The Progressive Case Against ProtectionismNovember/December 2019 119openness to trade and immigration, wages remain stagnant and in-
equality high. This has dire implications. As the economist Heather
Boushey has argued, inequality undermines the U.S. economy by
inhibiting competition and stiÁing the supply o talent and ideas.
Unmet economic expectations also fuel voter discontent and political
polarization, making it easy to blame outsiders and embrace counter-
productive policies. For the sake o both the country’s economy and
its politics, economic growth needs to be much more inclusive.
To achieve that, the United States needs, above all, a tax system
that ensures that economic prosperity lifts all boats. The Earned In-
come Tax Credit is a powerful tool in that regard. A credit targeted
at lower-income workers that grows as those workers earn more, the
¤¡ subsidizes their work, making
each hour o it more lucrative. This
credit should be expanded in size, it
should reach further up the income
distribution, and it should be made
more generous for childless workers—
changes that would particularly beneÄt those lower- and middle-class
Americans who have seen their wages stagnate in recent decades.
This policy would work well alongside an increase in the federal min-
imum wage, which would help combat the increased market power o
employers relative to employees.
Beyond these steps, the federal government should set up a wage
insurance program, which could make up some o the dierence in
lower wages for workers who have been displaced by foreign compe-
tition, technological change, domestic competition, natural disasters,
or other forces. The federal government should also make greater
investments in infrastructure, education, and research, all o which
would beneÄt workers by increasing their productivity and thus their
incomes. And it should strengthen the safety net, making improved
health-care access and aordability a top priority.
None o this will be cheap, o course. To raise revenue, the U.S. tax
system needs to be modernized. For corporations, Congress should
curb international tax avoidance, closing loopholes and reforming
minimum taxes so as to raise government revenues without chasing
proÄts oshore. Congress should also strengthen individual and estate
taxation, and it can do so without resorting to extreme rates. For the
income tax, it can cap or end various deductions and preferences; for
Immigration has long been
an enormous boon for the
U.S. economy.