Fiscal Policies Archives - Page 12 of 23 - Progressive Policy Institute

Even After Budget Deal, Discretionary Spending Remains Low

Posted on March 14, 2018September 18, 2024 by The Progressive Policy Institute

Although February’s bipartisan budget deal significantly increased discretionary spending, the portion of the federal budget appropriated annually by Congress remains near record-low levels. Both defense and non-defense (domestic) discretionary spending are falling relative to the size of the economy – a trend that has serious long-term implications for our nation’s ability to make critical public investments that strengthen the foundation of our economy.

Domestic discretionary spending is the category of federal spending that encompasses virtually all non-defense, non-entitlement programs. These programs include critical public investments such as infrastructure and scientific research that provide long-term benefits to our society. It is also the part of the budget that Congress has the flexibility to use for addressing unexpected crises such as natural disasters and economic downturns. Reducing the resources available for domestic discretionary spending thus risks jeopardizing many core government functions and the future health of our economy.

Unfortunately, that’s exactly what policymakers have been doing in recent years. The Budget Control Act of 2011 capped both categories of discretionary spending as part of a broader effort to reduce future deficits. When Congress failed to reach a bipartisan agreement on taxes and other categories of federal spending, the BCA automatically triggered an even deeper, across-the-board cut to discretionary spending known as sequestration. While the sequester has been lifted several times since it first took effect, discretionary spending consistently remained far below the original BCA caps.

That trend ended with the Bipartisan Budget Act of 2018. This budget deal not only lifted discretionary spending above sequester levels – it also went above and beyond the original BCA caps for two years. Nevertheless, projected domestic discretionary spending for Fiscal Year 2019 is significantly below the historical average as a percentage of gross domestic product. Moreover, even if policymakers extended these policy changes beyond the two years covered by the BBA, we project that domestic discretionary spending could fall to just 3 percent of GDP within the next decade – the lowest level in modern history.

The story is similar for defense spending. Thanks to the pressure put on by the sequester, defense discretionary spending fell to just under 3.1 percent of GDP in FY2017. Under the BBA, defense spending would increase to 3.4 percent of GDP in FY2019 before falling again. Unlike domestic discretionary spending, however, defense would remain above the all-time low it reached before the 2001 terrorist attacks throughout the next decade.

None of this is to say that policymakers should abandon any semblance of fiscal discipline when it comes to discretionary spending. The budget deal set domestic discretionary spending levels above those requested in President Obama’s final budget while also setting defense spending above the levels requested by President Trump. This fact suggests that the immediate spending increase was more than either party really needed to fund its priorities. Sharp spending increases without a clear purpose are more likely to lead to waste as government officials lose the incentive to make tradeoffs and efficiently target taxpayer resources.

Moreover, the budget challenges that led to the original imposition of the Budget Control Act remain serious. PPI criticized the BBA because we believe that any spending increase above the original BCA caps – which were meant to be a down payment on much-needed fiscal discipline – should be offset so as not to further exacerbate the nation’s already ballooning budget deficit. Thanks to both it and other recently enacted legislation, the federal government is now running an annual budget deficit that may never fall below $1 trillion again.

But when policymakers are ultimately forced to confront the nation’s long-term fiscal challenges, they should focus their efforts on the tax code and non-discretionary programs that are growing on auto-pilot faster than the economy. Discretionary spending isn’t the main driver our budget deficits, and most of the savings achieved by cutting internal waste should be redirected towards more beneficial public investments. A great nation invests in its future and cutting those investments too deeply will only hurt us in the long run.

Gerwin for The Hill, “‘Go-it-alone’ trade strategies are neither wise nor effective”

Posted on March 8, 2018 by The Progressive Policy Institute

On March 1, after weeks of “absolute chaos” within his administration, Trump held a hastily arranged “listening session” with metals executives.

Trump announced — to the surprise of his staff — that he’d be imposing import tariffs of 25 percent on steel and 10 percent on aluminum, and that these tariffs would last “a long period of time.” Trump reportedly chose 25 percent duties because a round number “sounds better.”

Reaction to Trump’s informal announcement was swift, widespread — and harsh. The stock market, which Trump cites as confirmation of his economic genius, plunged 420 points. The Wall Street Journal called the tariffs the “biggest policy blunder” of Trump’s presidency.

Continue reading at The Hill.

