Category: Uncategorized

One Year Later, the IRA has Made Strides in Clean Energy Transition and Created Opportunities for Working Families

Posted on by Alyssa Brown

Elan Sykes, Energy Policy Analyst at the Progressive Policy Institute (PPI) released the following statement on the one-year anniversary of President Biden signing the Inflation Reduction Act (IRA), the largest-ever investment into clean energy technology, into law.

“The Inflation Reduction Act is a historic inflection point in America’s progress toward clean energy investment, and decarbonization. This legislation creates opportunities for working-class families across the country through its monumental investment in manufacturing, working to lower energy costs for all Americans during a time of record inflation. However, there is much more work to be done.

“Maximizing the benefits of the IRA will require Congress and the Biden Administration to reduce barriers to deployment in the federal permitting process, expand secure supply chains domestically and in partnership with global allies, and increase the skilled clean energy workforce going forward. PPI calls on the Biden Administration and both parties in Congress to work pragmatically to secure a cleaner, brighter future for American Energy.”

Sykes, along with Paul Bledsoe, Strategic Advisor at PPI, recently released a report on a new ambitious approach to permitting reform. The report proposes a fundamental change to the permitting process by utilizing new analytics, scoping, and mapping technologies that can provide federal agencies and regulators the tools they need to comprehensively approve large batches of projects together, instead of individually reviewing projects.

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.

Follow the Progressive Policy Institute.

More from PPI’s Energy and Climate Solutions Initiative.

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Media Contact: Amelia Fox – afox@ppionline.org

Bledsoe for The Messenger: Gas Is a Better Option Than Coal on Our Path to Draw Down Emissions

Posted on by Alyssa Brown

By Paul Bledsoe

As the climate crisis worsens, the debate over emissions from natural gas is heating up, too. Unfortunately, both gas opponents and gas supporters have been cherry-picking the data, especially regarding the lifecycle emissions of gas, which under almost all circumstances are still lower than coal.

These contretemps are obscuring significant agreement between many gas suppliers, government regulators and climate campaigners about the need to dramatically reduce fugitive emissions of methane from the U.S. and global systems so gas can be as low-emitting as possible.

Switching from coal to natural gas in the U.S. has been responsible for three-fifths of U.S. carbon dioxide emissions reductions from 2005 to 2020. Across the U.S., major electric utilities continue to reduce coal. Duke Energy, for example, which operates in six states, including North Carolina, has retired more than 50 coal power plants and 7,000 megawatts of coal production since 2010.

Read more.

This story was originally published in The Messenger on August 12, 2023.

Trade Policymaking for Underserved America

Posted on by Alyssa Brown

Submitted to the Office of the U.S. Trade Representative in Response to June 11, 2023, Request for Public Comment on Ways Trade Policy Can Advance Racial and Gender Equity and Support Historically Underserved Communities

Thank you for this chance to offer suggestions on ways trade policy might better meet the needs of America’s underserved families and communities. I am Vice President of the Progressive Policy Institute (PPI), a 501(c)(3) nonprofit think tank established in 1989, which publishes on a wide range of public policy topics. My research focuses principally on U.S. international economic policy, with a particular focus on trade issues. I previously served for nine years at the Office of the U.S. Trade Representative, including as agency speechwriter (1998-2001) and as Assistant U.S. Trade Representative for Policy and Economics (2015-2021). In the latter capacity I oversaw USTR’s economic research and use of trade data, administration of the Generalized System of Preferences, and policy coordination work including concurrent service as Chair of the Trade Policy Staff Committee.

I would like to focus on two questions USTR poses in its June 12 Federal Register notice:

“Are there trade policies, provisions, or actions which are detrimental to advancing racial and gender equity, equality, and economic empowerment?”

and

 “What best practices should USTR consider to ensure that advancing equity, equality, and economic empowerment is standardized in community and stakeholder engagement regarding the development and implementation of U.S. trade and investment policy?”

As a point of departure, I applaud Ambassador Tai’s sustained interest in understanding any detrimental effects trade policy may have on underserved Americans, and finding ways policy might more effectively meet their needs. There is strong evidence that the tariff system has some detrimental effects in several areas, and in some ways, it presents an unfortunate contrast with other American taxes. Specifically, it taxes cheap and simple consumer goods much more heavily than analogous luxuries, and taxes many women’s clothing products at higher rates than analogous men’s clothes. This makes the tariff system an unusually regressive part of the American tax system, and likely the only one with an explicit gender bias. Many of the peak tariff lines apply to products not made in the United States, and could be revised without harm to U.S. growth or existing employment though at some modest cost in revenue.

The second question, on ways USTR might draw more advice from lower-income and underserved communities is more challenging. Trade agreements are often intensely debated and sometimes termed “non-transparent.” The permanent systems an agreement modifies, though, are typically far less frequently debated and seem to be largely opaque not only to the public but to many experts. This means communities affected badly by these systems rarely know they are affected, are thus relatively unlikely to respond to solicitations for advice, and may have difficulty even responding to direct outreach. U.S. officials hoping to encourage their participation in policy development might as a first step develop more detailed, regular, and contextual publications on the way these systems function and how they affect different groups within American society. This would help build understanding at least within the government, Congress, and academic communities, perhaps elicit ideas and ways to improve them, and likely encourage more informed discussion with underserved communities.

A more detailed discussion of these topics follows: first, on the regressivity of consumer goods tariffs and their consequent impact by income level and race/ethnicity; second, the gendered nature of the clothing tariff schedules, and the unintended but explicit bias this has created; and third, the challenge of drawing advice on policy from “underserved” communities.

READ THE FULL RESPONSE HERE.

