How do technological and global shifts reshape economies, communities, and the political environment around them? In a discussion sponsored by The Hub and the Adam Smith Society, Glenn Hubbard, the Russell L. Carson Professor of Finance and Economics at Columbia Business School, and Tano Santos, the Robert Heilbrunn Professor of Asset Management and Finance, explored these questions through the lens of Adam Smith’s work and today’s rapidly changing economic landscape.

Adam Smith’s Enduring Relevance

Hubbard and Santos began by revisiting The Wealth of Nations and The Theory of Moral Sentiments. They emphasized that Smith’s ideas offer valuable guidance for understanding what Hubbard described as a Modern Political Economy (MPE) moment, a period when economic and technological change outpaces the ability of political and social institutions to adjust. This mismatch shapes how societies interpret change, respond to emerging pressures, and re-evaluate long-standing assumptions about markets and governance.

Two Forces Reshaping Today’s Economy

Hubbard and Santos identified two tectonic forces driving the current MPE moment: technological change and globalization.

Technological Change

Technological progress, including artificial intelligence, is shifting the demand for skills much as earlier industrial transformations did. The first and second industrial revolutions displaced workers faster than institutions could adapt, and today’s technological shifts present similar challenges. Santos compared the rise of the internet to the arrival of the printing press because both compromised the “control of knowledge and information that gatekeepers traditionally had on society.” As with earlier technological revolutions, these transitions have economic, social, and political consequences.

Globalization

Globalization has made society better off on average, Hubbard said, yet the political system did not use the resulting gains to “compensate the losers.” He noted that this failure allowed pressures to build over decades, contributing to renewed attention to tariffs and industrial policy. 

Why Alienation Matters in an MPE Moment

Both speakers emphasized that economic transitions often leave some communities feeling out of focus. This sense of alienation is central to understanding political reactions during an MPE moment. Policies such as tariffs, even when viewed skeptically by economists, often emerge as political attempts to respond to people in regions that have not benefited from technological or global shifts.

What It Takes to Sustain Long-Term Growth

Hubbard highlighted three elements associated with strong economic growth:

  • Scientific ideas
  • People with the skills to apply those ideas
  • A society willing to embrace change

He noted that earlier periods of major economic transition were supported by significant public initiatives, including the land-grant college movement of the nineteenth century and the GI Bill after World War II, which helped prepare people for a different economy than the one they were in.

Hubbard added that today’s challenges require a “different kind of social insurance,” because current systems were built for job loss tied to the business cycle, rather than for situations where jobs disappear entirely due to technological or structural change. He explained that the institutional response must focus on preparation and reconnection, rather than treating displacement as a transition cost.

Today, he identified high-skilled immigration, investment in basic research, and regulatory modernization as effective policies for helping  individuals adapt to economic change and  support long-term stability and growth.

Full Takeaways

1. Technological and global forces are transforming the economy faster than institutions can adapt.

Artificial intelligence and globalization are reshaping skills, industries, and communities in ways that define today’s MPE moment.

2. Communities harmed by economic transitions often experience alienation, which shapes political responses.

This explains renewed attention to tariffs and industrial policy, which often serve as attempts to support “people in places left behind.”

3. Sustaining long-run growth requires investment in people, ideas, and institutions with the capacity to help society adapt.

Historic efforts such as the land-grant colleges and the GI Bill helped prepare Americans for new economic realities. Today, high skilled immigration, basic research funding, and regulatory modernization, combined with a focus on preparation and reconnection and a shift away from treating displaced individuals as transition costs, remain essential for long-term economic stability and growth.