issue: Regulatory Reform

Kim for The American Interest, “One of These Governors Could Save the Democrats in 2020”

Posted on by The Progressive Policy Institute

State-level Democratic leaders are showing how populism and pragmatism combined can energize liberal turnout while still winning crucial swing-state support.

Under a clear blue sky in late summer, with the peaks of the Gallatin Mountains as a backdrop, Montana Governor Steve Bullock mingles with guests at a private event on a ranch just outside Bozeman. Holding a plate piled high with barbecue, Bullock is half a head taller than most of the people here. He is genial and relaxed, in jeans and battered brown shoes. His nametag reads, “Governor Steve.”

A young mother brings over two little girls in flowered sundresses, and Bullock immediately drops down to eye level. A few minutes later, the girls leave with their mother, smiles on their faces, their votes no doubt locked up for 15 years hence when the girls will be old enough to cast a ballot. In half the conversations that swirl around Bullock, there are joking references to 2020 and hints about the Governor’s ambitions. It’s an open secret here that the Bullock might be running for President.

Just this past fall, Bullock won re-election over GOP challenger billionaire Greg Gianforte by four percentage points—50 percent to 46 percent—in a state where only 35 percent of voters chose Democrat Hillary Clinton for President and Donald Trump won by 20 points. That victory is Bullock’s calling card into the Democratic presidential sweepstakes, along with the prairie populist credentials he has burnished. As the state’s Attorney General, he endeared himself to sportsmen by authoring a state opinion guaranteeing access to public lands. He also took on the Supreme Court’s decision in Citizens United, defending the state’s ban on corporate spending (he lost when the Court reaffirmed its decision).

Continue reading at The American Interest. 

Forget free college. How about free credentials?

Posted on by The Progressive Policy Institute

A four-year degree is not the only path to middle-class security. High-quality occupational credentialing opportunities deserve equal standing and federal support.

Many progressives believe “free college” to be the best way of helping more Americans achieve economic mobility and security. On average, workers with four-year degrees enjoy greater earnings and job security than high school graduates,1 and it’s axiomatic that most future jobs will require some sort of postsecondary education.2 Free college, the logic goes, would ensure that more Americans share in the fruits of an economy where skills are increasingly at a premium.

This desire to tackle what many see as a root cause of growing inequality was a big reason “free college” figured so prominently in the presidential campaigns of both Democrats Hillary Clinton and Bernie Sanders in 2016. No doubt the idea will re-emerge in 2020.

But the single-minded focus on college diminishes other, equally viable paths to middle-class security – such as in health care, information technology, advanced manufacturing and other skilled professions – that require specialized occupational “credentials” but no four-year degree.

 

How Ecommerce Creates Jobs and Reduces Income Inequality

Posted on by The Progressive Policy Institute

The last retail revolution, the rise of the big box store, was not a good thing for the typical sales clerk or cashier.

“Warehouse clubs” and “supercenters” started popping up everywhere in the late 1980s. Retail productivity as measured by the government doubled from 1987 to 2007, as this new retail format was more efficient than traditional department stores and mom-and-pop operations, many of which were pushed out of business. Nevertheless, average real wages for
retail workers actually fell from 1987 to 2007, and the pay gap between retail workers and the rest of the workforce widened.

Now comes the ecommerce revolution. Given the bad experience of workers with the last retail revolution, it’s only natural to worry that this one will have an equally bad effect. As of the new first quarter of 2017, ecommerce has less than 9% of retail sales. What will happen to brick-and-mortar retail workers as 10% or 20%of sales move onto the Internet? Are we facing
a retail “apocalypse” that will destroy jobs that employ 15% of the American work.



			


	

			




			
				


	

		
How Should We Think About Pro-Growth, Pro-Job Competition Policy?

				

			Posted on  by The Progressive Policy Institute		

			


	

		
We think of the United States as a low-inflation economy, with an overall price increase of 36% since 2000, or less than 2% a year.  But the fact is, the inflation  performance of different industries has varied greatly since 2000.  For example, the price of construction has gone up more than 100% since 2000, as measured by the BEA’s implicit value-added price index. The price of educational services has gone up by 80%, and the price of air travel has gone up by 76%.


By comparison, according to the BEA, the value-added price of broadcasting and telecom services has fallen by 22% since 2000, while the price of computer and electronic products has fallen by 62%.


The high-inflation industries tend to be on the physical side of the economy. As they get more expensive, they eat away at living standards. Think about it. Americans spend only 6% of their consumption dollars on tech/telecom goods and services, as measured by the BEA.  Other areas, such as housing, health, food, and transportation, are far more important for consumer spending.


