Category: Uncategorized

Jacoby for The Bulwark: America’s Fleeting Chance to Resume Leadership

Posted on by Max Sherrill

By Tamar Jacoby

SENATORS, BOTH REPUBLICANS AND DEMOCRATS, made an important start yesterday when they voted 67 to 32 to advance legislation that would free up $95 billion in military and humanitarian aid for Ukraine, Israel, and Taiwan. It was, to be sure, just a preliminary, procedural vote. The Senate still needs to pass the bill, and even then it faces long odds in the House of Representatives. But the Senate vote was an overdue step to stop the disastrous downhill slide in American power and influence in the world. The United States faces a choice: to resume its role as what Secretary of State Madeleine Albright called the “indispensable nation,” or to sit by and watch the world become more dangerous for us and our allies.

Opinions vary on when American global leadership began to wane. Some will point to the Vietnam era; others to the post-9/11 wars; still others to the Obama administration’s effort to “lead from behind.” Then there was Donald Trump’s “America first” approach, which actually meant “America alone.”

President Joe Biden got off on the wrong foot on foreign policy in 2021. Even those who felt it made sense to withdraw American troops from Afghanistan can now agree it was done too abruptly, leaving our Afghan allies at the mercy of a Taliban takeover. But then in 2022, the president changed course. Through 2022 and into 2023, the United States took the lead, inspiring and encouraging the world to support Ukraine as it fought off Vladimir Putin’s brutal, unprovoked invasion. Washington got the ball rolling with military aid and intelligence sharing, and soon our allies in Europe and elsewhere were following suit.

Keep reading in The Bulwark.

Kirsty McNeill for LabourList: ‘Here’s what visiting the US taught me about why progressives win or lose’

Posted on by Max Sherrill

By Kirsty McNeill, PPC

The Labour Party has one job in 2024: delivering Keir Starmer a majority that is deep, durable, disciplined and democratic.

Deep because, to overcome our catastrophic 2019 result, we must bring over voters from every demographic and every corner of the country.

Durable because Labour has to govern with a relentless focus on deserving a second term so that we can win era-defining change, not just history-defying swings.

Disciplined because the country needs a united team that is prepared to take a long-term view.

And, most of all, democratic because we obsess about securing both ongoing enthusiasm for – and participation in – our ambitious missions.

We visited the US to understand voters’ lack of enthusiasm for Biden

It was with this in mind that a delegation, hosted by the Progressive Policy Institute (PPI) and Progressive Britain, travelled to the United States last week.

We were in Washington DC and Virginia to learn from the Democrats and try to understand why voters weren’t more enthusiastic about a presidency of such extraordinary consequence.

Keep reading in LabourList.

 

New data on ridesharing driver earnings

Posted on by The Progressive Policy Institute

How much do ride-sharing drivers earn? Lyft has just released a paper that sheds light on this important policy question. The paper estimates “earnings after expenses” for drivers on the Lyft platform, based on reasonable and straightforward accounting for additional driver costs such as fuel, maintenance, cleaning, and depreciation.

The Lyft paper finds that the median earnings after expenses per “engaged hour” was $23.46 in the second half of 2023. (Lyft defines an “engaged hour” as time spent driving a passenger, or traveling to pick up a passenger). This figure is a useful “peek under the hood” for a major ridesharing company.

However, there’s another question that the Lyft paper does not address: How does $23.46 stack up against the pay for comparable occupations? To answer this question, PPI used data from the BLS Occupational Employment and Wage Statistics (OEWS), which surveys employers to ask about detailed wages being paid for different occupations.

We pulled several data points from the OEWS. In May 2022, the median hourly wage for taxi drivers was $14.75, including tips. The median hourly wage for “shuttle drivers and chauffeurs” was $15.71, and the median hourly wage for security guards was $16.71. And just to give a backdrop, the median hourly wage for all occupations was $22.26 (yes, that seems low, but that’s what the data shows).

Now, these wage numbers do not include employer-paid benefits, which come to an average of roughly 20% of total compensation for part-time workers (based on BLS data). So we adjust the wage figures upwards to account for benefits.  Table 1 shows the comparison.

Table 1: Ridesharing earnings in perspective
Median hourly wages (OEWS) Adjusted for benefits (assuming part-time)
All occupations           22.26           27.83
Security guards           16.71           20.89
Shuttle drivers and chauffeurs           15.77           19.71
Taxi drivers           14.75           18.44
Hourly earnings after expenses
Drivers on Lyft platform           23.46

 

So we see that hourly earnings after expenses for drivers on the Lyft platform is $23.46, 27% higher than a benefit-adjusted hourly wage of $18.44 for taxi drivers who are employees, and 19% higher than the benefit-adjusted hourly wage for shuttle drivers and chauffeurs.

