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Clinton Defends Civil Society

Posted on by The Progressive Policy Institute

President Obama has reorganized U.S. foreign policy around a new trinity of diplomacy, development and defense. That’s been a sore point among some progressive internationalists, who see the omission of a fourth “d” – democracy – as an overreaction to George W. Bush’s messianic freedom agenda.

Administration officials insist that they aren’t abandoning democracy, just promoting it in new and more subtle ways. Secretary of State Hillary Clinton recently offered an intriguing case in point.

As Americans celebrated Independence Day, Clinton was in Krakow, Poland for the 10th anniversary gathering of the Community of Democracies. In an important speech that got little attention back home, she unveiled what she called a 21st century approach to promoting democracy by defending civil society. Clinton described an independent civic sector as a nursery for democratic citizenship, no less critical to a free society than representative government and a market economy. And she warned of a spreading global backlash against civil society.

Over the last six years, Clinton noted, 50 governments have clamped down on the ability of civil society or non-governmental organizations to operate freely. She called out persistent violators by name: not just usual suspects like Russia, China and Iran, but also aspiring autocracies like Venezuela under Hugo Chavez and some, such as Egypt and Ethiopia, that are closely allied with Washington. “An attack on civic activism and civil society is an attack on democracy,” she told the assembly.

This marks a significant departure from the Bush administration’s approach to democracy, which centered on demands for elections and accountable political institutions. “All who live in tyranny and hopelessness can know: the United States will not ignore your oppression, or excuse your oppressors. When you stand for your liberty, we will stand with you,” Bush declared in his 2004 inaugural address. Against the backdrop of the war in Iraq and the war on terror, however, Bush’s freedom agenda acquired a menacing and coercive aura. And when the United States insisted on elections in Gaza, only to see Hamas win in 2006, many critics questioned whether elections are always the right starting point in democracy promotion.

Clinton aimed more modestly, but shrewdly, at bolstering a particular aspect of liberty – freedom of association. In authoritarian countries, civil society or “third sector” organizations play an especially vital role in building the infrastructure of liberal democracy. The United States learned the hard way during the Bush years that democracy can rarely be imposed by force, and from the top down. Support for local voluntary associations, on the other hand, is harder to caricature as some heavy-handed U.S. attempt to “export democracy.” Yet it’s deeply subversive, in that it enables indigenous reformers to carve out space for civic action that is independent of state control. By defending the right of CSOs to organize and operate, and receive international support, the United States and other free countries can promote democracy from the ground up.

Also intriguing was Secretary Clinton’s choice of venue. The Community of Democracies (CD) was launched in 2000 by then Secretary of State Madeleine Albright and Polish Minister of Foreign Affairs Bronisław Geremek. Although originally seen as a way to consolidate the wave of democratic reformism that swept the world after the end of the Cold War, the Community often seemed adrift during the last decade. Lax membership rules haven’t helped: some of its 104 members aren’t by any stretch genuine democracies.

If it is going to be a force for democratic solidarity in the world, the CD needs a clear and invigorating mission. Clinton suggested one: rallying the world’s democracies to support embattled civil society groups. She proposed a four-part plan:

  1. Setting up a mechanism at the CD for monitoring repressive measures against civil society organizations.
  2. Encouraging the United Nations Human Rights Council to champion the right of association.
  3. Enlisting regional organizations such as the Organization of American States, the African Union and the Arab League to protect civil society.
  4. Creating some sort of “rapid response mechanism” to bring joint diplomatic pressure to bear on governments that suppress civil society.

In addition, Clinton said the United States would contribute $2 million to a new fund dedicated to helping NGOs targeted by repressive rulers.

True, these are not especially bold measures. And the Human Rights Council, dominated by autocratic regimes, can scarcely be trusted to defend human rights, let alone the right to associate. But Clinton rather deftly managed to elevate the issue of defending civil society without turning it into a purely American demand or preoccupation. In fact, a CD working group headed by Canada is expected to take the lead.

An internationalist approach, in which America coaxes rather than trying to dominate, is essential at a time when distrust of U.S. unilateralism still lingers, even in a relatively friendly forum like the CD. Our task now is to work with like-minded countries to make defense of civil society an international norm, just as Americans were instrumental in getting the United Nations to adopt the International Declaration of Human Rights after World War II. In this respect, Secretary Clinton’s speech was a strong start.

Photo Credit: nrbelex

Tactical Radicalism and Its Long-Term Implications

Posted on by The Progressive Policy Institute

It’s been obvious for quite some time–dating back at least to the fall of 2008–that the Republican Party is undergoing an ideological transformation that really is historically unusual. Normally political parties that go through two consecutive really bad electoral cycles downplay ideology and conspicuously seek “the center.” Not today’s GOP, in which there are virtually no self-identified “moderates,” and all the internal pressure on politicians — and all is no exaggeration — is from the right.

But as Jonathan Chait notes today, there are two distinct phenomena pulling the GOP to the right this year: there’s ideological radicalism, to be sure, but also what he calls “tactical radicalism:”

Obviously the conservative movement is intoxicated with hubris right now. Part of this hubris is their belief that the American people are truly and deeply on their side and that the last two elections were either a fluke or the product of a GOP that was too centrist. It’s a tactical radicalism, a belief that ideological purity carries no electoral cost whatsoever.

This is what I’ve called the “move right and win” hypothesis, and it’s generally based on some “hidden majority” theory whereby every defeat is the product of a discouraged conservative base or some anti-conservative conspiracy (e.g., the bizarre “ACORN stole the election” interpretation of 2008). As Chait observes, there is a counterpart hypothesis on the left, but is vastly less influential, and anyone watching internal party politics these days will note the vast difference in tone between Democratic primaries where moderation is a virtue and Republican primaries where it’s a vice.

While many Democrats (including Chait in the piece I’ve linked to) are interested in the short-term implications of tactical radicalism, such as the possibility that GOP candidates like Sharron Angle or Rand Paul could lose races that should be Republican cakewalks, there’s a long-term factor as well that no one should forget about for a moment. If, as is almost universally expected, Republicans have a very good midterm election year after a highly-self-conscious lurch to the right, will there be any force on earth limiting the tactical radicalism of conservatives going forward? I mean, really, there’s been almost no empirical evidence supporting the “move right and win” hypothesis up until now, and we see how fiercely it’s embraced by Republicans. Will 2010 serve as the eternal validator of the belief that America is not just a “center-right country” but a country prepared to repudiate every progressive development of the last century or so?

That could well be the conviction some conservatives carry away from this election cycle, and if so, what would normally pass for the political “center” will be wide open for Democrats to occupy for the foreseeable future.

Photo Credit: Steve Rhode’s Photostream

This item is cross-posted at The Democratic Strategist.

Increasing the Powers of the Nuclear Regulatory Commission

Posted on by The Progressive Policy Institute

We’re the good guys, right? The U.S. would never help other countries gain access to potentially dangerous nuclear technologies, would it? In general, that’s true. The United States has stringent export controls, and regularly sanctions companies that try to thwart these laws. Export control regulations, however, only cover technologies that have already been commercialized and are being sold for use in other countries. But what about new technologies for enriching uranium or separating plutonium? Should we be concerned about them even before they get built, especially if new technologies are smaller, more efficient, and could make it harder to detect cheating or covert plants?