Ritz and Verral for The Hill: One year after the CHIPS Act, Congress is starving science

Posted on by Alyssa Brown

By Ben Ritz and Stephen Verral

Public investments in research and development (R&D) during the 20th century have powered many of America’s greatest advancements. However, federal funding for R&D has been declining over the past 50 years. Now, as Congress negotiates spending bills for the new fiscal year, investments in R&D are being further starved in an effort to reduce budget deficits. Although now is a time when the federal government should be unwinding the nation’s debts, cutting R&D funding is a shortsighted decision that will barely change the fiscal trajectory while hobbling America’s ability to innovate.

When Congress passed the bipartisan CHIPS and Science Act one year ago, it was supposed to herald a $200 billion increase in public R&D that reversed the long-term funding decline and prevented China from gaining a technological edge. But lawmakers failed to appropriate the funds needed to meet this target in Fiscal Year 2023 — and the outlook for 2024 is even worse.

Congress will return to Washington in September embroiled in a partisan standoff over spending. Extremists in the far-right Freedom Caucus are demanding massive spending cuts beyond those agreed upon in the debt ceiling negotiations earlier this summer. Included in the House GOP’s proposed appropriations bills are deep cuts to R&D investments in energy, agriculture, the environment, space exploration, and health and medicine. Only the defense sector will see an expansion of R&D funding.

Read more in The Hill.

Marshall for The Hill: Xi’s losing bet on Putin is backfiring

Posted on by The Progressive Policy Institute

By Will Marshall

Since Xi Jinping rose to power in 2013, China has pursued an increasingly self-isolating diplomacy of jut-jawed belligerence. Nothing better illustrates the damage done to Beijing’s global standing than Xi’s declaration of a “no limits” partnership with Russia’s Vladimir Putin.

For starters, it was spectacularly mistimed. Xi announced the new Sino-Russian alliance during the Beijing Olympics in February 2022, just 20 days before Russia invaded Ukraine.

There’s no indication that Putin gave Xi a heads up about the attack, though President Biden had repeatedly warned the world it was coming. The invasion put the Chinese leader on the spot because it brazenly violated two principles Beijing supposedly holds sacred — territorial integrity and non-interference in the affairs of sovereign states.

Keep reading in The Hill.

Can the New Wave of AI Democratize Innovation?: The Case of Agriculture

Posted on by The Progressive Policy Institute

The full title should be “How the New Wave of AI Can Speed Adoption of New Technologies, Boost Productivity, Create New Well-Paying Jobs, and Democratize Innovation: The Case of Agriculture.”

We’re working on a study of the applications of AI to agriculture. We’ve laid out the main points that we are covering in an attached slide deck.

Here is a summary of the deck:

 

  1. People are worried that generative artificial intelligence (gAI)–and large language models (LLMs) in particular–will destroy jobs.
  2. We propose that LLMs should be thought of as a General Purpose Adoption Technology (GPAT) with the ability to break down some of the barriers to innovation that have held back stagnant sectors such as agriculture and manufacturing.
  3. The key is that LLMs are democratizing: They will allow small and medium enterprises (SMEs) to experiment with, adopt, and maintain new technologies such as machine learning and robots with less need to depend on expensive third-parties such as systems integrators.
  4. To put it another way, today SMEs that want to digitize have to purchase scarce “complementary inputs” such as design, installation and maintenance expertise at a high price. LLMs lower the long-term cost of those complementary inputs, and make them more widely available
  5. The best analogy is the introduction of the personal computer. Previous to the PC, information technology applications were controlled by centralized IT staff. But the PC brought the IT revolution down to the level of SMEs and individual departments of large enterprises, and greatly accelerated the rate of adoption.
  6. Because GPATs reduce dependence on expensive intermediaries, the new adoption technologies will accelerate diffusion, boost productivity, lower prices, and raise incomes. Mounting evidence also suggests that faster productivity growth could also bring more job creation.
  7. Since 2007, sectors with faster productivity growth have added 2.2 million jobs, while sectors with slower or negative productivity growth have lost 1.2 million jobs.
  8. The new adoption  technologies will aid a wide range of lagging industries, including manufacturing, construction, and food production.
  9. In this study we will focus on agriculture, which  has suffered from the unhappy combination of weak productivity growth for the past 20 years and no employment growth. The result has been rising food prices, stagnant farm incomes, and weak rural incomes.
  10. We suggest that LLMs can accelerate the adoption of digital  innovations on the farm (see Google’s Mineral), while boosting productivity and incomes, creating jobs and reviving local rural economies.
  11. We are already seeing applications of LLMs to agriculture, as the Farmers Business Network shows. We conclude by suggesting that applying LLMs to farming may reduce regional disparities.

PPI’s Trade Fact of the Week: Vanilla, a poorly chosen synonym for ‘boring’

Posted on by dcadmin

FACT: Vanilla, a poorly chosen synonym for “boring.”

THE NUMBERS: Annual production of —  

Sugar                177,000,000 tons
Cacao beans        2,900,000 tons
Vanilla                          7,614 tons

WHAT THEY MEAN:

Merriam-Webster’s two meanings for “vanilla,” in its adjective form:

1.  Flavored with vanilla
2.  Lacking distinction; synonyms plain, ordinary, conventional

How did vanilla get a reputation like this? A look at the facts argues pretty strongly that vanilla isn’t boring, plain, or conventional at all; rather it is exotic and expensive, hard to find and even harder to grow, and maybe a bit scandalous.  You be the judge:

Origins and chemistry: Like chocolate, vanilla is native to Mexico and was originally cultivated around Vera Cruz. Popular among the Aztec nobility as a flavoring for high-end drinks and sweets, it comes from the treated “pod” of an orchid pollinated by local bees and hummingbirds. The main active ingredient is a phenol-based chemical compound informally termed “vanillin.”