On the other hand, driver earnings per hour are 16%  lower than the benefit-adjusted median for all occupations, including high-skill white-collar occupations. That makes sense.

One final methodological note: The Lyft figures are based on the concept of “engaged time” — time spent driving a passenger, or traveling to pick up a passenger.  It does not include time spent waiting for the Lyft app to identify the next passenger. On the other hand, if the wait time is too long at a particular time of day, drivers are likely to turn off the app and do something else instead, like study for classes, shop for groceries, or take care of children or the elderly.

Similarly, the BLS hourly wage figures do not include time spent commuting to work. If we accounted for commuting time, then wages per hour would be much lower historically, but they would have soared when Americans shifted to working from home, and fallen as they returned to the workplace. The implication here is that flexibility in work arrangements affects the meaning of wage data, whether we are talking about jobs or gig economy work.

From a policy perspective, the Lyft paper suggests that ridesharing drivers are doing reasonably well in terms of earnings compared to similar occupations. That allows us to concentrate on other aspects of work, such as making sure that regulations and the tax code are modified to give gig economy workers access to the safety net while protecting flexibility for workers including caregivers and workers with disabilities.

 

PPI Reports on the Gig Economy:

Regulatory Improvement for Independent Workers: A New Vision (July 2020)

Platform Work and the Care Economy  (November 2022)

Disability and Changes in the Workplace  (November 2023)

Ritz for Forbes: Alarming CBO Report Shows Unprecedented Interest Costs Starting Next Year

Posted on by Max Sherrill

By Ben Ritz

Just as two years of punishing inflation finally appears to have subsided, new projections from the Congressional Budget Office show another major economic problem on the rise. Thanks to excessive deficit spending that worsened inflation and the interest-rate hikes implemented by the Federal Reserve to bring it under control, the U.S. government is now on track to spend a larger share of economic output on annual interest payments next year than at any other point in our nation’s history. Even worse, these costs are projected to more than double over the next 30 years if current law remains unchanged. And the worst part of all: CBO’s projections are more likely than not to deteriorate further based on the agendas being offered by the two major parties heading into the 2024 elections.

CBO’s Budget and Economic Outlooks have shown for years that government debt was on an unsustainable path. As our population ages, spending on retirement programs such as Social Security and Medicare is growing faster than the revenue needed to fund them. If the federal government continues relying on borrowed money to finance growing structural deficits, an ever-growing share of the federal budget will be spent just servicing past debts. That rising cost draws resources away from other critical public investments our government needs to fund and threatens to dampen economic growth.

Previous reports generally suggested this challenge was a long-term one: Just last summer, CBO estimated that annual interest payments as a percent of gross domestic product would remain below the all-time high they reached in 1991 until 2030. But thanks to an unforeseen spike in borrowing costs last fall, CBO now expects the previous record to be broken in 2025.

Keep reading in Forbes.

Maag for The Hill: With fewer degree requirements, the federal government can break the ‘paper ceiling’

Posted on by Max Sherrill

By Taylor Maag and Michael Brickman

Education has become one of America’s most significant dividing lines. Those with bachelor’s and advanced degrees have mostly prospered, while employment prospects, wages and advancement opportunities for those with less education have fallen.

Yet, with so much else dividing our country, there is a growing bipartisan consensus that we must tear “the paper ceiling” that denies opportunities to those without at least a bachelor’s degree.

Early in the 2000s, many employers began adding degree requirements to job descriptions — whether they needed them or not — using the degree as a proxy for job preparedness. As a result, workers without a bachelor’s degree were screened out of opportunities. For example, in 2015, 67 percent of production supervisor job postings asked for a four-year college degree, even though just 16 percent of employed production supervisors had graduated from college.

Research from Opportunity@Work found that because of this “degree inflation,” there is a talent pool of skilled workers being left behind in our economy. The data shows that Americans skilled through alternative routes other than a bachelor’s degree represent 50 percent of the U.S. workforce. Many of them possess skills that should qualify them for jobs with salaries at least 50 percent higher than their current job.

In other words, our current hiring practices systematically underutilize the skills of millions of U.S. workers, deepening the economic divide between those with and without college degrees.

Keep reading in The Hill.

Gresser in Politico: Trump promised to rebalance trade in North America. The US trade deficit keeps climbing.

Posted on by Alex Terr

The former president’s campaign advisers say that if he returns to the White House in 2025, Trump would consider raising duties on all imports coming into the country, while slashing business taxes beyond the cuts he made in 2017 — steps he and his advisers argue will help rebuild U.S. manufacturing and create better-paying jobs at home. Some economists, however, predict the economic impact of those actions could offset each other, leaving the trade deficit largely unchanged.

Ed Gresser, an economist and former trade official in both Democratic and Republican administrations, said the main effect of Trump’s tax and trade plans for his second term would “be to lower living standards in the United States” by increasing the cost of goods for both businesses and consumers. “It would be significantly inflationary,” far more than the tariffs that Trump imposed during his first term on China and steel and aluminum products, he added.

