Category: Uncategorized

Three Ways to Bring Manufacturing Back to America

Posted on by The Progressive Policy Institute

Writing for The Washington Monthly, Anne Kim discusses insourcing, and how it can affect the U.S. economy and U.S.-based innovation in the future.

In January 2012, President Barack Obama convened nineteen CEOs and business leaders at a White House forum to tout a potentially promising new phenomenon: instead of “shipping jobs overseas,” U.S. companies were bringing them back. “[W]hat these companies represent is a source of optimism and enormous potential for the future of America,” Obama said. “What they have in common is that they’re part of a hopeful trend: they are bringing jobs back
to America.”

Anecdotally, the record is impressive. A number of major companies—including some of the same firms that first took flak for “offshoring” jobs to China—are now expanding their manufacturing operations stateside. General Electric, for example, says it has created 16,000 new U.S. jobs since 2009, including jobs at a new locomotive plant in Fort Worth, Texas; a solar panel factory in Aurora, Colorado; and an engine manufacturing facility in Pennsylvania. The company’s recent revival of Appliance Park, in Louisville, Kentucky, as a maker of high-end refrigerators, was the subject of high-profile coverage, including a recent piece in the Atlantic.

Other companies that have seemingly caught the “reshoring” wave are appliance maker Whirlpool (which rejected sites in Mexico in favor of Tennessee), and iconic brands like Intel, Canon, Caterpillar, and DuPont. All of these firms have reported expanding or building new U.S. facilities in the last few years. In December 2012, computing giant Apple announced it would bring some Mac production back to America, investing about $100 million to do so.

So given these recent wins, can “insourcing” save America’s economy?

Read the complete piece at The Washington Monthly.

College Cost at a Glance

Posted on by The Progressive Policy Institute

PPI Senior Fellow Paul Weinstein lauds the White House’s creation of the College Scorecard:

If you haven’t yet, you should check out the new version of the College Scorecard launched by the White House this week.  The Scorecard is an example of the power of the President to act without Congress and the potential of “open” information to address social and economic problems—in this case the ability of colleges and universities to raise prices with little impact (to date) on demand, at a time when family incomes remain flat and more and more students are walking away after four or more years of college without degrees, without jobs, and with lots of debt.

Read the full piece at GovStud.

Rethinking the U.S. Presidency

Posted on by The Progressive Policy Institute

In an article for NPR, Linton Weeks discusses alternatives to adapt the U.S. presidency to the challenges of today. He cites Raymond A. Smith’s May 2012 policy brief:

The Progressive Policy Institute’s Smith believes that the president and the nation could benefit from strengthening the role played by the president’s executive committee — the Cabinet. “Generally speaking,” Smith says, “I think that presidents have not made good use of the Cabinet.”

In the past 50 years, Smith argues in his 2012 essay The Fine Art of Cabinet-Making: Five Ways to Build a Stronger Executive Team, the power of the presidential Cabinet has waned while the power of professional White House staffers has waxed, narrowing the breadth of opinions and views.

These days, Smith writes, Cabinet “meetings are often little more than occasional photo ops to bring together POTUS, the VP, the heads of the 15 executive departments and a few other ‘cabinet-rank’ officials such as the heads of the Office of Management and Budget and the Environmental Protection Agency, the Ambassador for the United Nations, and the U.S. Trade Representative.”

Read the entire article.

State of the Union 2013: Right Direction, Wrong Speed

Posted on by The Progressive Policy Institute

President Obama got off on the right foot in last night’s State of the Union address by putting America’s economic revival at the center of his second-term agenda. That was reassuring, since his second inaugural strangely neglected this crucial subject.

There’s no more urgent national challenge than building new economic foundations for shared prosperity. More than anything else, what happens to the U.S. economy over the next four years will decisively shape history’s judgment of Barack Obama’s presidency.

Last night, the president certainly got the goal right. But it’s fair to ask whether the modest means he proposed are adequate to the task.

On the plus side, the president’s endorsement of corporate tax reform was welcome. Eliminating tax loopholes and subsidies will make for better investment decisions, and bringing down the corporate rate will make doing business in the United States more attractive. We also need to overhaul a worldwide tax system that encourages companies to offshore activities and leaves profits stranded abroad.