I think so. After all, as Georgetown University physics professor Francis Slakey notes, “There’s been a number of different technologies to enrich uranium. Every single one of them — despite best efforts to keep secrets — every single one of them has proliferated.” The world’s most famous proliferator, AQ Khan, worked for the European company URENCO, a leading provider of nuclear fuel, in the 1970s. It is widely believed that he simply copied the blueprints for the enrichment technology — like gas centrifuges — that the company used at the time, and smuggled them out the front door, bit by bit. Later, in his native Pakistan, he led efforts to build centrifuges based on those designs and to improve them. Once he had mastered this technology, he offered both enrichment services and centrifuge designs to nearly anyone. Indeed, the International Atomic Energy Agency has reported that Iran’s centrifuges are based on the stolen URENCO designs.

So is there anything that we can do to prevent the next AQ Khan from stealing the latest and greatest new gadgets? One of our gatekeepers is the U.S. Nuclear Regulatory Commission. Created as an independent agency in 1974 by Congress to license the commercial nuclear power plants, the NRC also has oversight responsibility for all civilian uses of nuclear materials. Much of its jurisdiction predates the independent agency and is derived from the Atomic Energy Act of 1954 (when the NRC was part of the Atomic Energy Commission) and requires that the NRC evaluate whether the issuance of a license “would be inimical to the common defense and security or to the health and safety of the public.”

The Commission has a rigorous process in place to ensure that new nuclear power plants, enrichment facilities and storage depots — such as the now-in-limbo Yucca Mountain — all meet rigorous standards for safety and security. The NRC has not yet decided what role it can and should play in nonproliferation. Six members of the U.S. House of Representatives — both Democrats and Republicans — think that nonproliferation is already part of the NRC’s jurisdiction, and they’re recently written a letter to the NRC “expressing support for including a nonproliferation assessment as part of the process for evaluating license applications.”

The American Physical Society (APS), an organization I’m involved with, wants to go a step further. Based on information assembled in our recent report, Technical Steps to Support Nuclear Arsenal Downsizing, we noted that one way to ensure the peaceful use of fissile materials was to “elevate the priority of non-proliferation in the NRC licensing process.” Because of this, APS has filed a formal petition for an NRC rule change. If changes are made, nonproliferation would be an official part of the Standard Review Plan for the Review of a License Application for a Fuel Cycle Facility – Final Report (NUREG 1520 Revision 1).

What can NRC do? As part of the license application review process, NRC experts can determine if any of the technology is inherently dual-use or if technology is single-purpose. Single purpose technology — items that would only be used in this particular application — can be placed on export control lists and tightly constrained. For dual-use technologies, some may be placed on export controls lists as well. In addition, the NRC can require that no one — or at most, a very few highly trusted individuals — has access to the complete blueprints for these facilities. In other words, the NRC, in conjunction with other parts of the U.S. Government, can work to ensure that the particular components and ideas needed to make these facilities function properly don’t fall into the wrong hands.

So far, the U.S. has a stellar nonproliferation record. By including the Nuclear Regulatory Commission in nonproliferation efforts, we can better secure the country.

Photo Credit: Davi Sommerfeld’s Photostream

Georgia On the Mind

Posted on by The Progressive Policy Institute

As alert readers know by now, Robert Bentley won the Republican gubernatorial runoff in Alabama, with Terri Sewell winning the 7th district Democratic congressional nomination (tantamount to election), and Martha Roby turning back viral ad icon Rick Barber for the Republican nomination in the 2nd congressional district. My write-up of the results can be found here.

The next big primary state is Georgia, where voters go to the polls next Tuesday, July 20. There are competitive primaries for governor in both parties; and competitive Republican primaries for Congress in no fewer than six districts, with two Democratic congressional primaries that have drawn some attention. Georgia has a 50 percent nomination requirement, which means many contests will go to a runoff on August 10. This is also a state with a history of substantial early voting, though as of last week, mail-in and in-person ballots were down from prior elections, perhaps indicating a low turnout.

The Republican gubernatorial race (incumbent Republican Gov. Sonny Perdue is term-limited) has heated up in the last week, with a bunch of polls, sharp exchanges between candidates, and interventions by national figures. For most of the cycle, the front-runner has been State Insurance Commissioner John Oxendine, though he’s been considered vulnerable because of long-pending ethics investigations of alleged illegal contributions to his campaign by insurance companies. Three other candidates—former Secretary of State Karen Handel, former congressman Nathan Deal (who has some ethics issues of his own, which appeared to speed his departure from Congress), and state senator Eric Johnson—have been jockeying for a runoff position opposite Oxendine, though at least two polls now show the front-runner slipping into third place. Handel, whose campaign message closely resembles that of South Carolina gubernatorial nominee Nikki Haley (a “conservative reformer” fighting the “corrupt good old boys”), has been the candidate on the move of late, and got priceless attention this week from a Facebook endorsement by Sarah Palin. Deal countered with an endorsement from Georgian Newt Gingrich. Both Oxendine and Deal have been pounding Handel for alleged heresy on abortion and gay rights. And meanwhile, Johnson has been heavily running television ads, and has moved up into the teens in at least one poll. In other words, just about anything could happen on Tuesday, though Handel looks almost sure to have a runoff spot.

In terms of issues, all the GOP candidates have been competing to show avid support for an Arizona-style illegal immigration crackdown (Deal’s made this a signature issue, while Handel has sported an endorsement from Arizona Gov. Jan Brewer), and two candidates, Oxendine and Handel, have proposed abolition of the state’s income tax, reflecting the wild popularity of national “Fair Tax” proposals among Georgia Republicans. And all the candidates are hard-core conservatives on cultural issues, though Handel got into a fight with Georgia Right-to-Life by opposing its proposal to restrict IV fertilization procedures.

On the Democratic side, the big question all along has been whether former Gov. Roy Barnes, who lost to Perdue in a big upset eight years ago, can win the primary without a runoff, as most recent polls have suggested he will. Barnes’ most prominent challenger, Attorney General Thurbert Baker, got off to a very late start in television advertising, and is now trying to attract enough support from his fellow African-Americans to deny Barnes the win (African-Americans typically cast close to half the votes in Democratic primaries in Georgia). Baker got a significant boost earlier this week with an endorsement from President Bill Clinton (Baker was a big Human Rights Campaign supporter in 2008), and has been promoting legalization of electronic bingo as a way to raise money for K-12 education. But Barnes has strong African-American support of his own; just today he was endorsed by Atlanta Mayor Kasim Reed. Other significant candidates who could soak up some votes include former Secretary of State David Poythress, who’s been running an under-the-radar web-focused campaign, and former state House Democratic leader Dubose Porter, whose wife, Carol, is the odds-on favorite to win the Democratic nomination for Lt. Governor.

On the congressional front, the state’s two white (and Blue Doggy) Democratic House members, Jim Marshall and John Barrow, are as usual considered vulnerable in November. Marshall, whose district went solidly for John McCain, has drawn a strong opponent in state representative Scott Austin, who should win the GOP nomination easily on Tuesday. Barrow, whose district is marginally Democratic even in presidential years, has for the second time drawn a primary challenge from former state representative Regina Thomas, whom he beat 3-1 in 2008. Thomas got some help from in-district anger at Barrow’s vote against health care reform, but his massive financial advantage should get him over the line. Meanwhile, Tea Party-backed candidate Ray McKinney is favored over former fire chief Carl Smith for the right to oppose Barrow, though that race could easily go to a runoff.