…

The Commerce report shows the U.S. trade deficit with Mexico totaled a record $152 billion in 2023. And car imports continue to be a driving force behind that deficit, despite Trump’s emphasis on boosting U.S. auto production. The USMCA included a number of tough new provisions targeting the Mexican and Canadian auto sectors for just that purpose — for example, raising the amount of regional content included in a vehicle made in Canada and Mexico for it to qualify for the lower U.S. tariff rate. The Commerce report, however, shows the auto and auto parts trade deficit with Mexico hit $130 billion last year, compared to $83 billion in 2017.

Similarly, the overall trade deficit with Canada reached $68 billion in 2023, although that was down from $80 billion in 2022. The U.S. had a $19 billion deficit in passenger car trade with Canada but ran a small overall surplus in auto and auto parts trade with its northern neighbor.

The statistics illustrate how little Trump and his team understood the U.S. economy and how tax and trade policy work, said Gresser, who is now vice president for trade and global markets at the Progressive Policy Institute, a think tank closely aligned with centrist New Democrats.

“They didn’t understand what the trade deficit really meant and therefore they were not able to reduce it,” Gresser said, noting that other economic factors like how much a country invests and saves have a far larger influence on the size of the deficit than trade policy.

The big tax cut Congress passed during the Trump administration cut U.S. savings and boosted U.S. spending, pulling in more imports from abroad, Gresser said. Trump’s tariffs on more than $300 billion worth of Chinese goods “squeezed” the trade deficit with that country but caused it to swell with other countries, such as Mexico and Vietnam, he added.

…

U.S. auto sector employment has also grown under the USMCA, with help from additional government incentives provided by the Biden administration’s Inflation Reduction Act, said Scott Paul, president of the Alliance for American Manufacturing, a union-affiliated group that supported Trump’s renegotiation of USMCA.

“We’ve seen more factory announcements for auto and major auto part production coming to the United States than at any time over the last couple of decades that NAFTA was in effect, and so that clearly is a positive development,” Paul said.

However, U.S. auto industry employment was also rising during the later years of NAFTA and the recent increase in the number of those jobs looks like a return to that upward trend following a sharp drop during the pandemic, Gresser said.

Read more in Politico.

Trade Fact of the Week: U.S. Geological Survey: 33,000 tons of gold out there under the hills

Posted on by Max Sherrill

FACT: U.S. Geological Survey: 33,000 tons of gold out there under the hills.

THE NUMBERS: Quantity of gold “above ground” worldwide – 
2024: 212,582 tons*
2000: 144,000 tons?
1950:   70,000 tons?
1900:   30,000 tons?
1500:    ~5,000 – 15,000 tons?

* World Gold Council estimate.

WHAT THEY MEAN:

Previewing the betrayals, the shattered dreams, and the body count as The Treasure of the Sierra Madre opens, author B. Traven has some look-homeward-angel, be-content-with-what-you’ve-got advice:

“The treasure which you think not worth taking trouble and pains to find, this one alone is the real treasure you are longing for all your life.”

Still: The August U.S. Geological Survey reports last week in its 2024 Gold Commodity Summary that as much as 33,000 tons of gold is lying around under rocks and hills in the U.S. alone. (Including 3,000 tons of currently recoverable reserves, 12,000 tons of known but currently unrecoverable ore, and another 18,000 tons of undiscovered lodes.)  This in turn is “only a small portion” of total global reserves. With a price this week above $2,000 per ounce, the U.S. share alone would be worth about $2.2 trillion.

Should you quit your job and buy a shovel?

The sages of economics join Traven in loudly saying “No!” Here’s 18th-century econ. pioneer Adam Smith condemning speculators, amateur treasure-hunters, and professionals alike as “destined to bankruptcy and ruin,” in the appropriately titled Chapter 11 of The Wealth of Nations: 

“Of all those expensive and uncertain projects which bring bankruptcy upon the greater part of the people who engage in them, there is none perhaps more perfectly ruinous than the search after new gold and silver mines. … [W]hen any person undertakes to work a new mine in Peru, he is universally looked upon as a man destined to bankruptcy and ruin, and is upon that account shunned and avoided by everybody.”

From another tradition entirely, 14th-century Tunisian polymath ibn Khaldun scornfully rejects persistent rumors that sixth-century Byzantines, or alternatively djinns and wizards, had buried huge lots of gems and precious metals in caves.  He says the only ones who get rich on gold are con men swanning about the Maghreb selling phony maps and shares in non-existent mines. As to their dupes:

“Trying to make money from buried treasure is not a natural way to make a living.  Many weak-minded persons hope to discover riches under the earth and profit from them … Their motive is their inability to earn money normally, through commerce, farming or crafts.  They trust instead that they can grow rich without effort or trouble.”

