Category: Uncategorized

CNN: Should the American Gulliver be tied down?

Posted on by The Progressive Policy Institute

Having recently warned of the high costs and limited utility of U.S. military force, President Barack Obama is in Normandy to mark the 70th anniversary of one of its grandest achievements: the D-Day invasion.

No contradiction there – that America helped win the “good war” obviously doesn’t mean military intervention will always succeed. But Friday’s ceremony is a timely reminder of a paradoxical truth: The long peace the world has enjoyed since World War II is no historical accident. It rests upon the bedrock of America’s willingness to use force not only in the defense of its core national interests, but also to uphold the liberal world order.

Over the past seven decades, there have been no great power wars, the Soviet Union and communism have expired, the community of democracies has grown larger, and unprecedented global prosperity has lifted billions of people out of grinding poverty. Despite terrorism and spasms of ethnic and religious violence, analysts say the number of people dying in conflicts has dropped dramatically since 1945.

Continue reading the article at CNN.

The New York Times: Shifts in Wireless Market May Sway a Sprint Deal

Posted on by The Progressive Policy Institute

Edward Wyatt’s piece this morning, “Shifts in Wireless Market May Sway a Sprint Deal,” examines how the evolving mobile and wireless markets affect the prospects for a possible Sprint and T-Mobile merger.  PPI’s senior fellow Hal Singer is quoted commenting on how the lines separating once discrete markets seem to be fading, and whether this trend affects the deal’s chances:

If regulators continue to see the wireless and wireline business as discrete markets, they will continue to be skeptical,” said Hal J. Singer, a principal at Economists Incorporated and a senior fellow at the Progressive Policy Institute. “But if they can be convinced that the lines between wireless and wireline are beginning to blur,” there might be a chance for a merger to be approved, he said.

You can read the full article on The New York Times website, here.

Adapting U.S. China Policy to the Information Age

Posted on by The Progressive Policy Institute

Since the tanks rolled into Tiananmen Square 25 years ago today, the U.S. has not hesitated to criticize China’s dismal record on human rights and civil liberties.  Not much has changed. Since traditional state-to-state diplomacy has done little to affect China’s behavior, the American government needs to change tack.  If Washington is serious about change, it needs an information age strategy that directly targets and engages its greatest ally for change: the Chinese people.

The Internet has revolutionized communication, left deep impressions on China, and has opened up a new avenue for foreign policy action. Beijing has banned Twitter and Facebook, but their Chinese equivalents, Weibo and Wechat, have over 500 million and 355 million users respectively.  Social networks are proven activist tools, used during uprisings such as the Arab Spring for disseminating information and organizing protests.  But there are several steps Washington could take to help Chinese human rights, democracy activists and environmentalists connect, get access to information and publicize their movements.

The first step is to provide unfiltered, encrypted Internet access.  One method would be for the State Department to sponsor Virtual Private Network (VPN) services to distribute to Chinese civic society groups.  VPN’s enable users to view the global internet and all traffic is protected.  This technology is already used widely by expats, well-off citizens and domestic businesses with privacy concerns.  Despite several attempts, VPN providers consistently thwart government attacks on their networks, and any permanent blockage would additionally run the risk of damaging domestic businesses who also rely on these networks.  By contracting with VPN providers, (most of them outside of China), State would provide Chinese activists with access to reliable information and a more secure, private organization platform.

A digital age strategy should also include exposing the Chinese public to different kinds of information. The official voice of the United States government today – including statements by officials, Congressional hearings, or government news outlets such as Voice of America – is overwhelmingly censorious.  These criticisms are all valid, but such public shaming often lends credence to the CCP refrain that Westerners want to destabilize, bully and threaten China.  There is a nuanced difference here between standing up for democracy and actually bringing about democracy.  When Congress calls for the Chinese embassy’s street in D.C. to be renamed for a jailed dissident – few regular citizens will be aware, and those who are may not get the point.

Democratic evolution is served by giving Chinese citizens facts about their life and our system, thus letting the contrast speak for itself.  For example, the American embassy in Beijing maintains @BeijingAir, a Twitter handle with automated readings of air quality in the capitol every hour on the hour.  Even though Twitter is blocked, the readings are smuggled into Chinese social media and taken as the standard, reliable reading for air quality.  So much so that when the consulates in Shanghai and Guangzhou started doing the same, Chinese officials complained to the media that the U.S. was purposefully trying to make China look bad.