Continue reading “State of the Union 2013: Right Direction, Wrong Speed” →

The Real Problem with Colleges’ Business Model

Posted on by The Progressive Policy Institute

In the Slate blog Money Box, Mathew Yglesias argues that the decrease of college graduates’ earnings is related to the irrelevant business model followed by most colleges. He uses Diana G. Carew’s graphs from her blog post “Is the Labor Market for College Grads Looking Up?”.

Below is an important chart from Diana Carew of the Progressive Policy Institute showing the falling earnings of college graduates in the 25-to-34-year-old bracket.

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And that right there is the simple problem with the existing higher education business model in the United States, which has involved aggregate per student spending that rises faster than inflation for a long time. This has relatively little bearing on the missplaced worry about whether or not college is “worth it” (the relative earnings of college gradatues are still high) or on the overhyped idea that online education is going to disrupt traditional learning. The real issue is simply that people can’t spend money they don’t have on tuition, nor will banks want to lend people money that they aren’t going to have.

Read Yglesias’s blog post here.

Booming Data Economy Puts EU to the Test

Posted on by The Progressive Policy Institute

In an article for Euractiv, Jeremy Fleming calls for a new regulation adapted to the data economy in Europe. He cites Michael Mandel’s policy brief on the rise of the data-driven economy.

In a policy brief last autumn for the Progressive Policy Institute in Washington, Harvard economist Michael Mandel argued that “economic and regulatory policymakers around the world are not getting the data they need to understand the importance of data for the economy.”

Mandel cited the fact that Eurostat – the European statistical agency – reports how much European businesses invest in buildings and equipment, but not how much those same businesses spend on consumer or business databases, as evidence of a malaise.

“Since the modern concept of economic growth was developed in the 1930s, economists have been systematically trained to think of the economy as being divided into two big categories: ‘goods’ and ‘services’. But data is neither a good or service,” according to Mandel.

He believes that the key statistics watched by policymakers – economic growth, consumption, investment, and trade – dramatically understate the importance of data for the economy, and that “these misleading statistics distort government policy”.

Read the entire article here.

What Superdome Blackout Says About American Competitiveness

Posted on by The Progressive Policy Institute

In his Forbes article, Thomas J. Basile argues that the Superdome Blackout is a symbol of America’s aging infrastructures which drive down American Competitiveness. He cites Michael Mandel:

Even Michael Mandel of the Progressive Policy Institute lamented last year that Obama’s allocation of stimulus funds did little to help solve the problem because too much money was spent elsewhere.

Read the entire article here.

Is Your 401(k) Obsolete?

Posted on by The Progressive Policy Institute

New research by the firm HelloWallet finds that more than a quarter of Americans who have an employer-sponsored retirement plan are raiding these accounts for other uses.

According to HelloWallet’s report, Americans are withdrawing more than $70 billion a year from their retirement savings—and often paying big penalties to do so. On top of regular income taxes, early withdrawals are subject to a 10 percent additional tax penalty, which depending on the bracket, could eat up nearly half of a person’s withdrawal.

For many people, employer-sponsored retirement plans are the only mechanism “forcing” them to save. Yet the retirement-only focus of the current system isn’t versatile enough to meet people’s real needs—especially to cope with emergencies such as a job loss or a horrifically expensive car repair.

The depth and breadth of this ”leakage” from Americans’ retirement accounts means it’s time to rethink the kinds of savings accounts that all Americans should own. In particular, new ways to encourage emergency savings could help ensure that 401(k)s don’t continue to be an expensive, last-resort piggybank for so many Americans. Continue reading “Is Your 401(k) Obsolete?” →

What Privacy Means to Americans vs. Europeans

Posted on by The Progressive Policy Institute

Paul W. Taylor discusses the different attitudes towards privacy in American and European contexts in Governing Magazine, using PPI’s recent conference in Rome as a backdrop.

In October, I stopped for lunch at an outdoor osteria on Via della Lungara just east of the Tiber River. The pizza served there — puffy Neapolitan crust with buffalo mozzarella and fresh San Marzano tomatoes — was just the early part of a multicourse meal that always includes wine. Compare that to the American pie, a main course with its chewy crust smothered in tomato sauce, cheese and a seemingly endless variety of toppings. It almost always is accompanied by beer. All sorts of pies and slices get called pizza in the U.S., while the name and geographical distinctiveness of Neapolitan pizza is protected under European Union law.

