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The Hill: Protectionist trade policies would damage economy, cost jobs: report

Posted on November 1, 2016 by The Progressive Policy Institute

Protectionist trade policies would throw the U.S. economy into turmoil and lead to the loss of millions of middle-class jobs, a new report said on Monday.

The Progressive Policy Institute (PPI) concluded that trade policies that cut off the United States from the global economy would do more harm than good in boosting job creation and wages for the majority of Americans.

“We explain why protectionist policies that supporters claim will ‘bring back’ American jobs would, instead, likely throw America into an economic tailspin and destroy millions of good middle-class jobs in manufacturing, services and farming,” said Ed Gerwin, the report’s author and director of the Trade and Global Opportunity Project at PPI.

Continue Reading at The Hill.

Learning from Google Fiber

Posted on November 1, 2016September 18, 2024 by The Progressive Policy Institute

Google’s decision to pause its roll-out of Google Fiber to new cities is an important data point in our understanding of both the economics of telecom and the economics of innovation. The announcement said that:

In terms of our existing footprint, in the cities where we’ve launched or are under construction, our work will continue. For most of our “potential Fiber cities” — those where we’ve been in exploratory discussions — we’re going to pause our operations and offices while we refine our approaches.

Google should be applauded for its willingness to take a chance on laying fiber to the home—such big bets are the only way that innovation happens. Too many companies around the world choose to play it safe and avoid putting money into “moonshots.”

However, Google’s move emphasizes that telecom infrastructure investments cost big money and are risky. A company with one of the deepest pockets in the world—and a long-established willingness to innovate—has been forced to reassess its strategy. Advocates such as Susan Crawford have claimed in the past that the roll-out of Google Fiber proves that it is “cost-effective to install and sell fiber connectivity.” But by the same token, Google’s pause confirms that gigabit networks to the home are expensive, as incumbent providers have been saying, and not yet a winning proposition for most consumers.

Regulators need to remember that telecom infrastructure investments are not only large, but carry significant technological and business risk. Major telecom providers such as AT&T, Verizon, and Comcast have been at or near the top of our “Investment Heroes” list year after year precisely because they are willing to take those risks. And the risks will only get larger. No one is sure yet the best way to connect fiber backbones to homes and businesses, and what the business model will look like. For example, will fixed 5G networks be the best way to bridge the “last mile” to the home? It’s tough to say, given that the technical standards have not yet been set. A wrong bet could lead to billions of dollars in losses.

But there’s a broader point as well about size and innovation. Economists have long debated whether large companies or small companies contribute more to innovation. As a general rule, the answer is “it depends.” As we wrote in our policy memo, “Scale and Innovation in Today’s Economy”:

the current U.S. economy is dealing with a particular set of conditions that will make scale a positive influence on innovation. First, economic and job growth today are increasingly driven by large-scale innovation ecosystems, ….These ecosystems require management by a core company or companies with the resources and scale to provide leadership and technological direction. This task typically cannot be handled by a small company or startup.

Second, globalization puts more of a premium on size than ever before. A company that looks large in the context of the domestic economy may be relatively small in the context of the global economy. In order to capture the fruits of innovation, U.S. companies have to have the resources to stand against foreign competition, much of which may be state supported.

Finally, the U.S. faces a set of enormous challenges in reforming large-scale integrated systems such as health, energy, and education. Conventional venture-backed startups don’t have the resources to tackle these mammoth problems. Only large firms have the staying power and the scale to potentially implement systemic innovations in these industries.

These considerations raise certain questions about how regulators—in the US, Europe, and Japan—should think about the role of scale. Scale by itself should not be viewed an impediment to innovation. Small firms are essential to innovation, but big firms have an essential role to play as well.

Trade and Good Jobs for the 99 Percent: Debating Trade, the Elites, and Jobs

Posted on October 31, 2016 by The Progressive Policy Institute

Opponents of trade and trade agreements like the Trans-Pacific Partnership (TPP) often frame the trade debate as a battle between “the elites” and average Americans, especially American workers.