That’s why we are suggesting a different way of prioritizing where we should focus our competition policy. Take a look at the 2×2 matrix below, where we categorize industries by whether they are high-inflation or low-inflation, and high-innovation or low-innovation.


 


Competition Policy Matrix







High innovation
Low innovation




Rapid price increase


 


Air travel, construction, education





Slow price increase
Tech/telecom








 


 


We suggest that progressive competition policy should focus on the upper right-hand quadrant–those industries where prices are increasing rapidly and innovation has been slow. There are two issues in these industries. First, has market power pushed up prices and held back innovation? Second, is government regulation helping support that market power?


Moreover, it also often turns out that high-innovation, low-inflation industries produce more jobs than low-innovation, high-inflation industries. Take a look at the table below, which just focuses on performance since 2007. The value added price index for air travel has risen almost 55% since 2007, according to the BEA. Meanwhile, prices for the tech/telecom sector has fallen more than 6%. And tech/telecom is clearly more innovative than air travel.


Over the same period, jobs have grown three times as fast in the tech/telecom sector as in air travel (including supporting services).


 






Comparing Performance





change since 2007





Air travel
tech/telecom




Price change
54.5%
-6.4%




jobs (thousands)
16.5
498.5




jobs (percent)
2.5%
7.6%






 


We suggesting that tackling market power in high-inflation, low-innovation industries could help boost growth, raise living standards, and create more jobs.


			


	

			




			
				


	

		
EU Competition Policy

				

			Posted on  by The Progressive Policy Institute		

			


	

		
PPI believes that the tech/telecom space is intensely competitive, not just in the United States but around the world.  We also believe that companies which are innovative and invest in new technologies and capabilities are providing great benefits to consumers and workers, including a fast-growing number of good jobs.


From that perspective, we are strongly against the EU’s punitive $2.7 billion antitrust fine against Google.  We believe the EU’s action will only feed into a global regulatory attack against innovation, and as such, will hurt consumers and workers.


			


	

			




			
				


	

		
Lewis for Austin American-Statesman, “How better politics make a stronger and more open Internet”

				

			Posted on  by The Progressive Policy Institute		

			


	

		
Americans don’t agree on much these days — but everyone knows our politics isn’t working.


Even the simplest of issues are no match for the spinmeisters, and policy argument has been replaced by viral meme. It’s a plague that undermines the very idea of meeting in the middle that has been fundamental to our progress.


And the open internet appears to be its next target.


Internet openness – or neutrality – is a foundation of the economic, social and cultural success of the online ecosystem. It ensures broadband providers don’t block access to lawful websites, throttle traffic, or harmfully discriminate against apps or services online.


Two years ago, the FCC enshrined these basic principles into law. And while there was a healthy debate over the need for regulation – since the internet was already open and working well – the basic principles of openness and neutrality were not controversial.


Continue Reading at Austin American-Statesman. 


			


	

			




			
				


	

		
Flashback Friday: PPI in Hindsight

				

			Posted on  by The Progressive Policy Institute		

			


	

		
Just over a year ago, PPI unveiled a big ideas blueprint with a prescient subtitle: Unleashing Innovation and Growth: A Progressive Alternative to Populism. We knew that progressives in the United States and Europe needed better answers to the economic and cultural grievances that have fueled the rise of a retrograde populism and nationalism around the world. We did not foresee that Democrats would fail to offer a forward-looking plan for jobs and shared growth, opening the door to Donald Trump’s improbable victory.


Which makes the themes and ideas in PPI’s sweeping policy blueprint more important than ever. Populism today thrives in the political vacuum left by center-left parties that offer no clear vision for reviving economic dynamism and hope. “Winning the economic argument will be essential to victory in the 2016 elections and it starts by getting the diagnosis right,” the blueprint noted. Instead, Democrats ran a campaign that leaned heavily on identity politics, wealth redistribution and centralized, small-bore solutions.


Unleashing argued that America (and Europe) are stuck in a slow-growth trap that holds down wages and living standards. And it offered bold prescriptions for building on America’s competitive advantage in technology and entrepreneurship to spread innovation – now concentrated in a vibrant digital sector — to the nation’s physical economy, which continues to suffer from low productivity. In addition, the document proposed creative ways to modernize the nation’s economic infrastructure, improve the regulatory environment for innovation, build middle class wealth and empower poor Americans to work, save and chart their own course to social mobility and inclusion.