“Globalization” and modern production: Vanilla cultivation outside Mexico is challenging because no one so far has discovered another natural pollinator. Nonetheless, the 19th-century French empire found an alternative way to do it: the hand-pollination technique invented in 1841 by an enslaved 12-year-old farmhand named Edmond Albius on Reunion (then a French Indian Ocean possession, now an overseas department), and introduced to Madagascar after the colonial conquest in the 1890s.  Dutch colonials later introduced the same technique to Indonesia (or more specifically, the southern Sunda island group). Together Madagascar and Indonesia now produce about half of the world’s roughly 7,600 tons of natural vanilla each year.  Mexico adds about 500 tons; other outposts in Papua New Guinea, Tahiti, and Uganda account for most of the rest. To put this in context, each year the world’s farmers produce 25,000 tons of sugar, and 500 tons of the cocoa-bean precursor to chocolate, for every ton of natural vanilla.

Cost: Scarcity and difficulty of production make vanilla, in most years, the world’s second-most-expensive agricultural product. (As measured by price per kilo.)  Saffron at $500/kilo is easily the priciest; vanilla beans usually come at about $50 per kilo depending on annual marketing and harvest.  Cardamom sometimes puts up a fight for second, though.

Trade: Americans bought about a quarter of the world’s 2022 vanilla crop, or 1,989 tons in total. Most — 1,448 tons — came from Madagascar, followed by 207 tons of Indonesian vanilla (Flores, Sumba, west Timor) and 172 tons from Uganda making up most of the rest.  Other suppliers included 39 tons from Papua New Guinea, 36 tons from India, 24 tons from the Comoros Islands, and 0.5 tons from Tahiti. The harvested, dried, and washed pods arrive in cans, often groups of six weighing 48 kilos, mostly by air cargo. Total import value was $345 million — about two minutes worth of America’s year-long $3.27 trillion in total goods imports — and vanilla, like most spices, has no U.S. tariff.

Sexual reputation: Vanilla is sometimes said, maybe most frequently by vanilla marketers, to have a natural aphrodisiac effect. Though obviously a convenient sales pitch, this may have a factual base at least in the case of some rodents. A 2012 paper (Maskeri et al.) from the Pharmacognosy Journal: “Vanillin in the dose of 200 mg/kg demonstrated aphrodisiac properties in male wistar rats.”

Real vs. artificial: The 7,600-ton total output is far too little to meet the world’s flavoring and aromatic needs. Most vanilla used in sweets and cooking, therefore, is not the natural hand-pollinated stuff but artificial “vanillin.” This is the same active molecule, but extracted by chemistry-industry professionals in five factories — three in China, one in France, one in the United States — and not from delicate orchids but “wood pulp.” a substance with a more convincing claim to plainness, ordinariness, and conventionality than vanilla itself.

FURTHER READING

Merriam-Webster’s “vanilla” site — see uninspiring adjective definitions, also scroll down for the startling etymology.

Origins and production: 

The origin: NPR reports on Mexico’s troubled vanilla industry.

The inventor: Child laborer, enslaved farm-worker, and agricultural revolutionary Edmond Albius invented hand-pollination of vanilla orchids and so founded the modern global vanilla industry.

… and Reunion, now an overseas French Department, pitches the product 180 years later.

The top producer: Le Monde on an oversupply crisis this summer in Madagascar.

… and direct to Madagascar’s GEM (Groupement des Exporteurs de Vanille de Madagascar).

And the University of Florida explains attempts to grow it here.

Cost: 

A list of the world’s most expensive (per-kilo) ag products places vanilla second after saffron.

Sex & science:

NIH explains the chemical structure of vanillin.

A modern-day marketer enthusiastically details vanilla’s supposed aphrodisiac effects.

… and a scientific paper provides some backup, at least for “male wistar rats.”

And another thing:

“Chocolate” is originally an Aztec word, recalling the cocoa bean’s original Native American cultivators. (The cocoa tree’s modern scientific name, Theobroma cacoa, means food of the gods” and is one of the original Linneus’ species-names.) Chocolate’s first documented use, confirmed by archeologists in the early 2000s, was about 2,600 years ago in Guatemala. Nineteenth-century colonial entrepreneurs, mainly Brits in contrast to the French and Dutch vanilla-propagators, introduced cocoa trees to West Africa. This region remains the main cocoa-bean producer, particularly centered in Ghana and Cote d’Ivoire, and accounts for about 70% of modern cocoa-bean production.  Other production spreads around the Caribbean littoral, Indonesia, and Papua New Guinea. The Ghana Cocoa Board.

 

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 Progressive Economy 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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The Debate Over Liability for AI-Generated Content

Posted on by Alyssa Brown

Lawmakers and industry professionals alike are beginning to think about the future implications of artificial intelligence and, specifically, generative AI. Generative AI analyzes and processes existing data patterns to generate new texts, images, and musical compilations. The objective is to mimic man-made results so precisely that the artificially generated content is indistinguishable from that of man-made content. This poses the question, as humans and their actions on the internet are bound by the law — how should we go about establishing rules for generative AI?

An area where the distinction between human and AI-generated content will be particularly important is content liability. Put simply, is the company operating a chatbot liable for generated text and images, or does the liability fall on the user who asked for it to be generated? If ChatGPT writes a blog post full of misleading statements about an individual, is ChatGPT responsible for producing defamatory content? Or, alternatively, is it the responsibility of the user that posts the blog?