Trade skeptics charge that America’s pursuit of rules-based, open trade is essentially an exercise that’s by and for big multinationals and the Wall Street one percent, while leaving everyday American workers holding the bag. Critics like Donald Trump and Bernie Sanders claim that Americans would be better served by upending trade pacts like NAFTA, scrapping proposed deals like the TPP, and jacking up tariffs—including Trump’s proposed duties of 45 percent on Chinese imports and 35 percent on goods from Mexico. These tactics, they argue, would pressure trade partners and U.S. multinationals and “bring back” American jobs

But would a shift toward protectionism really help the 99 percent? Would such policies support more and better jobs for middle class workers? Guarantee a more prosperous and inclusive economic future for everyday Americans? If not, what policies would?

Press Release: PPI Announces Opening of European Office in Brussels

Posted on October 27, 2016 by The Progressive Policy Institute

WASHINGTON—The Progressive Policy Institute (PPI) today announced the opening of an office in Brussels to serve as its European base, a sign of its commitment to strengthening the transatlantic dialogue and relationship between the U.S. and our European partners. The office will be lead by veteran EU public affairs professional Michael Quigley and PPI Executive Director Lindsay Mark Lewis.

“PPI has been a catalyst for transatlantic dialogue for more than 25 years, since we helped Bill Clinton and Tony Blair launch the ‘Third Way’ conversations among progressive leaders,” said PPI President Will Marshall. “The opening of our European office underscores our commitment to bolstering our engagement in Europe and building relationships with policymakers and stakeholders in Brussels and across EU Member States.

“With both sides of the Atlantic, particularly Europe, facing a slow economic recovery and rising security concerns, a thriving transatlantic relationship is essential to spurring much-needed economic growth and job creation and the dispelling of violent extremism. PPI is dedicated to revitalizing transatlantic cooperation to advance our mutual prosperity and defend our shared liberal values.

“We are proud to welcome aboard Michael Quigley as Director of our European office in Brussels. Michael’s deep experience in Brussels and familiarity with the intricacies of EU politics and governance make him a valued partner in PPI’s deepening engagement with European leaders on data-driven innovation, competition policy, trade, taxation and other issues at the center of the transatlantic relationship.”

Prior to joining PPI Mr. Quigley spent more than 10 years working in public affairs advising companies in their dealings with the European Union across several sectors including financial services and technology, as well as on trade and competition. He has spent considerable time working in several European cities including London, Berlin, Paris, Dublin, and Rome, as well as his base in Brussels.

He has been working in Brussels on EU affairs since 1992 when he interned at the European Commission. He subsequently worked in the European Parliament for a Member of Parliament and a European political party before joining an Irish trade association.

Mr. Quigley is a graduate of University College Dublin with a Bachelor of Arts degree in Economics and Mathematics, as well as a Masters degree in Economic Science. He is currently enrolled in the LLM program of the Brussels School of Competition.

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A progressive case for Social Security reform

Posted on October 27, 2016 by The Progressive Policy Institute

With the campaign in its final weeks, there is at least one issue that both candidates agree on — preserving and expanding Social Security. We can “save Social Security” and cut taxes, as Donald Trump insists, merely by conjuring that elusive elixir of “economic growth.” Hillary Clinton goes further, calling to expand it for widows and caregivers, while increasing spending on underfunded domestic needs, paying for it all with higher taxes on that sliver of society known as “the rich.”

Progressives are absolutely right that that the nation needs to make essential investments in the future — in children and education, scientific and medical research, infrastructure, building an inclusive, higher-wage economy and creating a clean-energy economy. However, they can’t expand Social Security and spend more on a forward-looking domestic agenda without addressing the budgetary squeeze caused by growing Social Security and other mandatory entitlement spending. Just as Republicans won’t be able to preserve America’s largest and most popular program while cutting taxes.

The numbers just don’t add up and the premises come from the land of magical thinking.