There are big and active Republican primaries in the districts of African-American congressmen David Scott and Hank Johnson (who also faces former Dekalb County executive Vernon Jones, something of a party renegade, in the primary but isn’t expected to lose), who has had recent health problems, but Republicans would have to get very lucky to become competitive in either place.

An open seat in the north metro Atlanta 7th district has spawned a mammoth eight-candidate Republican primary to succeed John Linder, with every single candidate endorsing Linder’s “Fair Tax” proposal. Former state representative Clay Cox and former Linder chief of staff Rob Woodall are the favorite to make a runoff, though Christian Right figure Jody Hice also has some support.

And up in the North Georgia 9th district, until recently represented by gubernatorial candidate Nathan Deal, the winner of last month’s special election, Tea Party favorite and former state representative Tom Graves, must face pretty much the same field of opponents in the primary, but is expected to win.

In non-Georgia political news, the big development was probably the implosion of the Colorado gubernatorial campaign of former congressman (and GOP front-runner) Scott McInnis, accused of plagiarizing portions of a think-tank paper for which he was grossly overpaid a few years ago. Colorado Republicans are in a quandary; the only other candidate on the primary ballot, Don Maes, has struggled to raise money, and has, ironically, also been cited for campaign finance violations. To hand-pick another viable candidate, party leaders would have to wait for the primary to occur and then beg the winner to step aside.

Ed Kilgore’s PPI Political Memo runs every Tuesday and Friday

Everything Should Not be on the Budget Cutting Table: The Case for Expanding Public Investment

Posted on by The Progressive Policy Institute

The International Monetary Fund recently scolded the U.S. government for running large budget deficits. Leaving aside the absurdity of cutting deficits when unemployment is still extremely high, it’s clear that at some point – as joblessness declines toward 5 percent – deficit reduction will need to begin in earnest. But the real question is how to do that. There’s a risk that the Washington economic class – grounded as they are in 20th century neo-classical economics — will fail to balance the twin imperatives of fiscal discipline and public investment.

Indeed the common refrain that has become the new “group think” in DC is that “everything should be on the table” when it comes to addressing the debt. For example, the Bipartisan Policy Center’s Debt Reduction Task Force says, “everything should be on the table.” Even President Obama, who has at least rhetorically talked about the need for increases in public investment and fought to include public investment in the stimulus, now says that everything should be on the table. Other groups echo this intellectually easy, but intellectually simplistic, position. Pete Peterson’s Concord Coalition likewise calls for “applying budget discipline to all parts of the budget.” The New America Foundation’s Committee for a Responsible Budget supports a budget freeze on all discretionary spending. For these budget hawks, subsidies to farmers to produce crops that aren’t needed fall in the same category as funding for the National Science Foundation to advance science and technology critical to our nation’s future: they both cost money and both should be cut.

The Government’s Role

But there are some things that governments do – on the tax and spending sides – which drive productivity, spur innovation, improve health, clean up the environment and create other benefits that most certainly should not be on the table. The National Commission on Surface Transportation Financing (which I had the honor of chairing) recently highlighted a federal highway and transit funding gap of nearly $400 billion over the next five years. Increased federal support for highways and transit would lead to significantly greater societal benefits (reduced traffic congestion, higher productivity) than the costs in revenues. Yet some groups wave the budget red flag to oppose expanded infrastructure investment, even if increased user fees, such as the gas tax, pay it for. As ITIF has demonstrated, increasing the Research and Experimentation Tax Credit from 14 to 20 percent would return $9 billion more to the Treasury than it would cost. And as ITIF and the Breakthrough Institute have shown, solving climate change requires significant increases in federal support for clean energy innovation, but the benefits (saving the planet) are massive.

If neo-classical-inspired budget hawks want everything to be on the table, liberal Keynesians want to put practically nothing on the table, except higher taxes on the wealthy and business. For example, economist Jamie Galbraith would take entitlement reform off the table. His solution: pray the Chinese keep lending us money. Likewise, Jeff Faux, founder of the liberal Economic Policy Institute argues that, “The deficit projections no more reflect a crisis of “entitlement” overspending than they reflect a ‘crisis’ in any other category of spending, like military spending or agricultural subsidies. Sensible governance understands that the fact that a program area is expanding does not make it the source of fiscal imbalance. But with entitlements off the table, you can’t solve the government’s fiscal problems simply by raising taxes on the rich.

All Spending Is Not the Same

What’s behind this widespread unwillingness to prioritize investment? Budget hawks fear that sparing one item from the chopping block will only validate the demands of interest groups to exempt their pet programs. In addition, many adhere to a neo-classical economics perspective, which holds that government plays a negligible role in economic growth and should be neutral with regard to private sector activity. In the purest form of this thinking, everything is on the table, because nothing is more important than anything else. To paraphrase Michael Boskin, a neo-classical Bush I economist, a dollar of public investment on computer chips has the same societal value as a dollar spent on potato chips. But government should be anything but neutral. Science and infrastructure funding is more valuable than farm subsidies. Government support for research in computer chips is more valuable than support for potato chips.

For liberals, reducing spending on entitlements will not only harm working Americans, but will also reduce economic growth, since Keynesian doctrine holds that growth comes from increasing aggregate demand – meaning pump more money into the economy, period.

In contrast, an innovation economics approach to the budget distinguishes between spending on consumption and spending on investment. For innovation economics advocates, all spending (either on the tax or expenditure side) should be on the table, and all investment (on the tax and expenditure side) should be off the table.

Tax, Cut and Invest

The last time Washington paid attention to deficits was in the first Clinton term. At that time PPI Vice President Rob Shapiro wrote a series of reports with the title, “Cut and Invest.” The notion was that we should cut unnecessary spending and use a significant share of the savings to invest in the nation’s future, including education, infrastructure and research. That was the right message then and it is the right message now. Although today, such a report might be best titled, “Tax, Cut and Invest.” To solve the budget deficit in a way that enables the significant increases needed in investment, we need to raise some taxes, cut some spending and increase some investment.

The general outline should look like this: On the tax side, we should let the Bush tax cuts on the wealthy expire, including: dividend taxes, estate taxes (above a certain modest size) and top marginal rates. We should increase the gas tax by at least 15 cents a gallon (and index it to inflation) and at the same time institute a carbon tax. We should consider a border-adjustable business activity tax. We should eliminate the home mortgage interest deduction. (Home ownership has many societal benefits, but as we see from other nations without these large tax incentives, nations can get high levels of home ownership without wasteful subsidies.)

On the spending side, we need to deal with entitlements, including: progressive indexing of Social Security benefits and increasing the retirement age, continued health care reform — particularly focused on driving innovation to cut costs and cutting entitlements to farmers — farm subsidies. This should be a gradual process to spread the pain over time.

And most importantly, we should significantly expand investments. We need to expand investments in education and training, science and research, technology (including, but not limited to clean energy) and physical infrastructure. In order to ensure that companies in the U.S. are globally competitive and create jobs here at home, we need to expand corporate tax expenditures. For example, create a new corporate competitiveness tax credit that would include a much more generous credit for research and development, and a credit for business investments in workforce training and new capital equipment, especially software. Making these investments will cost money in the short run. But they will also generate returns to the economy and the government in the long term. In economic downturns, successful corporations don’t cut key investments because they know that these investments are vital to gaining market share and competitive advantage in the moderate term. Governments should think the same way.

So let’s stop talking about putting everything on the table and instead recognize that not only do investments need to be off the table, they need to get more from what’s on the table.