The fact is, they don’t need help looking bad.  Straight, localized information about rampant corruption, environmental degradation, and harsh repression are powerfully subversive of party control.  That’s exactly why the CCP has kept a choke hold on the flow of information.  Instead, they produce nonsensical propaganda, such as a claim that Beijing’s air has gotten better every year for the last 14 years.  Chinese social media outlets such as Weibo, We Chat, QQ, Renren, radio broadcasts and podcasts should be flooded with accurate, reliable local Chinese news.

Radio Free Europe (RFE) in Turkmenistan provides an example of this strategy at work in another authoritarian environment.  The current RFE station director changed the programming from “long, turgid segments featuring Turkmen dissidents” to news stories based on vetted listener tips and story requests. The response was overwhelming, as website views shot from a few hundred to 14,000 per day over two years.

Honest information also gives civil activists a fact base for comparison.  Last year, for instance, a picture of U.S. Ambassador went viral.  A Chinese netizen snapped a shot of the Ambassador buying his own coffee and uploaded it.  As the image went viral, comparisons between aloof, corrupt Chinese officials to the wholesome do-it-yourself Chinese American flew and again, Chinese officials complained.  In the same vein, when President Obama releases his tax returns every year, that story should be online, in Chinese.  The idea of Chinese President Xi Jinping reporting his wealth details is inconceivable.  The U.S. debate about fracking – showing how regular citizens have a say and can lobby the government – should be reported.  When a U.S. corporation is investigated and penalized, public trials and all should be available as an example of everyday democracy at work.

The Tiananmen Square massacre still holds two important lessons for American policy makers.  First, the Chinese people can rally for change, and many aspire to real democracy.  Second, there is no limit to what the CCP will do to stay in power.  The violation of basic human liberties by the Chinese government is and should be news.  But rhetoric and policy both need to balance the stand against the Chinese government with shows of support for the Chinese people.  The best way to show our support is by promoting information.  Access to information matters, the distribution of accurate information matters, and a basis for comparison matters.

China has been compared to a boiling pot of water.  The heat continues to rise while the government keeps pressing harder on the lid.  For 25 years the U.S. has tried to negotiate with the government to take its hand off the lid; they will not.  It’s time to add fuel to the fire.

Make college affordability about accountability

Posted on by The Progressive Policy Institute

June is fast turning into college affordability month on Capitol Hill. A fresh crop of college graduates, a final push for midterm election talking points, and the impending retirement of HELP Committee Chairman Sen. Tom Harkin (D-Iowa) have all raised the profile of student debt. But while promoting opportunity is essential, we can do more to address affordability by focusing on accountability — for schools and for students.

It is undeniable that rising student debt burdens are imposing a tremendous strain on young Americans. Though 70 percent of borrowers have outstanding loans of less than $25,000, all are struggling under the weight of a slow-growth economy.

Yet forgiving all of the student loans and interest payments in the world still doesn’t address why the postsecondary education system has become so unaffordable. Neither will blindly throwing more money into Pell Grants, a program with unknown effectiveness.

Continue reading the article at the Hill.

Course Correction

Posted on by The Progressive Policy Institute

Community colleges should be matching students to jobs, not funneling everyone into a four-year degree. A response to Richard D. Kahlenberg.

The United States is facing one of the greatest workforce challenges in recent history. Wages have been stagnant for a decade and middle-skill jobs have evaporated—and yet unfilled vacancies for high-wage computer and tech jobs are at record levels. Few have been as badly affected by the shifting landscape of the labor market as young Americans, who must adapt to the global competition for jobs with no guarantee of a secure retirement. Already a wealth gap exists relative to older generations at their age, and lower net worth, alongside rising student debt, will inevitably leave lasting economic scars.

In his recent Democracy essay [“Community of Equals?,” Issue #32], Richard Kahlenberg correctly points out that the failure of our nation’s community colleges is partly to blame. He rightly emphasizes the important role community colleges play in the well-being of our nation’s workforce, writing, “Their success or failure will help determine whether America remains globally competitive and whether American society can once again promote social mobility in an era of rapidly changing demographics.”