TVA’s New Reactor Bucks Nuclear Trend

Posted on October 26, 2016September 18, 2024 by The Progressive Policy Institute

Some good news at last on the nuclear front: The Tennessee Valley Authority (TVA) last week fired up a second reactor at its Watts Bar plant, making it the first new reactor to go live in this century. The advanced 1,150-megawatt reactor will supply carbon-free energy for 650,000 homes and businesses.

This follows a spate of announced closings of existing civilian nuclear reactors, including California’s Diablo Canyon. Since nuclear power is America’s largest source of zero-carbon energy, the shrinking of the nation’s nuclear fleet is both an environmental and an economic problem. It will compound the already difficult task of meeting U.S. commitments at the Paris climate summit to sharply reduce greenhouse gas emissions. It also weakens the U.S. civilian nuclear power industry as other nations race ahead to add more nuclear generation and develop “next-generation” reactor technologies.

The industry arguably was born in Tennessee. The world’s first nuclear fuel enrichment plant was built at Oak Ridge National Laboratory as part of the World War II Manhattan project. Even before Unit 2 was activated, nuclear power accounted for 33% of the state’s energy production from Watts Bar and two reactors located at the Sequoyah facility.

Thanks to TVA, Tennessee also is one of the top 3 largest producers of hydroelectricity east of the Rocky Mountains. But hydro accounts for only 6% of the state’s electricity production, while solar contributes another one percent. Renewable energy may hold great potential, but as these numbers show Tennessee and most other states are a long way from being able to generate most of their electricity from such sources.

While America’s much ballyhooed “nuclear renaissance” has yet to materialize – one reason is the shale boom-enabled influx of relatively cheap natural gas — four other reactors are under construction around the country and are expected to be completed over the next four years. That’s encouraging, but it’s not enough to offset the rate of plant closures, including the five reactors shuttered in 2013 and 2014. Diablo Canyon will be mothballed in 2025, 20 years before its useful life is scheduled to end.

In addition to cheap natural gas, the U.S. nuclear energy industry continues to be hobbled by hostility from “green” activists who want to put all of America’s energy policy eggs in one basket. That’s a huge mistake. Advanced nuclear technologies hold enormous potential for generating clean power in safer and cheaper ways than today’s nuclear reactors. Yet regulatory inertia and lingering prejudices against nuclear power stand in the way.

Fortunately, there is some hope for regulatory improvement. Last month, the House passed the Advanced Nuclear Technology Development Act which would require the Department of Energy (DOE) and Nuclear Regulatory Commission (NRC) to develop a regulatory framework for the testing and licensing of advanced reactors. It would also ensure the two agencies have sufficient technical expertise to regulate advanced designs, and move beyond their current focus on light-water reactors. Regulatory commitments such as this and more will be necessary if the U.S. wants to be a global leader in the clean energy market place.

In the meantime, TVA’s investment in new nuclear generating capacity will ensure that Tennessee remains a clean energy innovation leader.

Yarrow for San Francisco Chronicle: A Progressive Case for Social Security Reform

Posted on October 26, 2016 by The Progressive Policy Institute

Continue reading at the San Francisco Chronicle.

Fast Company: America’s Infrastructure is Crumbling–Here’s How We Can Fix It

Posted on October 24, 2016 by The Progressive Policy Institute

An article published today by Fast Company’s Co.Exist highlights two policy ideas of PPI’s on how to get more infrastructure projects up and running.

Borrow Money When It’s Cheap

The Progressive Policy Institute, a centrist Washington, D.C., think tank, has proposed several ways around relying on the gas tax for infrastructure funding. These include using “dynamic scoring” to assess the true value of public works. Research shows that each dollar invested produces economic value of between $1.5 and $2. So, says the PPI, it makes sense for the federal government to borrow the money directly, especially at a time when interest rates are low. The PPI says we need to get away from the “hardening Republican view” that all public spending is bad, and instead make a distinction between borrowing that funds investment and borrowing that pays for ongoing everyday programs.

Public-Private Partnerships

Will Marshall, president of the PPI, says Congress should agree to a White House proposal to exempt infrastructure companies from certain taxes. And it should seed a self-financing infrastructure bank, which would act as a founding partner as the public-private deals are being signed. Another idea is the West Coast Infrastructure Exchange, which bundles smaller projects across state lines, producing more attractive opportunities for private investors.

