The Hill: New student debt rule could harm taxpayers and spur speculative litigation

President Obama often cites escalating college costs and student debt burdens as major obstacles to upward mobility for many young Americans. He is right, but the White House just proposed a new rule that, rather than make college more affordable, makes it too easy for students to get out of paying back their student loans. The problem is that it could stick American taxpayers with the bills, lead to speculative litigation against colleges, and deprive students of valuable courses.

What triggered the new rule was last year’s collapse of Corinthian College, a for-profit college with more than 100 campuses. After it closed, thousands of Corinthian students asked the Department of Education to discharge their loans. Among other things, they alleged that Corinthian had misrepresented job placement rates. A special master has been appointed to discharge the debt of any student illegally duped into attending Corinthian.

This loan discharge program, first adopted in 1995, has worked fairly well. It provides a legal backstop for vulnerable students when a college commits fraud or otherwise violates state law related to the loan or services for which the student paid. The government forgives the loan and tries to recoup the costs from the college, but taxpayers generally pay the tab. The program had been sparingly used, and the recent mass of claims exposed some procedural inefficiencies.

Continue reading at The Hill.

New Ruling Makes Waves in South China Sea

An international court ruled today on a challenge to China’s controversial bid to extend its sovereignty over vast swaths of the South China Sea. The Philippines brought the case to the Permanent Court of Arbitration in The Hague in June 2013, but multi-national disputes over the island chains and surrounding waters date back centuries. In recent years, China has been building islands within an area it’s defined as the “nine-dash line,” and has been claiming control over a 12-mile radius surrounding each of the new landmasses.

The much anticipated ruling, however, may be moot, since China already has declared that it will not adhere to any ruling by the tribunal. Beijing’s truculence underscores the necessity of President Obama’s attempts to “rebalance” U.S. foreign and security policy toward the Asia Pacific. Moreover, the United States is obligated through defense pacts with both the Philippines and Japan to provide military assistance in the region. To vindicate the right of all nations to navigate these waters, the United States sent a missile destroyer last October within the 12-nautical mile zone China has claimed as sovereign waters. The U.S. Navy has continued to sail within the disputed waters, and it recently concluded a major exercise consisting of two carrier strike groups near the Philippines.

The islands themselves appear to be heavily militarized with ports capable of servicing naval vessels and runways long enough to support advanced military aircraft. This militarization has encouraged several countries to seek strategic partnerships with the U.S. This includes Vietnam, which has allowed U.S. naval forces increased access to its deep water ports. The Philippines has invited the U.S. forces back into several military bases for the first time since giving them the boot in the early 1990s. In addition to joint military aid, Washington is seeking to organize a vast free trade bloc that pointedly excludes China. The Trans-Pacific Partnership (TPP) would lower trade barriers while raising labor and environmental standards throughout the region.

Defense Secretary Ashton Carter has strongly supported TPP as a vital soft power complement to America’s military presence in the Pacific. “In fact, you may not expect to hear this from a Secretary of Defense, but in terms of our rebalance in the broadest sense, passing TPP is as important to me as another aircraft carrier,” Carter said. With China already refusing to adhere to any ruling made by the tribunal, the TPP is a potent tool Washington can use to assemble a regional coalition of nations to balance China’s economic and military clout.

While all the TPP countries have a common interest in unfettered access to the South China Sea’s shipping lanes, Brunei, Malaysia and Vietnam, in particular, have competing claims on islands in the region. Additionally, the Philippines has expressed strong interest in joining the trade agreement. If Congress fails to approve the TPP, it would undermine America’s influence in the Asia Pacific and ability to act as a counterweight to China.

With more than half the world’s merchant ships passing through the disputed area, the United States and its Asian allies must not acquiesce in China’s aggressive bid to control the South China Sea. But our security strategy also needs a strong economic component. President Obama rightly envisions the TPP as a way to forge closer commercial and trade relationships with key regional partners and emerging markets like Vietnam. Not only will that make China’s anxious neighbors less susceptible to economic reprisals from Beijing, it will also give Americans access to the world’s fastest growing markets.