Senate Democrats’ Deficit-Neutral Infrastructure Plan Clarifies the Cost of Tax Cuts

Posted on March 8, 2018September 18, 2024 by The Progressive Policy Institute

Senate Democrats yesterday unveiled an ambitious $1 trillion infrastructure proposal that would invest in everything from roads and railways to hospitals and high-speed broadband. And in sharp contrast to recent proposals by the Trump administration, this new Democratic proposal includes a plan to fully pay for itself.

The proposal calls for repealing three elements of the recently-enacted Republican tax bill that almost exclusively benefit the wealthiest taxpayers, as well as closing the “carried interest loophole” that allows certain earnings on Wall Street to be taxed at a lower rate than other compensation. It would also raise the top corporate tax rate from 21 percent to 25 percent – the average rate among OECD countries and the level originally proposed by House Ways and Means Chairman David Camp (R-MI) back in 2014.

Spending in the new proposal is broken down into 19 different categories, each with its own budget and parameters for implementation. The package as a whole includes additional guidelines, such as encouraging the adoption of innovative technologies and long-term financing mechanisms, to accompany proposed spending. If fully implemented, the proposal’s authors believe it would create 15 million good-paying jobs.

Compare that to the proposal offered last month by the Trump administration, which claims to increase infrastructure investment by $1.5 trillion even though the administration’s budget provided no additional funding for it. The Trump proposal would also privatize a wide variety of physical assets, such as waterways and interstate highways, that the Democratic proposal would retain for public use.

Another advantage of the Democratic proposal is that it makes clear to voters the true cost of the Republican tax cut enacted last year – something PPI has been urging Democrats to do since before passage of the bill. For less than half the cost of this terrible tax cut, voters could have gotten a robust 21^st century infrastructure that would benefit our economy for generations to come. That message could be a powerful one heading into the midterm elections, especially if paired with a credible and comprehensive Democratic framework for “repealing and replacing” the GOP tax bill.

Senate Democrats should be commended for including suggested funding mechanisms in their proposal. Whereas Republicans added over $2 trillion of tax cuts to the national debt, the Democrats’ infrastructure proposal would be fully funded and deficit-neutral. If implemented in a timely and cost-effective way, their proposal might even reduce budget deficits because of the high economic returns on well-targeted infrastructure investment. The stark contrast between these two approaches to fiscal policy is just further evidence that only one of the two political parties in Washington is making any attempt to pay for its proposed policies.

But when they find themselves in a position to implement these policies, Democrats should keep in mind that simply paying for their new proposals isn’t sufficient.

The federal government is now spending $1 trillion more than it raises in revenue every year – a gap that is projected to more than double over the next decade. It will be impossible to sustain social programs as they’re currently structured, let alone fund new ones, without major reforms to both existing spending and the tax code. The government cannot afford to commit every dollar of additional revenue to new promises until it finds a way to pay for the ones we’ve already made.

For these reasons, Democrats would be wise to use yesterday’s proposal as merely the starting point for crafting a complete fiscal policy: one that sustainably finances both public investments and a strong social safety net without placing an undue burden on young Americans. A fiscally responsible public agenda along these lines is what the Democratic Party needs, and it’s what our country deserves.

New Analysis Highlights Dire Fiscal Situation

Posted on March 5, 2018September 18, 2024 by The Progressive Policy Institute

New projections from the non-partisan Committee for a Responsible Federal Budget show that Donald Trump and the Republican-controlled Congress have plunged the United States back into trillion-dollar deficits at a time when most economists believe we should be whittling them down.

According to CRFB’s estimates, which are based on a methodology similar to the one used by official scorekeepers at the Congressional Budget Office, the policy changes made since last fall will likely result in $6 trillion being added to the national debt over the next decade if they’re allowed to remain in place. This is in addition to $10 trillion of new debt that was already projected to accumulate under the law as it was previously written.

If the government continues on this trajectory, our national debt will be more than double the level it was when Donald Trump took office by the end of the decade. Annual budget deficits will triple. Annual spending on interest payments will quadruple. And economic growth won’t be able to keep up with any of it.

Many of the fiscal challenges facing the United States predate the current administration. But whereas CBO previously projected annual budget deficits to exceed $1 trillion beginning in 2022, CRFB’s analysis warns that we now face trillion-dollar deficits this year. By 2028, the budget deficit will swell to 2.4 trillion, which would be over 8 percent of gross domestic product – a level not seen outside of the Great Recession since World War II.

