As we’ve repeatedly said, innovation creates jobs, not destroys them. But we’ve also recently pointed out that government has been lagging private sector spending on R&D, and that’s one reason why productivity growth and job creation has been weak. Moreover, PPI’s Will Marshall recently wrote that the Democrats have to resolve their economic identity crisis.
So it was good news when in today’s speech in Michigan, Hillary Clinton said:
And we’re going to … recommit to scientific research that can create entire new industries.
She’s been getting increasingly powerful on this point. On her website, her “Jobs Plan for Millennials” contains the paragraph (our bold):
Support scientific research and technological innovation. We must ensure that America remains at the forefront of scientific and technological innovation in the 21st century. We will make bold new investments in scientific research, which will create entirely new industries and the good-paying jobs of the future. Together, we can achieve bold research goals, like preventing, effectively treating, and making an Alzheimer’s cure possible by 2025. And we will pursue public policies that spur technological innovation and support young entrepreneurs. Hillary believes that by supporting young entrepreneurs in all types of communities, we can catalyze innovation hubs across the country, encourage millennial talent and capital to invest in their communities, and build thriving local economies.
By contrast, a Google search of Trump’s website shows no appearances of the term “scientific research.” The outline of Trump’s economic vision on his website does not contain the words ‘technology’ or ‘innovation’. We wonder if Trump understands that his favorite outlet, Twitter, was only invented in 2006.
Donald Trump’s travesty of a presidential campaign is forcing Republicans to ask themselves some hard questions: Does party loyalty outweigh the risks of putting a self-infatuated political ignoramus in the White House? Do they hate Hillary Clinton more than they love their country?
No doubt Democrats are enjoying the GOP’s agonizing moment of truth, but their party also faces a big strategic choice. Will Democrats wage the fall campaign as pro-growth progressives or as angry populists?
PPI was among the first organizations to highlight the business investment drought, starting in 2010 and 2011, way before it became commonly accepted (see here and here). And our “Investment Heroes” annual ranking was started in 2012 precisely to contrast the companies that were investing heavily in the United States with the many others that chose to pare back. So the issue of short-term business thinking is no stranger to us.
But we were pondering the recent annual revision from the Bureau of Economic Analysis, and noticed something very interesting: By some objective measures, government is more guilty of short-term thinking than business is.
For example, one of the key measures of short-term vs long-term thinking is how much money is being invested in research and development. We found that over the past ten years R&D spending by the private sector has increased by 34%, in real terms. By comparison, real R&D spending by government at all levels has decreased by 2% (see chart below). This decline is mostly driven by defense R&D. But even if we just restrict ourselves to civilian R&D (federal state and local), the real gain in government R&D spending since 2005 is only 12%, far below the private sector increase.*
The gap between private sector and government investment in software is large, but not as large as for R&D. Since 2005, the private sector has increased its investment in software by 51% in real terms, compared to only 37% for government. Similarly, growth in real equipment expenditures by the private sector outpaced the government sector by a wide margin.
Finally, we come to structures. The private sector, despite the recession, has managed to somewhat expand its real spending on long-lived structures over the past ten years. Meanwhile, real government spending on structures–especially infrastructure–has tanked. Real government outlays for highways and streets is down 21% from 2005 to 2014.
Now let’s focus down a bit more on R&D, which is one clear measure of long-term thinking. From 1995 to 2005, private R&D spending, civilian government R&D spending, and GDP all grew at roughly the same rate, adjusted for inflation. For example, over that period real GDP rose by 40%, and real private R&D spending rose by 41%.
But over the past ten years, the pattern is far different. GDP growth slowed sharply, from 40% to 15%, and so did the growth of civilian govt R&D. But private R&D spending barely took a pause, dropping only to 34%. In other words, the private sector continued to boost spending on R&D at more than twice the rate of the rate of GDP growth.
Finally, we can compare private sector R&D with civilian govt R&D, as a share of GDP, over the past 45 years. It turns that private sector R&D is at 45-year high, as a share of GDP, while civilian govt R&D spending is near a 45-year low.