In practice, ibn Kh. may have been basically right about get-rich-quick dreamers, but Smith was off-base on professional mining. The World Gold Council (a trade association of 32 of the world’s big gold-mining companies) reports 4,899 tons of gold ‘used’ in 2023, the largest annual total they have on record. About two-fifths of this, 2,168 tons, went to jewelers; investors bought about the same amount, with 1,040 tons going to central banks and 1,190 to private buyers. The rest divides between 298 tons to tech businesses for semiconductor wire bonding, infrared sensors, thermal protection for aerospace technologies, photovoltaics and solar cells, reflective satellite mirrors, etc.; 40 tons or so to dentists, and the rest to miscellaneous buyers. The WGC says that 1,800 of the 4,899 tons came from recycling, and the other 3,100 tons from mines.

Therefore, Smith is incorrect and lots of professionals make money digging up gold. The Council’s figures imply that a third of all currently circulating gold has been dug up since 2000, and the total — “about 212,852 tonnes” by their count — rises about 1% each year.  Production is pretty diffuse by country: the Council and the USGS disagree slightly on totals, but concur that four countries produce more than 200 tons a year (China, Australia, Russia, and Canada), and another 10 or so are above 100 tons:  the U.S. at 170 tons (124 tons from Nevada, 20 from Alaska), joined by Burkina Faso, Ghana, Indonesia, Mali, Mexico, South Africa, and Uzbekistan.  USGS has the Peruvian mines Smith scoffed at 250 years ago producing 90 tons a year.  Gold trade comes to about $450 billion per year — not far behind the WTO’s figure of about $625 billion in iron and steel exports, and about 2% of world goods trade — as metal flows through the London Bullion Market, the slightly smaller New York, Zurich, and Tokyo exchanges, Swiss metal refineries and financial institutions, Indian and Hong Kong investor portfolios and so forth. Switzerland is the largest trader, often both importing and exporting $90 billion worth in a year.

Could you, realistically, get a bit of this? Well, there’s still lots more gold beneath the ground than above it. World “reserves” in the technical sense of “recoverable without loss under current technology and mining and other costs” are 3,000 tons in the U.S. and 59,000 tons worldwide; adding in veins and lodes too expensive to get at, and extrapolating the USGS’ figure for currently unrecoverable and unknown lodes in the U.S. to the world suggests a world total above half a million tons.

But even the ore everybody knows about is hard and expensive to dig up. As an extreme but illustrative example, the Mponeng mine near Johannesburg is a hole 4 kilometers deep. The World Gold Council puts the current AISC (“All-In Sustaining Cost,” the average cost of digging up an ounce of gold) at $1,276. This allows substantial profits given a $2,076/oz. market price, but you’d need lots of capital to keep going, as well as very high up-front capital for opening a mine. So even if you could find one of USGS’ 33,000 tons, it might not pay to try for it.

Still, even Traven is equivocal. If his first sentence tells you that you’ll regret trying, his second wistfully suggests that you might want to make one last try:

“The glittering treasure you are hunting for day and night lies buried on the other side of that hill yonder.” 

FURTHER READING

Data:

The U.S. Geological Survey’s 2024 gold report.

The U.S. Geological Survey has U.S. production, world production, trade, and price data for gold and eight-three other minerals — everything from platinum-group metals and gemstones through iron and tin and on to salt, gravel, and peat — from the early 20th century to 2023.

All the gold in the world: 

USGS says there are 59,000 tons of currently recoverable gold “reserves” worldwide underground, including the 3,000 tons in the U.S. Gold being resistant to tarnish, it stays around, except for the fraction hidden in booby-trapped tombs, buried in pirate chests, or dropped down manholes. The World Gold Council helpfully illustrates their “around 212,852 tonnes” estimate with a picture of a 212,000-ton solid gold cube 73 feet on each side. It would be worth about $15.5 trillion.  One ton of gold would be a cube with sides about 15″ long.

A counterpoint, attempting to estimate the total gold available to kings, sultans, pirates, merchants, &c. from 1492 to the present, guesses pre-1900 stocks were quite low.

The Swiss news service looks at Switzerland’s gold vortex, human rights compliance, money laundering, and policy.

And the Mponeng mine, deepest in the world.

Nothing new under the sun:

Ibn Khaldun’s Muqaddimah.

Smith’s Wealth of Nations.

Ibn Khaldun’s con men have modern descendants: the Nevada Mining Commission warns a gullible public to steer clear of get-rich-quick schemes and “dirt pile swindles.”

And last:

If you must — The U.S. Geological Survey has advice on where to go to find gold, and how to do it.

But be warned — B. Traven’s Treasure of the Sierra Madre.

