Category: Uncategorized

Ryan for Newsweek: To Avoid Danger, U.S. Must Lead on Crypto and Blockchain

Posted on by Max Sherrill

By Tim Ryan

“Those who came before us made certain that this country rode the first waves of the industrial revolution, the first waves of modern invention, and the first wave of nuclear power, and this generation does not intend to founder in the backwash of the coming age of space. We mean to be a part of it—we mean to lead it.”

That was President Kennedy more than a half-century ago. Even then, he understood better than most that America’s place in the world was bound up with our determination to be at the cutting edge of progress. We were a beacon of hope because the world knew that we would use our technological prowess to expand the rule of law and the basic human rights of all people. America’s promise was to ensure that breakthroughs would be used for the good of humanity.

Today, that same spirit still animates certain elements of progressive thinking. My fellow Democrats aren’t trying to smother the emerging industry being born from artificial intelligence—they’re trying to establish wise and fair rules that ensure both that its deployed safely and that it benefits everyone, and not just the very well off. They’re refusing to cede the advanced semiconductor industry to businesses overseas—helping instead to induce the industry to construct “fabs” domestically in places like my home state of Ohio. On a whole range of issues, Democrats are determined to keep America at the cutting edge.

But when it comes to blockchain, namely the new technology promising to power a new, secure, decentralized, and transparent set of applications across a whole range of industries, many Democrats seem to have lost sight of Kennedy’s admonition. Having convinced themselves that various misuses of blockchain obviate its underlying value, Sen. Elizabeth Warren and her allies seem more interested in smothering innovation than harnessing its potential for the public benefit. While their concerns are understandable, their approach is fundamentally misguided.

Keep reading in Newsweek.

PPI Comment on NPRM for Additional Student Debt Relief, Docket ID ED-2023-OPE-0123, Federal Register, 2024-07726

Posted on by Max Sherrill

Although we at the Progressive Policy Institute (PPI) believe some modest relief from overly burdensome debt is warranted, we are concerned many of this rule’s provisions would provide generous windfalls to relatively affluent borrowers while providing little additional benefit for borrowers most in need. The rule also comes with a high cost to taxpayers — $147 billion by the department’s own estimates — yet has no offsets to pay for it, making it a clear violation of the Fiscal Responsibility Act’s administrative PAYGO provision. Proceeding with this rule as written would only worsen the existing bias that federal policy has towards the minority of young people who attend college, at the expense of the majority who do not yet will be saddled with the bill.

Founded in 1989, PPI – a 501(c)(3) think tank – is a force for radically pragmatic innovation in politics and government. Our mission is to develop a new progressive blueprint for change that can help center-left parties broaden their appeal and build stable governing majorities. PPI has been a prominent voice in fiscal policy through our Center for Funding America’s Future, which works to promote a fiscally responsible public investment agenda that fosters robust and inclusive economic growth. The Center has played a critical role in shaping fiscal policy debates around key legislation over the past five years and has been extremely involved in the national college affordability discussion.

In a previous comment, we applauded the administration’s efforts to expand and improve upon income-driven repayment programs, which we believe are the best mechanisms to help borrowers who are burdened by the debt of pursuing degrees from which they did not ultimately benefit. But we also warned that the Department’s SAVE plan was overly aggressive in scope, leading to the typical college graduate paying back only three fifths of what they initially borrowed — and not a dollar of interest. Providing such a generous subsidy is profoundly unfair to the majority of American taxpayers who didn’t attend college and are being asked to foot the bill for people who did, despite earning lower average incomes than them. Even worse, it is likely to further inflate the already high costs of college by incentivizing universities to hike tuition rather than control costs.

PPI is concerned that the current proposed rule would compound these mistakes. The rule’s most expensive provision, the cancellation of accumulated interest, will mostly benefit wealthy professionals while being redundant for low-income borrowers struggling with high debt burdens. Enrolling the SAVE plan already prevents borrowers with large loan balances and lifetime earnings equal to or below those of the average college graduate from having to pay any interest. But borrowers who enhance their future earnings by taking on large debts, such as lawyers, doctors, and other professional degree holders, will reap a significant windfall that they should not get if this rule is finalized as proposed. Currently, the rule proposes to cancel up to $20,000 of interest for those on standard repayment and an unlimited amount for those enrolled in IDR. We urge the department to set this interest cap as low as possible for all borrowers to limit these regressive impacts.

We are similarly concerned about the provision to forgive all loans after 20-25 years. Those enrolled in IDR plans even before the SAVE plan was enacted were on track to have their balances forgiven after 20-25 years of making the required payments. If someone is paying back student loans for more than 25 years, they are likely a professional degree holder with a large debt balance who has chosen to structure their repayment plans over a longer period of time. Giving forgiveness to a relatively affluent group in the last few years of their repayment is unnecessary and arbitrary, especially when the most vulnerable borrowers already benefit from a similar policy.

We are more sympathetic towards the provision providing relief to borrowers who attended low-value educational institutions. These students are most likely to be burdened by the debt of pursuing a degree from which they did not financially benefit. We applaud previous rulemaking from the department targeting these often fraudulent institutions, forcing them to transparently disclose the financial value they provide for students, cutting off future federal aid, and closing them if necessary. But we encourage the Department to work with Congress to ensure the costs of canceling this debt are borne by these predatory institutions as much as possible rather than asking taxpayers to foot the bill.

The administration has already spent more than $600 billion of American taxpayer money on executive actions to cancel student loan debt, most of which belonged to individuals with above-average lifetime earnings, without explicit approval from Congress. We urge the Department to work with lawmakers on developing progressive reforms to the SAVE plan, greater accountability for educational institutions, and other common-sense reforms to control the cost of higher education rather than pursuing more unilateral debt cancellation schemes.