Local Economic Revival and The Unpredictability of Technological Innovation

One of the important themes of this year’s presidential campaign is the need for economic growth to move beyond the tech hubs and coastal urban areas that have prospered in recent years.  To some degree, this is already happening. Our latest analysis shows that the top 10 App Economy states include Illinois (4) and Michigan (9),  where jobs developing, creating, and maintaining mobile apps are partially replacing lost employment in manufacturing.

Similarly, the hydraulic fracturing (fracking) revolution created a new wave of job growth in areas such as Pennsylvania, North Dakota and Texas–not just oil and gas drilling workers, but transportation and construction jobs as well.  The exact number is a contentious subject, but even skeptics agree that the added employment has been significant in some areas. One even-handed report noted that

Pennsylvania’s shale boom was enough to ease — but not erase — the state’s pain during the recession. BLS reports the state shed a net total of 74,133 jobs between 2007 and 2012, while the oil and gas industry added roughly 21,000 jobs.

Taking into account spillover jobs, it’s clear that Pennsylvania’s downturn would have been a lot worse without fracking. Once again, innovation creates new industries and new jobs.

Still, apps and fracking by themselves are hardly enough to revive some of the hardest-hit areas of the country, especially those which have suffered from the loss of manufacturing jobs. Local officials ask, quite naturally, where the next innovation job boom will come from. And here the glass is both half-empty and half-full. There are plenty of candidates for the “next big thing,”  ranging from the Internet of Things to additive manufacturing to artificial organ factories to autonomous cars to space commerce to Elon Musk’s hyperloop. Each of these has the potential to revolutionize an industry, and to create many thousands or even millions of jobs in the process–not just for the highly-educated, but a whole range of workers.

Yet the problem–and the beauty–is that technological innovation is fundamentally unpredictable, even at close range. Consider this: The two most important innovations of the past decade, economically,  have been the smartphone and fracking. The smartphone transformed the way that we communicate and hydraulic fracturing has driven down the price of energy, not to mention shifting the geopolitical balance of power.

Yet a decade ago, in 2006, the major business press wrote precisely two (2) stories about fracking–one in the New York Times, and one in the Wall Street Journal. BusinessWeek, Fortune, Forbes, The Economist, and the Financial Times had not a mention, even though fracking as a technique had been around for years. Even though production was already ramping up, few people saw the profound economic impact of being able to tap into shale oil and gas reserves.

And while in 2006 journalists and analysts were writing about the possibility of an Apple phone, it was more with an air of bemused skepticism. Nobody forecast that the the iPhone,  followed by Android-based phones, would quickly make all other phones obsolete. More importantly, nobody foresaw the introduction of an App Store that created millions of app-related jobs around the world.

What does this history tell us? First,  the next big job-creating innovation isn’t likely to announce itself in bold letters before it arrives. Just because the next big thing isn’t obvious today doesn’t mean it won’t be obvious a year from now.

Second, when the next big job-creating innovation occurs, there will be a chance to spread the wealth by boosting growth in areas that are lagging today. The geographic pattern of tech jobs need not be replicated for  additive manufacturing or space commerce. Innovation doesn’t just create jobs, it creates opportunities for local economic revival as well.

 

 

 

 

 

 

 

The Daily Beast: Hillary Clinton Will Be Barack Obama’s Third Term

With so much ink spilled on the prospects of a Trump presidency, far less attention is being devoted to the more likely scenario of a Hillary Clinton presidency. When there has been sustained speculation, it’s typically been either biographical or ideological: how would her storied professional and personal life, or her sometimes unclear political beliefs, shape her behavior in office?

At least as important to understanding any presidency, however, is determining where that chief executive resides within larger cycles of history and politics. Such a perspective strongly suggests that a Clinton presidency would be one of “articulation” and would bear most similarity to those of Harry Truman (1945-53), Lyndon Johnson (1963-69), and George H. W. Bush (1989-1993).