Currently, Section 230 of the Communications Decency Act of 1996 prevents a website that displays third-party content from being considered the legal publisher of that content, placing the liability for online content on those who post it. This not only insulates social media websites from liability, but also e-commerce websites and any other platforms that publish consumer reviews. In its application to generative AI, we need to consider the degree to which the user is responsible for the output of the content, and thus how much responsibility should be given to the tool itself.

Two opposing interpretations of whether or not Section 230 liability protections should apply to AI tools exist in the current debate. The first argues that content generated by artificial intelligence applications are driven by third-party input and thus Section 230 protections should apply, while the other maintains that Section 230 protects third party content, not content generated by a platform. The answer to AI’s legal status lies between the two: Do generative AI tools like OpenAI’s ChatGPT and Dall-E qualify as material contributors of the content they generate, removing them from Section 230’s scope?

The first legal argument would mean shielding generative AI from liability under Section 230’s safe harbor because generative AI output is fueled by human input, thus the application is not a material contributor to the content. This would be an admission that generative AI is not responsible for the content it produces. Rather the liability falls on the initial third-party input and a wealth of pre-existing data pulled from the web which create the content in question.

Benefits of lending Section 230 protections to generative AI include the freedom to innovate unfettered by costly lawsuits and a healthier competitive market. While larger, established companies have robust legal teams and funds to take on liability litigation, smaller start-ups, and independent developers are not as readily able to take accountability for every statement produced by a program that can be manipulated by users. Holding the companies that develop artificial intelligence technology liable for potential mistakes could produce a chilling effect that prevents smaller entities from entering the market in the first place and allows larger ones to dominate.

Arguments opposing Section 230’s application to generative AI claim that generative AI does not have a passive role in creating the content it produces. Section 230 protects the ability for third parties to post on platforms. Organization and editing of third-party data may transform the AI into a material contributor, therefore not qualifying for Section 230 immunity. Because generative AI creates content rather than hosts content like a Reddit message board or a Twitter timeline, it could be argued that it has decidedly more editorial agency over what is created.

Former Representative Chris Cox and Senator Ron Wyden, the co-authors of Section 230, claim that “Section 230 is about protecting users and sites from hosting and organizing users’ speech” and was never intended to shield companies from the consequences of the products they create. Further, Sam Altman, the CEO of OpenAI, testified during a Senate hearing that he believes Section 230 does not provide an adequate regulatory framework for generative AI tools and that innovators must work with the government to formulate new solutions.

Without Section 230 protection, the primary risk associated with holding companies accountable is when users directly prompt AI to generate unlawful conduct. Should authorities view the AI as actively creating those harmful messages or as a passive platform that enables its users to spread violent or false information? If the former is true, developers must anticipate and mitigate all possible inputs that could produce harmful content. Further, free expression will inevitably be limited. Because these platforms would be exposed to a new mass of litigation, curbing legal risk would require censoring both malicious and legitimate speech to reduce the risk of culpability.

While a clear answer to generative AI’s liability has yet to be reached, some policy experts suspect that Section 230 may only shield companies in specific scenarios. Even if each harmful action inflicted by AI is evaluated by its specific facts alone, the amount of creative license that AI has over its output is difficult to measure with reproducible accuracy and precision. Even if section 230 is the appropriate regulatory structure for now, generative AI raises broader theoretical questions about the future of content moderation.

Ritz for Forbes: Why The Fitch Downgrade Should Be A Wake-Up Call To Washington — Even If It’s Wrong

Posted on by Alyssa Brown

By Ben Ritz

How concerned should policymakers and their constituents be about Fitch Ratings Agency’s decision to downgrade the United States credit rating from AAA to AA+ last week? The White House brushed it off, saying Fitch “defies reality” to downgrade U.S. credit at a time when the country is experiencing “the strongest recovery of any major economy in the world.” Meanwhile, leading Republicans say it’s a “a wake-up call to get our fiscal house in order before it’s too late.” The truth is: they’re both right.

On the fundamentals, this downgrade is perplexing because the federal government is no more likely to miss a bond payment today than it has been for the past decade. As the world’s largest economy and one that borrows in its own currency, there is little doubt the U.S. government has a greater ability to pay back its debts than any other entity on Earth. Both Fitch and Moody’s Analytics reaffirmed the AAA credit rating in 2011 even when formerly unprecedented debt-limit brinkmanship caused S&P to issue the first-ever downgrade of U.S. credit. Little has changed since then from a financial perspective — if anything, the U.S. economy is far stronger than it was 12 years ago, both in absolute terms and relative to other advanced economies.

But in another sense, the lack of any meaningful change in the government’s approach to fiscal policy from 12 years ago is exactly the problem. In 2011, the federal government was running an annual budget deficit equal to 8.4% of gross domestic product. This made sense at a time when the national unemployment rate was roughly 9% and expansionary fiscal policy was needed to support a weakened economy struggling to recover from the 2008 financial crisis. Today, the annual budget deficit is over 6% of GDP — roughly triple what it averaged in the 50 years before the financial crisis, even though unemployment today is lower than it was at any point over that period.

Read more in Forbes.

Building the Next Digital Workforce Generation

Posted on by dcadmin

On this episode of the Mosaic Moment, Jasmine Stoughton sits down with PPI’s Director of Workforce Development Policy, Taylor Maag, and Senior Software Engineer, Eela Nagaraj, to talk about the importance of building a strong digital workforce and how governments and the tech industry are ensuring the next generation of skilled professionals.

Taylor unpacks findings from her research paper, “Closing the Digital Skills Gap: Unveiling Insights from Four Countries,” and Eela shares insights from her experiences as a senior software engineer and as a volunteer instructor teaching technology education to folks from underrepresented and forced-migration backgrounds.

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PPI’s Trade Fact of the Week: National Security Council — Trade policy not ‘at the core’ of ‘international economic policy’

Posted on by dcadmin

FACT: National Security Council — Trade policy not “at the core” of “international economic policy.”