Rob Atkinson is president and founder of ITIF, a Washington-based think tank providing cutting-edge thinking on technology and economic policy issues.

Photo Credit: Gliko’s Photostream

China’s Switch from Importer to Exporter of Fast Trains Holds Lessons for U.S.

Posted on by The Progressive Policy Institute

In the world of high-speed rail, imitation can be an appealing form of flattery. While the Obama administration is literally tying the railway supply industry in knots by insisting on trainsets built solely of U.S. content, China opened its arms to foreign train manufacturers during the early stages of its high-speed rail program.

Now within the space of six years, China has become the fastest-growing exporter of rail equipment in the world. On Wednesday, Argentina signed a $12 billion deal to purchase locomotives, cars and infrastructure from state-owned Chinese railways. This triumph follows the country’s success in exporting its technology to Saudi Arabia, Turkey and Venezuela.

China’s ability to create a booming rail sector is a case study of how to leapfrog over established builders and stimulate domestic employment at the same time.

In 2004, China sealed a contract with a consortium led by Kawasaki Heavy Industries to build “bullet trains.” Local equipment makers soon mastered the know-how for their manufacture and licensed other design features from companies in Canada, France, Germany and Sweden.

Today, China operates the world’s fastest trains, with about 15 percent of the parts coming from overseas.

Cutting a Deal in California

On the global stage, China was a non-factor in high-speed-rail (HSR) manufacturing until about 20 months ago when it started bidding on projects overseas. With its cheap cost basis, China quickly made inroads against Siemens of Germany and Alstom of France – together with its former partner, Kawasaki, which reportedly could not imagine that the catch-up would be so fast.

The Chinese government recently signed a preliminary agreement to cooperate with California to help finance and build a HSR line between San Diego and Sacramento. China’s rail ministry has a framework agreement to license its technology to General Electric.

GE describes the agreement as requiring at least 80 percent of the components to come from American suppliers and final assembly in the U.S. GE itself would supply 200-mph electric locomotives using technology licensed from China.

Gov. Arnold Schwarzenegger is scheduled to lead a trade mission to Beijing in September to discuss China’s offer.

Insisting on All-American Content

The example of China provides an alternative model to the “do-it-yourself” approach of the Obama administration. Propelled by a desire to create jobs quickly, the administration says it will only fund rail projects where all manufactured parts – plus the underlining iron and steel – are produced in the U.S.

The 100-percent American rule was contained in Congressional legislation that authorized the spending of $8 billion in stimulus funds for HSR. The administration has told suppliers that it does not plan to use the law’s waiver to exempt some components, even though subway and light-rail trainsets funded with federal money may use up to 30 percent non-U.S. content.

America’s supremacy in railway carbuilding has long past. The last builder, Pullman-Standard Co., went out of business 25 years ago. A century before, George Pullman built the largest passenger railcar business in the world through his innovative Pullman sleeping car.

Without any current base to produce such equipment domestically, attempts to build a homegrown business are fraught with problems, according to many experts.

Last month, the Government Accountability Office (GAO) noted that it could take as many as nine years to build high-speed trainsets domestically. This included up to 21 months for testing the equipment and 42 months for production.

Easing Safety Rules

Complicating the situation are rules established by the Federal Railroad Administration that bar foreign trainsets on American rails because they do not meet the agency’s safety standards.

FRA requires massive amounts of steel in passenger cars so they can withstand a crash with a freight train on shared track. Foreign standards focus more on crash avoidance rather than crash survival, the GAO pointed out, making for lighter trains that nevertheless have stellar safety records.

The agency has shown some relaxation of its heavy-metal mindset by allowing California to operate European-style trains on a dedicated passenger line being planned between San Francisco and San Jose.

Opening the door to foreign suppliers of cars and locomotives, at least until American companies can digest the technology required for their manufacture, could speed up rail service and potentially re-position the U.S. in markets once ruled by George Pullman.

Photo credit: jiadoldol

Israel’s National Mindset

Posted on by The Progressive Policy Institute

“Is America really Israel’s ally? You think so? We’re not so sure.” An Israeli Defense Force reservist said this to me during a post-dinner drink on a deck overlooking the captivating Sea of Galilee last week.

My response was curt — “You better start believing it. Otherwise, you’re screwed.” Okay, perhaps that wasn’t terribly “PC” and perhaps my tone did little to convince him. After all, my reservist friend wasn’t particularly predisposed towards diplomatic nuance — he opposed any peace deal whatsoever.

However, the sentiment he expressed — that Israel is alone, that it has been abandoned and that it can only count on itself — is deeply embedded in Israel’s national psyche. I’m not here to argue whether this world-view is correct, but like it or not, it’s important to recognize that it exists, and that it lies at the heart of many Israeli foreign policy decisions.

It was hardly just one IDF reservist that tingled my spidey-sense. A top-level Israeli ex-peace negotiator was even more explicit: “Are we paranoid? Yes.” The IDF soldier based along the “blue line” separating Israel and Lebanon believed what UNIFIL — the UN’s peacekeeping force along the border — was doing “is not sufficient” to protect Israel.

The former peace negotiator went on to recount a meeting with a well-known European newspaper’s editorial board. When the board asked what the Israeli government disliked about the newspaper’s writing style, he responded succinctly: “To be sure comma,” a phrase that typically starts the sentence that ends with, “Israel has the right to defend itself.”

That caveat –“To be sure, Israel has the right to defend itself” – is standard fare among American and European opinion columns that go on to criticize Israeli actions. From his perspective, that disclaim glosses over the threats Israel lives under — international terrorist groups in southern Lebanon and Gaza bent on firing rockets and sending suicide bombers into his country, coupled with the stress of a perpetually unstable region, and Iran’s repeated threats of Israeli destruction. His point was: that in Washington, London or Paris, it’s easy to discount the seriousness (would it really make sense for Iran to attack?), scale and immediacy of these threats as these cities don’t live under them every day.

But in Israeli eyes, these threats loom larger. That’s what drove Israel’s unapologetic heavy hand in the 2nd Lebanon War, in Operation Cast Lead, and during the flotilla incident when so many Palestinian civilians were killed in the fighting. Israel is prepared to endure the resulting international condemnation, because civilian causalities and a soiled reputation are lesser evils when compared with looming national security threats, “It’s us or them, and I’d rather it be them. We can’t count on anyone else, so we’ll do it ourselves.”

In short, Israel is banking on military victories to create the appearance of invincibility. Israel reasons that, if the Arab countries believe they can defeat Israel militarily, why then would the Arabs be interested in a peace agreement. Yet that sentiment lands Israel in a catch-22 — if Israel appears militarily invincible, then why negotiate peace? The answer is, of course, that the longer conflict drags on, the higher the cost of appearing invincible will be — in lives, resources, and reputation.

Israel shouldn’t be given a pass for its heavy-handed actions, particularly ones that needlessly take the lives of innocent civilian bystanders. But understanding Israel’s conflicted inner-monologue is a critical component in brokering a lasting peace.

Photo credit: Hoyasmeg’s Photostream

Newt Versus Sarah

Posted on by The Progressive Policy Institute

It didn’t get the kind of national attention that Sarah Palin’s endorsement of Karen Handel received, but it could matter down the road: Newt Gingrich has endorsed his former House colleague Nathan Deal for governor of Georgia, just a week before the July 20 primary. Moreover, Gingrich offered his imprimatur in Georgia, not on a Facebook site (Palin’s only venue for Handel so far), and has cut an ad for the North Georgia party-switcher.