Even in the absence of congressional action, we also encourage the Department to keep the above concerns in mind when developing their proposed regulations on “waivers for hardship,” as is mentioned to be forthcoming in the proposed rule.

Read the comment on the proposed Department of Education rule.

Johnson for American Purpose: Caring Isn’t Enough

Posted on by Max Sherrill

By Jeremiah Johnson

Over the past few weeks, campus protests focusing on the Israeli-Palestinian conflict have received an inordinate amount of media attention. Images of the protests, news of university actions (or lack of action) against the protests, and debates about their legitimacy have been front-page news. And yet for all the breathless coverage, one thing seems to be missing: an explanation why any of this matters at all.

You may say that these events matter to the colleges impacted or to America’s domestic politics. But the protests are nominally about what’s happening in Gaza. And there’s very little reporting on how any of the protestors plan to make a difference there.

The truth is that they’re not going to make any difference to those enduring the conflict whatsoever. Furthermore, it’s not even clear whether the protestors realize that is supposed to be the goal. Helping Palestinians in Gaza no longer seems to be the point. It’s certainly worthwhile for college students to care about injustice in the world. But caring isn’t enough.

Read more in American Purpose.

The Future of the Canadian App Economy

Posted on by Max Sherrill

INTRODUCTION

Since 2019, Canada’s digital sector has outperformed the rest of the national economy. The output of the information and communications sector has grown by 21%, compared to 5% for the economy as a whole. Data processing was up by 52% and computer systems design up by 39%.

Within the digital economy, mobile application development and support is a particularly important sector. Apps are no longer just about playing games or scrolling through social networks. Instead, people are using apps to connect with their health care providers, interact with their cars, and for banking and shopping. At the same time, mobile apps have become increasingly important to all sorts of businesses — apps to track trucks, to monitor energy systems and forestry operations. Moreover, artificial intelligence, low latency, and high bandwidth 5G connections, virtual/ mixed reality, Intensive data processing, and on-device machine learning will give rise to entire new categories of mobile applications.

All of this app development and support is a potent source of new jobs. In this paper we estimate 385,000 App Economy jobs for Canada, as of April 2024, up 47% since 2018. None of these jobs existed 16 years ago, when Apple first opened the App Store on July 10, 2008. Android Market (which later became Google Play) was announced by Google shortly after. These app stores created a new route through which software developers could write programs for smartphones. These mobile applications— called “apps” — could then be distributed to the rapidly growing number of smartphone users around the world.

Moreover, app development and the app stores are a key route by which young people can develop tech skills and become an integral part of the global digital economy.

In addition to estimating the number of jobs in Canada’s App Economy, this paper also estimates the size of the iOS and Android ecosystems. We compare Canada’s App Economy with other industrialized countries. Finally, we also give some examples of App Economy jobs, with special attention to the geographic and industrial diversity of the App Economy.

Read the full report.

Trade Fact of the Week: U.S. auto production unchanged since ‘USMCA’ replaced ‘NAFTA’ in 2020.

Posted on by Max Sherrill

FACT: U.S. auto production unchanged since ‘USMCA’ replaced ‘NAFTA’ in 2020.


THE NUMBERS: U.S. car and light truck production* –
2023 10.6 million vehicles
1994-2019 average 10.7 million vehicles
1975-1993 average 10.3 million vehicles

* Bureau of Transportation Statistics for 1993-2021; OICA for 2022 and 2023. From 1993-2019, production ranged from a low of 5.7 million vehicles during the financial crisis in 2010 to a peak of 13.0 million in 1999.

WHAT THEY MEAN:

Trump administration negotiators in 2018 said their “primary objective” in renegotiating the North American Free Trade Agreement was “to improve the U.S. trade balance and reduce the trade deficit with the NAFTA countries.”  This plainly didn’t happen — deficits instead rose by a combined $91 billion by 2023 –—but not because a different agreement text or legislative drafting would have gotten a different outcome. Rather, the Trump group promised something a new agreement couldn’t, and therefore didn’t, deliver. (See below for a bit more.) As the resulting “USMCA” approaches its fourth birthday this June, the more interesting question is whether the four big real-world policy revisions separating it from the NAFTA — automotive trade, labor policy, environmental protection, internet policy, and digital data flows – are working.  Here’s a somewhat troubling look at the auto side:

As a point of reference, U.S. auto production averaged 10.7 million vehicles annually over NAFTA’s 26-year life, with output varying from a 13.0 million peak in 1999 to a financial crisis low of 5.7 million in 2009.  The 2016 figure was 12.2 million vehicles, of which two million went abroad for export and 10 million to American dealerships. Meanwhile, about 8 million vehicles arrived from abroad that year as imports, including 2.2 million from Mexico and 2.0 million from Canada under NAFTA’s tariff waivers. (The normal auto tariff rates are 2.5% on cars and 25% on light trucks.) According to the U.S. International Trade Commission’s “Dataweb,” about 1% of these vehicles arrived outside NAFTA — 39,000 passenger cars and 100 light trucks from Mexico, 6,000 cars from Canada — and so were subject to the regular tariffs.

USMCA’s U.S. negotiators and Congressional legislative text drafters hoped to (a) encourage more car and truck assembly in the United States, and (b) increase the “North American” parts, metal, and labor content of vehicles produced in the U.S., Mexico, and Canada for American, Mexican, and Canadian car-buyers. To this end, USMCA developed “rules of origin” — that is, legal definitions of what it means for a car or truck to be “made in” the U.S., Canada, or Mexico and therefore eligible for tariff waivers — much more restrictive than NAFTA’s. Briefly summarizing some complex formulae, NAFTA required a “regional value” of 62.5%.  This meant buyers had to certify that 62.5% of a car’s value was “North American”. That is, a sedan valued at $30,000 at the border needed to show that $18,750 of its parts, labor, metal, paint, and so forth had to come from the U.S., Canada, or Mexico to qualify. USMCA’s 46-page set of rules raised this “regional value” to 75% — $22,500 of the same $30,000 car — and added new requirements covering (i) use of parts, from brake linings and transmission shafts to ball bearings, gaskets, and radios; (ii) use of metals, with 70% of the steel and aluminum in a car or truck (by value) needing to come from North American mills or smelters; and (iii) labor input, with 45% of the labor value required to be “high-wage.” The rules take effect in over five years, beginning with USMCA’s “entry into force” in June 2020 and fully in effect by 2025.