THE NUMBERS: U.S. economy 2022

GDP:                                         $25.5 trillion
Of which, exports:                       $3.0 trillion*
Manufacturing:                            $1.6 trillion
Digitally deliverable services       $720 billion
Energy                                         $380 billion
Agriculture                                   $196 billion

*Census for goods trade, BEA for digitally deliverable services. Definitions of “manufactured goods,” “energy,” and “agriculture” overlap; figures above include NAICS for manufacturing, USDA for agriculture, and HTS-27 for energy. BEA’s “ICT” and “potentially ICT-enabled” services include computer and telecommunication services, intellectual property revenue, finance, and insurance, “cultural and recreational” services such as entertainment and media, business & professional services such as architecture, accounting, advertising, research & development, etc.

WHAT THEY MEAN:

A late-June comment from the National Security Council’s “International Economics” Deputy: Asked at a Carnegie Endowment event what “compelling practical value proposition” the U.S. has to offer developing countries on trade, the NSC officer tells them they should be thinking about something else. Our transcription:

“[W]e’re at a place where average U.S. tariffs are at historic lows, still 2.4% … in a lot of ways we don’t see tariffs as being at the core of trade policy, and we don’t see trade policy as being at the core of international economic policy.  What needs to be at the core of international economic policy? Well, an emerging set of challenges that haven’t been addressed — things like supply chain fragility and resilience, things like climate and clean energy, things like anti-corruption, things like global tax. Those are the kind of pressing economic issues internationally right now.”

Japanese Prime Minister Kishida, speaking across the street at Johns Hopkins/SAIS a few months earlier during his January visit, sees a quite different “core.” His counterpoint:

“[T]he core of what creates an economic order in the region [i.e., Asia-Pacific] is a framework with market access for goods and services. In the Asia-Pacific region, we indeed have such a framework, the Trans-Pacific Partnership. The TPP was originally initiated by the United States, and then was eventually launched without U.S. participation. Now, the United Kingdom, China, Taiwan, and others have expressed their intention to join this agreement. Against the backdrop, let me state that the United States’ return is of paramount importance.”

A couple of cautions before over-interpreting anything: While context suggests that the NSC Deputy is making a general statement about the non-“coreness” of trade policy, he is responding to a question specifically about economic relationships with developing countries and perhaps meant something less sweeping. Likewise, it isn’t exactly clear who his “we” includes (the NSC staff as a group?), as policy statements by administration Cabinet departments, by neighboring EOP “components” with economic or trade authority such as the Council of Economic Advisers and the U.S. Trade Representative Office, and by independent agencies like the Ex-Im Bank, et al, don’t typically reach such a Lao Tzu-like plane of inertness. But these cautions noted, two observations:

1. Foreigners looking at the U.S.: As we noted last month, NSC’s “2.4%” average tariff rate isn’t factually correct and (more important) wouldn’t be very relevant if it were. In general, tariffs as taxation of imported goods are one component of a larger “market access” concept — that is, the policy-induced cost and ease or difficulty of selling something to a foreign customer — which also includes quota limits, import licenses, some types of regulatory approvals and services policies, customs efficiency, and so on.  Foreigners often have good reason to view this set of issues as important, and American policymakers can’t easily disentangle them from ‘core’ issues such as supply-chain fragility and resilience.  As a mini-case study, the ‘average’ U.S. tariff rate on imports from New Zealand was 2022 was a modest 1.0%, but Kiwis are more concerned about restrictive dairy quotas and illogical inspection rules. These, together with tariffs of 17.5% (under quota) and “13.6% + $1.035/kg” (above quota), make it nearly impossible for American grocery stores to buy New Zealand infant formula. This in turn the main reason the U.S. “supply chain” for formula is fragile, non-“resilient,” and prone to shortages and hardships for moms when one of the dozen or so U.S. formula plants runs into trouble.

With respect to tariffs as such, few countries see a “2.4%” average. U.S. tariff rates vary by product (as do those of other countries), from mostly zero or near zero for energy and natural resources, to low to medium for industrial inputs, and high for lots of consumer goods. Thus by country, rates run in a continuum from near-zero for resource exporters (say, Saudi Arabia, Greenland, Kazakhstan) and countries exempted from tariffs through free trade agreements or “preference” programs, to an 8%-15% range for low-income Asian countries specialized in clothing (Cambodia, Pakistan, Bangladesh, Sri Lanka).  So foreigners often have reason to view “market access” generally, and sometimes tariffs specifically, as important or even “core.”

2. Americans looking outward: The same applies in the other direction. NSC’s interest in anti-corruption and global tax issues isn’t trivial; neither, however, are more local questions about American job quality, growth sources, and inflation-fighting.  For example, the United States has its own large but troubled export sector, measured at $3 trillion last year.  Among much else this sector provides 20% of American farm income; creates markets for $1.6 trillion in U.S.-produced airplanes, cars, semiconductor chips, MRI machines, and other manufactured goods abroad; sends $720 billion in digitally deliverable services abroad via wire and satellite beam; makes up a ninth of Oregon’s GDP and a fifth of Texas’; supports 21,000 women-owned exporting businesses with over a million employees; and, in macro terms, presents ways to help the U.S. sustain growth as government fiscal stimulus fades and Federal Reserve interest rates cool off U.S. demand.