I’d say this is a pretty risky gambit for Newt, taking on Palin in his own home state, all the more because this is an extremely unstable race. Five different polling outfits have released surveys of this contest since July 1, and the results are all over the place. Two polls, from Survey USA and Mason-Dixon, have shown longtime frontrunner John Oxendine maintaining his lead with over 30 percent of the vote, and Karen Handel moving up into second place at 23 percent. Two other polls, from Insider Advantage and Magellan, have Oxendine’s support collapsing down into the teens; IA had him tied with Handel, and Magellan had Handel surging into the lead. All four polls had Nathan Deal bumping along in the teens as well, and not showing much momentum.

Now Rasmussen‘s weighed in with a poll showing Handel and Deal tied for the lead at 25 percent, with Oxendine semi-collapsing back to 20 percent.

If Rasmussen’s right, and Handel and Deal wind up in a runoff, the Newt-Versus-Sarah story-line will get a lot more play, and pressure on Palin to personally campaign for her latest Mama Grizzly will grow intense.

All this activity is preliminary, of course, to the general election, and the latest poll to test various Republicans against likely Democratic nominee Roy Barnes, the Mason-Dixon survey, shows the former governor tied with Oxendine, up eleven points over Handel, and up eighteen points over Deal.

Photo Credit: Auburnxc’s Photostream

This item is cross-posted at The Democratic Strategist.

Chinese Workers Flex Muscles

Posted on by The Progressive Policy Institute

PPI Special Report

The following is a guest column from PPI friend and sometime contributor Earl Brown, Labor and Employment Law Counsel for the American Center for International Labor Solidarity.

Over the last few months, thousands of workers, toiling in the Chinese factories of Japanese car manufacturers, have struck for improved wages, hours and working conditions—autonomously, without foreign input and with astonishing tenacity and shrewdness. These strikes have attracted much international media and scholarly commentary ranging from “nothing new” to “a new era dawns.” To adequately understand these strikes, however, we need to heed to the words of the strikers themselves.

Let’s look at the strike that garnered the most international coverage; the roughly two to three week strike at the Honda transmission plant in Foshan City near Guangzhou in the industrial province of Guangdong. Although Honda’s China operations are quite profitable and a key to Honda’s overall success, workers down its supply chain remain locked in a labor regime of low wages, speed-up and long hours. Of the roughly 1900 workers at the Foshan plant, some 800 plus are classified as “interns” and thus get even lower wages.

Facing announcements of a dramatic speed-up, the workers spontaneously struck. The strike at the Foshan transmission plant idled the whole Honda “just-in-time” system — a continuous production with low inventory — as completed transmissions could not be fed into the assembly plants. At first, Honda reacted with firings of strike leaders and threats, accompanied by minimal offers of wage improvements. When this didn’t work, Honda management, local government and the local government union used muscle.

Thick thirty-year-olds, connected to local government and decked in polo shirts and yellow hats, attempted to push and herd the massed, lean twenty-year-old striking men and women back into the factory. It didn’t work. At that point, Honda was desperate to get production back up as market analysts all over the world lasered in on Honda’s inability to crank out cars in China. Having exhausted heavy-handed labor relation’s tactics that weren’t working, upper management reached out to the elected representatives of these young, rights-conscious workers and quickly hammered out an agreement and a return to work.

Direct negotiation with real plant-level worker representatives, in the glare of international and national publicity, is a telling event. China has had many strikes. In the nineties, there were protests, which aimed at recouping unpaid wages from failed factories, or challenged privatization. More recently, strikes have occurred all over China for wage improvements in the logistics sector, in public transportation and, of course, in manufacturing. But this is the first time that workers, acting on their own, have compelled a major multi-national employer to deal directly and formally with their elected grass-roots representatives, on the stage of China and the world.

Many commentators, sensing the significance of this development, have looked to Poland and Detroit in the thirties to parse these events. These young Foshan workers, however, live in the China of now. They are imbued with a new rights consciousness, buttressed by recent advances in Chinese labor law. Operating within the framework of existing Chinese law, they want a decent life, not a wholesale revisiting of China’s history or political arrangements. In their very words:

“…. [our] fundamental demands are…salary raises…for the whole workforce including interns; improvements in the wage structure and job promotion mechanism; and last but not least, restructuring the branch trade union at Honda Auto Parts Manufacturing Co.’ Ltd. Another fundamental demand… [is]…non-retaliation and no dismissal of workers participating in the strike.”

Many outsiders have confused the demand for “restructuring the branch trade union at Honda Auto Parts Manufacturing Company” with insistence on an independent union, apart from the official sanctioned union. It is not. As Chinese law provides, these workers are asking for the opportunity to elect “branch” grass roots representatives, as is their right under Chinese labor law. In short, they have not asked for an independent union but a union that acts independently! A grass-roots union that speaks for them and not the employer or local government. More wages, more and better personal life and more “industrial democracy.”

In every industrial society thus far, underpaid industrial workers, without recourse to mechanisms for negotiating with employers, have struck as a last resort. Many strikes end without gains for workers. But where industrial workers can stop production, even in complex and diffuse supply chains, they are sometimes able to compel recalcitrant employers to recognize them as partners in the production process and make economic concessions. If we listen to the words of the striking Honda and Toyota workers in China, we will discover that this industrial drama is now being played out in China at the peak of its industrial system in auto manufacturing.

There are no outside agitators here, just young, educated and patriotic Chinese workers fashioning “industrial democracy” in China, on uniquely Chinese terms. They are doing so in front of a national and international audience. Because of this international context, these Chinese workers are also affecting the global economy. They could be leading the way towards an end to the global “race to the bottom” in working and living conditions for the world’s majority — at least as far as China is concerned. Our own Justice Brandeis, who at a similar stage in our industrial story put forward the need for industrial democracy and income equity, would welcome these Chinese events and be proud.

Alabama Runoff: Business As Usual

Posted on by The Progressive Policy Institute

Going into yesterday’s Alabama runoffs, the Republican gubernatorial contest revolved around rumors of a big, teacher-union-generated Democratic crossover vote in favor of Dr. Robert Bentley, along with speculation that his opponent, Bradley Byrne, might have gained crucial momentum by accusing Bentley of being a Democratic or union stooge.

Bentley beat Byrne 56-44, and a cursory look at the returns shows no evidence of any massive Democratic crossover vote. In fact, turnout was down 6 percent from the primary, with no apparent relationship between Republican turnout numbers and those counties with or without significant Democratic contests to keep Democrats on their side of the line. Moreover, Byrne did quite well in most of the counties with a big Democratic constituency. There was some anecdotal buzz yesterday about Democratic crossover in isolated locations (e.g., Madison County, where Republican turnout actually dropped 17 percent), but most election officials said it didn’t seem to be happening.

The much more likely explanation is that Bentley got the bulk of voters who cast ballots for Tim James and Roy Moore in the primary, hardly a stretch since both their campaign managers endorsed Bentley. James voters in particular probably discounted Byrne’s attacks on Bentley as no more credible than Byrne’s earlier attacks on their candidate.

In any event, future Republican candidates who think demonizing teachers unions is a failsafe strategy should take a close look at Alabama.