So ineffective have community colleges become that they are hardly considered a viable pathway into the workforce. In fact, a four-year credential seems to be the only acceptable postsecondary pathway; you either earn a bachelor’s degree or accept a fate of underemployment and low pay. It follows that since 2000, the number of two-year colleges has remained flat while the number of four-year institutions has increased by more than 400, or 17 percent. There are now about 2,900 four-year colleges in the country, or roughly one four-year institution for every U.S. county.

Kahlenberg wisely advocates reforming the entire community college system. However, his analysis and proposed solutions are flawed in three important ways. First, community colleges are failing not because of de facto segregation, as Kahlenberg insists, but because they don’t adequately prepare students for the workforce. The best way to fix this is through private-sector engagement, not heavy-handed government intervention. Second, the goal of community colleges should be to prepare students for the workforce, not just to pave a path to a bachelor’s degree, as Kahlenberg suggests. Finally, failure within the postsecondary education system is not confined to two-year colleges. Four-year colleges are also facing serious challenges.

The first flaw in Kahlenberg’s analysis is his foregrounding of socioeconomic segregation as the main problem facing community colleges. He writes, “[O]ur higher education system, like the larger society, is increasingly divided between rich and poor, an arrangement that rarely works out well for low-income people.” He suggests that the demise of community colleges stems from a vicious cycle of reinforcing racial and low-income stratification, where only poor people go to community colleges while better-off people get an automatic pass to attend a four-year institution.

Kahlenberg offers the fact that four-year colleges enjoy greater government support as proof of inherent preferential treatment toward more affluent Americans. He laments that “direct federal aid to higher education disproportionately benefits four-year over two-year colleges” and that “wealthy four-year universities receive large public subsidies in the form of tax breaks that are largely hidden from public view.” Yet this is hardly proof of income or racial bias. Four-year colleges are more expensive, and provide a longer, more comprehensive service than community colleges, so it’s not surprising that more federal aid goes to four-year institutions. Moreover, if private nonprofit schools are able to use tax-supported donor funds to defray rising costs instead of increasing tuition or relying on students to take on more debt, then that should be applauded, not assailed.

By focusing on segregation, Kahlenberg misses the fact there are other factors at play. For example, our nation’s K-12 education system bears much of the blame for perpetuating the failure of community colleges. Too many young Americans graduate from high school without rudimentary skills, forcing community colleges to retrain students in basic education. For instance, the Northern Virginia community college system—an exemplary system by Kahlenberg’s definition because it grants automatic admission to Virginia state universities upon completion—offers a course in learning “whole numbers.” But I found no courses specifically in SAS, STATA, Eviews, or other statistical analysis software that high-wage employers are looking for. By being forced to offer mainly remedial courses, such community colleges disserve the many students who do have basic skills and prohibit the integration of people from different backgrounds that Kahlenberg strives to encourage.

In reality, our community colleges are failing for a reason more obvious than a socially ingrained elitism. It’s because they aren’t providing students with a positive return on investment. They are not adequately preparing their students for the workforce with dynamic training programs that align with local employer demands.

Indeed, the best way to promote economic and social mobility is to prepare our workforce for jobs that match such demands. The key is to engage the private sector: the employers. They must be an active partner to community colleges, participating in curriculum design and engaging with prospective hires. Nowhere in his essay does Kahlenberg mention the role of the private sector, leaving a rather large hole in his analysis.

Instead, the author’s proposed reform of reallocated government spending will only preserve the status quo. Worse, it would exacerbate the skills mismatch, as community college administrators would have little incentive to work with local employers. His focus on bringing in more middle-class students to community colleges would also do little to help millions of struggling young Americans of all backgrounds.

Real reform of community colleges would also engage the education-technology revolution that is passing too many postsecondary education institutions by. Low-cost, high-speed broadband has the potential to transform workforce training, creating enormous economic and social opportunity by including people of all socioeconomic backgrounds. For example, the University of Colorado’s College of Engineering and Science recently launched a program to help its students master communications technologies to collaborate with engineers from around the world. Designed to teach students the online skills they need to succeed in business, the program saw a diverse student body—50 percent female, 30 percent Latino—in its first year. The emergence of massive open online courses and customized education is also of great promise, and could even encourage higher completion rates—an area of concern in the postsecondary education industry.

If community colleges realigned their mission to prioritize workforce preparedness, the growing socioeconomic divide Kahlenberg writes about would likely be to a certain extent reversed. Perhaps more students of varied backgrounds would want to enroll if they knew the associate degree held more clout in the workforce. The segregation that plagues today’s system would improve organically, in a virtuous cycle, without heavy-handed government mandates.