The export sector has lots of headaches though, and it could use policy help. To draw a few from various government sources:

        • Gloomy statistical trends: The Census Bureau’s tally of exporting U.S. firms has dropped by about 12%, from a peak of 305,000 late in the Obama administration to 278,000 as of 2022. Meanwhile, the U.S. share of world exports has dropped by WTO count from 9.1% to 8.3% in goods, and 15.2% to 12.8% in services.
        • Policy problems not rare: The 2023 edition of the U.S. Trade Representative Office’s 467-page “National Trade Estimate Report on Foreign Trade Barriers” recounts objectionable policies whose revision might help a bit, ranging from mandatory Tunisian “import license” rules for automobiles, through Nigerian bans of American chicken and beef, to an Indian “simple average” tariff rate of 18.3%, seven pages of European Union ag policies, Chinese subsidies, and lots more.
        • Foreign tariff and “market access” arrangements: Few foreign governments share the view that trade is not a core part of international economic policy.  As they continue reducing barriers to one another’s products via the “Regional Comprehensive Economic Partnership,” the CPTPP Prime Minister Kishida cites, European and Chinese agreements with South American countries, etc., the policy landscape is tilting against American businesses and their workers.

 

Against this background, P.M. Kishida looks tactful and correct as he gives his own view of what might be at the “core” of international economic policy. The NSC’s approach, whether in terms of international economic order or more local concerns about jobs, inflation, and growth, looks very much in need of its own rethink.

FURTHER READING

NSC’s Deputy at the Carnegie Endowment: The eight-minute exchange on the U.S.’ “practical value proposition” for developing countries, the non-core status of trade policy, etc., begins with a question at about 09:00, with the quoted passage at 16:00.

Six months earlier and across Massachusetts Avenue at SAIS, Prime Minister Kishida’s view of U.S.-Japan relations, Asia-Pacific security, market access, and economic order.

Case study:

Kadee Russ (UC-Davis) and Phillip Dean (Deakin University, in Australia), look at infant formula tariffs, quotas, trade, and shortages.

Elsewhere in the administration, some different emphases: 

The Department of Agriculture reports a record $196 billion in farm exports for 2022.

The U.S. Trade Representative Office’s National Trade Estimate Report on Foreign Trade Barriers 2023 spans 467 pages of foreign tariffs, import licenses, objectionable agricultural policies, digital trade barriers, subsidies, and more.

Ex-Im Bank Chair Reta Lewis and the Congressional Black Caucus confer last June on export opportunities for minority-owned businesses.

And the Commerce Department’s blog-site has export promotion goals for 2023.

Dome data:

Census’ main trade data page.

Census and BEA on ownership, pay, markets, and employment for exporting companies.

USDA’s Global Agricultural Trade Statistics database.

BEA’s services trade data.

The U.S. International Trade Commission has U.S. import totals, tariff revenue, and average rates, from 1891’s 25.5%, through 2008’s 1.2%, to 2021’s 3.0%.

The WTO’s World Trade Statistical Review 2023, just out on Monday with data through the first half of 2023.

 

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 Progressive Economy 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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Bledsoe and Sykes for The Hill: Energy permitting is broken: New analytics can fix it

Posted on by Alyssa Brown

By Paul Bledsoe and Elan Sykes

The energy permitting reforms included in the recent bipartisan budget agreement represented modest progress — but they didn’t fix the problem. The main challenge, and the huge economic opportunity, is the sheer number of energy projects that must be permitted rapidly to save consumers money and limit emissions.

Thousands of these projects — wind power, solar, geothermal, powerlines, pipelines, carbon capture and many more — are pending reviews by federal agencies, electricity grid operators and state and local jurisdictions in every region. These permits cannot possibly be processed rapidly on a one-by-one basis, as the current system demands.

Fortunately, analytic and scoping technologies developed in the half-century since the passage of the National Environmental Policy Act (NEPA) can help expedite the process. These advances include a far better understanding of geological, ecological and other scientific conditions as well as the capacity to process and display information through technologies like computationally intensive modeling and Geographical Information Systems programs. These technologies can provide regulators the capacity they need to more comprehensively approve large batches of similar projects together. Only such basic reforms will upgrade our national energy infrastructure quickly and cost-effectively.

Agencies can increasingly use these technologies to conduct programmatic reviews that study groups of projects across wide geographic or technological areas. These systematic reviews can proactively identify, study and map places with significant clean energy potential and recognize issues that may require mitigation measures.

Read more in The Hill.

Members of Congress and Experts Discuss How to Solve America’s Most Pressing Workforce Challenges

Posted on by Alyssa Brown

Amidst our tight labor market, our nation is facing pressing workforce challenges that demand urgent attention. Employers of every size and industry can’t find enough workers to fill open jobs — the latest data shows that we have 9.8 million job openings in the U.S. but only 5.9 million unemployed workers; eligible workers remain on the sidelines in need of skills training or support services to enter and advance in the labor market and the adoption of technological innovations continue to disrupt the way we work — creating an increasingly large skills-gap that is undermining our nation’s competitive edge and worker access to economic opportunity. To ensure our nation’s workers and businesses can succeed in today and tomorrow’s economy, policymakers must confront these trials head-on.

And some are. Last week PPI’s New Skills for a New Economy Project, had the privilege of partnering with members of Congress on the New Democrat Coalition (NDC) to convene a roundtable on workforce development.

The roundtable brought together Members of Congress, including Representatives Kathy Manning (NC-06), Salud Carbajal (CA-24), Hillary Scholten (MI-3), Gabe Vasquez (NM-02), Val Hoyle (OR-04), Lucy McBath (GA-06), and Donald Norcross (NJ-01). The event also included expert speakers from across the workforce ecosystem — representing the workforce system, community colleges, industry partners and intermediaries working to expand youth and adult apprenticeships. Roundtable speakers included: Portia Wu, Maryland Secretary of Labor; Steven Partridge, Vice President of Strategy, Workforce, and Innovation at Northern Virginia Community College (NOVA); Patrick Combs, Vice President for Apprenticeships and Work-Based Learning at Job For the Future; Lateefah Durant, Vice President of Innovation at CareerWiseDC and Steve Perrotta, Director of Public Policy at Society for Human Resource Management.