The term “articulation” comes from the four-part typology (also including “reconstruction,” “disjunction,” and “preemption”) created by political scientist Stephen Skowronek in his now-classic 1997 book The Politics Presidents Make. Skowronek argues that a key to locating presidents in “political time” is to determine whether they are opposed to, or aligned with, the prevailing political paradigms of their time, and then to assess whether those structures and ideologies remain resilient or have grown vulnerable to challenge.

Continue reading at the Daily Beast.

Spreading the Wealth: Globalization, Innovation, and Local Policy

Donald Trump’s attack on trade, if carried out as President, would be an economic disaster. Connections with the global economy enable the free flow of goods, services, ideas, data and people across national borders.. Countries that make use of those connections have prospered, while countries that have engaged in protectionism have stagnated. We believe that trade agreements such as TTIP and TPP are essential to global growth.

Nevertheless, we must acknowledge that the process of globalization has produced much more turbulence than expected. When the United States concluded the trade deals of the 1990s, most economists expected that advanced countries would continue to climb the technological and productivity ladder, creating space on the lower rungs for countries such as China and India. Meanwhile American workers were supposed to reap the benefits of innovation and productivity gains in the United States.

This assumption turned out to be only half true. The US excelled in the digital sphere, creating new companies, new industries, and millions of new jobs.

However, innovation has faltered in physical industries such as manufacturing. Take a look at the table below, which shows multifactor productivity growth in manufacturing since 1994, when GATT was approved.

Multifactor productivity growth (1994-2014)
average annual percentage change
Computer and electronic products 7.9%
Printing 1.2%
Petroleum 1.0%
Textiles 0.7%
Miscellaneous (including toys and medical equipment) 0.6%
Transportation equipment 0.5%
Plastic and rubber 0.4%
Wood products 0.1%
Primary metals 0.1%
Nonmetallic minerals -0.1%
Machinery -0.2%
Furniture -0.3%
Fabricated Metal Products -0.3%
Food, beverage, and tobacco -0.4%
Paper products -0.6%
Electrical equipment -0.6%
Chemical products -0.7%
Apparel and leather -2.2%

 

Since 1994,  multifactor productivity has actually fallen in 9 out of 18 manufacturing industries, and has barely risen in another 4 manufacturing industries. The only industry with significant productivity growth over the past 20 years is computer and electronic products.

So no wonder manufacturing has lost so many jobs! Without productivity growth, US manufacturing workers got stuck on the lower rung and had to fight for space with much lower paid workers overseas.

Indeed, the narrative that job loss in manufacturing is due to higher levels of productivity is fundamentally wrong and unsupported by the data. Rather, the lack of productivity growth has exposed U.S. manufacturing workers to foreign competition.

Continue reading “Spreading the Wealth: Globalization, Innovation, and Local Policy”

U.S. News & World Report: Tom Vilsack for Veep

On what basis should presidential nominees pick their running mates? Theories abound, but there’s scant proof that vice presidential candidates ever change electoral outcomes. It’s still an important choice that says much about a nominee’s political psychology and needs. But selecting a veep, like pairing wines with food, is more art than science.

There used to be a premium on balancing the ticket geographically. John Kennedy picked Lyndon Johnson in 1960 to hold Texas and the Solid South for Democrats. The suave Bostonian and earthy Texan made a fascinatingly odd couple, but political scientists find little evidence that the pick helped JFK win. And by the time Michael Dukakis tried to reprise the Boston-Austin axis by tapping Lloyd Bentsen in 1988, the entire South was largely lost to Democrats.

Ronald Reagan, running an insurgent campaign against Gerald Ford in 1976, opted instead for ideological balance. To soften his right-wing image, he tapped the blandly moderate Sen. Richard Schweiker of Pennsylvania. Four years later, Reagan did it again, picking primary rival and GOP establishment favorite George H.W. Bush with an eye toward uniting his party for the fall showdown with incumbent President Jimmy Carter.

Continue reading at U.S. News & World Report.

Brexit and Innovation

The exit of the UK from the EU is and will be a tremendous shock to the global economic and business community. Certainly no one knows what is going to happen in areas such as finance, immigration, and even trade.

