's Omicron wave will effectively be followed by "global immunity…for quite some weeks and months." Fortune

Australia snub

The WeChat account of Australian Prime Minister Scott Morrison was "hijacked" with its name being changed to "Australian-Chinese New Life." Aussie lawmaker James Paterson claimed this was the Chinese government's doing, accusing Beijing of "foreign interference in our democracy in an election year." ABC

Fugitive cruise

A cruise suddenly changed its destination from Miami to the Bahamas, to avoid impoundment. The Crystal Symphony is operated by Genting Hong Kong, which is in the process of going bankrupt. Fortune

This edition of CEO Daily was edited by David Meyer.

This is the web version of CEO Daily, a daily newsletter of must-read insights from Fortune CEO Alan Murray. Sign up to get it delivered free to your inbox.

Read More

CEO DailyCFO DailyBroadsheetData SheetTerm Sheet