The group had a holistic conversation about these pressing workforce challenges and ways in which the public and private sectors can work together to create innovative and effective solutions. Leaders discussed high-quality skill development opportunities; tackling barriers to employment; incentivizing cross-sector collaboration and the critical importance of robust industry partnerships. From this discussion, three themes emerged:

 

  • Build Stronger Career Pathways for Youth & Adults: To address emerging skill gaps and ensure current and future workers are prepared for in-demand employment, Members and experts discussed the need to expand high-quality skill development programs across the U.S. Leaders emphasized the growing degree divide in our country — stating that while degree programs yield strong returns in our labor market, the majority of workers don’t earn degrees. As a result, in addition to ensuring higher education is more accessible, policymakers must commit to creating more high-quality alternatives to college that yield strong returns. The group talked about apprenticeship as a solution and how these effective earn-and-learn models should be expanded to serve more businesses and more people. Lateefah Durant, from CityWorks DC, discussed her work in implementing the CareerWise, youth apprenticeship model which has seen success across the country and has helped to expand opportunity for young people in D.C. through not only the necessary on-the-job training and related instruction but through social capital and network building. Lastly, the group discussed other more rapid reskilling efforts, like short-term credential programs. Steve Partridge, spoke to Virginia’s FastForward program and how state investment in these types of programs has allowed NOVA to help more students get in-demand credentials and jobs across the state.

 

  • Move Toward a Skills-Based Labor Market: For decades, employers have used the degree as a proxy for job preparedness. To break down this barrier to employment, leaders discussed the need to move toward a more skills-based labor market — where someone is assessed by their skill sets and experience rather than their attained credentials. Portia Wu, Maryland’s Secretary of Labor spoke to Maryland’s efforts to remove degree requirements from government jobs as a way to attract diverse talent, expand access to good government jobs and model how this can and should work for other employers. Portia discussed how these efforts along with removing some of the requirements for federal contract work can create more opportunity for workers without degrees, returning citizens and other workers that face increased barriers to employment. Steve Perrotta from SHRM, reaffirmed Portia’s points stating that this is a huge priority for employers across the country. However, as with any new effort, leaders discussed that this will take time to get right. Not only do employers have to change practices and learn how to better market jobs and assess skills but moving toward skills-based hiring will require overhauling our nation’s workforce development system. This means a greater emphasis on industry-responsive education, training, and experience, like career and technical education and work-based learning, across K-12 and postsecondary education. Policies that promote competency-based education, offer prior-learning assessments, and expand career pathways will also be increasingly important so individuals can have more stackable, skills-based learning opportunities while also understanding changing labor market demands. Additionally, innovation around learning and employment records, which provide digital infrastructure to hold information about a person’s academic and industry achievements will be important to design and scale so individuals have a more accessible way to demonstrate their accumulation of skills, knowledge and experiences.

 

  • Increase investment in workforce development efforts: Last but definitely not least, to do any of this effectively there needs to be greater investment in workforce development at the national level. Prior to COVID and recovery spending, the nation spent $149 billion on higher education versus $58 billion for workforce-related education and training. Since the latter figure also includes Pell Grants and veterans’ programs, Washington really only spends about $16 billion, spread across 17 separate federal programs that provide workforce-focused education, employment, and training assistance. Experts at the roundtable discussed how this is not sufficient. In addition, to the general disagreement with our nation’s inequitable funding for workforce, speakers elevated what needs to be invested in. Portia, discussed the importance of sector based investment — highlighting The Department of Commerce’s Good Jobs Challenge — as a way to build career pathways in high-demand fields while supporting the economic development of a region. Steve Patridge spoke to the importance of career guidance and ensuring community college students have access to career counselors as well as better labor market insights to make informed career decisions. And lastly, Patrick and Lateefah spoke to the growth and scale of apprenticeships in our country, for adults and youth alike.

 

Across these major themes, it was made clear that not one system can do this work alone. Instead we must break down silos between public programs and agencies as well as with the private sector to create more collaborative and aligned solutions that serve the needs of employers and workers.

The roundtable facilitated an illuminating conversation — shedding a light on potential federal actions that can solve persisting workforce shortages; our nation’s stagnant labor force participation rate and make it easier for employers and workers to keep pace with our rapidly changing economy. PPI’s New Skills Project looks forward to continued work with these Congressional champions and workforce experts to enact the policy changes needed to create more equitable economic opportunity in America.

Pankovits for The Messenger: How Democrats Can Turn the Tables on Republicans’ Education Politics

Posted on by Alyssa Brown

By Tressa Pankovits

President Lyndon B. Johnson signed the Elementary and Secondary Education Act (ESEA) in 1965. It’s one of the most important education-related pieces of legislation ever passed, in no small part because of its Title I provision.

House Republicans on the Appropriations Committee just voted to gut Title I. Specifically, they want to slash an astonishing 80% of its budget. With a Democrat-controlled Senate and President Biden’s veto pen ready, House Republicans have zero chance of enacting this funding cut. Democrats should waste no time making hay out of their maleficence.

Johnson designed Title I as “the” federal funding vehicle to help close skill gaps in reading, writing and math between urban and rural children from low-income households, and middle or upper-class children in suburban school systems. Johnson considered the U.S. poverty level a national disgrace that demanded a national response. He understood that poor children were not at fault for their socioeconomic status and, without resources dedicated to equalizing educational opportunity, many would be condemned to a life of hardship and want.