The primary contributors to this deteriorating fiscal situation are the Republican tax bill (formerly known as the Tax Cuts and Jobs Act) and the February budget deal (the Bipartisan Budget Act of 2018), which together account for over half of the additional borrowing expected over the coming decade. Funding for disaster relief, overseas military engagements, and other “emergencies,” as well as policies that were supposed to expire last year but were nonetheless extended without being offset, were expected to add another trillion dollars to the debt. Finally, Republican efforts to undermine the Affordable Care Act by defunding cost-sharing reductions would further grow government debt by increasing the cost of health care.

The CRFB report notes that when President Obama left office, “paying for new legislation and securing the solvency of various trust funds would have been sufficient to prevent debt from rising rapidly as a share of GDP.” Since then, legislation spearheaded by Republicans has “turned a dismal fiscal situation into a dire one.”

Most of the blame belongs to the GOP, but Democrats are not completely innocent either. Many supported the February budget deal that not only reversed harmful sequestration but also busted through less restrictive spending caps originally intended to be a down payment on fiscal discipline, as well as some of the other policy changes mentioned above that were adopted without offsets. Both parties now have their hands on the shovel being used to dig our fiscal hole deeper and, as this new analysis makes clear, they need to put it down.

PPI Launches Center for Funding America’s Future

Posted on February 12, 2018 by The Progressive Policy Institute

WASHINGTON – The Progressive Policy Institute today announced the launch of a new Center for Funding America’s Future that will promote a fiscally responsible public investment agenda.

This launch comes at a pivotal moment in the federal budget debate. In under two months, Donald Trump and the Republican-controlled Congress have enacted policies that grow federal budget deficits by several trillion dollars throughout the next decade. The administration’s latest budget proposal, meanwhile, offers few ideas to tackle the soaring deficit aside from gutting critical investments in our nation’s intellectual, human, and physical capital.

The PPI Center for Funding America’s Future will offer sensible center-left alternatives to this reckless agenda that foster robust and inclusive economic growth. The Center’s work will include publishing research reports, providing timely commentary on policy debates, and organizing a series of public engagement events around the country.

“The United States now faces trillion-dollar deficits every year as far as the eye can see, which threaten to undermine public support and funding for important investments in the long-term health of our economy,” said Will Marshall, President of the Progressive Policy Institute. “The events of the past week make clear that the work of PPI’s new Center on Funding America’s Future is needed now more than ever.”

The Center will be led by Ben Ritz, who will provide PPI with expert analysis of government spending and tax policies. Ritz previously staffed the Bipartisan Policy Center’s Commission on Retirement Security and Personal Savings, where he helped develop the commission’s comprehensive proposals to reform Social Security and retirement-related tax expenditures, and served as Legislative Outreach Director for the budget-focused Concord Coalition. Ritz has also provided communications and research assistance to several victorious Democratic political campaigns in the Trump era.

“Democrats have a unique opportunity to present themselves as the responsible stewards of government,” said Ritz. “But in order to do so, they need to stand firm against Republican profligacy and offer a credible alternative. I am excited to help PPI’s Center on Funding America’s Future make the case for a fiscally responsible public investment agenda to policymakers and their constituents alike.”

Don’t Help GOP Budget Busters

Posted on February 8, 2018September 18, 2024 by The Progressive Policy Institute

The Republican Party, led by self-proclaimed “King of Debt” Donald Trump, is embracing fiscal profligacy on an epic scale. First, the Trump Republicans broke their promise of “revenue-neutral tax reform” and instead rammed through a bill that will grow deficits by at least $1.5 trillion last December. Now they’ve struck a deal with Senate Democrats that, combined with the tax bill, would add more than $3 trillion to the deficit over the next decade. It’s a one-two gut punch to fiscal responsibility.

It’s regrettable that Senate Democrats have made themselves complicit in the Republican raid on the U.S. Treasury. Yes, this deal would avoid a federal shutdown, which is a good thing. But the pricetag is simply too steep. We support funding disaster relief, health care programs and other critical public investments, and we support adequate defense spending as well. But we’re against unnecessary borrowing to pay for it, which represents an abdication of Congress’s core Constitutional responsibility: paying for government without passing the bill to the next generation.

From the Brownback debacle in Kansas to the tax bill and this latest budget deal, Republicans are proving to be the most reckless and incompetent managers of public finances. All their fiscal posturing and brinksmanship during the Obama years stands exposed as rank hypocrisy. But Democrats can’t effectively make that case to voters if they join in a bipartisan conspiracy against fiscal discipline in Washington.