Fortune: The Red Tape Conundrum

Posted on October 20, 2016 by The Progressive Policy Institute

How the wrong kind of regulation is strangling business—and what to do about it.

Even economists who believe that the system is flawed have a hard time quantifying the issue. “I do think that our economy loses resilience and adaptability because the regulatory structure is so rigid,” says Michael Mandel, chief economic strategist at the center-left Progressive Policy Institute and one of Washington’s top thinkers on regulatory reform. “I would say that our sluggish growth is partly connected with regulation. But it’s hard for me to put a number on it. And God knows I’ve tried.”

…

Mandel of the Progressive Policy Institute has introduced a metaphor—one that was often repeated to me by others—to describe the effects of regulatory accumulation. It’s like throwing pebbles in a stream, the economist says. Toss one in, or even two or three, and there’s no obvious effect. But once you throw in a hundred you may start to block the flow of water. “It’s really about taking degrees of freedom away from businesses,” he says.

This is compounded by the fact that the rulemaking machinery—just like the law-making system—is geared toward pushing out new regulations, not removing them. And once new rules are on the books, they usually just stay there. Mandel points out that there is no central place in the federal government where you can report problems with regulations. And because there’s no database of complaints, there’s no way to analyze the patterns and identify overlaps that need addressing.

“I kind of think of the regulatory issue as people basically saying in their own varying ways, ‘Who’s in charge here?’ ” says Mandel. “Is there anybody who’s really steering the ship? If you point out to somebody that there’s a problem, is there anybody that can respond?”

…

The Progressive Policy Institute’s Mandel worries about red tape stifling innovation in ways that we don’t even see. As an example, he offers arguably the biggest consumer technology breakthrough of the past decade—the smartphone. Mandel points out that when Apple partnered with AT&T to bring out the first iPhone in 2007, the companies were able to negotiate their original deal for the uniquely data-heavy iPhone, including an unlimited data plan, without regulators looking over their shoulders. “Suppose that you’d had to have hearings? And how long it would have taken, and how many objections would there have been?” asks Mandel, exploring the hypothetical. “How much growth would have been lost by that?”

…

Mandel says the current system of retrospective review hasn’t made an impact. Along with Diana Carew, a colleague of his at PPI, he has proposed the formation of a Regulatory Improvement Commission that would be authorized by Congress for a fixed period to identify regulations that should be eliminated or changed to encourage innovation. A version of the proposal has been introduced in the Senate and House in the past couple of years, but has yet to gain traction.

PPI President Will Marshall Takes on Trump Senior Policy Advisors in Trade Debate

Posted on October 19, 2016 by The Progressive Policy Institute

In a new special series published by RealClearPolicy, PPI President Will Marshall squares off against Wilbur Ross and Peter Navarro, senior policy advisors to the Trump campaign, on trade policy in the next presidential administration.

“Donald Trump calls the U.S. economy a ‘disaster’ and blames trade for sapping America’s industrial might,” Marshall writes. “Neither claim is true, but it’s hard to refute someone who offers no evidence or economic analysis to support his hyperbolic assertions. For that we must turn to his campaign’s economic advisers, Peter Navarro and Wilbur Ross. Unfortunately, their defense of what they grandly call the ‘Trump Trade Doctrine’ is rife with dubious logic and funny numbers.

“The ‘Trump Trade Doctrine’ is profoundly reactionary. It looks back nostalgically to the industrial order of the 1950s, promising to ‘bring back’ yesterday’s jobs. It takes no account of the central role economic innovation plays in accelerating productivity growth, which is the key to raising U.S. wages and living standards. And its adoption as national policy would be a calamity for the tens of millions of U.S. workers whose well-paying jobs — in manufacturing, services, and the digital economy — depend on open markets and trade.”