A second problem with Kahlenberg’s essay is his assumption that the end goal of the community college system is for everyone to get a four-year degree. Here Kahlenberg is not alone; it seems as if the bachelor’s degree is seen by the entire postsecondary education industry as the Holy Grail for the economic woes that afflict young Americans.

This is simply not true. Not every job requires a four-year degree and not everyone needs one. For example, according to the Bureau of Labor Statistics, over the next decade new jobs requiring either an associate degree or a postsecondary non-degree award are expected to grow faster than jobs requiring a bachelor’s degree. Many of these jobs—such as those for medical or engineering technicians, or for computer support specialists—pay well and are vocational or technical. This suggests some four-year students could probably get a better return on investment from a two-year credential or non-degree certification.

The fact is that when it comes to a bachelor’s degree, it matters where you go to school and what you study. While on average those with a bachelor’s degree earn $1 million more in their lifetime than those without, the variance in return on investment is large.

There is no question that some form of postsecondary training or education is necessary in today’s economy. Young Americans without education beyond a high-school diploma are dropping out of the labor force at an alarming rate, or working less, unable to compete for decent jobs. But the question we should be asking is: What type of postsecondary credentials do we need? We must design postsecondary education policies that reflect the reality on the ground by promoting more alternative pathways into the workforce outside of a bachelor’s degree.

This brings us to the third flaw in Kahlenberg’s analysis. By wanting to funnel everyone into four-year schools, he ignores the fact that the four-year model is already beginning to implode. It turns out that the recent building binge of four-year colleges may not have been the greatest idea, as we are now saddled with many ineffective four-year schools. A painful truth is that the failure of postsecondary education is not confined to community colleges, and many four-year institutions are also facing tough questions from students and parents.

Young college graduates know all too well that having a bachelor’s degree is not a guaranteed ticket to financial success. They have seen their real average annual earnings drop by 15 percent over the last decade, as the hollowing out of middle-skill jobs over that time has forced more graduates to take lower-paying jobs that do not require a four-year degree. In fact, my research has shown that college graduates are forcing those with less education and experience out of the labor force—what I call the “Great Squeeze.” At the same time, they face rising student debt levels, now more than $29,000 per borrower. Too many young Americans are leaving the postsecondary education system with thousands in debt and little to show for it.

In his essay, Kahlenberg argues that four-year institutions provide a better service because they spend more per student than community colleges. He notes that “stunningly, over the past decade, inflation-adjusted spending on public research universities has increased roughly $4,200 per student, compared with just a $1 per student increase for community colleges.”

But this just shows how much more expensive it is to provide everyone with a four-year degree. Further, it wrongly assumes that because four-year research universities spend more per student, the student is getting a better education. The most recent data shows in that 2011, public universities spent more on “auxiliary enterprises,” which includes bookstores, dorms, and dining, than on academic support and student services.

Moreover, public funding for postsecondary education has been decreasing across the board, with four-year colleges also feeling the pinch. In Colorado, for example, annual public funding for postsecondary institutions is expected to decrease to zero by 2022. As state spending falls and tuition rises, the federal government has shouldered the burden of ensuring equal access. This includes the expansion of federal student aid and programs like income-driven repayment. According to the College Board, Pell grants are up 118 percent over the last decade. It turns out the increased spending per student at public universities is being paid for in large part by the student and the taxpayer.

By encouraging everyone to get a four-year degree, we will add more debt on the backs of young Americans and put greater strain on the federal aid system. This is especially true if more young Americans feel obligated to pursue graduate school to stand out to employers, taking on even more debt in the process. We need to have other viable pathways into the workforce that don’t require major time and financial commitments.

What we need is a community college system that can stand on its own. It should be a standard, if not common, pathway into the workforce. Its success should depend on how many students are able to achieve a decent standard of living upon completion, with transfers into four-year colleges as one possible option. Certainly, some colleges are getting the formula right, leading the way with innovative practices and programs that integrate local employers to the benefit of their students. Yet such cases remain the exception rather than the rule.

The goal of the postsecondary education system should be to facilitate America’s workforce preparedness. Only when we realize that multiple pathways are needed to reach this goal—rather than a one-size fits all approach—will we undertake the radical reforms we truly need.