Nevertheless,  Brexit does nothing to change the fundamental economic problems facing the developed world: Slow growth, and an inability to create new industries that can employ the millions of workers whose careers have been  disrupted in areas such as manufacturing and transportation. These problems are fueling populist revolts around the world that are all the more powerful because they are based on a kernel of reality.

The productivity numbers in Europe are, frankly, terrifying. Based on OECD data, from 2007 to 2015 labor productivity growth averaged 0.3% annually in France, 0.15% annually in the UK, and a stunningly low 0.02% in Germany. Let’s not forget Italy, where productivity actually shrank over this period.The US was doing a bit better at 0.9%, but only in comparison.

With growth so slow, no wonder the voters want something different, even if they are not sure what it is.

There is no end of good innovative ideas in London, Paris, and Berlin. The App Economy is booming in Europe, as our research has shown.  But a combination of factors–ranging from culture to finance to government regulation–makes it more difficult to convert scientific research and small start-ups into productive and job-creating businesses.  Indeed, the US is having much the same problems.

Innovation creates jobs and growth. The problem is that the developed world have not had enough innovation, not that there’s been too much. Our challenge is to fix that.

 

 

 

 

The Hill: How ‘Brexit’ would inflame populism abroad – and here in the US

The ‘Brexit’ tide at last seems to have hit the sturdy seawall of British common sense. Heading into today’s national referendum, polls show rising support for staying in the European Union.

True, the contest remains a dead heat and could go either way. But the momentum apparently shifted after last week’s shocking murder of Labour Member of Parliament Jo Cox by a man spouting ultra-nationalist slogans. It’s also possible that the impending vote has concentrated U.K. voters’ minds on the sheer implausibility of going it alone in today’s interconnected world.

There’s little doubt where global markets stand on the question. Stocks surged everywhere early this week and the British pound rose as word of the new polls spread. That reaction can only reinforce the “Remain” camp’s argument that detaching from Europe would, on balance, weaken Britain’s economy.

Continue reading at The Hill.

The Hill: Trade is popular in swing states, among Democrats

The Hill’s Vicki Needham cited a PPI poll and quoted both PPI President Will Marshall and Senior Fellow for Trade and Global Opportunity Ed Gerwin in an article on how voter’s opinions on trade will impact the election.

Voters in four battleground states — Colorado, Florida, Nevada, and Ohio — expressed positive views about the U.S. expanding trade, even while Hillary Clinton and Donald Trump call for major changes to the nation’s global commercial outreach.

A new Progressive Policy Institute (PPI) poll on Wednesday shows that by a 55 to 32 percent margin swing-state voters say that new high-standard trade deals can help the U.S. economy and support good paying jobs.”

Read the entirety of the article at The Hill.

Does ‘Deadbeat Donald’ Have Any Money?

On Saturday, Donald Trump issued an “emergency” appeal seeking $100,000 for his campaign “to help get our ads on the air.”

This was odd for three reasons. First, according to his own commercials, the main premise of Trump’s campaign was that he would pay for it himself. Second, Trump’s campaign disclosure forms allege that his total net worth is ten billion dollars. To be clear, this is 100,000 times larger than his $100,000 urgent appeal. If Trump told the truth about his wealth, $100,000 for him would be the same as about 2 or 3 dollars for an average American. Third, his near-bankrupt campaign has paid out millions of dollars to Trump businesses and family members.

These facts add to mounting evidence that Trump has lied about his wealth. As Forbes recently wrote, “The Occam’s razor explanation is that he’s not worth $10 billion.” Forbes should know, given the magazine’s long track record of assessing the relative wealth of various billionaires. Just last year, Forbes concluded that Trump’s $10 billion claim was “a whopper” of a lie. Indeed, experts suggest that the reason Trump refuses to release his tax returns because they will reveal the extent of his lies.

So how has Trump gotten away with lying about his business record?