On that trip, just two blocks from the osteria, an international gathering at John Cabot University, a private American liberal arts school in Rome, was considering another transatlantic divide — privacy in an era of big data — that has striking similarities to the different ways Americans and Europeans cook and serve pizza.

Read the entire article here.

Why Fannie and Freddie Aren’t Going Away Anytime Soon

Posted on by The Progressive Policy Institute

Writing for US News & World Report, Jason Gold argues that despite conservatives and progressives’ demand for a reform of Fannie Mae and Freddie Mac, the two GSEs are going to stay as they are for some time.

Fannie Mae and Freddie Mac, the two formerly private mortgage giants, have been in limbo since 2008 when the federal government took them into conservatorship.

Since then, Congress and President Barack Obama have proposed sweeping reforms of Fannie and Freddie—conservatives demand the government-sponsored enterprises (GSEs) be privatized if not abolished altogether, while progressives favor a more gradual phasing out of the two mortgage giants, which have become critical to the housing market recovery during the past several years.

There seems to be no hurry among policymakers to decide the fate of Fannie and Freddie, but it looks increasingly as if the GSEs are here to stay. Fresh evidence of this came last month, when the Consumer Financial Protection Bureau (CFPB) endorsed guidelines Fannie and Freddie now use in making new mortgage loans. The details are complicated, but in essence the bureau’s much anticipated qualified mortgage rule exempts Fannie and Freddie from the strict guidelines private bankers must now follow to ensure that borrowers can repay their loans.

This could mark a turning point in the GSEs’ fortunes.

Read the piece at US News & World Report.

Tracking Healthcare Cost Growth Through a New Measure of Productivity

Posted on by The Progressive Policy Institute

This brief provides a new explanation for why healthcare cost growth is showing restraint. Specifically, we find evidence that the healthcare sector is finally managing to use its workers more productively.

In this policy brief we define a new measure of healthcare productivity, Gross Medical Productivity (GMP). We define GMP as the number of potential patients per healthcare worker, where the pool of potential patients is the entire population. GMP measures healthcare productivity by looking at how effectively the sector uses its workers. So, if the potential patient population grows faster than the number of healthcare workers, GMP rises.

We argue GMP is a reasonable proxy for healthcare productivity, and could be a leading indicator for trends in healthcare cost growth going forward. Research shows labor accounts for over half of total healthcare costs1, suggesting a strong relationship between labor productivity and cost growth. Indeed, historically GMP has been falling at a rapid rate, corresponding to rapid growth in healthcare costs. That suggests a rise in GMP, or a rise in the number of potential patients per worker, will place downward pressure on healthcare cost growth. And because we can see changes in GMP well before official healthcare cost data is available, we believe GMP can provide early insight on the direction of cost growth.

From this approach we find evidence to suggest healthcare cost growth continued to show restraint in 2012, especially for the elderly population. We found that GMP rose considerably in 2012 for the 65 and over population, one of the largest drivers of healthcare cost growth, as healthcare workers became more productive in treating older patients. However, we also note that GMP for the entire potential patient population continues to fall.

Download the policy brief.

The Secret Ingredient for Solving Economic Inequality: Savings

Posted on by The Progressive Policy Institute

In his second inaugural address, President Obama laid out a bold vision for solving economic inequality. “We are true to our creed,” he said, “when a little girl born into the bleakest poverty knows that she has the same chance to succeed as anybody else because she is an American.”

The president has hinted at a variety of approaches for solving inequality, ranging from education reform to job training. But he has yet to spotlight one critical ingredient: savings. Without an aggressive plan to help all Americans save and build wealth, genuine equality of opportunity is impossible.

Stagnant household incomes are unquestionably inequality’s principal source of nourishment. The Census reports 2011 real median income was down nearly 9 percent from its high in 1999. Continue reading “The Secret Ingredient for Solving Economic Inequality: Savings” →

Reframing the Marriage Debate

Posted on by The Progressive Policy Institute

Listening to the political debate in Washington, you’d think the only important question about marriage is whether there’s any valid reason to bar gays from it. Few pay attention to the basic health of the institution we’re all fighting over.

David Blakenhorn is an exception. He and his colleagues at the Institute for American Values are calling public attention to the decline of marriage in the United States, and the profound social and economic implications it entails. They’ve just issued a call for a “new conversation on marriage,” which I’ve been pleased to endorse.