This article was originally posted by Democracy.

Book review: Reclaiming America’s fiscal freedom

Posted on by The Progressive Policy Institute

There’s a lull in Washington’s budget battles, but it won’t last. Inevitably, the fight will flare up again, because the nation’s spending and tax policies are fundamentally at odds with what it will take to restore shared prosperity in America.

For now, though, it’s a relief to be spared another mortifying spectacle of fiscal brinkmanship.  After their 2010 midterm sweep, Republicans were convinced they had won a mandate for drastic cuts in federal spending. Spurning compromise, they shut down the government and repeatedly pushed the country to the brink of default. Such reckless antics shook investor confidence in the U.S. economy, triggered a credit downgrade and made America look like a banana republic.

While tea party zealots were chiefly to blame, Democrats didn’t exactly cover themselves with glory, either. President Obama lost his gamble that Republicans would relent in their opposition to tax hikes rather than let the budget sequester gouge big holes in defense spending. And by rejecting serious entitlement reform, Congressional Democrats allowed domestic spending to bear the brunt of deficit reduction. Continue reading “Book review: Reclaiming America’s fiscal freedom” →

National Journal: Public-Private Partnerships Hinge on Tax Policy

Posted on by The Progressive Policy Institute

In “Public-Private Partnerships Hinge on Tax Policy” Fawn Johnson of the National Journal discusses a policy memo released last week by Diana Carew, economist at PPI. In this article Johnson notes that public-private partnerships are becoming less partisan and more of an across the aisle issue. Johnson also elaborates on Carew’s memo, particularly Carew’s argument for changing the tax code in order to foster more public-private partnerships.

“Increasingly, however, public-private partnerships are becoming a topic of conversation among Democrats, another signal that the Eisenhower, big-government highway era is over. (We’ve known that’s been coming for several years.) Last week, the Progressive Policy Institute, a Clinton-era think tank, released a policy memo making the case that public-private partnerships are a good way to supplement our infrastructure needs without relying on the government to fund everything.”

You can read the rest of the article, as well as Carew’s policy memo, on the National Journal’s website, here.

How Public-Private Partnerships Can Get America Moving Again

Posted on by The Progressive Policy Institute

Nowhere is America’s chronic underinvestment in infrastructure more visible than in the nation’s transportation systems, which present a sorry picture of crumbling bridges, congested freeways, shabby airports, crammed transit and slow freight and passenger trains. We strive to be a first-class economy, but we cannot achieve that status with second-rate infrastructure. To put America back on a high-growth path, we must invest in repairing and upgrading our nation’s transport systems.

Today’s political landscape presents an opportune moment for Democrats and Republicans to act on addressing our deficient infrastructure. The Federal Highway Trust Fund, the main funding program for highways, is set to go broke at the end of this fiscal year without Congressional intervention. The Department of Transportation is also up for reauthorization with the expiration of the Moving Ahead for Progress in the 21st Century Act (MAP-21), which accounts for most federal transportation infrastructure financing programs. Providing financing certainty through long-term legislative commitments today means fewer project delays or cancellations tomorrow.

By making investment in infrastructure a priority now, and not letting partisan politics dictate the conversation, we can sieze this opportunity to enhance our future competitiveness. Over the last decade, public funding for transport infrastructure has been falling at all levels of government. This is true in recent years, even though interest rates are at historic lows.

The question, then, is how to get the biggest bang for the federal buck. Given the reality of continued fiscal constraints, it is increasingly clear that we cannot rely solely on more government spending. Instead, policymakers must also embrace a new model of infrastructure finance, one that creatively engages private resources to meet our infrastructure investment needs.
This report shows how public-private partnerships (PPPs) already have begun to break the traditional government monopoly on infrastructure spending. PPPs, also known as “P3s” and, increasingly as “performance-based contracting,” are a form of project finance that combines long-term public and private financing. Over the last few years, cities and states across the country have embarked on ambitious PPP projects to get America moving again, from the Port of Miami tunnel project, to modernizing Gary airport in Indiana, to creating the West Coast Infrastructure Exchange. While this report focuses on transportation infrastructure, the proposals put forward certainly apply to other forms of infrastructure, including water, energy, telecommunications, and social infrastructure such as schools, hospitals, and courthouses.