Will Marshall, ” Detoxifying the Trade Debate. “

Wilbur Ross & Peter Navarro, ” The Trump Trade Doctrine: A Path to Growth & Budget Balance. “

Will Marshall and Wilbur Ross & Peter Navarro, ” Marshall v. Ross & Navarro: The Authors Respond. “

Creating Measurement and Accountability Systems for 21st Century Schools: A Guide for State Policymakers

Posted on October 19, 2016 by The Progressive Policy Institute

Because Congress passed the Every Student Succeeds Act (ESSA) last December, states are revamping their federally required systems to measure school quality and hold schools accountable for performance. But most are doing so using outdated assumptions, holdovers from the Industrial Era, when cookiecutter public schools followed orders from central headquarters and students were assigned to the closest school. Today we are migrating toward systems of diverse, fairly autonomous schools of choice, some of them operated by independent organizations. Before revising their measurement and accountability systems, states need to rethink their assumptions.

For instance, most states have assumed that they should apply one standardized, statewide accountability system to almost all public schools. Most have also assumed that measurement and accountability systems are roughly the same thing, so the only aspects of performance they need to measure are those in their federally-required accountability systems. Under the old No Child Left Behind (NCLB) Act, most of those measures were standardized test scores, and what counted was the percentage of students scoring “proficient” or better. When schools repeatedly failed to meet such standards, most states assumed the proper response was someminor form of restructuring required by NCLB—perhaps a new principal, perhaps some new teachers, perhaps some new money.

None of these assumptions will produce the schools our children need in the 21st century. NCLB was an important step in its time, institutionalizing an expectation that states would hold schools accountable for the learning of all their children, including the poor, minorities, and those with special needs. But it relied on the fairly blunt tools used by most states back in 2001: primarily achievement scores on standardized math and reading tests. In the intervening 15 years, more tools
have become available—and even more are the subject of intense research today. Fortunately, the ESSA has opened the door to these new approaches.

Marshall for The American Interest: The (Bad) Ideas Election

Posted on October 17, 2016 by The Progressive Policy Institute

Hillary’s answer to American discontent is a familiar litany of left-liberalism, while conservative scholars outline a post-Trump intellectual revival.

Sometimes U.S. presidential elections confront Americans with a choice between starkly different political visions, not just leaders and parties. The elections of 1800, 1860, 1912, and 1932, for example, were truly pivotal contests that altered the nation’s democratic trajectory.

The 2016 election doesn’t fall into that category. It’s more a clash of personalities than ideas. That mainly reflects Donald Trump’s grab-bag demagoguery and inability to offer voters anything like a coherent governing agenda. But it also stems from Hillary Clinton’s lack of policy ambition and dogged incrementalism. The result is a not-so-great debate that turns on the candidates’ personal foibles rather than the urgent issues before the country.

That’s not to say the race lacks big ideas. Indeed, there are plenty of them—but they tend to be epically bad ideas. Here again Trump is the prime offender, with his calls for a “beautiful” border wall, mass deportations, the use of torture, bans on Muslim refugees, and a trade war with China. Trump is exploiting white working-class grievances and prejudices with all the subtlety of a hammerhead shark, in the process resurrecting such long-discredited concepts as nativism, protectionism, and “America First” isolationism.

Continue reading here.

Osborne-A Note to Massachusetts Progressives: Remember, It Was Democrats Who Brought Charter Schools to Town

Posted on October 13, 2016 by The Progressive Policy Institute

In my home state of Massachusetts, voters will decide in November whether to expand the number of urban charter schools — now capped at 18 percent of students in a city. The propaganda wars have begun, and the lies are flying as fast and thick as they do from Donald Trump’s mouth.

Charters are public schools operated independently of district bureaucracies, with more freedom to design their schools and choose their teachers but also subject to greater accountability. If they fail — if their students fall too far behind — they are closed.

Led by the teachers unions, critics of the current ballot proposition to lift the state’s charter cap use several lines of argument — the same arguments they use to oppose charter schools in every other state.

Continue reading at The 74 Million.