In part, he’s used lawsuits to deter people from poking around in his affairs. For instance, in 2009, Timothy O’Brien published a book reporting that Trump was a millionaire, not a billionaire, who had amassed less money than prior presidential nominees such as Ross Perot (roughly $3.9 billion) or Mitt Romney (roughly $330 million if you include the separate trust for his children). Trump sued O’Brien for defamation, as part of a broader legal campaign to ward off critics.

Unfortunately for Trump, he lost his lawsuit against O’Brien both at trial and on appeal, and in the process was forced to give depositions and even privately share his tax returns with O’Brien.

So, when the lies are pulled away, what information do we have about Trump as a businessman and a candidate?

First, Trump inherited his money.

Over four decades ago, in 1974, Trump’s father gave him control of a company that was worth $200 million, and then provided additional loans and assistance over time. A finance professor at the University of Texas, who analyzed Trump’s holdings since 1976, concluded that: “Trump has underperformed the real estate market by approximately $13.2 billion, or 57%.” That bears repeating. Compared with average business performance in the real estate sector, Trump squandered billions of dollars over the course of his career.

Second, Trump is more grifter than a business leader.

As The Atlantic reported in 2011: “In financial circles, it’s pretty well known that Trump is a deadbeat.” While Trump has paid himself and family members out of campaign funds, he has repeatedly stiffed smaller vendors, destroying some mom-and-pop businesses that had previously survived for generations. He’s also destroyed wealth by urging people to invest in failing businesses, such as Trump Mortgages; Trump Tower Tampa; Trump Ocean Resort Baja Mexico; Trump Taj Mahal; Trump Magazine; Trump World Magazine; Trump Steaks; the Trump Shuttle; and Trump University. In several of these projects, Trump was sued. He settled out-of-court with investors in some cases. With Trump University, tuition-paying students allege that Trump used fraud to dupe them into becoming customers. Each time a Trump company declares bankruptcy, his partners and investors are left holding the bag.

Third, Trump had strong ties to the Mafia when he was a real estate developer.

Pulitzer Prize-winning journalist David Cay Johnston, who has written a book about organized crime and gambling, has spent many years investigating the ties between Trump and the Mafia. In a lengthy story for Politico, Johnston “encountered multiple threads linking Trump to organized crime.” These threads included openly seeking mob support to compete against real estate developers who refused to do so. This seems astonishing for a mainstream presidential candidate, but recall that unlike Trump’s political rivals, Trump has aggressively used libel laws to prevent prior journalistic investigations of his money. Johnston’s Politico story is well worth a close read.

Fourth, Trump’s only “legitimate” money came from promoting gambling, sex, and violence.

When you take away the inheritance, the mob ties, the contract breaches, bankruptcy court, litigation threats, eminent domain, and fraud, what’s left is Trump’s role as a huckster. In 1992, Trump blamed Mike Tyson’s rape victim for her rape, when Tyson’s release would have boosted Trump’s boxing-related revenues. In 1994, Trump spoke with Lifestyles of the Rich and Famous and speculated as to whether his then-infant daughter would develop attractive breasts. From the late 1990s onward, Trump built his name as a “reality star” by repeatedly demeaning women first on Howard Stern’s radio show, then later on his television show The Apprentice. As the Washington Post summed it up, “Trump has made flippant misogyny as much a part of his trademark as his ostentatious lifestyle.” Apparently, this brand appealed to the roughly 5 percent of eligible American voters who voted for Trump in the GOP primaries, but sleaze marketing is not much of a blueprint from which to strengthen America.

Finally, Trump’s proposals would be a disaster for the American economy.

So what are the policy ideas of this so-called “businessman” whose only clean money comes from reality television? For starters, Trump has made it clear that he intends to extend the philosophy of “Deadbeat Donald” to the full faith and credit of the United States Treasury. During a recent interview with CNBC, Trump literally suggested that the United States should threaten bankruptcy to stiff owners of Treasury bonds. As analysts from the left, right, and center pointed out, this idea would trigger an immediate global economic crisis. This is because the world economy relies upon Treasury bonds as risk-free securities, to the benefit of global financial markets and the enormous benefit of the United States.