PPPs have several key advantages over traditional public funding. First, using public dollars to leverage private investment means lower burdens on taxpayers and less borrowing to maintain and improve infrastructure. Second, private businesses, who need to be assured a decent rate of return on their investment, bring market discipline to bear on both the selection and the management of projects. Risk-sharing with the private sector encourages innovation in project design, and cost-saving techniques in project construction and operation. Third, depoliticizing decisions about where to invest scarce infrastructure dollars can boost public confidence that their tax dollars aren’t being wasted on pork-barrel projects.

For all these reasons, PPPs have been growing, but their potential is still much greater. Skepticism among private investors about governments’ grasp of basic principles of project finance are limiting widespread use, as is the fact that appropriators often are reluctant to give up the power to steer public infrastructure spending toward favored interests and communities. Further, some political activists object in principle to private sector involvement in providing what they see as ineluctably “public goods,” whether they are roads, prisons, water systems or schools.

Perhaps more important, however, is the lack of understanding, especially at the state and local level, of how PPPs work and how to structure deals that generate market returns while also serving public needs. Only a handful of states make extensive use of PPPs, and 26 states have no experience at all with them.  And 17 states have yet to pass laws enabling public-private projects.

This report argues for policies that educate decision-makers about project finance, encourage the standardization of processes and documents, and promote regional collaboration. Washington, as the main provider of infrastructure funding, has an especially critical role to play. As such, this report also underscores three urgent priorities for federal policymakers:

  • First, Congress should pass legislation that enables states to issue more tax-exempt private activity bonds for PPP infrastructure projects, and expand their scope beyond surface transportation. The transportation infrastructure carve-out for private activity bonds in the tax code was authorized by Congress in 2006, but the $15 billion ceiling is expected to be reached in the near future.
  • Second, Congress should encourage foreign investors to join in projects aimed at rebuilding America’s economically vital infrastructure. This will require reforms to the Foreign Investment in Real Property Tax Act that currently sets the tax rate for the majority foreign of owners at 35 percent on all capital gains, much higher than the rate for domestic investors. President Obama has previously advocated such reforms, explicitly for the purpose of increasing foreign investment in America’s infrastructure.
  • Third, Congress should set up a national financing facility or fund to provide money and project finance expertise to infrastructure projects of national significance. Both the House and Senate currently have proposals to create an American Infrastructure Fund. But if partisan paralysis prevents Congress from acting on such proposals, PPI proposes a fallback—to expand and work within the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, a de facto infrastructure facility within the Department of Transportation.

Download the entire memo.

The Hill: Europe’s Tea Party Rising?

Posted on by The Progressive Policy Institute

Americans are mostly mystified by European Union politics, but then so are many Europeans. It’s hard to know exactly what to make of last week’s voting across 28 EU member states for the European Parliament.

“An earthquake” is how French Prime Minister Manuel Valls described the outcome. And no wonder: Both his Socialists and the main center-right coalition got walloped by the populist National Front, which took a quarter of the vote.

The other seismic shock came in Britain, where the U.K. Independence Party (UKIP) led all parties with 27.5 percent of the vote. Prime Minister David Cameron, duly chastened, urged other European leaders to “heed the views expressed at the ballot box” and curtail the powers of the sprawling Brussels bureaucracy.

Continue reading at the Hill.

The Hill: Cutting through the regulatory thicket

Posted on by The Progressive Policy Institute

Representatives Patrick Murphy (D-Fla.) and Mick Mulvaney (R-S.C.) wrote an op-ed for The Hill published today on their Regulatory Improvement Commission (RIC) bill.  PPI’s RIC proposal, written by Michael Mandel and Diana Carew in May 2013, was brought to the Senate floor as a bill last year, followed by the recent bill in the House of Representatives, in both cases garnering significant bi-partisan support.  As the op-ed explains:

According to the Progressive Policy Institute, there were 169,301 pages in the Federal Code of Regulations in 2011, an increase of almost 4,000 pages from just a year earlier. Expecting businesses, large or small, to comply with such a bloated body of rules detracts from their core function of producing better goods and services while creating jobs.

You can read about the RIC, the bill in the House, and the rest of the op-ed on The Hill’s website, here.

Gigaom: The FCC cares about peering fights, but how will it act?