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: After fumbling border security, the immigration crisis is on Republicans

Posted on by Max Sherrill

By Will Marshall

President Biden must feel like he can’t catch a break. Even as the nation’s cost-of-living crisis seems to be abating, another is rising to take its place: A record-breaking surge of illegal immigrants across America’s southern border.

Recent polls show that immigration has either edged out inflation as U.S. voters’ top concern or is running a close second. The last thing President Biden and Democrats need is a chaotic border taking center stage in the 2024 presidential campaign.

The spike has overwhelmed border and customs officials, flooded immigration courts and detention shelters and imposed heavy economic costs on border communities. It’s also sparking a backlash in big “sanctuary cities” like Chicago, Denver and New York, where Texas Gov. Greg Abbott has been busing migrants.

The public consequently gives Biden low marks for handling immigration. That’s especially true in key swing states, where by hefty margins voters trust Donald Trump more than Biden to manage the situation on the border.

But if immigration is a political headache for Biden and his party, it’s turning into a debacle for the Republican Party. Yesterday, in a stunning display of hypocrisy and cowardice, Republican congressional leaders torpedoed a tough national and border security bill designed to drastically curtail illegal immigration.

Keep reading in The Hill.

Marshall in Politico: Where’s Biden? A bit off stage from the main attraction.

Posted on by Alex Terr

The president has kept a distance from the action, not addressing the nation on the strikes, not staying in South Carolina for his win and declining to participate in the semi-traditional Super Bowl interview this coming Sunday.

The low key approach is one the White House has adopted before, at times worrying some in his party who say it’s critical that he seize any opportunity to counter criticism that he’s too old or disengaged for the job.

“He’s got to make his case,” said Will Marshall, president of the Democratic think tank Progressive Policy Institute. “There are opportunities to take the offensive on the economy and even now on immigration.”

But the administration insists it is by design and that the concerns miss not just how much he interacts with the public but the nuances of the job. That’s especially true, they note, with respect to the airstrikes launched in response to the deaths of three American soldiers.

Read more in Politico.

Maag for RealClearEducation: Can Career Learning Bring America’s Young People Back to School?

Posted on by Max Sherrill

By Taylor Maag

School absenteeism sky-rocketed post-pandemic: 6.5 million more students missed at least 10% or more of the 2021-22 school year than in 2017-18. This means 14.7 million students were chronically absent even after schools reopened from the pandemic. While preliminary data shows that absentee rates slightly decreased in the 2022-23 school year, truancy remains a serious concern for our nation’s K-12 system.

School absences take a toll on the academic performance and social-emotional development of young people. The National Center for Education Statistics, the organization that administers the National Assessment for Educational Progress (NAEP), cited increased student absenteeism as a main factor in recent NAEP score declines. Beyond test scores, irregular attendance can be a predictor of dropping out of high school, which has been linked to poor labor market prospects, diminished health, and increased involvement in the criminal justice system.

If we want to get students back in the classroom and avoid poor outcomes for our nation’s young people, U.S. leaders must rethink how we operate K-12 education. One potential solution is reinventing high school to ensure every young person is exposed to the world of work through career-oriented education and learning. An analysis of international cross-section data found that nations enrolling a large proportion of students in vocational or career-focused programs have significantly higher school attendance rates and higher completion rates than those that don’t.

Read more in RealClearEducation.

 

Europe’s App Store Regulation Experiment

Posted on by The Progressive Policy Institute

The European Union is running a massive regulatory and economic experiment. In information technology, a key sector where the region is lagging, the EU has adopted several pieces of prescriptive legislation — including the Digital Markets Act (DMA) — designed to change the behavior of the most successful tech companies (none of which are European).

In response to the DMA, Apple has just announced a massive restructuring of its App Store infrastructure in Europe, including provisions for alternative app stores and changes in pricing schemes. Apple has made a good faith effort to comply with the DMA, while still creating a safe haven for developers and consumers who prefer the current system.

The question is, what will be the impact of all of these changes? First, implementing the new regulations will mean more uncertainty for developers and consumers. App Economy workers are not likely to be helped, either. We note that before the DMA went into effect, PPI’s latest analysis shows that the iOS ecosystem accounted for 2.1 million jobs in the European Union in 2023, up 52% since 2019. Additional uncertainty could slow down that growth.

Another issue is the safety of the new app stores. Apple will be “notarizing” apps downloaded from the new app stores, using a combination of automated checks and a basic human review to guard against malware or collection of “private, sensitive data without a user’s knowledge.” Apple notes that while notarization “includes basic protections designed to reduce some of the new risks created by alternative app distribution,” the notarization process does not set the “same high bar for privacy and security as the App Store.”

As a result, alternative app stores pose the danger of a race to the bottom, both for app stores and developers. Security is expensive. Each update or version has to be extensively tested, and the data protections maintained in operation. Developers have an incentive to spend less on security and more on flashy new features. Alternative app stores may have an incentive to be more hospitable to developers who invest less in security.