Our statement underscores that the erosion of marriage among non-college educated Americans (not just the poor) is reinforcing other baleful trends – wage stagnation and the concentration of economic gains at the top of the economic pyramid – that are deepening class divides in our supposedly classless society. And yet:

This hollowing out of marriage in mainstream America is among the most consequential social facts of our era. It’s contributing to the growth of inequality, harming countless children, and weakening, perhaps fatally, our formerly strong middle class. And amazingly, if you listen to political leaders of both parties and opinion leaders from both the left and right, you’ll discover that very few of them appear even to have noticed what’s happening.

The appeal ends by challenging the fatalistic view that the decline of marriage is some kind of historical or evolutionary inevitability. Marriage is an organic social institution, and we can take intelligent steps to strengthen it. By reframing the marriage debate, this statement begins that vital process of renewal.

Stop the Debt!

Posted on by The Progressive Policy Institute

Writing for Politico, Will Marshall argues that President Obama should counter the Republican’s proposal of balancing the federal budget in 10 years with an achievable goal of stopping the debt growth this year:

Republicans have retreated twice this month on the fiscal front, but they aren’t giving up. After having been forced to swallow higher tax rates and a debt ceiling increase, they’ve regrouped behind a new demand: balance the federal budget in 10 years.

That’s not going to happen, but no matter: The GOP is making an ideological statement. President Barack Obama should counter with a realistic fiscal goal, one Congress could actually achieve this year: Stop the debt from growing.

It’s finally dawned on Republicans that control of the House doesn’t entitle them to dictate the nation’s agenda. Still, they want to keep debt reduction front and center in Washington, because it’s a proxy for what conservatives regard as the nation’s overriding priority: shrinking the federal government.

But Obama won the election, and he has other ideas. One of them is not letting the right hold America’s economy hostage to demands for brutally deep cuts in public spending. The public backs the president, as evidenced by polls showing Americans believe GOP rigidity is the chief obstacle to a fiscal compromise.

Read the piece at Politico.

Ending the Endless Election Season

Posted on by The Progressive Policy Institute

National elections in the United States now stretch out over nearly 24 months, with each new electoral cycle seeming to start up almost as soon as the last has ended. By contrast, British law allows elections in the United Kingdom to last no more than 17 working days. In 2005, for instance, the electoral season began on April 11 with the formal dissolution of Parliament and the vote was taken on May 5. The U.K. is not alone in the speed of its elections: the 2008 Canadian federal election began on September 14 and ended on October 7. That same year, elections in Italy lasted a slightly longer seven weeks, while in 2010 in the Netherlands the process took ten weeks.

There are reasons that the United States probably can’t have elections quite as compact as those in parliamentary democracies. But do they really need to last 40 times as long as in Britain, or even 10 times as long as in the Netherlands? And do our elections need to be so exorbitantly expensive? The $49 million cost of the 2010 U.K. parliamentary election was 120 times less than the almost $6 billion cost of the 2012 U.S. presidential election, or about 1/23rd as much per capita.

There is much that the U.S. system can learn from other democracies that would enable it to significantly streamline, simplify, and shorten our interminable electoral process for both the president and Congress, as well as state and local offices. Following are five ideas from around the world. Not all could be easily or directly imported into the U.S. system, but at a minimum they offer food for thought; in some cases they offer the start of blueprints for action.

Download the policy brief.

End the Endless Election Season

Posted on by The Progressive Policy Institute

Writing for the Daily Beast, PPI Senior Fellow Raymond A. Smith lays out policies to improve our presidential elections.

President Obama’s second inauguration last week capped a long electoral cycle that began almost two years ago, in early 2011. The stupendous length and cost of America’s presidential elections is a wonder to the world – and not in a good way.

In scarcely 24 months, the whole spectacle will start anew. Then it’s two years of straw polls, fundraising reports, and breathless horserace coverage of non-events. This will be followed by a gauntlet of caucuses and primaries whose arcane rules are understood only by a small priesthood of campaign consultants. And it in the end will yield a general election campaign smothered in attack ads paid for by shadowy “independent” groups accountable to no one.

Does democracy really have to be this way? No, and for proof we need only look to our closest democratic allies, whose national elections are notably brief, efficient and orderly. How do they manage this? Four sets of policies and practices stand out.

Read the complete piece at the Daily Beast.