Posted on by The Progressive Policy Institute

On May 27th PPI hosted an event titled “Should the FCC serve as Internet Cop?”  The event consisted of a panel discussion as well as a keynote speech from Ruth Milkman, Chief of Staff to the FCC Chairman Tom Wheeler. Milkman discussed the role of the FCC in relation to Internet Service Providers (ISPs).

“Ruth Milkman, Chief of Staff for FCC Chairman Tom Wheeler discussed the fights in the interconnection market today at a speech at the Progressive Policy Institute, signaling that the FCC may be ready to act on the issue of last mile ISPs such as Comcast, charging content companies like Netflix, Apple or Google for the right to directly interconnect with their networks.”

Read the full article on Gigaom’s webiste.

Mandatory Interconnection: Should the FCC Serve as Internet Traffic Cop?

Posted on by The Progressive Policy Institute

Since the agreement between Comcast and Netflix was struck in February 2014, several parties have called on the Federal Communications Commission (FCC) to regulate dealings between networks that comprise the Internet generally, and to dictate the terms of interconnection by Internet service providers (ISPs) in particular. This Policy Brief considers the costs and benefits to consumers if the FCC interferes with the terms under which ISPs connect with transit providers, content providers, and others. A key lesson from the economics literature that informs this question is that antitrust enforcement acts as a substitute for sector-specific interconnection obligations in industries that have made sufficient progress along the “deregulatory arc.” Because the communications sector was set on a deregulatory path nearly 20 years ago, has the time come to rely on antitrust to adjudicate interconnection disputes on the Internet?

Introduction
To date, interconnection agreements between the networks that comprise the Internet have been privately negotiated without a regulatory backstop. The vast majority of these negotiations have gone down without a hitch. Some notable interconnection disputes in the United States involved Cogent-AOL (2002), Cogent-Level 3 (2005), and Cogent-Sprint (2008). While transit companies such as Co-gent and Level 3 have complained about the quality of interconnection with certain Internet service providers (ISPs), consumers have largely been unaffected; rarely does a dispute turn into a prolonged service disruption for customers. Yet the question of the FCC’s role in dealings among these “core” networks is front and center inside the Beltway.

The interconnection controversy is playing out as the FCC grapples with new rules to “Protect and Promote an Open Internet,” which are designed to protect “edge” providers such as content providers, application providers, and device makers. In its May 2014 Notice of Proposed Rulemaking, the FCC tried to distinguish interconnection from so-called “net neutrality” issues:

Separate and apart from this connectivity [to the Internet by the ISP] is the question of interconnection (‘peering’) between the consumer’s net-work provider and the various networks that deliver to that ISP. That is a different matter that is better addressed separately. Today’s proposal is all about what happens on the broadband provider’s network and how the consumer’s connection to the Internet may not be interfered with or otherwise compromised.

Although the Open Internet proposals are designed to address the management of traffic within an ISP’s network, the FCC also seeks comment on how it can ensure that an ISP “would not be able to evade [its] open Internet rules by engaging in traffic exchange practices that would be outside the scope of the rules as pro-posed.” The issue is clearly timely and ripe for resolution.

Some scholars have advocated for greater FCC involvement in interconnection disputes. For example, Werbach (2014) suggests that the FCC’s mobile-data-roaming order could serve as a regulatory template for compelling interconnec-tion on the Internet. Under this approach, networks could negotiate terms for interconnection; where conflicts arise, the FCC would provide a backstop for dispute resolution. Narechana and Wu (2014) advocate that the FCC classify the ISP’s transfer of data from content providers to consumers as a telecommunications service, subject to “common carrier” regulation. The authors argue that “because such sender-side regulation focuses on incoming traffic, it also provides a useful framework for addressing interconnection disputes between broadband carriers and content providers.” This more invasive approach would give the FCC power to compel interconnection without need for voluntary negotiations, and interconnection rates could be set by regulatory fiat.

Missing from much of this debate is an analysis of the social costs and benefits associated with mandatory interconnection. This Policy Brief seeks to identify these effects from the consumers’ vantage and offers an economic principle that may guide policymakers to a narrowly tailored solution. In their review of inter-connection obligations across several network industries, Carlton and Picker (2006) explain that sector-specific interconnection obligations and antitrust enforcement serve as complements in partially deregulated industries; in fully de-regulated industries, antitrust enforcement acts as a substitute for sector-specific interconnection obligation. Because the communications sector was set on a deregulatory path nearly 20 years ago, has the time has come to rely on antitrust to adjudicate interconnection disputes on the Internet?