So what conclusion can we come to? Clearly there is a business investment drought in many parts of the economy, as we have written repeatedly. But private sector R&D growth–a true measure of long-term thinking–has held up surprisingly well over the past decade, despite slow GDP growth. Meanwhile, civilian govt spending on R&D has slowed more or less in tandem with the overall economy. Government spending on structures–including physical infrastructure–has simply collapsed
So if policymakers are worried about short-term thinking holding back US growth, they might find it easier and faster to boost government spending on R&D and infrastructure, rather than crafting complex policies to affect private sector decision making.
*Data from OMB shows that nondefense federal outlays for R&D rose by 3.5% from FY2005 to FY 2015.
Yes, the productivity slump has hit the iron and steel mill industry as well.
Robert Samuelson wrote a long piece in the WaPo about productivity growth in the steel industry, arguing that “…[p]roductivity (a.k.a., efficiency) has increased dramatically.” His main source was a very careful academic study by Allan Collard-Wexler of Duke University and Jan De Loecker of Princeton University.
However, that study only used data up to 2002. Since then, multifactor productivity growth in the iron and steel mill industry has cratered, according to data from the Bureau of Labor Statistics (‘multifactor productivity’ growth, also called ‘total factor productivity’ growth, adjusts for use of capital, materials, energy, and purchased services. )
The chart below shows the growth rate of multifactor productivity was 2 percent annually in the 10 years ending in 1999. Then it slumped sharply. In the 10 years ending 2007–before the financial crisis–the average annual multifactor productivity gain was an excruciatingly slow 0.6%. That’s about where it is today.
Now, iron and steel mills are only a part of the steel industry. What’s happened to productivity growth in the primary metal industry, which also includes companies that buy steel and make it into steel products, foundries, and makers of non-ferrous metals such as aluminum and copper?
Nothing good, I’m afraid. In the 20 years between 1994 and 2014, multifactor productivity in the primary metal industry rose by only 1.7% in total. That averages out to an annual rate of less than 0.1%. In other words, any productivity gains in iron and steel mills since 1994 were swallowed up in the rest of the primary metal industry.
This is actually the central puzzle that economists have to unravel. Why has multifactor productivity growth been so slow across much of manufacturing over the past 20 years? (see the data here). Without significant productivity growth, it’s tough to produce rising wages or to compete against low-cost countries.
The ‘wedge’ between productivity growth and average real compensation growth has shrunk to the lowest level in at least fifteen years.* That’s because productivity growth is slowing, not because real compensation growth is accelerating significantly.
The top line is the ten-year growth rate of nonfarm business productivity, based on data reported by the Bureau of Labor Statistics. The bottom line is the ten-year growth rate of real labor compensation. The vertical lines represent the’wedge’–the difference between productivity growth and compensation growth.
What we see is that the wedge is 0.6 percentage points, the smallest difference between productivity growth and compensation growth in at least 15 years. To put it a different way, the slowdown of real compensation growth is very closely tied to the collapse of productivity growth.
This data does not mean there is no inequality problem. Because these figures report average compensation growth, they do not reflect increased inequality between workers, or the difference between median and average workers. However, they do imply that the problems facing American workers today have at least as much to do with weak productivity growth as with rising inequality.
We see the exact same pattern in the manufacturing data, only more so. The growth rate of manufacturing productivity peaked in the mid-2000s, along with the growth of real compensation in manufacturing. Since then, productivity growth has collapsed by 2.4 percentage points, while real compensation growth has dropped by 1.5%. So even within the goods-producing sector, the extreme weakness in compensation growth is driven by the decline in productivity growth.
If we look at the 10-year growth rate of multifactor productivity, the importance of slowing productivity growth becomes even more vivid. Multifactor productivity growth in some sense represents the “innovation” component of growth. It measures the ‘vibrancy’ of an economy–the ability to get out more than we put in by being smarter.
We see that multifactor productivity growth has collapsed to only 0.4% annually, well below the 0.7% growth in the 10 years before 1997. Indeed, as a recent blog item showed, many manufacturing industries have negative multifactor productivity growth since 1994. When the pie is shrinking, it can’t be cut in a way to make everyone happy.