What has happened since?

Output: Not much so far, at least in the U.S. Auto production fell sharply during the 2020 COVID pandemic to 8.8 million vehicles, and as of 2023 had rebounded to 10.6 million, slightly below the long-term NAFTA average. So to date, USMCA’s auto innovations have left U.S. production about the same, though they’re still new and might have larger effects later on.

Trade: Trade flows in total likewise haven’t changed drastically. Last year’s 8 million in new car and truck imports were about the same as those of 2016, with a few more from Mexico and a few less from Canada. But the detailed data published in the Dataweb suggest an unexpected shift: at least in car trade with Mexico, USMCA seems to be getting less use than NAFTA.  These figures report that in 2023, about 468,000 Mexican-made cars — 20% of the year’s 2.1 million total, 20 times the 2016 figure — arrived with the 2.5% MFN tariff rather than duty-free under USMCA.  Light truck imports have also shifted a bit, though much less dramatically, with 1700 arriving outside USMCA.  Canadian cars and trucks, by contrast, were almost all covered by USMCA.  The 468,000 outside-USMCA vehicles are not subject to any “rule of origin” at all, so if the Dataweb figures are correct rather than some kind of data entry problem, and don’t simply reflect a temporary adjustment as manufacturers get used to new rules, the tariffed cars can contain lots more foreign parts, metal, and so forth than their NAFTA-era predecessors.

A cautionary note: The USMCA is still new, the shift is mainly in car imports from Mexico rather than in trucks or U.S.-Canada trade, and auto production patterns take years to change. More generally, the slightly lower post-USMCA auto production in the U.S. isn’t necessarily related to the agreement; it could reflect unusual post-pandemic buying patterns, EV transition, etc. But these points duly noted, the revised auto rules so far (a) don’t seem to have brought more auto production to the U.S., and (b) if the tariffed, outside-USMCA imports continue to grow, could be encouraging more rather than less “international” content in “North American” cars. They haven’t by any means failed in the conclusive way Trump negotiators’ hope for lower trade deficits failed; but so far, they seem less than a resounding success, and maybe not an improvement.

FURTHER READING

USMCA text, see pp. 224-270 of Chapter 4 for rules governing cars, trucks, and parts.

Agreements and rules:

A U.S. Trade Representative Office Federal Register Notice from last March requests thoughts on supply-chain “resilience,” with Question 8 asking specifically about rules of origin:

“There is concern that preferential rules of origin in free trade agreements can operate as a “backdoor” benefiting goods and/or firms from countries that are not party to the agreements and are not bound by labor and environmental commitments. What actions could be taken to mitigate these risks and maximize production in the parties? What policies could support strong rules of origin and adherence to rules of origin?”

The FRN.

PPI’s Gresser, testifying at the hearing a week ago Thursday, carefully suggests that USTR’s phrasing is a bit off, as adjectives like “strong” or “weak” aren’t really the point. The low-drama response, using USMCA’s auto rules as a case in point.

“A well-designed rule strikes a balance, enabling firms to meet it easily and cheaply while not being so permissive as to reduce the benefit to the countries participating in the agreement.  Complex and very demanding rules, however, may be so costly or create such paperwork burdens that businesses choose not to use the agreement.  In this case they may continue importing under MFN tariffs (using any outside inputs they find convenient) or find non-FTA sources instead.”

Gresser testimony.

Global perspective:

Where do cars come from? The Organization of International Automobile Manufacturers’ country-by-country data show about a third of the world’s 93.5 million new cars made in China in 2023, and a sixth in the U.S./Canada/Mexico:

World Vehicle Production: 93.5 million
China 30.2 million
European Union 14.3 million
(Germany) 4.1 million
(France) 1.5 million
(Slovakia) 1.4 million
(Czechia) 1.4 million
(Italy) 0.9 million
United States 10.6 million
Japan 9.0 million
India 5.9 million
Korea 4.2 million
Mexico 4.0 million
Thailand 1.8 million
Canada 1.6 million
United Kingdom 1.0 million
All other 10.9 million

OICA’s production and sales data.

And from the Commerce Department, U.S. automotive trade data, sadly updated only through 2021.

And a note on balances:

The Trump administration’s 2018 “President’s Trade Agenda” report uses trade balance as the main grounds to renegotiate NAFTA:

“[O]ur goods trade balance with Mexico, until 1994 characterized by reciprocal trade flows, almost immediately soured after NAFTA implementation, with a deficit of over $15 billion in 1995, and over $71 billion by 2017. … USTR has set as its primary objective for these renegotiations – to improve the U.S. trade balance and reduce the trade deficit with the NAFTA countries.”

As of 2023 — three years into USMCA — this same “goods trade balance” with Mexico was -$152 billion in deficit, and with Canada -$25.8 billion.  So, pretty total failure here, with both deficits doubled. The reason for this, though, isn’t any particular problem with the new agreement’s text or legislative drafting, though. Rather it’s that the Trump-era policy designers didn’t understand trade balances and promised something the agreement couldn’t deliver.