For other countries that are considering DMA-type bills, it’s a good time to step back and see how the EU regulatory experiment plays out. Will the new regulations make a positive difference to consumers and developers? Or will the massive new rules get in the way of innovation and growth?

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Tim Ryan Joins PPI Campaign for Working Americans

Posted on by Max Sherrill

Washington, D.C. — Former U.S. Representative Tim Ryan (D-Ohio) joins the Progressive Policy Institute (PPI) as Senior Advisor to its new Campaign for Working Americans. Its mission is to develop a radically pragmatic governing agenda that can help Democrats and other center-left parties regain the allegiance of working class voters.

Ryan, who represented northeast Ohio in Congress from 2003 to 2023, also will help shape PPI’s energy and climate work. It advocates for a realistic, “all-of-the-above” approach to America’s clean energy transition that can win the support of working families, including those with good production jobs in traditional energy sectors.

Ryan grew up in a blue-collar, Irish-Italian family in Ohio’s Steel Valley. In Congress, he earned a reputation as a leading champion for U.S. manufacturing and economic redevelopment in America’s industrial centers. In 2022, Ryan was the Democratic nominee for the U.S. Senate in Ohio.

“I have long admired PPI’s pragmatic approach to policymaking and share its commitment to helping the Democratic Party win back working Americans. Ahead of this year’s critical election, I am excited to help PPI forge a new economic offer to working families who feel their voices aren’t heard in Washington,” said Tim Ryan.

“PPI is delighted to welcome our friend Tim Ryan aboard,” said Will Marshall, President of PPI. “He is a tireless fighter for the economic aspirations and heartland values of ordinary working Americans. We believe Tim can help us reach across the ‘diploma divide’ to these once and future Democrats.”

“It’s past time for working America to have a seat at the policymaking table, especially in the Democratic Party where the elites now have excessive influence,” said Lindsay Mark Lewis, Executive Director of PPI. “Tim Ryan has been a voice for working America for over two decades and we are thrilled to have him join PPI to continue this important work.”

Read the full analysis of PPI’s working-class poll here. Read more about PPI’s energy and climate work here. Read more about PPI’s Project on Center Left Renewal 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: Amelia Fox – afox@ppionline.org

PPI’s Trade Fact of the Week: WTO members will decide whether to preserve “duty-free cyberspace” by February 29.

Posted on by Max Sherrill

FACT: WTO members will decide whether to preserve “duty-free cyberspace” by February 29.

THE NUMBERS: Internet users as a share of the worldwide population – 

2024:      67%
2018:      49%
2012:      34%
1998*:       3%

The WTO membership approved ‘duty-free cyberspace’ in May 1998.

WHAT THEY MEAN:

In PPI’s latest policy paper, Tech Policy Director Malena Dailey and Ed Gresser urge the World Trade Organization members to support music lovers, heed Taoist policy advice, encourage teenage influencers, and help small businesses participate in trade, by continuing their 25-year practice of not taxing flows of information over the internet. By way of background:

On February 26, the WTO will meet in Abu Dhabi for “MC-13” (the group’s 13th Ministerial Conference; the first was in 1996). Their docket extends from the seas (fisheries subsidies), to the land (agricultural stockpiling), the lab (medicines and medical technology intellectual property post-COVID pandemic), and the law (revival of the Dispute Settlement system).  The sky is not absent: one of the marquee MC-13 decisions is whether the members will extend the “moratorium” they imposed on applying tariffs to electronic transmissions, “duty-free cyberspace” for short, at “MC-2” in the spring of 1998. The 14-word moratorium is one of the simplest and most easily understood of all trade agreements, reading as follows:

““Members will continue their current practice of not imposing customs duties on electronic transmission.”

Dailey and Gresser call up Taoist sage Lao Tzu, not always a perfect guide to policymaking, but quite right in this case:

“Those who would gain all under heaven by tampering with it — I have seen that they do not succeed. Those that tamper with it, harm it; those that lose it.”

Translating this into data-flow and taxation, internet transmissions are fundamentally ways to exchange information. Allowing people and businesses to exchange information without taxing them for it will encourage them to exchange more.  Taxing this flow of ideas and knowledge, meanwhile, will mean they exchange less of it. The analogous if more prosaic present-day economist’s saying about this sort of situation is “don’t just do something, stand there.”

That’s essentially what WTO members have done for the last generation. Over their 25 years of refraining from grabbing and tampering, benevolently standing there, and maintaining the “duty-free cyberspace” principle, trade has visibly ‘democratized’ as electronic commerce has boomed and barriers to small business and individual participation in exports have diminished. Some figures illustrate:

* Massive growth in internet access and use: The world internet user population has grown from 150 million, mostly in the U.S. and other wealthy countries in 1998, to a third of the world’s people by 2012, half by 2019, and 5.4 billion or two-thirds of the world’s people (and 79% of the world’s young people, according to the International Telecommunications Union).