Addressing the inequality problem is important. But Americans can’t prosper unless we fix the productivity problem as well.
*This discussion abstracts from a very wide range of substantive and technical issues, including: the difference between median and average workers; the correct measure of compensation; the best deflator to use, etc. A good review of some of these issues can be found here, though I disagree with some of the conclusions. In addition, I believe that productivity growth figures should be treated with some wariness, given the inability of statisticians to do a good job tracking global supply chains in goods, services, and data. Having said all that, there is little doubt that productivity growth has slumped sharply, not just in the US but across the developed world.
After the Republican fear-fest in Cleveland, watching the Democrats in Philadelphia last week was like stepping out of the Dark Ages into the Enlightenment. Donald Trump may have no use for facts, civility or rational argument, but these things still seem to matter to Democrats.
There was, however, a big exception to the rule: trade. Riding a wave of populist wrath, Democrats demonized President Obama’s Trans-Pacific Partnership (TPP) as a gift to the 1% and mortal threat to U.S. workers. It’s a bogus claim, and one that has them sounding a lot like, well, Trump.
TPP is a linchpin of Obama’s strategic goal of “rebalancing” U.S. power and diplomacy. It would combine the U.S. and 11 Pacific nations in a vast free-trade zone that would act as a counterweight to China’s enormous economic might. If the pact goes down, so will our influence in the region, leaving Beijing to call the shots.
The division between the trade skeptics and the trade supporters in the Democratic Party is on stark display at this week’s convention in Philadelphia. The Progressive Policy Institute favors smart, high-standard trade agreements, as PPI president Will Marshall and senior fellow Ed Gerwin recently wrote.
Yet both trade skeptics and supporters can agree on one critical point: The government must do more, much more, to provide American manufacturers, especially small ones, with the tools they need to compete successfully against foreign rivals on global and domestic markets. If American manufacturers can compete more successfully, that will lead to more jobs for Americans.
A good first step: The International Trade Commission, the Bureau of Labor Statistics, and the Department of Commerce should jointly lead a government-wide project to do a “competitiveness audit“ of the U.S. economy, as PPI wrote in a previous policy brief, “How a Competitiveness Audit Can Create Jobs”. This competitiveness audit would compare the price of a wide variety of US-made products with the price of similar imported products, based on functionality and quality. The audit would cover the full range of manufacturing industries, from communications equipment to furniture to chemicals to machinery. So, for example, the audit would compare the producer price of a piece of household furniture produced in the United States versus the import price of a similar piece produced in China.
The competitiveness audit is likely to show a big gap between US-made and import prices for some products. But other products are likely to have a small and perhaps shrinking gap, making them prime targets for expansion of US production.
Armed with this information, American manufacturers will be able to target markets where the United States has a competitive advantage. Small companies, especially, will benefit from information produced by the competitiveness audit, since they don’t have access to the global networks that their bigger counterparts do.
The competitiveness audit can also stimulate the formation of new manufacturing businesses by pointing out market opportunities to potential entrepreneurs. People who want to start a new manufacturing business in Ohio, say, will be able to use the competitiveness audit to attract funding.
In addition, mayors and other local officials would be able to use the results of the national competitiveness audit to help direct their economic development efforts. Right now, they are simply shooting blind, without adequate information about where the US has a competitive edge.
Surprisingly, the government currently does not collect or publish data comparing prices of domestic and imported products. That’s an egregious hole. Filling that hole would not only help manufacturers, but would also help economists resolve some big issues about the impact of trade on the economy.
No matter where you fall on the trade question, a competitiveness audit makes sense: If we want to see a revival of manufacturing employment, we have to provide small manufacturers and local officials with the information they need to make good decisions.
Reference
Michael Mandel and Diana Carew , “How a Competitiveness Audit Can Help Create Jobs,” Progressive Policy Institute, November 2011. https://progressivefix.com/wp-content/uploads/2011/11/11.2011-Mandel-Carew_How-A-Competitiveness-Audit-Can-Help-Create-Jobs.pdf
One of the important themes of this year’s presidential campaign is the need for economic growth to move beyond the tech hubs and coastal urban areas that have prospered in recent years. To some degree, this is already happening. Our latest analysis shows that the top 10 App Economy states include Illinois (4) and Michigan (9), where jobs developing, creating, and maintaining mobile apps are partially replacing lost employment in manufacturing.