The U.S. trade balance is the difference between national savings and national investment. The nearly simultaneous 2017 tax bill raised fiscal deficits, and therefore reduced government savings. Unless for some reason families and businesses started to save more (and they didn’t), the overall U.S. trade deficit was naturally going to rise as a result.  With tariffs on China pushing U.S. purchasing of some formerly Chinese-made refrigerators, TV sets, clothing, etc. into other countries (especially Vietnam but also Mexico), the U.S.-China “bilateral” deficit dropped a bit, but this forced a larger increase with other countries, Mexico and Canada among them.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

Marshall for The Hill: Red states are fueling a public school exodus

Posted on by The Progressive Policy Institute

By Will Marshall

A new spirit of secession is fracturing our country. Republicans are carving out a red-state confederacy where they can impose their own laws and social mores in defiance of national majorities.

To take the most obvious example, Americans strongly oppose abortion bans. That hasn’t stopped 21 Republican-controlled states from passing laws outlawing or severely restricting abortion.

Now red states are applying this twist on John Calhoun’s doctrine of states’ rights and concurrent majorities to education.

Read More in The Hill.

Trade Fact of the Week: U.S. R&D spending approaching $1 trillion per year.

Posted on by Max Sherrill

FACT: U.S. R&D spending approaching $1 trillion per year.

THE NUMBERS: U.S. share of world “knowledge- and technology-intensive” manufacturing and services –
Manufacturing
2022 20.4%
2012 20.1%
Services
2022 39.7%
2012 29.3%

National Science Foundation, 2024.  Manufacturing includes chemicals; pharmaceuticals; weapons and ammunition; computer, electronic, and optical; electrical equipment; machinery; automotive; aerospace; railroad and other transport; and medical devices.  Services include IT and information services, software, and research and development.

WHAT THEY MEAN:

President Biden in October delivered seven Medals of Science and nine Medals of Technology and Innovation:  Dr. Marder of Brandeis for analysis of brain biochemistry and neurocircuitry, Caltech’s Professor Barish for detecting gravitational waves from merging black holes, Mary-Dell Chilton of Syngenta for agricultural biotechnology, Roy Cooper from the VA for inventing improved wheelchairs, along with Internet pioneers, 3D printing founders, social neurologists and more.  He took some time to note administration science policy highlights –— the Cancer Moonshot, the CHIPS and Science Act, climate research — but could perhaps have said a bit more.  The individual achievements and the government policy look less like one-offs than or unusual cases, than especially strong examples of a remarkable if little-recognized Biden-era boom in American science. Two indexes and then some comparisons:

1. Research and Development: Each year the National Science Foundation publishes figures on research and development spending.  Their latest edition launched in March.  It shows U.S. R&D investment rising from $717 billion in 2020 to a likely $886 billion in 2022, with government support up from $65 billion to $73 billion, business commitments from $520 billion to $673 billion, and nonprofit and academic funding from $43 billion to $47 billion. The overall jumps of 10% and 12% in 2021 and 2022 appear to be the largest in the last thirty years.  This makes America’s “research intensity” — R&D spending divided by national GDP — 3.5% by the NSF’s count, or 3.6% according to the OECD.  This figure is up from 2.8% in 2012 and 3.2% in 2019; or in a longer perspective, from 2.4% at the launch of the World Wide Web in 1993 and 2.6% during the moon-landing year 1969. If this “intensity” level held up through 2023, total U.S. science commitment in 2024 would top $1 trillion.

2. Working Scientists: The Bureau of Labor Statistics, meanwhile, reports a 26% growth in the count of working R&D scientists in the last three years, from 796,000 at the beginning of 2021 to 956,000 as the NSF launched its March R&D report. To put this in perspective, total employment in the U.S. has grown by 10% in the last three years.  So the lab workforce is rising more than twice as fast as the general workforce.  From another perspective, the 3.3-year jump of 160,000 scientists compares to a rise of 290,000 in the entire twenty years from the turn of the century to the end of 2020 (and has nearby analogues in similar jumps of 140,000 in engineering, and 300,000 in computer systems design).

Now to the comparisons:

Measured by spending, NSF’s $886 billion R&D estimate places the U.S. first in the world, and makes up about 30% of known R&D worldwide.  Measured by “research intensity”, OECD’s 3.6% estimate puts the U.S. fourth, behind only Israel’s 6.0%, Korea’s 5.2%, and Taiwan’s 4.0%. Comparable figures for other big economies include 3.4% for Japan, 3.1% for Germany, 2.9% for the U.K. 2.9%, 2.4% for China, and 2.2% for France. Rounding out the G-7, Canada is a bit below at 1.7%, and Galileo’s Italy a comparatively anemic 1.3%. A table with the top countries and the world’s ten largest economies:

Israel 6.0%
Korea 5.2%
Taiwan 4.0%
U.S. 3.6%
Sweden 3.4%
Japan 3.4%
Belgium 3.4%
Germany 3.1%
U.K. 2.9%
China 2.4%
France 2.2%
Canada 1.7%
Italy 1.3%
Brazil 1.2%
Russia 1.1%
India 0.7%

What about real-world output as opposed to spending and puttering about in labs?  In April, a few weeks after the R&D report, NSF’s busy editors put out another one looking at the world’s “Knowledge and Technology Intensive Industries”.  Complete with a new acronym, “KTI”, this examines production of a list of impressive things – aircraft and satellites, high-speed dental drills, self-guiding cars and computer software, digital technology, biologic medicines, etc. — and estimates world high-tech industry output at $11.1 trillion in 2022.  (This would be about 10% of world GDP.)  Here the U.S. has a peer — in fact, China’s $3.0 trillion shades America’s $2.9 trillion – while the EU comes in at $1.7 trillion, Japan $0.6 trillion, and Korea $0.4 trillion.  China’s leads show up in the manufacturing of computers, electronics, and optics, while the U.S. is top producer of medicines, medical devices, aerospace, software, and digital information.