In the two congressional runoffs, nothing that unusual happened, either. In the 2nd district Republican contest, “establishment” candidate Martha Roby easily dispatched Tea Party activist Rick Barber 60-40, beating him nearly three-to-one in their common home county, Montgomery, where the fiery pool hall owner did not gather his armies effectively. Roby will now face Democratic incumbent Bobby Bright in what is expected to be a close race in November.

And in the 7th district Democratic contest, where the Democratic nomination really is tantamount to election, Terri Sewell, who had superior financial resources and significant national support, defeated Shelia Smoot 55-45, with the key being Sewell’s 54-46 margin in Jefferson County, where local races boosted turnout.

Photo credit: Roadside Bandit’s Photostream

This item is cross-posted at The Democratic Strategist.

Israeli Soldiers Duped on Facebook Into Revealing Base Location

Posted on by The Progressive Policy Institute

Last Friday, the Jerusalem Post reported that some 265 Israeli soldiers were lured into a cybersecurity trap, unwittingly revealing the location of a secret Israeli military base.

Soldiers who formerly served at the secret facility set up a Facebook group to serve as a mechanism to share stories and reflections about their time at the base. It was a “public, closed” group, which means the wider Facebook community could learn of the group’s existence, but applicants must request membership from the group’s organizer.

The location was exposed when a journalist requested membership, which was granted without vetting his (non-existent) military credentials.

Speaking on the condition of anonymity for fear of retribution, a soldier intimately involved in the army’s cyber operations said the group is one example of many serious security breaches by [Israeli Defense Force] soldiers in online social networks.

“It’s a security failure and they made a big mistake,” the soldier told The Media Line. “There is a reason why this base is a secret and this will undoubtedly cause harm, allowing Israel’s enemies to get important information and use it to attack Israel.

“Not only did they set up a group,” he said, “they set up the group publicly, rather than by invitation only.”

…

“Beyond national security, it is also a safety issue,” the source continued. “In the past Hezbollah operatives would set up a profile pretending to be Israeli women and ask to be friends with soldiers or join soldiers’ groups on Facebook. Over time through the status updates Hezbollah learned a bit about the soldiers, where they lived and were able to connect the dots. In theory, they could eventually kidnap that person,” he explained.

What’s the proper policy response?  Should the IDF ban all its soldiers’ access to Facebook?  That’s usually the American military’s knee-jerk response. According to Danger Room’s Noah Shachtman, education is the key. Here’s what he said in a PPI policy memo on a proper response to open-network, military-centric cyber threats:

The armed forces find it much easier to ban something than to educate its troops about responsible use. MySpace and YouTube are inaccessible from Pentagon computers – even though the military makes extensive use of the sites. Thumb drives are mostly forbidden as well, even though battlefield units rely on them to swap data in lonely places where bandwidth is hard to find. In the name of information security, information flow has been restricted. Meanwhile, secret overhead surveillance feeds are routinely left unencrypted; with an off-the-shelf satellite dish and $26 software, militants can see through the Air Force’s eyes in the sky. It’s a problem the military has known about for more than a decade but never bothered to fix. According to the Wall Street Journal, “the Pentagon assumed local adversaries wouldn’t know how to exploit it.”

Clearly, there needs to be a rather serious re-evaluation of military information assurance. The Pentagon needs to do a better job of figuring out theoretical risks from actual dangers; secret drone feeds can’t be left open while blogs are placed off-limits. Troops also need to be trained – and then trusted. The military routinely gives a 19-year-old private the power to kill everyone he sees. Surely, if that private can be taught to use an automatic rifle responsibly, he can be educated in computing without sharing secrets.

Militaries have give-and-take relationships with social networking sites. Yes, there are clearly vulnerabilities, but Facebook, Skype and Twitter are morale-boosters — they let troops in Iraq, Afghanistan and elsewhere stay connected to their families.

The military’s heavy-handed — shut-it-down mentality — kills morale and troops will get around the blockages anyway. As a former DoD civilian employee, I can give you multiple internet-based email services that allow access to your officially-blocked Gmail address.

Education is the only solution, and the military needs to embrace.

Photo credit: US Army Korea- IMCOM’s Photostream

How Bad is the Job Situation, Really?

Posted on by The Progressive Policy Institute

When it comes to economic conditions, I’m generally a glass-three-quarters-full kind of guy. Take unemployment. Quick—what was the risk in 2008 that an American worker would experience at least one bout of unemployment? Chances are you thought that that risk was higher than one in eight.* But figures from government surveys indeed suggest that thirteen out of fifteen workers (or would-be workers) had not a single day unemployed during the first year of the “Great Recession”.** (Incidentally, the recessions of the mid-1970s and the early 1980s were also called the “Great Recession” by some commentators.)

The 2009 data won’t be out until later in the year, but if last year ends up comparable to the depths of the early 1980s recession, then the average worker will “only” have had a seven in nine chance of avoiding unemployment.*** But these figures overstate economic risk because some unemployment is voluntary and much of it is brief. According to the Congressional Budget Office, the chance that a worker experienced an unemployment spell lasting more than two weeks during the three years from 2001 to 2003 was just one in thirteen—a period covering the last recession.

So as I’ve been following the debate about unemployment insurance and whether it actually worsens the unemployment rate, I’ve actually been open to the idea that being able to receive benefits for up to two years might create perverse incentives. The research is not as uniformly dismissive of the idea as some liberal assessments have implied (go to NBER’s website and search the working papers for “unemployment” if you want to check this out yourself).

In particular, the idea that there were 5 people looking for work for every job opening struck me as sounding overly alarmist. So I started looking into the numbers to determine whether I thought they were reliable. The figures folks are using rely on a survey from the Bureau of Labor Statistics called the Job Openings and Labor Turnover Survey, which unfortunately only goes back to December of 2000. But the Conference Board has put out estimates of the number of help wanted ads since the 1950s. Through mid-2005, the estimates were based on print ads, as far as I can tell, but the Conference Board then switched to monitoring online ads. You can find the monthly figures for print ads here and the ones for online ads here. The JOLT and unemployment figures are relatively easy to find at BLS’s website.

When I graphed the two Conference Board series (which requires some indexing to make them consistent–the print ad series being an index pegged to 1987 while the online series gives the actual number of ads) against the number of unemployed, and then the JOLT series against the unemployed, here’s what I found:

I’ll just say I was shocked and that I am much more sympathetic to extension of unemployment insurance than I was yesterday.

*The post originally said one in ten, which was wrong (the result of mistakenly using a figure I had computed for an older age range). Technically, the the figure was 13.2%, or 1 in 7.6.
** The original post said nine out of ten.
*** The original post said that if it reaches the depths of the 1990s recession, then the average worker will have had a five in six chance of unemployment. I located data for the early 1980s recession, which is a better comparison to the current one.

This item is cross-posted at https://www.scottwinship.com/1/post/2010/07/how-bad-is-the-job-situation-really.html.

Kind and Mandel to Speak on Innovation and Job Creation

Posted on by The Progressive Policy Institute

PRESS CONTACT:
Steven Chlapecka—schlapecka@ppionline.org, T: 202.525.3931

WASHINGTON, D.C. – Tuesday, July 20, Representative Ron Kind (D-WI) and Michael Mandel, former BusinessWeek chief economist and founder of Visible Economy LLC, will join the Progressive Policy Institute for a policy briefing and the release of “The Coming Communication Boom? Jobs, Innovation and Countercyclical Regulator Policy,” a policy memo focusing on job growth in innovative industries and the role of regulatory policy in aiding economic development.

Register for the event.