Similarly, the hydraulic fracturing (fracking) revolution created a new wave of job growth in areas such as Pennsylvania, North Dakota and Texas–not just oil and gas drilling workers, but transportation and construction jobs as well. The exact number is a contentious subject, but even skeptics agree that the added employment has been significant in some areas. One even-handed report noted that
Pennsylvania’s shale boom was enough to ease — but not erase — the state’s pain during the recession. BLS reports the state shed a net total of 74,133 jobs between 2007 and 2012, while the oil and gas industry added roughly 21,000 jobs.
Taking into account spillover jobs, it’s clear that Pennsylvania’s downturn would have been a lot worse without fracking. Once again, innovation creates new industries and new jobs.
Still, apps and fracking by themselves are hardly enough to revive some of the hardest-hit areas of the country, especially those which have suffered from the loss of manufacturing jobs. Local officials ask, quite naturally, where the next innovation job boom will come from. And here the glass is both half-empty and half-full. There are plenty of candidates for the “next big thing,” ranging from the Internet of Things to additive manufacturing to artificial organ factories to autonomous cars to space commerce to Elon Musk’s hyperloop. Each of these has the potential to revolutionize an industry, and to create many thousands or even millions of jobs in the process–not just for the highly-educated, but a whole range of workers.
Yet the problem–and the beauty–is that technological innovation is fundamentally unpredictable, even at close range. Consider this: The two most important innovations of the past decade, economically, have been the smartphone and fracking. The smartphone transformed the way that we communicate and hydraulic fracturing has driven down the price of energy, not to mention shifting the geopolitical balance of power.
Yet a decade ago, in 2006, the major business press wrote precisely two (2) stories about fracking–one in the New York Times, and one in the Wall Street Journal. BusinessWeek, Fortune, Forbes, The Economist, and the Financial Times had not a mention, even though fracking as a technique had been around for years. Even though production was already ramping up, few people saw the profound economic impact of being able to tap into shale oil and gas reserves.
And while in 2006 journalists and analysts were writing about the possibility of an Apple phone, it was more with an air of bemused skepticism. Nobody forecast that the the iPhone, followed by Android-based phones, would quickly make all other phones obsolete. More importantly, nobody foresaw the introduction of an App Store that created millions of app-related jobs around the world.
What does this history tell us? First, the next big job-creating innovation isn’t likely to announce itself in bold letters before it arrives. Just because the next big thing isn’t obvious today doesn’t mean it won’t be obvious a year from now.
Second, when the next big job-creating innovation occurs, there will be a chance to spread the wealth by boosting growth in areas that are lagging today. The geographic pattern of tech jobs need not be replicated for additive manufacturing or space commerce. Innovation doesn’t just create jobs, it creates opportunities for local economic revival as well.
Donald Trump’s attack on trade, if carried out as President, would be an economic disaster. Connections with the global economy enable the free flow of goods, services, ideas, data and people across national borders.. Countries that make use of those connections have prospered, while countries that have engaged in protectionism have stagnated. We believe that trade agreements such as TTIP and TPP are essential to global growth.
Nevertheless, we must acknowledge that the process of globalization has produced much more turbulence than expected. When the United States concluded the trade deals of the 1990s, most economists expected that advanced countries would continue to climb the technological and productivity ladder, creating space on the lower rungs for countries such as China and India. Meanwhile American workers were supposed to reap the benefits of innovation and productivity gains in the United States.
This assumption turned out to be only half true. The US excelled in the digital sphere, creating new companies, new industries, and millions of new jobs.
However, innovation has faltered in physical industries such as manufacturing. Take a look at the table below, which shows multifactor productivity growth in manufacturing since 1994, when GATT was approved.