This is not the only economically catastrophic idea that Trump has proposed. Actual business leader Mitt Romney, the Republican Party’s presidential nominee four years ago, explained that: “If Donald Trump’s plans were ever implemented, the country would sink into a prolonged recession” by triggering a trade war with other nations. Trump’s budget math does not remotely add up. His famous wall with Mexico would cost tens of billions of dollars to build and maintain, and no, Mexico will not pay for it.

Americans have roughly five months to learn about the “Deadbeat Donald” aspect of Trump’s track record and policy ideas. If we do not learn that lesson by November 4, unfortunately we will learn it the hard way shortly thereafter.

Cross-posted from Huffington Post. A version of this post originally appeared on Medium.

RealClearPolicy: Trump’s Wrong on Trade Policy & Maybe Trade Politics, Too

The Washington Post’s Catherine Rampell recently detailed the economic carnage that would result from Donald Trump’s reckless approach to trade — including likely recessions, millions of lost jobs, and higher prices for American consumers.

As we’ve detailed, protectionism is bad economics. But, apparently, it’s been good politics for Trump as well as Bernie Sanders, both of whom used trade-bashing populism to energize angry voters during primary elections, where extreme partisans often play an outsized role. And Trump promises to double down on opposition to trade as he pivots toward November.

As America moves from interminable primaries to the general election, however, Trump — and Hillary Clinton — will face a different political calculus on trade. A new Progressive Policy Institute poll shows that Democratic voters in key battleground states have a broadly positive view on trade — and a more positive one than do Republicans. Crucially, so do the swing voters, who will ultimately determine whether these states go red or blue in November.

Swing voters and voters in battleground states played a decisive role in reelecting Barack Obama in 2012 — and in sending a large Republican majority to Congress in 2014. As detailed in our new poll, conducted by veteran Democratic pollster Peter Brodnitz, these voters also have decidedly different attitudes about trade and America’s role in the global economy.

Continue reading at RealClearPolicy.

Sympathy for Diablo

Nuclear power is by far America’s biggest source of zero-carbon energy, providing 19.5 percent of the nation’s electricity. So why are environmental groups who profess to care about climate change working overtime to get rid of nukes?

The mystery deepens with today’s announcement by Pacific Gas & Electric that it intends to shutter California’s Diablo Canyon facility, the West’s last zero-carbon nuclear plant. The decision reflects a deal PG&E has struck with labor and environmental groups to invest more in energy efficiency, renewables and storage as it phases out Diablo Canyon.

The news comes amid a recent wave of nuclear plant closures in the Midwest, where deregulated markets flush with wind and natural gas simply make the plants uncompetitive. But Diablo’s costs are carried by rates, not competitive markets, so something else was clearly at work. And that something was extreme green politics.

Behind the Faustian bargain were big environmental groups like Friends of the Earth, National Resources Defense Council and Environment California. Together with their allies in state government (Mary Nichols, chair of California’s powerful Air Resources Board, founded the state’s NRDC chapter), the groups have advocated successfully for policies that privilege renewables as the only “clean” route to a low-carbon economy. Governor Brown’s former girlfriend, Linda Ronstadt, recently joined celebrities who have made a second career off opposing Diablo in sending a letter of opposition to relicensing. Not surprisingly the state’s 50 percent renewable standard—enshrined on Governor Brown’s watch–excludes nuclear.

The bargain would let Diablo’s duel reactors run until 2024 and 2025 but retire them 20 years before their useful life is up, in 2044, 2045. The groups claim Diablo’s power would be replaced by renewables and by energy efficiency, but as Rod Adams, blogging for Forbes noted:

“That’s a deceptive fig leaf; it is physically impossible for wind, solar and energy efficiency to replace the steady production of a nuclear power plant. Producing the same total number of kilowatt-hours each year is not the same as producing the same kilowatt-hours on a minute by minute, hour by hour or day by day basis.”

The wind doesn’t always blow and the sun doesn’t shine at night but a nuclear reactor generates zero emission electricity 24/7. In a state where industry continues to flee (Toyota ran to Texas and Tesla opted for Reno) there just isn’t sufficient demand to manage over-generation. And for a company such as PG&E, beleaguered over the current criminal trial for a natural gas explosion, it was politics rather than economics that trumped the West’s last nuclear plant standing.