WHO

Rep. Ron Kind (D-WI), Co-chair, New Democrat Coalition Task Force on Innovation and Competitiveness
Michael Mandel, Founder, Visible Economy LLC
Will Marshall, President, Progressive Policy Institute

WHAT

The briefing will outline the latest trends in innovation and job creation, and offer a future outlook for the communications sector as a driver for economic growth.  Rep. Ron Kind, co-chair of the New Democrats Coalition Task Force on Innovation, will offer opening remarks at 12 p.m. Immediately following, Mandel will discuss and offer recommendations from his memo. This event marks the official release of the PPI policy memo “The Coming Communication Boom? Jobs, Innovation and Countercyclical Regulator Policy.”

WHEN

12 p.m. – 1:30 p.m. Tuesday, July 20

WHERE

U.S. Capitol, Room H-137, East Capitol St and 1st St NE, Washington, D.C.

MEDIA COVERAGE

The event is open to the press.  Media wishing to attend should contact Steven Chlapecka at 202.525.3931 or schlapecka@ppionline.org.

# # #

Register for the event.

Primary Turnout Challenge

Posted on by The Progressive Policy Institute

Today’s political feature is the runoff in Alabama, which I previewed in the last PPI political memo. As noted then, turnout patterns will probably be the determining factor in the GOP gubernatorial runoff, with the big question being whether Democrats will cross over in significant numbers. In the congressional runoffs, Democrat Terri Sewell is the favorite to win virtual election to the House in the 7th district seat vacated by unsuccessful gubernatorial candidate Artur Davis, and Martha Roby should be able to turn back viral ad star Rick Barber in the Republican contest in the 2nd district. In most of the state, voters will be suffering through hot, humid weather with possible thunderstorms.

The primary state up next on the calendar is Georgia on July 20, and the highly competitive Republican gubernatorial primary there was roiled yesterday by Sarah Palin’s endorsement of former Secretary of State Karen Handel. It’s not clear yet whether Palin’s endorsement was one of those one-off interventions that have often characterized her activity this year (viz. her endorsement of Terry Brandstad in Iowa without so much as a phone conversation), or will be followed up by more active engagement. But it was well-timed: Handel has been moving up in the polls recently, holding a strong second place behind long-time front-runner John Oxendine in a SUSA poll released last week. Much as happened in Iowa, Georgia’s social conservatives have not reacted well to Palin’s endorsement, and former congressman Nathan Deal, who has been battling Handel for a runoff spot, put out a release expressing disappointment in Palin for supporting “the most liberal Republican in this race.”

Rhetoric aside, Handel’s profile in the race is actually pretty similar to that of another recent Palin endorsee, South Carolina’s Nikki Haley, at least before hamhanded allegations about Haley’s sex life and background took over news coverage and vaulted her to a landslide runoff victory. Like Haley, Handel is positioning herself as a “conservative reformer” taking on the state GOP’s good ol’ boys, and her single biggest problem, poor fundraising, may have been offset by the attention she’ll get from Palin’s endorsement. Right now an Oxendine-Handel runoff is the most likely outcome next Tuesday, though both Deal and a fourth candidate, Eric Johnson (who’s been running copious television ads) will fight her tooth and nail to the finish.

An even bigger name than Palin got involved in Georgia’s Democratic gubernatorial primary over the weekend, as former president Bill Clinton endorsed Attorney General Thurbert Baker. This wasn’t that big a surprise, since Baker was Hillary Clinton’s highest-profile Georgia supporter in 2008 (at least after John Lewis defected to the Obama camp). And there are no signs that the Big Dog will actually show up in Georgia to thump the tubs for Thurbert. But Baker definitely needs the help. Long assumed to have a virtual lock on a runoff spot opposite former Gov. Roy Barnes, Baker’s late-developing campaign has struggled to get off the ground, and recent polls show Barnes headed for a primary victory without a runoff (there are two other significant candidates on the ballot: former Secretary of State David Poythress and Democratic state legislative leader Dubose Porter). With some more attention, Baker might have a chance to keep Barnes below 50 percent: he’s an African-American in a state where a majority of the likely Democratic primary voters are African-American, and he’s lately found a distinctive issue by coming out for an electronic bingo initiative to help forestall education cuts.

In polling news, Rasmussen has a survey of general election matchups in the Colorado Senate race, showing another beneficiary of a Bill Clinton endorsement, former state House speaker Andrew Romanoff, running a bit better than incumbent Sen. Michael Bennet (D-CO) against either of the two main Republican candidates, Ken Buck or Jane Norton. Colorado’s primary is four weeks from today.

Quinnipiac has released a new poll of the PA governor’s race, which, as in its May survey, shows Democrat Dan Onorato within single digits of Republican Tom Corbett, who leads 44-37.

The first poll in a good while in Indiana, by Rasmussen, shows Republican Dan Coats continuing to hold a big (51-30) lead over Rep. Brad Ellsworth (D-IA) for the Senate, though Ellsworth’s approval/disapproval ratio remains relatively strong at 42-29.

Ed Kilgore’s PPI Political Memo runs every Tuesday and Friday.

Israeli Settlements in the West Bank: An Explainer

Posted on by The Progressive Policy Institute

Last Thursday morning, I was perched and staring at Tel Aviv in the distance to my left, Haifa to my right, and the vast Mediterranean Sea that seemed to separate them. My crow’s nest view was from a lookout point from the Israeli settlement of Alfei Menashe, which is situated clearly inside the West Bank and guarded by the controversial barrier that separates Israel from the Palestinian territories (I had to chose my words carefully there — the Israelis call it a “security fence” and the Palestinians have far less PC terms for it. In the name of impartiality, I’ll go with “controversial barrier.”)

Israeli settlements in the West Bank have been a lightening rod for criticism and division. The major settlement push took hold under Menachem Begin, Israel’s prime minister from 1977-83, who supported Israeli construction in the West Bank and Gaza Strip as a way to consolidate Israel’s territorial gains in 1967’s Six Day War. In the present context, they’ve become a key issue as the Israelis and Palestinians negotiate peace — as Israelis continue to build new settlements or expand existing ones, it appears as though Israel’s government is interested only in tightening its grip on Palestinian territories, not giving them back.

Construction in and around Israeli settlements came to the forefront in George W. Bush’s 2003 “Roadmap for Peace,” which called for a “freeze on settlement expansion.” Ariel Sharon, Israeli prime minister at the time, suggested that such a freeze was impossible due to the need for settlers to build new houses and start families. The issue has remained controversial ever since.

Occasionally, this family issue has been falsely referred to as “natural settlement growth.” In reality, “natural growth” is completely different. Here’s how it works:  legal Israeli settlements are allotted a certain municipal boundary, but construction initially takes place on a small percentage of the designated land. “Natural growth” means that over time, the settlement expands to these full territorial boundaries. As construction continues, particularly for settlements deep on the West Bank, it certainly does look like an Israeli land grab.

In November, the Netanyahu government announced a 10-month moratorium on settlement construction, with an exemption for East Jerusalem. It’s due to be lifted in September.

The latest flare-up occurred during Vice President Joe Biden’s trip to Israel in March when the Israeli Interior Ministry announced the approval of construction of 1,600 new apartments in East Jerusalem. (NB: The Interior Ministry is headed by right-wing Shas Party member Eli Yishai, a rival to PM Netanyahu. The Interior Ministry’s announcement was likely designed to embarrasse Netanyahu during Biden’s visit.)