Now, without the safeguard of a Democratic Senate and White House, Republicans’ proposed Title I budget would kick 220,000 teachers out of classrooms and kneecap learning for millions of children. House Appropriations Subcommittee Chairman Robert Aderholt (R-Ala.), while arguing in favor of the bill, acknowledged, “While Title I funds are distributed to school districts everywhere, including rural schools in districts like my own, these funds disproportionally support big-city public schools, the same public schools that failed to educate the most vulnerable children entrusted to them by closing their doors for almost two years.”

Read more.

This story was originally published in The Messenger on July 31, 2023.

New IFP Report: Identifying Domestic Trade Vulnerabilities Are Critical to Strengthening Supply Chains and Reducing Dependence on China

Posted on by Alyssa Brown

Throughout his administration, President Biden has prioritized improving domestic supply chains and preventing supply chain disruptions. But China remains one of the United States’ biggest threats, as the country is both a strategic competitor and the U.S.’s largest trading partner outside of North America. President Biden’s industrial policy has been one of selective decoupling, rather than a complete decoupling of economic ties. This policy, however, does lead to vulnerabilities in both economic and national security, and managing these vulnerabilities is one of the Biden Administration’s biggest challenges when addressing supply chains.

Today, the Progressive Policy Institute’s (PPI) Innovation Frontier Project (IFP) released a new report, “U.S. Supply Chains and Biden’s China Challenge,” which offers a new approach based on a novel metric to respond to the vulnerabilities in the U.S.’s trade relationship with China. Report author Keith Belton introduces a new supply chain measure called revealed comparative dependence (RCD), which can be used to identify goods and industries where the U.S. is excessively dependent on Chinese imports.

“To fully address and strengthen the United States’ supply chains, we must first understand where the biggest gaps are, which is what the revealed comparative dependence (RCD) metric can help measure. The U.S.’s biggest vulnerabilities come when our domestic manufacturing capabilities are lacking and when our foreign dependence is significant, as well as concentrated in one region or country,” said Keith Belton, Senior Director of Policy Analysis with the American Chemistry Council. “Strategically investing in high vulnerability goods will better reduce the U.S.’ dependence on China and strengthen domestic supply chains.”

The report finds that the highest vulnerabilities in the U.S. over the last decade have been driven by a loss in domestic manufacturing, rather than dependence on China.

The report makes the following policy recommendations:

  • The Department of Commerce should annually identify and publicize high vulnerability goods by calculating the RCD, which will serve to educate and influence the private sector in the management of global supply chains.
  • The comprehensive analysis of traded goods should inform federal implementation of the Inflation Reduction Act, The Infrastructure Investment and Jobs Act, and the CHIPS and Science Act, which direct together $1 trillion to strengthen U.S. supply chains. The Administration should give greater weight to applications for federal subsidies that reduce high vulnerabilities.
  • President Biden should scale back the Trump 301 tariffs on the vast majority of Chinese goods, which often impose a burden on U.S. manufacturing. The scope of the tariffs should be narrowed to finished goods or high vulnerability goods.
  • Finally, President Biden should make it easier for the U.S. to attract and retain foreign workers that possess tacit know-how that is lacking domestically.

 

Read and download the report here.

Based in Washington, D.C., and housed in the Progressive Policy Institute, the Innovation Frontier Project explores the role of public policy in science, technology and innovation.

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

 

U.S. Supply Chains and Biden’s China Challenge

Posted on by Alyssa Brown

EXECUTIVE SUMMARY

This paper introduces a new supply chain measure called revealed comparative dependence (RCD), based on publicly available national and global trade data. The paper shows how high RCD can be used to identify product classes where the United States is excessively dependent on Chinese imports.

The paper suggests that RCD can be used to inform the Biden Administration’s industrial policy. The Department of Commerce can use RCD to publish a list of high-vulnerability goods. Policymakers can pay special attention to goods on the list to reduce dependence on China, while considering rolling back tariffs on goods not on the list.

INTRODUCTION

The Biden Administration wants to improve the resilience of U.S. supply chains — the ability to recover quickly from a supply disruption anywhere in the world. A key element is preventing a supply chain crisis “from hitting in the first place.”

But China is the elephant in the room. It is both a strategic competitor and the United States’ largest trading partner outside of North America. The concern is that China might weaponize its industrial might for geopolitical gain — something it may be doing now (Keeley 2018) and for which the United States is admittedly ill-prepared. The economic damage to the United States from a war with China5 would be considerable, as Babbage (2023) described:

U.S. supplies of many products could soon run low, paralyzing a vast range of businesses. It could take months to restore trade, and emergency rationing of some items would be needed. Inflation and unemployment would surge, especially in the period in which the economy is repurposed for the war effort . . . Stock exchanges in the United States and other countries might temporarily halt trading because of the enormous economic uncertainties.

To avoid such a scenario, some China hawks call for a complete decoupling of economic ties, but President Biden doesn’t want to eliminate the substantial economic benefits arising from international trade. His industrial policy is one of selective decoupling, focusing on foundational technologies, critical/essential goods, and goods made from forced labor.

Selective decoupling, however, implies acceptance of vulnerabilities in economic and national security. Managing these vulnerabilities is arguably Biden’s biggest challenge in enhancing the resilience of U.S. supply chains.

In this paper, we offer an approach, based on a novel metric, to characterize and respond to these vulnerabilities. We apply this approach to a subset of traded goods, advanced technology products — a focal point of industrial policy in both China and the United States. We derive lessons for policymakers and offer some policy recommendations consistent with Biden’s industrial policy. We make no presumption as to the merits of Biden’s policy; we take it as given, and our aim is to improve its effectiveness.

READ THE FULL REPORT.