Crucially, the blueprint also urged progressives to reject anger and victimhood and offer voters a confident account for how America can build a new, inclusive prosperity:


What America needs is a forward-looking plan to unleash innovation, stimulate productive investment, groom the world’s most talented workers, and put our economy back on a high-growth path, It’s time to banish fear and pessimism and trust instead in the liberal and individualist values and enterprising culture that have always made America great.


That was the road not taken in 2016. Now it’s the road to political relevance and success for progressives here and elsewhere.


 


			


	

			




			
				


	

		
Embrace of IT in Physical Industries Has U.S. on the Cusp of a Productivity Boom

				

			Posted on  by The Progressive Policy Institute		

			


	

		
WASHINGTON—The Technology CEO Council (TCC) today released a new economic analysis, co-researched and written by PPI Chief Economic Strategist Michael Mandel that shows a coming U.S. productivity boom enabled by the diffusion of information technology (IT) into the physical industries, including manufacturing, agriculture, healthcare, transportation, and energy. Far from a jobless future, Mandel’s co-analysis predicts that increased use of information technology will make the physical economy more productive and American workers more valuable.


“Job and productivity growth has stalled in many industrialized countries, including the U.S.,” says Mandel. “While some economists will put the blame squarely on IT for disrupting industries and destroying jobs, the surprising fact is that 70 percent of companies in the U.S. economy are not taking full advantage of the power of information technology. And that’s the problem.”


By comparison, digital industries have fully embraced information technology, building new products and platforms—the PC, the Web, the smartphone, cloud computing, electronic financial markets—all of which empowered further explosions of entrepreneurial activity and along with it, jobs.


According to the report, this IT-enabled transformation could add $2.7 trillion to U.S. annual economic output by 2031 (in 2016 dollars), and grow federal revenues by a cumulative $3.9 trillion over the next 15 years.


In particular, The Coming Productivity Boom details a manufacturing sector in the midst of major transformation—not just by robotics and 3D printing, but by the emergence of smart manufacturing, a fundamental rethinking of the production and design process that will substantially boost productivity and demand. In turn, smart manufacturing will lead to the creation of a new set of manufacturing-related jobs and allow American factories to compete more effectively against low-wage overseas competition.


Catalyzing this growth requires better tax policy, the free flow of goods, services and data around the world, investments in communications networks and in education and training, as well as an embrace of innovation among regulators.


The complete report is available for download at www.techceocouncil.org/productivityboom.


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Trump’s Executive Order on Regulations: All Show, No Substance

				

			Posted on  by The Progressive Policy Institute		

			


	

		
Today President Donald Trump signed an executive order requiring agencies to cut two existing regulations for every new rule introduced, “to the extent permitted by law.”  Trump, of course, already has control of new regulations from the executive branch, so the executive order was not needed.  At the same time, his attempt to pare back existing regulations by executive order is not new. In fact,  every president since Jimmy Carter, Democrat or Republican has issued executive orders calling on agencies to review and cut down existing regulations.  Unfortunately, these executive orders have never worked, for three reasons:


    

  • First, most regulations are issued in response to Congressional mandates or legislation, which agencies can’t override without Congressional action.
    • 

  • Second,  no matter their political stripe, presidents tend to impose new regulations when they think they are necessary, ignoring the economic cost. For example, George W. Bush created an entirely new agency and regulatory apparatus, the Transportation Security Administration, in response to 9/11.  Similarly, Trump’s executive order exempts “military, national security, or foreign affairs” regulations.  Notably, his immigration executive order has the potential to impose large regulatory costs on American businesses. 
    • 

  • Third, it’s a difficult process for agencies estimate the impact of repealing an existing regulation, requiring intrusive data gathering from businesses.
    • 



Moreover, even if agencies manage to identify regulations to repeal, these changes are more likely to benefit large businesses which have the clout to lobby agencies, rather than small businesses.


That’s why the Progressive Policy Institute supports legislation such as the Regulatory Improvement Act of 2015 (HR 1407  and  S 708), which had sponsors from both parties.  This legislation would set up an independent Regulatory Improvement Commission to collect testimony from businesses and individuals to help identify which regulations needed to be repealed or improved. Then the Commission would make recommendations to Congress, which would vote the Commission’s proposal up or down.


Trump and the Republicans have the chance to move forward, if they want, on important regulatory improvement.  This executive order does nothing to help small businesses.


 


 


 


 


 


 


 


 


 


 


 


			


	

			




			
				


	

		
Berg for Washington Monthly: U.S. Poverty Policy Is Outdated and Inefficient. Here’s a Better Approach.

				

			Posted on  by The Progressive Policy Institute		

			


	

		
All low-income Americans should be equipped with an Online HOPE (Health, Opportunity, and Personal Empowerment) account.