Multifactor productivity growth (1994-2014)
average annual percentage change
Computer and electronic products
7.9%
Printing
1.2%
Petroleum
1.0%
Textiles
0.7%
Miscellaneous (including toys and medical equipment)
0.6%
Transportation equipment
0.5%
Plastic and rubber
0.4%
Wood products
0.1%
Primary metals
0.1%
Nonmetallic minerals
-0.1%
Machinery
-0.2%
Furniture
-0.3%
Fabricated Metal Products
-0.3%
Food, beverage, and tobacco
-0.4%
Paper products
-0.6%
Electrical equipment
-0.6%
Chemical products
-0.7%
Apparel and leather
-2.2%
Since 1994, multifactor productivity has actually fallen in 9 out of 18 manufacturing industries, and has barely risen in another 4 manufacturing industries. The only industry with significant productivity growth over the past 20 years is computer and electronic products.
So no wonder manufacturing has lost so many jobs! Without productivity growth, US manufacturing workers got stuck on the lower rung and had to fight for space with much lower paid workers overseas.
Indeed, the narrative that job loss in manufacturing is due to higher levels of productivity is fundamentally wrong and unsupported by the data. Rather, the lack of productivity growth has exposed U.S. manufacturing workers to foreign competition.
The exit of the UK from the EU is and will be a tremendous shock to the global economic and business community. Certainly no one knows what is going to happen in areas such as finance, immigration, and even trade.
Nevertheless, Brexit does nothing to change the fundamental economic problems facing the developed world: Slow growth, and an inability to create new industries that can employ the millions of workers whose careers have been disrupted in areas such as manufacturing and transportation. These problems are fueling populist revolts around the world that are all the more powerful because they are based on a kernel of reality.
The productivity numbers in Europe are, frankly, terrifying. Based on OECD data, from 2007 to 2015 labor productivity growth averaged 0.3% annually in France, 0.15% annually in the UK, and a stunningly low 0.02% in Germany. Let’s not forget Italy, where productivity actually shrank over this period.The US was doing a bit better at 0.9%, but only in comparison.
With growth so slow, no wonder the voters want something different, even if they are not sure what it is.
There is no end of good innovative ideas in London, Paris, and Berlin. The App Economy is booming in Europe, as our research has shown. But a combination of factors–ranging from culture to finance to government regulation–makes it more difficult to convert scientific research and small start-ups into productive and job-creating businesses. Indeed, the US is having much the same problems.
Innovation creates jobs and growth. The problem is that the developed world have not had enough innovation, not that there’s been too much. Our challenge is to fix that.
The ‘Brexit’ tide at last seems to have hit the sturdy seawall of British common sense. Heading into today’s national referendum, polls show rising support for staying in the European Union.
True, the contest remains a dead heat and could go either way. But the momentum apparently shifted after last week’s shocking murder of Labour Member of Parliament Jo Cox by a man spouting ultra-nationalist slogans. It’s also possible that the impending vote has concentrated U.K. voters’ minds on the sheer implausibility of going it alone in today’s interconnected world.
There’s little doubt where global markets stand on the question. Stocks surged everywhere early this week and the British pound rose as word of the new polls spread. That reaction can only reinforce the “Remain” camp’s argument that detaching from Europe would, on balance, weaken Britain’s economy.
The Hill’s Vicki Needham cited a PPI poll and quoted both PPI President Will Marshall and Senior Fellow for Trade and Global Opportunity Ed Gerwin in an article on how voter’s opinions on trade will impact the election.
Voters in four battleground states — Colorado, Florida, Nevada, and Ohio — expressed positive views about the U.S. expanding trade, even while Hillary Clinton and Donald Trump call for major changes to the nation’s global commercial outreach.
A new Progressive Policy Institute (PPI) poll on Wednesday shows that by a 55 to 32 percent margin swing-state voters say that new high-standard trade deals can help the U.S. economy and support good paying jobs.”
On Saturday, Donald Trump issued an “emergency” appeal seeking $100,000 for his campaign “to help get our ads on the air.”
This was odd for three reasons. First, according to his own commercials, the main premise of Trump’s campaign was that he would pay for it himself. Second, Trump’s campaign disclosure forms allege that his total net worth is ten billion dollars. To be clear, this is 100,000 times larger than his $100,000 urgent appeal. If Trump told the truth about his wealth, $100,000 for him would be the same as about 2 or 3 dollars for an average American. Third, his near-bankrupt campaign has paid out millions of dollars to Trump businesses and family members.