It would be one thing if this budget deal merely repealed the sequester, which was never meant to take effect and has hamstrung important investments in both defense and domestic initiatives. The Senate budget deal, however, would raise spending above the original levels agreed to by both parties in the Budget Control Act of 2011. It would also cut taxes for corporations by an additional $17 billion and repeal important cost-control measures imposed by the Affordable Care Act – all without paying for them.

If policymakers are going to abandon the BCA, they need to replace it with another plan for controlling America’s massive public debt. The Senate deal places America on the fast track to trillion-dollar deficits as far as the eye can see. That’s the opposite of the fiscal policy our country needs today. When the economy is expanding, we should be unwinding the debt, not using the threat of a government shutdown to make it worse. Otherwise, young Americans will face higher tax and debt payment burdens, and the federal government will have little “fiscal reserve” to tap the next time the economy goes into recession.

Happy Holidays from PPI

Posted on December 19, 2017September 18, 2024 by The Progressive Policy Institute

It’s been a surreal political year, but PPI has much to celebrate this holiday season. Throughout 2017, we expanded our productive capacity and the scope of our political and media outreach significantly. For example, PPI organized 150 meetings with prominent elected officials; visited 10 state capitals and 10 foreign capitals, published an influential book and more than 40 original research papers, and hosted nearly 30 private salon dinners on a variety of topical issues.

Best of all, we saw PPI’s research, analysis, and innovative ideas breaking through the political static and changing the way people think about some critical issues, including how to revive U.S. economic dynamism, spread innovation and jobs to people and places left behind by economic growth, and modernize the ways we prepare young people for work and citizenship.

Let me give you some highlights:

This fall, David Osborne’s new book, Reinventing America’s Schools, was published on the 25th anniversary of the nation’s first charter school in Minnesota. David, who heads PPI’s Reinventing America’s Schools project, documents the emergence of a new “21^st Century” model for organizing and modernizing our public school system around the principles of school autonomy, accountability, choice, and diversity. David is just winding up a remarkable 20-city book tour that drew wide attention from education, political, and civic leaders, as well as the media. Because David is a great storyteller, as well as analyst, it’s a highly readable book that offers a cogent picture of a K-12 school system geared to the demands of the knowledge economy. It makes a great holiday gift!

Dr. Michael Mandel’s pioneering research on e-commerce and job creation also upended conventional wisdom and caught the attention of top economic commentators. Dr. Mandel, PPI’s chief economic strategist, found that online commerce has actually created more jobs in retail than it destroys, and that these new jobs (many in fulfillment centers in outlying areas) pay considerably better than traditional ones. His research buttresses the main premise of PPI’s progressive pro-growth agenda: that spreading digital innovation to the physical economy will create new jobs and businesses, raise labor productivity, and reduce inequality.

PPI challenged the dubious panacea of “free college” and proposed a progressive alternative – a robust system of post-secondary learning and credentials for the roughly 70 percent of young Americans who don’t get college degrees. PPI Senior Fellow Harry Holzer developed a creative menu of ways to create more “hybrid learning” opportunities combining work-based and classroom instruction. And PPI Senior Fellow Anne Kim highlighted the inequity of current government policies that subsidize college-bound youth (e.g., Pell Grants), but provide no help for people earning credentials certifying skills that employers value.

Building on last year’s opening of a PPI office in Brussels, we expanded our overseas work considerably in 2017. In January, I endeavored to explain the outcome of the U.S. election to shell-shocked audiences in London, Brussels, and Berlin. In April, we led our annual Congressional senior staff delegation to Paris, Brussels, and Berlin to engage European policymakers on the French presidential election and other U.S-E.U. issues, including international taxation, competition policy, and trade. PPI also took its message of data-driven innovation and growth to Australia, Brazil, Japan and a number of other countries.

Other 2017 highlights included a strategy retreat in February with two dozen top elected leaders to explore ideas for a new, radically pragmatic agenda for progressives; a Washington conference with our longtime friend Janet Napolitano (now President of the University of California system) on how to update and preserve NAFTA; public forums in Washington on pricing carbon, infrastructure, tax reform, and other pressing issues; creative policy reports on varied subjects; and a robust output of articles, op-eds, blogs, and social media activity.

I’m also happy to report many terrific additions to PPI in 2017. Rob Keast joined to manage our external relations and new policy development; Paul Bledsoe assumed a new role as Strategic Adviser as well as guiding our work on energy and climate policy; and Emily Langhorne joined as Education Policy Analyst. We will also be adding a fiscal project next year.