And over time?  The American share of world “KTI” manufacturing, having fallen from 29.5% in 2002 to 20.1% in 2012, began a rebound during the Obama administration and has risen a bit to 20.5%.  Or, setting aside what other countries might be doing, the value of this output has grown from $1.3 trillion in 2020 to $1.6 trillion in 2022. The U.S. share of world “KTI” services production — the software, IT services, and research work noted above – has steadily risen, accelerated by the internet industry, from a world-leading 29.3% in 2012 to 39.7% in 2022. All of which suggests that Biden’s well-deserved praise for the individual neuroscientists, astronomers, wheelchair and Internet-backbone designers highlights not only exceptional personal achievement, but the fact that the administration deserves credit for some large-scale science policies and has reason to feel good about the last three years’ results.

FURTHER READING

Biden presents last year’s Medals of Science and of Technology and Innovation last October.

The White House’s Office of Science and Technology Policy.

… the Cancer Moonshot.

… and never out of fashion, Dr. Vannevar Bush’s original 1945 Endless Frontier report, arguing for a permanent government role in promotion of science and technology.

Assessment:

The National Science Foundation’s April 2024 Production and Trade of Knowledge- and Technology-Intensive Industries report.

And the American Association for the Advancement of Science reviews government policy.

And some data:

OECD’s estimates of R&D spending, GDP share, and science employment by country as of 2022.

And NSF’s State of U.S. Science and Engineering looks at American scientific research, education, workforce and more, with some international comparisons.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

Ecommerce worker safety is important. But a new bill takes the wrong approach.

Posted on by The Progressive Policy Institute

PPI believes that worker safety and dignity is one of the key pillars of modern technological society. The evidence of the past fifty years shows that it is possible to increase productivity, keep weekly work hours about the same,  and reduce injuries at the same time. Since the early 1970s, labor productivity has risen by about 140%, and the average hours worked per week has fallen by about 10%. But over the same stretch, the work-related injury and illness rate in the private sector has fallen by 75%.

There’s a lot going on beneath the surface of these historical trends, including massive shifts in the structure of the economy away from high-risk production jobs in manufacturing, many of which moved overseas or were automated out of existence. But now the debate over worker safety has moved away from manufacturing to ecommerce.

A bill called “The Warehouse Worker Protection Act” is being introduced in the Senate by Senator Ed Markey and three co-sponsors. The bill contains some reasonable provisions, including a requirement that bathroom breaks not be counted against workers. But the core of the bill is a full-scale assault on quantifiable performance standards, which the bill misleadingly calls “quotas.”

Quantifiable performance standards are a way of life in many industries, from manufacturing to consulting. But the bill bizarrely only targets a small number of industries, creating a new federal bureaucracy and set of arcane rules for performance standards that only apply to ecommerce industries such as warehousing and shipping.

That focus is ironic, since the ecommerce/retail sector stands out as the main source of new jobs for workers with less than a bachelor’s degree. PPI analyzed data from the Current Population Survey from the first quarter of 2019 and the first quarter of 2024. We found that over the last five years, the ecommerce/retail sector added roughly 880,000 workers with a high school diploma, some college or an associate degree. Meanwhile, job opportunities for similarly-educated workers in the rest of the economy shrunk substantially.

To put it another way, Americans face a labor market that is mostly inhospitable to non-college-educated workers. For example, manufacturers employ about 900,000 fewer workers with a high school diploma, some college, or an associate degree today, compared to the first quarter of 2019. That’s why the role of ecommerce jobs is so crucial in many parts of the country.

The importance of ecommerce/retail jobs for non-college-educated workers does not mean we should ignore safety. Quite the contrary. Safety is important, and the efforts of companies like Amazon to improve worker safety should be acknowledged. For example, Amazon’s Lost Time Incident Rate (LTIR) — which includes any work-related injury that requires someone to take time away from work (the most serious of injuries) — has improved 60% since 2019.

Given the gains in safety combined with much-needed job growth, it seems like the industry is already moving along a path that is beneficial to non-college-educated workers without the new legislation. Policymakers should think seriously before they create an unnecessary new federal bureaucracy and rules.

 

 

Bureaucrats vs. Free Speech

Posted on by The Progressive Policy Institute

This week, President Biden schooled U.S. college students protesting the war in Gaza on the difference between exercising their Constitutional rights and engaging in mob violence and vandalism.

The campus clashes, he said, test two “fundamental American principles”:

“The first is the right to free speech and for people to peacefully assemble and make their voices heard. The second is the rule of law. Both must be upheld.”

He was dead right, of course, and likely spoke for millions of Americans appalled both by what’s happening in Gaza and the campus intifada.

But while he’s on the subject of free speech, the president also may want to have a word with federal bureaucrats on the National Labor Relations Board (NLRB).

Brian Gee, an NLRB administrative law judge, ruled this week that Amazon CEO Andy Jassy violated federal labor laws by talking with company employees about his view of the downsides of a 2022 union drive.

Of course, more often than not, employers and workers disagree about the merits of unionization. There’s no law against managers talking to workers about their reasons for opposing a union, just as workers have the right to organize one and make a public case for it.

Nor does the Constitution make any exception for business executives in guaranteeing the free speech rights of all U.S. citizens. Gee’s decision maneuvers disingenuously around these inconvenient obstacles by claiming that Jassy’s arguments threatened workers.

“I find that Jassy’s comments threatened employees that, if they selected a union, they would become less empowered and would find it harder to get things done quickly,” Gee wrote in his ruling. “Jassy’s comments that employees would be better off without a union were accompanied by his coercive predictions about the effects of unionization.”

Not exactly bloodcurdling stuff! But don’t take my word for it. Read Jassy’s actual words here and see if you can discern any actual threats.

Union-busting executives who threaten to fire or demote or transfer or otherwise harm workers involved in organizing drives should be prosecuted to the full extent of the many pertinent laws.

By Gee’s expansive definition of the term, however, any executive who offers an opinion about the impact of unionization on the company he/she is charged with running could be charged with issuing threats or trying to coerce workers. If this ruling stands, it would chill any reasonable discussion between employers and employees about unionization and alternative ways to improve compensation, working conditions, and productivity.