These facts add to mounting evidence that Trump has lied about his wealth. As Forbes recently wrote, “The Occam’s razor explanation is that he’s not worth $10 billion.” Forbes should know, given the magazine’s long track record of assessing the relative wealth of various billionaires. Just last year, Forbesconcluded that Trump’s $10 billion claim was “a whopper” of a lie. Indeed, experts suggest that the reason Trump refuses to release his tax returns because they will reveal the extent of his lies.
So how has Trump gotten away with lying about his business record?
In part, he’s used lawsuits to deter people from poking around in his affairs. For instance, in 2009, Timothy O’Brien published a book reporting that Trump was a millionaire, not a billionaire, who had amassed less money than prior presidential nominees such as Ross Perot (roughly $3.9 billion) or Mitt Romney (roughly $330 million if you include the separate trust for his children). Trump sued O’Brien for defamation, as part of a broader legal campaign to ward off critics.
So, when the lies are pulled away, what information do we have about Trump as a businessman and a candidate?
First, Trump inherited his money.
Over four decades ago, in 1974, Trump’s father gave him control of a company that was worth $200 million, and then provided additional loans and assistance over time. A finance professor at the University of Texas, who analyzed Trump’s holdings since 1976, concluded that: “Trump has underperformed the real estate market by approximately $13.2 billion, or 57%.” That bears repeating. Compared with average business performance in the real estate sector, Trump squandered billions of dollars over the course of his career.
Second, Trump is more grifter than a business leader.
As The Atlantic reported in 2011: “In financial circles, it’s pretty well known that Trump is a deadbeat.” While Trump has paid himself and family members out of campaign funds, he has repeatedly stiffed smaller vendors, destroying some mom-and-pop businesses that had previously survived for generations. He’s also destroyed wealth by urging people to invest in failing businesses, such as Trump Mortgages; Trump Tower Tampa; Trump Ocean Resort Baja Mexico; Trump Taj Mahal; Trump Magazine; Trump World Magazine; Trump Steaks; the Trump Shuttle; and Trump University. In several of these projects, Trump was sued. He settled out-of-court with investors in some cases. With Trump University, tuition-paying students allege that Trump used fraud to dupe them into becoming customers. Each time a Trump company declares bankruptcy, his partners and investors are left holding the bag.
Third, Trump had strong ties to the Mafia when he was a real estate developer.
Pulitzer Prize-winning journalist David Cay Johnston, who has written a book about organized crime and gambling, has spent many years investigating the ties between Trump and the Mafia. In a lengthy story for Politico, Johnston “encountered multiple threads linking Trump to organized crime.” These threads included openly seeking mob support to compete against real estate developers who refused to do so. This seems astonishing for a mainstream presidential candidate, but recall that unlike Trump’s political rivals, Trump has aggressively used libel laws to prevent prior journalistic investigations of his money. Johnston’s Politico story is well worth a close read.
Fourth, Trump’s only “legitimate” money came from promoting gambling, sex, and violence.
When you take away the inheritance, the mob ties, the contract breaches, bankruptcy court, litigation threats, eminent domain, and fraud, what’s left is Trump’s role as a huckster. In 1992, Trump blamed Mike Tyson’s rape victim for her rape, when Tyson’s release would have boosted Trump’s boxing-related revenues. In 1994, Trump spoke with Lifestyles of the Rich and Famous and speculated as to whether his then-infant daughter would develop attractive breasts. From the late 1990s onward, Trump built his name as a “reality star” by repeatedly demeaning women first on Howard Stern’s radio show, then later on his television showThe Apprentice. As the Washington Post summed it up, “Trump has made flippant misogyny as much a part of his trademark as his ostentatious lifestyle.” Apparently, this brand appealed to the roughly 5 percent of eligible American voters who voted for Trump in the GOP primaries, but sleaze marketing is not much of a blueprint from which to strengthen America.