All this leaves us poised for a high-impact year in 2018. In this midterm-election year, our top priority will be crafting and building support for a new progressive platform — a radically pragmatic alternative to the political tribalism throttling America’s progress. That starts with new and better ideas for solving peoples’ problems that look forward, not backward, and that speak to their hopes and aspirations, not their anger and mistrust.

It’s a tall order, and we cannot succeed without your help and support. Thanks for all you have done over past years, and we look forward to working with you in 2018.

Happy holidays and New Year!

Expansion of the Joint Employer Doctrine Fails to Strike the Right Balance

Posted on October 5, 2017September 18, 2024 by The Progressive Policy Institute

Policymakers across the United States are struggling to figure out how to adapt to swift changes in the American workforce. So-called “alternative work arrangements,” for example, are growing: in 2015, 15.8 percent of workers were independent contractors, temporary workers, contracted workers, or “gig” workers—a 50 percent increase in just a decade. Yet some efforts at adaptation—such as expansion of the “joint employer” doctrine—may do more harm than good. PPI is committed to helping find solutions that balance worker protection with business productivity and investment and the expansion of the joint employer doctrine fails to strike that balance. We must figure out a better way forward that boosts economic dynamism without sacrificing worker interests.

At the end of July, the Save Local Business Act was introduced into the House of Representatives. The bill, with three Democratic cosponsors among over three dozen Republicans, aims to narrow the expanded definition of “joint employer” promulgated by the National Labor Relations Board (NLRB) in 2015. This elicited immediate praise from business groups—particularly those associated with franchises—and opposition from unions and other groups advocating for worker rights.

The joint employer doctrine is used by the NLRB and courts in determining legal responsibility for issues such as overtime pay when more than one employer is involved. If a bank, for example, contracts with a company to provide janitors to clean the bank facilities, the janitors are employees of the contract firm, not the bank. Yet, if the bank has some level of control over of the janitors’ wages and hours, it could be deemed a “joint employer” and would be responsible for appropriate legal compliance.

Not incidentally, the joint employer doctrine is central in shaping the ability of employees to engage in collective bargaining. Contract workers, temporary workers, and franchise employees—all of whom are affected by the joint employer doctrine—are difficult to unionize. Employees of franchise locations—fast-food restaurants, for example—are technically employees of the franchisee (the local operator), not the franchisor (the national brand). The entire purpose of the franchising model is to allow the franchisor to focus on brand and system, and leave the franchisee to focus on operations and local context, including employment.

Under the expanded joint employer doctrine of the NLRB, however, it is possible that both the franchisee and the franchisor could be considered employers of the workers at each individual franchise location. This “could fundamentally change business in the United States by destroying the franchise model.”

Until the 1980s, the NLRB threshold for a joint employer finding was “direct or indirect control” over working conditions. This was a fairly broad doctrine and, in certain circumstances, could be used to find that employees were subject to “control” by more than one employer. Nonetheless, the NLRB joint employer standard remained more modest than definitions used in Title VII of the Civil Rights Act and the Fair Labor Standards Act (FLSA).

Beginning in the 1980s, the NLRB gradually narrowed the definition to “direct and immediate” control over employment issues. The change from “indirect” to “immediate” had large implications in where the joint-employer line was drawn. If the bank “shares or codetermines” the conditions of employment of the contracted janitors, and “meaningfully affects” their hiring, firing, supervision, etc., the company could be a joint employer. Now, the NLRB says, no longer is “direct and immediate control” required—even the possession of authority to direct third-party employees is sufficient, regardless of whether the authority is exercised.

These subtleties in language and reliance on factual findings are classic examples of legalese, but cases involving worker rights and business interests frequently turn on choice of words and how those words are put into practice.

Business groups do not welcome a broader definition. Especially as it pertains to franchise arrangements, the more expansive standard could open up franchisors to greater liability and more attempts at collective bargaining. Already, we have seen arguments to apply the extended joint employer doctrine to other areas, such as student athletes. A challenge to the NLRB’s expansive interpretation is currently pending in front of the D.C. Circuit, and it is expected that the NLRB under President Trump will work to narrow the standard. In the Republican-controlled Congress, the Save Local Business Act could find easy passage and, at the state level, legislatures are being lobbied to pass laws saying that franchisors cannot be considered joint employers.