* High-tech infrastructure boom: The infrastructure necessary to serve this large number of users has grown, in the case of submarine fiber-optic cables from 84 in the late 1990s to 574 of much better quality as 2024 begins; in the case of satellites, from under 1,000 birds then to nearly 8,000 now.

* Data flow: The volume of data traversing these wires and beams, as calculated by Cisco in their fondly remembered “Visual Networking Index,” had by 2017 risen from the trillions of bytes to the quintillions before it became too hard to count.

* Electronic commerce: Much of this data has commercial as well as intellectual or entertainment purposes: the value of electronic commerce just within the United States, according to the Commerce Department, has risen 50-fold from $700 billion to $36 trillion, about 40% above the U.S.’ $26 trillion GDP.

* “Democratization” of trade and small business exporting (U.S.):  As the price of finding overseas customers has dropped, the Census Bureau’s count of exporting American small businesses has grown from about 170,000 to 250,000. This is likely a large understatement, as the Census counts only “goods” exporters of things like farm products and manufactured goods. They are not yet able to tally services exporters such as musicians, Instagram influencers, clinics supplying telemedicine, artists and comedians, distance educators, and other large and active Internet users.

* “Democratization” of trade and small business exporting (developing countries): And similar booms spring up around the world. Dailey and Gresser cite Indonesian musicians, Bangladeshi web-site designers, Albanian social media account managers, and more, as examples of the way the falling costs of communications help small firms and entrepreneurs find potential partners, suppliers, and customers around the world.

In sum, the ‘foundational’ WTO decision 25 years ago to leave the Internet tariff-free, refrain from tampering and grabbing, stand there, etc.,* has worked very well. Good job. Keep it up.

* Asterisk: Note of course that this approach isn’t always best. Lao Tzu points out after all in Chapter 1 that “the Way is not an unvarying way.” Per Dailey and Gresser, while it’s best to refrain from taxation and tariffs, it’s also important to have active policies for privacy protection and law enforcement, to have appropriate content moderation, and to ensure access for the 2.5 billion people worldwide, including about 25 million Americans, who don’t now have the connection they want.

FURTHER READING

Dailey and Gresser on duty-free cyberspace.

PPI’s digital policy project.

At the creation:

Then-U.S. Trade Representative Charlene Barshefsky set out digital trade policy in 1998. Core graph, with the foundational value of duty-free cyberspace the “do-something” policy agenda in privacy, security, access, and so forth both still very current:

“Moving on from the foundational commitment we won from the WTO members in 1998 on the principle of “duty-free cyber-space” – that is, ensuring that electronic transmissions over the Internet remain free from tariffs – we are moving on to a longer-term work program. Its goals include ensuring that our trading partners avoid measures that unduly restrict development of electronic commerce; ensuring that WTO rules do not discriminate against new technologies and methods of trade; according proper application of WTO rules to trade in digital products; and ensuring full protection of intellectual property rights on the Net.  At the same time, we are working with individual trading partners on a series of related questions – for example, on privacy issues where we have worked closely with the European Union to create a model that both protects consumer privacy and prevents unnecessary barriers to transatlantic economic commerce.”

… and now: 

The White House’s “Declaration for the Future of the Internet,” signed by the U.S. and 61 other countries, sketches out an agenda for privacy, law enforcement and public-interest regulation, universal access, and encouragement for growing data transfer.

The WTO on digital trade as a development tool.

The Joint Initiative on electronic commerce.

… and on this topic, a highly concerned & critical PPI look at the U.S.’ sudden and mysterious loss of direction on data flow and related issues.

Data:

ITU counts Internet users, end 2023.

And a counterpoint:

Why, with all this in mind, would someone want to breach the moratorium? Proposals, mainly from India and South Africa, rest on the idea that refraining from tampering and grabbing means that developing countries lose tax revenue. A UNCTAD staff paper of 2018 to this effect argues current tariff rates in developing countries, if imposed on digital products, could yield about $10 billion in tax money is a frequent point of reference. (India is the paper’s top hypothetical tax recipient at about $400 million.) Dailey and Gresser note (a) that this sort of thing — taxing music downloads? who pays? the artist? the platform? the submarine cable or fiberoptic owner? — not only may fail in practice, but (b) that the money involved in UNCTAD’s speculation is pretty trivial, and (c) the arithmetic almost certainly works against governments considering this sort of thing:

*    For India, the $400 million high-end estimate would be about 0.1% of that year’s ~$324 billion in Indian government revenue. This is almost certainly well below the losses the Indian Finance Ministry would incur as other governments tax and shrink India’s services export industries, and VAT and other income tax receipts accordingly fall.
*    For “developing countries” generally, also about 0.1%.