So, how do we sort this out? What’s the real concern with settlements, and how is the issue leveraged for political posturing?

The first thing to note is that certain settlement construction is more important (worrying) than others. Growth should only be highly controversial in settlement areas that will, one day, certainly be evacuated and turned over to Palestinian control.

If you look at a map of the West Bank, this includes the row of small settlements along the spine of the Jordan River and all those scattered in a seemingly random pattern throughout the heart of the territory. Jewish inhabitants in these locations number anywhere from a handful to a few thousand, and Israeli governments (yes, even those lead by Bibi) realize that they will not be part of Israel after a peace deal. Construction here in any form is unacceptable.

The biggest problem in this regard is Ariel, a settlement some ten miles behind the 1949 Green Line border. With about 80,000 Jewish residents living in relatively new apartment blocks that extend to its full municipal boundaries, both sides acknowledge moving them is probably more trouble than it’s worth. That’s why “new” construction in a place like Ariel technically isn’t that controversial–Ariel’s boundaries are firm, so construction won’t expand Ariel’s reach into the West Bank.  Most likely, Ariel will be walled off as a non-contiguous part of Israel (with some sort of a land-bridge to the “mainland”), just like Kaliningrad is separated from the rest of Russia. Or Alaska from the US. Furthermore, a Palestinian state will be compensated with land elsewhere for Ariel.

Moreover, construction in many — though not all — of the settlements in East Jerusalem is less of a big deal than it seems. Certain settlements, like Alfei Menashe in the first paragraph of this post, will very likely become part of Israel in a peace deal. Settlements in Jerusalem, like the Gilo settlement in the city’s south, may indeed be over the Green Line, but it, like Ariel, is a well-developed community that has been considered a regular Jerusalem suburb for decades. It’s clear to both sides that Alfei Menashe and Gilo — communities that have reached their allotted territorial capacity and have no more room for “natural growth”– will become permanent parts of Israel in a peace deal, and, critically, that the Palestinian state will be compensated with land elsewhere.

In other words, continued construction in a place like Gilo is controversial only because it is symbolic and plays well in the media. In reality, building a new apartment block right in the middle of a settlement technically violates the general construction “freeze,” but in reality isn’t a strategic expansion. Even so, Vice President Biden must severely object to these letter-of-the-law violations because they smack of Israeli tone-deafness to this political sensitivity.

That means that when we hear of construction in settlements, we have to be careful to separate the acceptable-but-tone-deaf construction from the strategically unacceptable. Greater understanding of the strategic and tactical realities of settlements would help diffuse an intense public sensitivity to a highly complex issue.

Andy Grove and a Needed Conversation

Posted on by The Progressive Policy Institute

The recent Bloomberg BusinessWeek cover story by former Intel CEO Andy Grove, “How to Make an American Job,” has stimulated no shortage of reaction in the blogosphere. From the even-handed and the thoughtful, to the politely skeptical and the sharply critical, bloggers and commentators have weighed in on Grove’s essay.

What precipitated this running debate is Grove’s apparent suggestion that, to spur job creation and innovation, the United States should instigate a national-level industrial policy which favors some companies over others. He points to successful Asian economies as potential models. The distinguishing characteristic of the favored companies would be, what Grove asserts is the real engine of job creation, the scaling process:

Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter.

Other commentators have already pointed out that Grove perhaps focuses too much on manufacturing (and specifically technology manufacturing such as semiconductors), and that he misses the critical importance of startup firms to job creation and innovation.

I agree that the long-running lament over the loss of manufacturing jobs in the United States is overdone—much of that employment reduction has come about through productivity gains rather than offshoring. The scaling process Grove celebrates is in fact partly responsible for the loss of technology manufacturing jobs. Since 2000, industry concentration in Silicon Valley has increased dramatically in sectors such as computer equipment manufacturing and semiconductor manufacturing while employment has fallen. Just last week, my colleague Tim Kane published a report on just how much startups matter to net job creation in the United States. As Tim puts it, startups aren’t everything, they’re the only thing.

Finally, Vivek Wadhwa offers what is probably the best take on Grove’s article—Vivek is hugely knowledgeable about innovation in China and India, and offers, as others have not, actual concrete suggestions for how we can reignite economic growth in the United States.

Despite the flaws in Grove’s essay,  it should not be dismissed. For one thing, he is a highly intelligent and highly successful entrepreneur who has lived through—indeed, helped shape—dramatic transformations of the U.S. economy.

Furthermore, scale companies are important to economic growth. No one can talk about the economic history of the United States without mentioning the scale companies that, at each stage of development, pioneered innovations, reduced costs and generally helped spread prosperity: Union Pacific, Standard Oil, Ford Motor, Wal-Mart, Intel, Microsoft, Google. Obviously, economic growth cannot solely be ascribed to such firms—they are only one piece of the economic ecosystem and while Grove may have overemphasized scale, he certainly was not wrong to discuss it. But the process of scaling must be contextualized: startups are essential in part because, without them, we do not even get to the scaling process. Competition helps ensure that scaling is accompanied by innovation and efficiency. Once they reach a certain level of scale, large firms depend on the acquisition of startups as a source of innovations and new jobs.

Scale firms can also be merely seen as incidents of deeper factors driving growth. After I gave a presentation on the economic contribution of high-growth firms a few months ago, an eminent economist dismissed everything by saying, “well, yes, but this is all simply explained by information technology; that’s the real story of growth.” The IT-as-the-root-of-all-prosperity argument has been popular in recent years but, as Paul Kedrosky later pointed out to me, this is a “turtles all the way down” type of argument. Behind IT is cheap energy, behind cheap energy is access to natural resources, behind natural resources … and so on. (Scale companies, in fact, could even be seen as a fertile source of knowledge for economists themselves: Thomas McCraw, inter alios, has argued that the rise of scale firms in the second half of the 1800s helped prompt the marginal revolution in economic thought.)

All of this still overlooks the most important part of Grove’s article, a point that escaped me upon first reading: “A new industry needs an effective ecosystem in which technology knowhow accumulates, experience builds on experience, and close relationships develop between supplier and customer.” The reason that the scaling process—rather than simply scale itself—is economically important is the learning-by-doing path by which it proceeds. Knowledge accumulates, innovations come and go, companies iterate back and forth—this is the messy process by which economic growth happens. If this reading is correct, Grove is claiming that the offshoring of technology manufacturing jobs threatens such learning-by-doing. In this formulation, productivity gains in manufacturing can actually undermine future cycles of learning and iterating.

The conversation Grove is trying to stimulate is worth having. It is probably too much to extrapolate technology manufacturing to the entire U.S. economy. There are certainly sectors, aside from manufacturing, in which learning-by-doing drives growth and it is not clear that those sectors have lost such capacity. Software development and certain institutions in the world of health care rely on this process. Yochai Benkler’s work can be seen as emphasizing the extent to which learning and iteration underwrites a great deal of innovation across the economy today.

But Grove’s point should be taken seriously in the sense that real barriers exist to innovation and the scaling process in many areas of the economy. Rather than seeing his article as a call for a government-driven competitiveness agenda or industrial policy, we should read it as a starting point for seeking out release valves at which small changes can be made that would release huge amounts of pent-up entrepreneurial energy. The stunted process of commercializing innovations out of universities leaps to mind as an area ripe for such analysis, as does current immigration policy. The national conversation about innovation and economic growth should be engaged in exactly this type of search.

Photo credit: jurvetson