Download the complete brief.

Politic365: Government Investment Best Suited for Transportation Infrastructure

Posted on by The Progressive Policy Institute

In “Government Investment Best Suited for Transportation Infrastructure,” Jessica Washington of Politic365 discusses the recently released report by PPI economists Diana Carew and Dr. Michael Mandel. Washington summarizes the report and agrees that private companies are the best option to provide high-quality and dependable broadband, while the government would be better suited to focus on public interest by increasing transportation infrastructure.

A recently released report by Diana Carew and Dr. Michael Mandel of the Progressive Policy Institute says government investment is best spent on transportation infrastructure rather than on broadband buildout. For every $1 invested in roads, bridges, and public transit systems, the economy receives a $1.5 to $2 benefit.”

The rest of this article, along with Carew’s and Mandel’s report, can be found at Politic365.

Senate’s Failure to Move Patent Reform Stifles Innovation

Posted on by The Progressive Policy Institute

In this year of partisan gridlock, there have been precious few issues that enjoyed broad bi-partisan support. Patent troll reform has been one of them – until now. With word out today that the Senate has set aside their effort on patent troll reform, gridlock has succumbed another victim. This time, the victims are businesses across the country who are being extorted by patent trolls.

As the President has explained in calling for reform, patent trolling is a litigation abuse play. “Trolls” are shell companies that buy dormant patents, wait for others to independently develop new technology, and then accuse them of infringing on their patents. They strategically price settlement demands below the cost of defending the claim, knowing many companies will pay them to go away, rather than defend the rights to their own inventions. The Progressive Policy Institute published a paper titled, Stumping Patent Trolls on the Bridge to Innovation in October 2013 making the case for why these reforms are needed.

When the President called for targeted litigation reforms and the House obliged with a bi-partisan bill that passed 325 to 91 at the end of last year, hopes were high that the Senate could get something done. We commend Senators on the Judiciary Committee and their staffs for spending so much time and energy on this issue. We urge them not to give up or be distracted by issues irrelevant to patent litigation. The stakes are too high for too many people.

Where are the Big Data Jobs?

Posted on by The Progressive Policy Institute

The recent White House report on big data has garnered a great deal of public attention, both for its strong support for big data as a “driver of progress” and for its highlighting of privacy concerns. The bottom line of the report: “Americans’ relationship with data should expand, not diminish, their opportunities and potential.”

However, the authors of the White House report paid little attention to one important economic topic: Big data as a jobs creator. Big data is creating a wide variety of jobs, from data analysts to software developers to the people who run the massive data warehouses that are essential to almost every large company these days. This jobs impact should be an important part of policy considerations about big data.

In this memo, we estimate the number of ‘big data’ jobs in the U.S. economy as of May 2014. We define a big data job as a computer and mathematical occupation that uses big data skills, such as data analytics or knowledge of big data programs such as Hadoop or Cassandra. We track these big data jobs using a want-ad methodology developed by South Mountain Economics LLC in a series of papers on App Economy employment and a forthcoming analysis of big data and medtech jobs in Great Britain.

We find that the United States now has about 500,000 “big data” jobs. Roughly 100,000 of these jobs are in California, and another 100,000 are in New York, Texas, and Washington. Table 1 lists the top ten states for big data jobs, as of May 2014.

Download the policy brief.

The Hill: Panel to cut red tape gains Dem support

Posted on by The Progressive Policy Institute

On Tuesday, May 20 Will Marshall, PPI President, joined a bipartisan group of House members to announce a proposal for a Regulatory Improvement Commission that would weed out accumulated rules and modernize outdated federal regulations in an effort to spur growth and innovation. PPI was noted for its work on the proposed legislation in Benjamin Goad’s article for The Hill. Goad also quoted statements made by Marshall during Tuesday’s press conference.

Thus far, the push has attracted support from two dozen members of the House and Senate, including 10 Democrats. The Progressive Policy Institute (PPI) is also pressing the idea.

Officials from the group noted that every president from Jimmy Carter to President Obama has directed his administration to root out overly burdensome rules, though they said none has made sufficient progress toward addressing the accumulation of new rules, continuously layered upon the old ones.

“It’s not because we hate regulations,” PPI President Will Marshall said. “It’s because we love economic growth and innovation.”

Read the full article on The Hill’s website here.