Not at all a good exchange. See pp. 8-12 on the folly of putting small revenue gains above large GDP, technological, and employment advances.

The UNCTAD staff paper is here.

And the India/South Africa submission.

And last:

Lao Tzu (Waley translation); see Chapter 29 for the grabbing and tampering piece, and Chapter 1 as a caution against over-reliance on policy minimalism.

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.

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Duty-Free Cyberspace: Why the WTO Should Continue the E-Commerce Tariff Moratorium

Posted on by Max Sherrill

Washington, D.C. — As the World Trade Organization (WTO) prepares for its 13th Ministerial Conference late this February, its 164 members face a key decision — whether to renew a 25-year-old e-commerce tariff “moratorium” that helped create a “duty-free cyberspace” principle for the group in 1998 and has done so ever since. The 2024 world of 5.4 billion internet users, and an electronic commerce value likely approaching that of global GDP, may vastly differ from the 150-million-user experiments-with-email world of 1998, but as noted in a new PPI report, duty-free cyberspace is still at the foundation of the digital economy and still essential to policy.

Today, the Progressive Policy Institute (PPI) released a report titled “WTO E-Commerce Tariff Moratorium at 25,” which examines whether the WTO members should continue their current “moratorium” on imposing tariffs on (or otherwise taxing) electronic transmissions over the internet. Report authors Malena Dailey, PPI’s Director of Technology Policy, and Ed Gresser, PPI’s Vice President and Director for Trade and Global Markets, argue that the WTO members should continue this moratorium and outline the extensive policy reasons for why they should do so.

The report demonstrates the value of this moratorium for the growth of the digital economy overall, and for small businesses, individual creators, and entrepreneurs in particular. If the WTO members heed the authors’ advice, they will also help grow and develop the economies of lower-income countries, and simultaneously help the Biden administration achieve its goal of a more “inclusive” trading system.

“This commitment, simply by avoiding unintentional harm, would allow the digital economy to continue the natural growth that has helped hundreds of thousands of small businesses, and countless individuals, enter the global economy and find new ways to realize dreams and earn incomes,” said Malena Dailey.

“Abandoning the moratorium would be a sad mistake — for global progress, for innovation, and for the governments who are losing sight of larger growth and development opportunities in favor of potential tax revenues,” said Ed Gresser. “Duty-free cyberspace remains critical to all these things, and the WTO members should enthusiastically endorse it once again.”

Read and download the report 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: Amelia Fox – afox@ppionline.org

WTO E-Commerce Tariff Moratorium at 25

Posted on by Max Sherrill

INTRODUCTION

Here’s semi-mythical classical sage Lao Tzu, with some poetic advice to authorities who long to fix things. Sometimes they’re not broken, and are best left as is:

“Those who would gain all under heaven by tampering with it — I have seen that they do not succeed. Those that tamper with it, harm it. Those that grab at it, lose it.”

Prosaic modern economists occasionally echo him, with the unexciting but sometimes correct advice: “Don’t just do something, stand there.”

As the World Trade Organization (WTO) prepares for its 13th Ministerial Conference late in February, both the ancient sage and the modern wonks are offering very good (if also very modest) advice on the most modern of all technologies: the internet and the world’s digital economy. If the WTO members take heed, they will help growth and development in lower-income countries, and simultaneously help the Biden administration achieve its goal of a more “inclusive” trading system that does more to create opportunities for the small and the less powerful “empowering small businesses to enter the market, grow, and compete.”

Read the full report.

Jacoby for Washington Monthly: How Ukranians Are Dealing with Republicans Dithering Over Military Aid

Posted on by Max Sherrill

By Tamar Jacoby

Ukrainians reacted with surprising equanimity last week when Donald Trump all but clinched the Republican nomination for president by winning the New Hampshire primary. Most mainstream media outlets here in Kyiv treated the looming possibility of the 45th president’s return to office as a second-tier story, despite his hostility to Ukraine’s war for survival and his determination to scuttle a U.S. border security deal that would pave the way for $61 billion in aid to Kyiv. The Telegram channels where most Ukrainians get their news hardly seemed to notice his victory over former United Nations Ambassador Nikki Haley, a fervent advocate of aid to Kyiv. There were no screaming headlines, angry political speeches, or sardonic commentary by Telegram subscribers.

The Trump victory comes at a dark time for Ukraine: stalled fighting in the country’s southern and eastern regions, intensifying Russian missile strikes, growing fears that Ukrainian fighters—those on the front lines and those defending civilians against air attacks—are running out of ammunition. Kyiv depends on Washington—more than $75 billion has flowed here since February 2022, when Vladimir Putin invaded in full force. (Russian forces have controlled Crimea since 2014.) The outcome of this week’s debate on Capitol Hill is as important for Ukraine’s future as anything that happens on the battlefield.

Keep reading in Washington Monthly.