Finally, Trump’s proposals would be a disaster for the American economy.
So what are the policy ideas of this so-called “businessman” whose only clean money comes from reality television? For starters, Trump has made it clear that he intends to extend the philosophy of “Deadbeat Donald” to the full faith and credit of the United States Treasury. During a recent interview with CNBC, Trump literally suggested that the United States should threaten bankruptcy to stiff owners of Treasury bonds. As analysts from the left, right, and center pointed out, this idea would trigger an immediate global economic crisis. This is because the world economy relies upon Treasury bonds as risk-free securities, to the benefit of global financial markets and the enormous benefit of the United States.
Americans have roughly five months to learn about the “Deadbeat Donald” aspect of Trump’s track record and policy ideas. If we do not learn that lesson by November 4, unfortunately we will learn it the hard way shortly thereafter.
Cross-posted from Huffington Post. A version of this post originally appeared on Medium.
The Washington Post’s Catherine Rampell recently detailed the economic carnage that would result from Donald Trump’s reckless approach to trade — including likely recessions, millions of lost jobs, and higher prices for American consumers.
As we’ve detailed, protectionism is bad economics. But, apparently, it’s been good politics for Trump as well as Bernie Sanders, both of whom used trade-bashing populism to energize angry voters during primary elections, where extreme partisans often play an outsized role. And Trump promises to double down on opposition to trade as he pivots toward November.
As America moves from interminable primaries to the general election, however, Trump — and Hillary Clinton — will face a different political calculus on trade. A new Progressive Policy Institute poll shows that Democratic voters in key battleground states have a broadly positive view on trade — and a more positive one than do Republicans. Crucially, so do the swing voters, who will ultimately determine whether these states go red or blue in November.
Swing voters and voters in battleground states played a decisive role in reelecting Barack Obama in 2012 — and in sending a large Republican majority to Congress in 2014. As detailed in our new poll, conducted by veteran Democratic pollster Peter Brodnitz, these voters also have decidedly different attitudes about trade and America’s role in the global economy.
Dr. Michael Mandel, PPI’s chief economic strategist, is quoted in David Rotman’s piece about the advances in technology and economic slowdown.
Michael Mandel, an economist at the Progressive Policy Institute in Washington, D.C., says the productivity slowdown is occurring in what he calls the physical industries, including manufacturing and health care. Such industries, which he estimates make up 80 percent of the national economy, account for only 35 percent of investments in information technology and their productivity reflects that, growing at only 0.9 percent annually. Meanwhile, productivity is growing by 2.8 percent a year in what Mandel calls digital industries, which include finance and business services.
If that is what is going on, it leaves plenty of room for optimism. “As we learn to apply the new technologies,” says Mandel, “we could see growth in productivity speed up again.”
This past year, public nuisance lawsuits have spiraled out of control in California. Cities like San Diego, Berkeley and Los Angeles have been convinced to sue U.S. companies for enormous sums. Trial lawyers, looking to win big, scour the state and the nation for potential plaintiffs and then recruit municipalities to partner with them to file suits against businesses.
Pandora was let out of the box in 2002 when Santa Clara County and Orange County, using private plaintiff’s lawyers to bring the charge, sued lead paint manufacturers under a public nuisance theory – even though the paint manufacturers didn’t know about problems with lead paint at the time they sold it. After that, the Orange County District Attorney’s Office used public nuisance theory to sue drug manufacturers for the costs of unemployment, emergency room visits and other social services. The idea was that people took prescription painkillers, then got addicted, then the prescription ran out, then they switched to heroin, then they lost their jobs and ended up in the emergency room without insurance, so the drugmakers should pay for the county’s unemployment and ER costs. The judge dismissed the case because the FDA regulates prescription drugs, because some patients really do need painkillers and because it’s not appropriate for local prosecutors partnering with private plaintiff’s lawyers to do the oversight and regulation that appropriately belongs to the federal government.
Along with other cities, San Diego has entered the fray. By partnering with a plaintiff’s firm, the city doesn’t have to pay for the expense of investigating and prosecuting the case – those costs are fronted by the trial lawyer firm. But this partnership is ethically suspect.