As I wrote back in 2022, PPI strongly supports both workers’ right to organize unions and the First Amendment right to free speech. That’s why NLRB’s complaint against Jassy for expressing his opinion that Amazon workers would be better off without unions left us scratching our heads.

As it happens, most of the 5,800 workers at Amazon’s Bessemer, Alabama fulfillment center agreed with Jassy. In 2021, they voted overwhelmingly not to form a union. After labor activists cried foul, the NLRB ordered a second vote to be held in March 2022. It also failed.

Last fall, workers at an Amazon warehouse near Albany, NY also voted emphatically (66%) against unionization. These battles likely will continue, and the NLRB has an important role to play in making sure that managers don’t abuse their power to threaten workers’ livelihoods.

By the same token, however, the NLRB is supposed to be a neutral arbiter and should respect workers’ rights not to form a union. Not every organizing drive fails due to intimidation or dirty tricks by management. In this case, it’s hard to avoid the suspicion that the pro-union majority on the Labor Board didn’t like those results and is scapegoating Jassy.

For reasons we deeply respect, President Biden is strongly pro-union and Democrats have historically championed labor rights. But the issue here isn’t whether you are pro-labor or pro-business. It’s about respect for the Constitution and impartial enforcement of labor laws.

In any case, federal bureaucrats cannot arrogate to themselves the power to deprive any American citizen — even executives of powerful corporations — of their constitutional rights.

Where is the ACLU when we need them?

PPI’s Ed Gresser Testifies to the Office of the United States Trade Representative on Supply Chain Policy

Posted on by Max Sherrill

Washington, D.C. — Today, Ed Gresser, Vice President and Director for Trade and Global Markets at the Progressive Policy Institute (PPI), testified to the Office of the U.S. Trade Representative (USTR) and interagency trade officials on supply-chain issues. Gresser is formerly the Assistant U.S. Trade Representative for Trade Policy and Economics at USTR.

The hearing, announced in a March Federal Register Notice (FRN), solicited public comment on policy options to ensure the “resilience” of U.S. supply chains. In his testimony, Gresser applauds the agencies for thinking systematically about the way trade and investment policy mesh with logistics and production choices, and agrees that over-concentration of sourcing from single countries — especially those in regions at high geopolitical risk — or small numbers of suppliers creates systemic risk.

Balancing this, Gresser notes that efficient supply chains offer significant benefits too — for example, speeding the development, production, and global delivery of COVID-19 vaccines in 2021 — and a future policy needs to take this into account. He also delivers a constructive critique of some of the premises in the FRN, arguing that: (a) policy should not downgrade the priority of efficiency, which is important to U.S. competitiveness and also helps keep the price of goods affordable; (b) should see high labor and environmental standards as advantages rather than disadvantages; and (c) questioning some overly negative assessments of past trade policies.

Additionally, Gresser responds to several of USTR’s FRN questions about the policy options open to U.S. officials seeking ways to improve supply-chain resilience. Here he makes some suggestions about new types of data the government would need, and suggests thinking about two “buckets” of policy options: one which offers incentives and cost savings through Free Trade Agreements (FTAs), tariff preferences, and eased border inspections; a second which uses disincentives such as import bans and higher tariff rates. Gresser concludes — while the second is sometimes necessary — the first approach is almost always preferable since disincentives can deter U.S. competitiveness due to higher costs.

You can read Gresser’s full testimony here and you can watch the full hearing, including Gresser’s testimony here.

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org. Find an expert at PPI and follow us on Twitter.

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Media Contact: Tommy Kaelin – tkaelin@ppionline.org

USTR Supply Chain Hearing

Posted on by Max Sherrill

The following is testimony submitted by Edward Gresser, on behalf of the Progressive Policy Institute, at a public hearing convened by the Office of the U.S. Trade Representative on May 2, 2024. The hearing is meant to help inform USTR and other agencies with trade responsibilities working with the White House Council on Supply Chain Resilience, formed in November 2023, to oversee efforts to reduce risk in U.S. supply chains for semiconductors, critical minerals, medical goods, and other products.

Thank you very much for this opportunity to testify this morning, as the U.S. Trade Representative Office and other agencies consider supply chains, their implications for the U.S. economy, and associated policy. By way of introduction, I am Vice President of the Progressive Policy Institute (PPI) in Washington, D.C., a 501(c)(3) nonprofit research institution established in 1989, which publishes a wide range of public policy topics. Before joining PPI, I served at USTR from 2015 to 2021 as Assistant U.S. Trade Representative for Trade Policy and Economics, with responsibility for overseeing USTR’s economic research and use of trade data, interagency policy coordination including chairing the interagency Trade Policy Staff Committee, and administration of the Generalized System of Preferences.

I applaud the agency for thinking systemically about the way trade and investment policy mesh with logistics and production choices, and the way both public and private-sector decisions might affect the security of U.S. industry in unexpected shocks. And I share the view implicit in the March 7 Federal Register Notice (FRN) which announced this hearing, that recent experience, including the COVID-19 pandemic, offers important perspective on the topic. My testimony will offer some general thoughts on these matters (from the point of view of a policy analyst and former government official rather than someone professionally involved in supply chain design or management), and share views on questions 8, 9, and 11 of the FRN on business sourcing choices, ‘rules of origin’ in free trade agreements, and data that might help inform policymaking.

Read the full testimony.

Trade Fact of the Week: 38 of the world’s 100 tallest buildings have opened since 2019.

Posted on by Max Sherrill

FACT: 38 of the world’s 100 tallest buildings have opened since 2019.