The timing could not be worse as parts of California are reeling from one of the worst heat waves to hit the Golden State at a time of year when it typically is blanketed by fog or “June Gloom.” In Southern California, grid operators are straining to meet demand in a system that both lost the San Onofre Nuclear Generating Station but also placed a moratorium on natural gas from Aliso Canyon. As a result of the Aliso Canyon moratorium, the state’s grid operator for this summer has forecast at least 14 rolling blackouts.

Renewables need fast-ramp natural gas to back off generation at midday, when solar generates a surplus, and then to ramp back up at night when the sun sets. California’s grid operator throws away or curtails as much as 13,000 megawatts of excess electricity per day. For the green extreme shuttering Diablo is the path to tossing away less solar.

Reliability is an issue but the green extreme’s well-kept dirty secret is that wind and solar have severe environmental downsides. Diablo’s closure will eliminate in 10 years the state’s last, steady reliable, pollution-free electricity source. Replacing Diablo with solar will require vast tracts of land. Siting those facilities pits NRDC against staunch conservationists dead set against displacing the desert tortoise. And wind kills hundreds of thousands of birds and bats annually. But the environmental downside is that renewables need to team with fossil to keep the lights on.

California has for years been banking on an unholy alliance between renewables and load-following natural gas. Moreover, California has already blown its climate change targets because 100,000 tons of potent climate-changing methane leaked unabated into the atmosphere from the Aliso Canyon natural gas field. In a world of unreliable renewables, electricity systems require something to keep the lights on. But unlike nuclear, natural gas is a fossil fuel. California’s apparent model — Germany — has watched climate pollution increase there as decommissioning nuclear plants has led Berlin to rely more on carbon-intensive coal to backup to wind and solar.

But the green extreme is mute on rising emissions. “It makes your skin tingle,” said Damon Moglen, senior advisor with Friends of the Earth, regarding Diablo’s closure. Probably the highly-skilled and decently-paid nuclear plant workers at Diablo are feeling that way too.

MIT Technology Review: Dear Silicon Valley: Forget Flying Cars, Give Us Economic Growth

Dr. Michael Mandel, PPI’s chief economic strategist, is quoted in David Rotman’s piece about the advances in technology and economic slowdown. 

Michael Mandel, an economist at the Progressive Policy Institute in Washington, D.C., says the productivity slowdown is occurring in what he calls the physical industries, including manufacturing and health care. Such industries, which he estimates make up 80 percent of the national economy, account for only 35 percent of investments in information technology and their productivity reflects that, growing at only 0.9 percent annually. Meanwhile, productivity is growing by 2.8 percent a year in what Mandel calls digital industries, which include finance and business services.

If that is what is going on, it leaves plenty of room for optimism. “As we learn to apply the new technologies,” says Mandel, “we could see growth in productivity speed up again.”

Read the rest of the article at the MIT Technology Review.

Financial Times: Who will be Hillary Clinton’s vice-presidential pick?

PPI President Will Marshall was quoted in the Financial Times about his thoughts on who Hillary Clinton should choose for her running mate.

The improbable elevation of Trump to the GOP nomination leaves open a vast swath of political terrain across the middle. It puts in play all kinds of moderate Republicans, particularly suburbanites, particularly women,” says Will Marshall, president of the Progressive Policy Institute, a think-tank close to the Bill Clinton administration. “So if I were in her shoes, I’d say you want to pick somebody who has crossover appeal, somebody who appeals to the moderate, middle America.”

Read the rest of the article at the Financial Times.

San Diego Union-Tribune: Public Nuisance Lawsuits Out of Control

This past year, public nuisance lawsuits have spiraled out of control in California. Cities like San Diego, Berkeley and Los Angeles have been convinced to sue U.S. companies for enormous sums. Trial lawyers, looking to win big, scour the state and the nation for potential plaintiffs and then recruit municipalities to partner with them to file suits against businesses.