Tracking Colombia’s App Economy

Posted on October 13, 2016 by The Progressive Policy Institute

All around the world we are seeing the rise of the App Economy— jobs, companies, and economic growth created by the production and distribution of mobile applications (“apps”) that run on smartphones. Since the introduction of the iPhone in 2007, the App Economy has grown from nothing to a powerful economic force that rivals existing industries.1

In this paper we examine the production and distribution of mobile apps as a source of growth and job creation for Colombia. We find that Colombia had over 83,100 App Economy jobs as of September 2016, including a conservative estimate of spillover jobs. What’s more, Colombia’s connectivity with the global economy, particularly the United States, gives the country the potential to add many more App Economy jobs in the near future.

Going forward, Colombia has several important advantages in positioning itself as a hub for domestic and export app development. Colombia benefits from a growing economy in a time of economic volatility in the region. For 2015, Colombia showed annual growth of 3.1 percent, while the overall Latin American economy contracted. This is a slowdown compared to the growth Colombia experienced in years 2010-2014, due in large part to external factors: the decrease in global demand, particularly from China; and falling oil prices, with petroleum accounting to nearly half of the country’s total exports.3 Growth is expected to slow further in 2016, with economic and political uncertainty, including the ongoing peace process and tax reform.

The Real Story of the Tech Job Boom: A Response to the WSJ

Posted on October 12, 2016September 18, 2024 by The Progressive Policy Institute

Suppose you were counselling your college-age child about what fields to consider. Where would you tell them to start?

The short answer: Tech and health. Just look at the numbers: Since 2007, when the current tech boom started, employment in computer and mathematical occupations–including software developers and network administrators–has grown by more than 900,000 jobs. Employment in healthcare occupations–including physicians, nurses, skilled medical technicians, and support occupations–has risen by almost 1.9 million jobs. Everything else: Zilch.

That’s why it was a bit strange to read today’s WSJ piece, entitled “America’s Dazzling Tech Boom Has a Downside: Not Enough Jobs”. The gist of the article is summed up in the lede:

The technology revolution has delivered Google searches, Facebook friends, iPhone apps, Twitter rants and shopping for almost anything on Amazon, all in the past decade and a half.

What it hasn’t delivered are many jobs.

Here’s my problem with their conclusion: The authors restricted themselves to looking at employment at tech companies, and tech industries as defined by the BLS. That makes sense if we think about tech like it was a manufacturing industry, where the jobs are concentrated in factories that can be easily tracked by government statisticians.

However, a large number of jobs created by the tech boom are outside the tech industry, and indeed, outside the conventional tech hubs. Instead, many people working in IT are in mining, transportation, government, finance, education, media, healthcare, and retail. The tech boom has spread across the entire economy, lifting employment far from Silicon Valley.

Some of these computer and mathematical occupation jobs are related to the App Economy, which we have discussed elsewhere. Indeed, creating and maintaining mobile apps has become a significant source of employment for the US and other countries. This includes ensuring the cyber security of mobile apps, which is increasingly important for banks and other companies that are worried about being hacked. These jobs are only going to grow.

Here’s a chart that puts job growth into three buckets: computer and mathematical occupations; healthcare practitioner, technical, and support occupations; and all other occupations. We see that since 2000, computer and mathematical occupations are up 32%, and healthcare occupations are up 47%. Everything else? Only a 5% gain.

What if we start from 2007, when the current tech boom really took off, propelled by Apple’s introduction of the iPhone and the mobile revolution? Since 2007, employment computer and mathematical occupations is up 27%, and jobs in healthcare occupations is up 18%. Meanwhile, the rest of the economy has produced no net new jobs at all.

So, of course that number is heavily influenced by the job losses in maufacturing production workers. What if we just focus on managers? Even there, the growth has been much faster in tech and health. Since 2007, the number of computer and information systems managers is up 40%. The number of medical and health services managers is up 19%. For all other types of managers, the growth is only 8%, or only 1% per year.

Now, there are all sorts of reasons to worry if these trends will continue. The tech boom could come to an end, pressures on health care costs could slow job growth. But at least for now, if your kid is looking for growth sectors, tech and health are the name of the game.