THE NUMBERS: U.S.’ share of the world’s 100 tallest buildings –
2024 14
2020 14
2010 29
2000 47
1990 87
1950 91
1900 38

 

WHAT THEY MEAN:

An early architecture critic, the Venerable Rodolf Glaber of the Dijon Abbey, looks back from somewhere around the year 1040 to Europe’s turn-of-the-millennium cathedral boom:

“It was as though the world had shaken herself and cast off her old age, and clothed herself everywhere in a white garment of churches…”

Then this year: Merdeka 118, the pride of Kuala Lumpur, opened January 24 as the world’s second-tallest building and fourth officially “mega-tall”* skyscraper.  At 2,233 feet or 681 meters, and overtopped only by Dubai’s 2,787 foot/870 meters Burj Khalifa, M-118 is the most recent in Asia’s newly built ‘steel-and-glass garment’ of tall buildings.  To be precise, the New York-based Council on Tall Buildings and Urban Habitat reports that of the world’s 100 tallest buildings, 35 have opened since 2019, and 62 of the top 100 since 2014. Using computer-aided design and new alloys developed in the last generation — twisting facades to minimize wind torque, lightweight alloy cladding to resist heat, and so forth — they have metaphorically put the American skyline a bit in the shade.

U.S. urban skyscrapers using steel-girder-and-curtain-wall technology surpassed Glaber’s stone-on-stone cathedrals as the tallest buildings in the 1920s. As recently as 1990 the U.S. was home to 9 of the world’s top 10 buildings, and 87 of its top 100. The current count is about half Chinese, with the United Arab Emirates and the U.S. a tier down, and eight other mostly East and Southeast Asian countries making up the rest.  A rundown of the Council’s current 100-highest list looks like this:

(1) 46 in mainland China, including five of the top ten. The Shanghai Tower (2015, 2073 feet) joins M-118, Burj Khalifa, and the Makkah Clock Tower in Riyadh as one of four officially-recognized “megatalls” (above 1,968 feet); the 5th-ranked Ping An Tower in Shenzhen (2017) just misses at 1,965 feet.  Five more of the top 100 are in Hong Kong.

(2) 15 in the United Arab Emirates, including top-ranked Burj Kh., with fourteen in Dubai City.  Dubai for the past twenty years has held a lead over New York as the city with the highest ultra-tall count.

(3) 14 in the United States. Eight are in New York, with One World Trade Center seventh in the world at 1,776 feet.  The Empire State Building, open since 1931 and by far the oldest building in the top 100, ranks 53rd. Chicago has five, and Philadelphia has one, the 95th-place Comcast Tower. No other U.S. city has a top-100 building. (LA’s Wilshire Grand ranked 88th when it opened in 2017, but has already dropped to 104th.) By way of comparison, in 1990 17 U.S. cities had at least one of the world’s top 100 buildings, and New York alone had 23.

(4) 20 elsewhere: Five in Malaysia, another five in Russia, three in Korea, two apiece in Taiwan and Saudi Arabia, one each in Vietnam, Kuwait, and Indonesia.

By way of consolation, though the American skyline may no longer tower over its rivals, the U.S. intellectual role in skyscraper design and construction remains very big. Ultra-tall buildings are highly “globalized” efforts; the builders of Merdeka-118, for example, turned to New York-based LERA (Leslie E. Robertson Associates) to oversee its structural engineering, while U.S. firms Fisher Marantz Stone, Barker Mohandas, and CPP handled vertical transport, lighting systems, and wind stress design. (As well as Samsung’s construction wing for the building contract, Australian and Hong Kong architects, and a Finnish elevator company.) Overall, specialized U.S. architecture and engineering firms in Chicago, New York, New England, and California designed or co-designed nine of the ten buildings at the top of the current top 100 list, and five of the ten tallest openings in 2022 and 2023.

FURTHER READING

New York’s Council on Tall Building and Urban Habitat lists the world’s 100 tallest buildings in 2024, 2020, 2010, 2000, 1990, and 1980.  The 2025 list, assuming buildings now in the final-construction stage open as planned, will bring on 11 new ones of 1,145 feet and up, and by necessity drop numbers 90-100 off.  On net this means China’s share will rise from 46 to 47.  Dubai will also get another, and Cairo and Istanbul will join.  The U.S., Korea, Malaysia, and Russia will lose one each.

Merdeka 118.

… Samsung Construction explains the concrete — 400,000 tons of it, enough to “cover a football field to a height of 19 stories in one solid block,” and braced by 40,000 km of rebar.

… and structural engineering lead Leslie E. Robertson Associates summarizes design.

Burj Khalifa features 160 floors, a spiral shape to minimize upper-story wind torque, specialized glass, and heat-resistant glazed aluminum/stainless steel cladding on the outer walls.

One World Trade Center (2014) at 1776 feet, ranks seventh worldwide and tops the U.S.

And the current ‘ultimate project’ – LERA, in partnership with Chicago-based Kohn Pederson Fox, has the most ambitious proposal of all: a 5,700-foot “Sky Mile Tower” in Tokyo, twice as high as Burj Khalifa and burying every conceivable competitor.  The “vision” outline of the Sky Mile Tower.

A brief survey of tall-building record-holders and techniques:

Here’s a list of the world’s tallest buildings and their opening dates (or best estimates) if there isn’t a precise one available:

2010: 2,716 feet (Burj Khalifa, UAE)
2004: 1,666 feet (Taipei 101, Taipei)
1998: 1,482 feet (Petronas Towers, Kuala Lumpur)
1974: 1,450 feet (Sears Tower, Chicago)
1972: 1,368 feet (World Trade Center, New York)
1931: 1,250 feet (Empire State Building, New York)
1930: 1,046 feet (Chrysler Building, New York)
1913: 792 feet (Woolworth Building, New York)
1908: 612 feet (Singer Building, New York)
1901: 548 feet (City Hall, Philadelphia)
1311: 525 feet** (Lincoln Cathedral, UK)
~2550 BC: 481 feet (Great Pyramid, Egypt)

* Not counting free-standing towers like the 555-foot Washington Monument (1884) or the 986-foot Eiffel Tower (1889).
** Estimated including the original spire, which fell down in 1548.