Pandora was let out of the box in 2002 when Santa Clara County and Orange County, using private plaintiff’s lawyers to bring the charge, sued lead paint manufacturers under a public nuisance theory – even though the paint manufacturers didn’t know about problems with lead paint at the time they sold it. After that, the Orange County District Attorney’s Office used public nuisance theory to sue drug manufacturers for the costs of unemployment, emergency room visits and other social services. The idea was that people took prescription painkillers, then got addicted, then the prescription ran out, then they switched to heroin, then they lost their jobs and ended up in the emergency room without insurance, so the drugmakers should pay for the county’s unemployment and ER costs. The judge dismissed the case because the FDA regulates prescription drugs, because some patients really do need painkillers and because it’s not appropriate for local prosecutors partnering with private plaintiff’s lawyers to do the oversight and regulation that appropriately belongs to the federal government.

Along with other cities, San Diego has entered the fray. By partnering with a plaintiff’s firm, the city doesn’t have to pay for the expense of investigating and prosecuting the case – those costs are fronted by the trial lawyer firm. But this partnership is ethically suspect.

Continue reading at the San Diego Union-Tribune.

 

Cutting the Cost of College with Three-Year Degrees

Recently a group urging free tuition at Harvard University failed to win a seat on the University’s Board of Overseers. With an endowment of $38 billion, Harvard can afford to have this debate. But the vast majority of schools in America today are too tuition dependent to offer universal free tuition. And while any plan to get the debt monkey off the back of students is welcome, the reality is the promise of free tuition is illusory – most of the proposals would only cover the cost of tuition at your typical community college, fail to reign in rising college prices, and are cost prohibitive (for example Senator Sanders proposal would run about $70 billion a year).

Fortunately, many voters have not been blinded by the allure of promises of free tuition. According to a recent poll by veteran Democratic pollster Peter Brodnitz for the Progressive Policy Institute (PPI), When asked to choose between free college tuition and a proposal to offer three-year college degrees, thereby cutting college tuition costs by a quarter, Swing voters picked three year degrees by a 63 percent to 29 percent margin

Three-year colleges are the norm in many European countries, and a few enterprising universities here have begun to follow suit. This proposal would require any U.S. college or university with students who receive any type of federal student aid to offer the option of earning a bachelor’s degree in three years, and to hold annual increases in the price of tuition and fees to just over inflation.

By making a three-year bachelor’s degree the norm the cost of attending college would drop dramatically. Students currently attending four-year public schools (in-state) would see savings on average of $8,893 while those at private schools would experience a $30,094 reduction.

Cutting tuition by a quarter would also reduce the amount students need to borrow. Nearly 70 percent of bachelor degree holders have taken out student loans, with an average debt burden of $29,400. Assuming someone borrows $29,400 at the going rate of 4.66 percent over four years, the interest owed would amount to $7,505. But shaving a year off college cuts that interest tab to about $5,629, a savings of $1,876. And keep in mind we are talking averages here; the many students carrying debts well above the average will reap bigger savings.

But wouldn’t shaving a year off college also mean giving colleges a financial haircut? Not necessarily. Colleges could increase the number of students in each incoming class by 33 percent given that annual class capacity would be greater with the elimination of the 4th year. While suffering transition costs over the initial three years, many schools, particularly the most attractive ones in the top two-thirds of college rankings, would eventually be made whole under the Three-Year Degree.

While some schools might be tempted to squeeze a four-year degree into three years, that approach would be unwise, given that the majority of today’s college students need six years to complete a bachelors.

A better approach would be for schools and their accreditors to rethink their curriculum. For example, reducing the number of electives, cutting back on core requirements or shifting to shorter semesters are all options that schools could use to move to a three-year bachelors and improve the educational experience.

The debate over the cost of college is long overdue. Yet the solution cannot be one that would cripple the world’s finest system of higher education nor allow colleges and universities to continue to pile debt on the backs of families and students. Shifting to a three-year degree bachelor will ensure American’s can afford college to send their children to college again while expanding access to the best schools in the world.