One problem is the likely response from franchisors to the expanded NLRB standard—in particular, we may see reduced business dynamism. Franchising is an engine of entrepreneurship in the United States, with independent operators who, despite the assistance of national brands, assume plenty of financial risk themselves. At the same time, we have seen the rise of large franchising operations that own hundreds of franchises across the country. Not surprisingly, large franchising operations are better able to comply with employment laws than small, single-operator franchisees. Faced with the new incentive structure of the expanded joint employer doctrine, franchisors will have a clear preference against smaller franchisees in favor of the larger organizations. This will make it much harder for new entrepreneurs to enter business through franchising, further raising barriers of entry for business creation.

The NLRB and other public agencies have the unenviable task of modifying law and policy to keep up with shifting employment arrangements, in an environment of stagnant wages for many workers, geographic concentration of economic rewards, and concerns about entire occupational categories being lost to automation. As mentioned, “alternative work” is growing. The Government Accountability Office (GAO) estimates that the “contingent workforce,” depending on the definitions used, could be anywhere from five to 40 percent of the total labor force. More people are receiving income from multiple sources, which includes new online and on-demand platforms. These changes have prompted calls for new legal classifications, such as the “independent worker” category proposed by the Hamilton Project two years ago.

Confronted with these challenges, expanding the joint employer doctrine is perhaps an understandable attempt to try to help workers cope. The fastest-growing type of alternative work arrangements is “workers provided by contract firms,” precisely those at the core of the joint employer doctrine. Yet we also need to help policymakers and businesses think creatively about other ways to manage and adapt to these challenges, as they will only increase in significance. In the face of a “fissured workplace,” how can policymakers help workers and businesses adapt and succeed together?

In managing these changes, we must ensure adequate worker protection and representation while also supporting (or at least not hindering) businesses to pursue innovation and productivity. Policymaking should be guided by certain principles, among which might be the following.

Clarity and certainty. Any standard leaves room for interpretation (and litigation), but workers and firms need to have clear ideas about where they stand regarding rights and responsibilities.
Get the incentives right. Policies should minimize the amount of “gaming” that might go on by firms in trying to avoid legal compliance. This doesn’t mean the presumption should be that all firms will act badly—policymakers need to pay attention to the incentives they establish.
New ways for workers to organize and improve. Despite the NLRB’s presumption, traditional unions may not be the best adaptive form of organizing in the modern workplace, and new Internet platforms have arisen to help fill the gap. Policy should facilitate these, but also focus on how new organizing tools can support learning and skill upgrading among workers, not just collective bargaining.
Informational equity and transparency. As the Roosevelt Institute has coherently outlined, employees in more sectors are subject to “opaque algorithms” that determine wages, scheduling, evaluation, and so on. Giving workers more transparency and control over this information will reduce asymmetry and empower workers to better manage their careers.

Most of the American labor force is still characterized by traditional employment, but new forms of work are growing rapidly, especially in sectors where low-wage and high-turnover work predominates. Addressing this challenge is a major priority, and we need to find ways that policy can jointly advance the interests of workers and firms.

Gerwin for The Hill, “The bitter harvest of Trump’s protectionist stance”

Posted on August 1, 2017 by The Progressive Policy Institute

Donald Trump is infatuated with the 2016 election map, which underscores his dominance in red-coded rural counties. Candidate Trump repeatedly promised to “take care” of America’s rural voters who, in return, provided some of his biggest vote margins.

It’s ironic, then, that on issues from budgets to healthcare, America’s heartland stands to become an early and particular victim of Trump’s misplaced priorities. Nowhere is this more evident than with Trump’s wrongheaded, protectionist approach to trade.

Continue reading at The Hill.

The Economic Impact of Data: Why Data Is Not Like Oil

Posted on July 11, 2017 by The Progressive Policy Institute

The saying “data is the new oil” is at times referenced by analysts working to assess whether our increasingly digital and data-driven world generates positive impact for our economy and society. However, this saying is imprecise. Data should not be compared to oil – it is not a scarce commodity, is nonrival, and cannot be monopolized.

With regards to privacy, the analogy further weakens. While regulations for traditional commodities like oil seek to protect individual rights to ownership of resources (an individual’s oil), the same regulations for the data-driven sector can have negative impact on the economy overall. This is because, when it comes to data, economic value creation is driven by the analysis of data in conjunction with other information. Thus, laws that quite rightfully protect individual rights to data can be at odds with innovation and economic growth.

overview: Power-of-Data-One-Pager