Pyramids & Ziggurats: The 481-foot Great Pyramid outside Cairo held the world’s tallest record for 3,800 years. Not just a lame pile of rocks, the G.P. is a “smart pyramid” with a complex interior network of chambers, tunnels, and ventilation shafts meant for practical, religious, and perhaps astronomical purposes, all pointing to sophisticated though unrecorded architectural drafting and engineering techniques. The slightly younger ziggurats in neighboring Sumer and Akkad were made of brick, a squishier material which meant they couldn’t be as tall, and topped out around 170 feet. The Great Pyramid

Cathedrals: Designed without printing presses, standardized weights and measures, or mathematics beyond flat-plane geometry, cathedrals overtook pyramids in the 14th century.  As of 1900 they still made up all of the world’s top 20; and except for Philadelphia’s 548-foot City Hall (1901) they remain today the world’s tallest stone-on-stone buildings. Glaber on the 1000-AD cathedral boom.

… and the Ulm Munster, tallest existing cathedral.

Skyscrapers: Stone buildings can’t get much above 500 feet, since the weight of the upper tiers will crack the load-bearing pillars and walls beneath. Steel-skeleton buildings with curtain walls designed in Chicago and New York solved the problem. Meanwhile, the Otis hydraulic elevator system settled the 50-story-climb-to-the-top challenge, and architects set aside a few floors for water pumps so penthouse suites and executive offices could get toilets that flush and faucets that spout water rather than sucking air. Here’s the Empire State Building looking ahead to its 2031 centennial.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

Jacoby for New York Post: The new $61B aid package for Ukraine is merely a good start

Posted on by Max Sherrill

By Tamar Jacoby

KYIV — I was elated on Saturday night as I watched the House of Representatives wrap up its vote on a $61 billion aid package for Ukraine.

Even six months after President Biden proposed the increased aid, bringing the bill up for a vote took historic courage and leadership from House Speaker Mike Johnson, who could still lose his job for defying the will of the majority of House Republicans who oppose aid.

But here in Ukraine, the reaction has been surprisingly muted.

The weaponry likely to flow in coming weeks will be essential on the battlefield and in cities across the country, where Russian air attacks have intensified sharply in recent weeks.

It should start to stabilize the front in eastern and southern Ukraine, where Moscow is currently poised to break through, and help Ukrainians shore up their defenses in anticipation of the Russian thrust that many expect in coming months as spring sunshine hardens the muddy ground between the two armies.

What the package is unlikely to do is enable Kyiv to go on the offensive, turning the tide of the war and positioning Ukraine to win.

Keep reading in New York Post.

Moss and Gresser on Medium: Bracing for the Fight Over U.S. Steel: Trading Sentiment and Political Optics For a U.S. Competition Problem

Posted on by The Progressive Policy Institute

By Diana L. Moss and Ed Gresser

U.S. Steel (USS) is a 123 year-old American company, founded by J.P. Morgan at the turn of the 20th century. As with any centenarian company, USS has seen a lot, navigating changes in demand for steel, the globalization of steel markets, the “greening” of the steel industry, and antitrust troubles. Between 2008 and 2022, USS slid from 8th largest to 24th largest steel producer in the world.

Today, USS finds itself at the center of an unwelcome debate. In late 2023, Nippon Steel made a bid for the company, a deal that would combine the largest Japanese steel producer with the 3rd largest U.S. steelmaker. The bid outmatched a competing offer by the recently assembled conglomerate Cleveland-Cliffs, a mining company turned metals producer that in 2020 emerged as one of the largest American steelmakers after buying up most of the U.S. assets of Arcelor-Mittal.

Read the full piece on Medium.

Pankovits for The Orange County Register: Moderate Sen. Bill Dodd should withdraw misguided anti-charter school bill

Posted on by Max Sherrill

By Tressa Pankovits

Senator Bill Dodd, D-Napa, bills himself a moderate with pragmatic priorities. So, it’s puzzling that he’d introduce Senate Bill 1380. SB 1380 would authorize school district boards to deny charter school applications if it had closed a school within the past five years. It would also gut county education boards’ authority to overrule the local board’s denial.

Elected school board members are politicians. They can be beholden to political donors, and sometimes donors’ priorities don’t align with families’ need for better public school options. Taking away oversight over school boards’ decision-making would grant them excessive power.

Dodd’s rationale is the misguided notion that when parents enroll their child in a public charter school, they drain school districts of funding. But charter schools are public schools: free and open to all. They are part of California’s public school system; they simply operate independently of district bureaucracies.

Keep reading in The Orange County Register.

Marshall for The Hill: Why Putin needs Trump to win

Posted on by Max Sherrill

By Will Marshall

In Ukraine, the fickle fortunes of war have turned in Russia’s favor. The invaders have seized the military initiative, while a Trumpified Republican Party has thrown in doubt both America’s commitment to a free Ukraine and our will to confront a new Russian imperialism.

For the moment, however, GOP House Speaker Mike Johnson (R-La.) has managed to unsnag more than $60 billion in long-stalled U.S. military aid that Ukraine desperately needs to defend itself against a Russian summer offensive.

Russian Foreign Minister Sergei Lavrov recently confirmed Moscow’s plan to seize Kharkiv, Ukraine’s second-largest city. Exploiting their advantages in manpower and missiles, willingness to take casualties and Ukraine’s dire shortage of artillery shells, Russian forces lately have made significant if costly advances near Bakhmut, Avdiivka and Donetsk City.

Although I’m loathe to praise any 2020 election denier, Speaker Johnson acted patriotically, if belatedly, in bringing the aid package to the House floor and passing it with Democratic help.

Keep reading in The Hill.