.S. poverty policy is stuck in a rut. In 2015, 43 million people in America were living in poverty – more than the combined populations of Texas, Pennsylvania, and Nebraska and 11 million more than in 2000.


Slow growth and inequality are the main culprits. But the outdated way we deliver social services – through ponderous, top-down bureaucracies and siloed programs – also hinders efforts by low-income Americans to rise out of poverty.


Economists often apply the term “opportunity costs” to high and middle-income people, meaning that the time they spend on one task is time not available to perform other, potentially more valuable tasks. But society rarely applies the concept to low-income people, acting as if their time is essentially worthless.


While government safety net programs help tens of million Americans avoid starvation, homelessness, and other outcomes even more dreadful than everyday poverty, government anti-poverty aid is generally a major hassle to obtain and keep, supposedly to ensure that only “deserving” people get them. Congress, which creates the laws governing the programs, and most states and localities, which implement those laws, purposely make it extremely difficult to advertise these programs and enable families to access them. That’s why many low-income people are actually unaware of all the government benefits for which they are eligible, thereby reducing the amount of help going to Americans in need by tens of billions of dollars every year. For instance, 17 percent of all people – and 28 percent of working people – eligible for SNAP benefits (formerly called food stamps) fail to receive them.


Continue reading at Washington Monthly. 


			


	

			




			
				


	

		
Fighting Poverty with HOPE

				

			Posted on  by The Progressive Policy Institute		

			


	

		
Economists often apply the term “opportunity costs” to high and middle-income people, meaning that the time they spend on one task is time not available to perform other, potentially more valuable tasks. But social scientists rarely apply the concept to low-income people, acting as if their time is essentially worthless. Sort of like the spouse who doesn’t count your food shopping, cooking, cleaning, child-rearing, accounting for family finances, shuttling family member to appointments, taking care of your sick parents, etc., as work.


Yet, in addition to lacking money, low-income Americans frequently lack time. Just as many personal relationships collapse when people don’t have “quality time” with each other, a lack of time works mightily against the efforts of lowincome people to have constructive relationships with their families and with the broader society.


 




 


			


	

			




			
				


	

		
Yarrow for San Francisco Chronicle: Trump administration must base policy on science

				

			Posted on  by The Progressive Policy Institute		

			


	

		
There is a widespread, hardly unfounded, belief that government regulators and business are in perpetual, bitter conflict over regulations concerning environmental, food and drug, transportation and workplace safety. Government wants tough standards and businesses say they will cut into profits or drive them out of business, or so the story goes.




That story is not entirely true.




When business and government collaborate on matters of science, it is better for public well-being and the economy, and it generally results in more efficient and less antagonistic public policy and regulatory outcomes. America’s successes have so often depended on scientific innovations that have been funded by government and then spurred economic growth. Reinvigorating this collaborative approach, more in vogue from the FDR to Johnson administrations, has been a significant achievement of the Obama administration and one that needs to be continued and expanded under the Trump administration.




Continue reading at San Francisco Chronicle


			


	

			




			
				


	

		
Fortune: The Red Tape Conundrum

				

			Posted on  by The Progressive Policy Institute		

			


	

		
How the wrong kind of regulation is strangling business—and what to do about it.






Even economists who believe that the system is flawed have a hard time quantifying the issue. “I do think that our economy loses resilience and adaptability because the regulatory structure is so rigid,” says Michael Mandel, chief economic strategist at the center-left Progressive Policy Institute and one of Washington’s top thinkers on regulatory reform. “I would say that our sluggish growth is partly connected with regulation. But it’s hard for me to put a number on it. And God knows I’ve tried.”






…






Mandel of the Progressive Policy Institute has introduced a metaphor—one that was often repeated to me by others—to describe the effects of regulatory accumulation. It’s like throwing pebbles in a stream, the economist says. Toss one in, or even two or three, and there’s no obvious effect. But once you throw in a hundred you may start to block the flow of water. “It’s really about taking degrees of freedom away from businesses,” he says.






This is compounded by the fact that the rulemaking machinery—just like the law-making system—is geared toward pushing out new regulations, not removing them. And once new rules are on the books, they usually just stay there. Mandel points out that there is no central place in the federal government where you can report problems with regulations. And because there’s no database of complaints, there’s no way to analyze the patterns and identify overlaps that need addressing.






“I kind of think of the regulatory issue as people basically saying in their own varying ways, ‘Who’s in charge here?’ ” says Mandel. “Is there anybody who’s really steering the ship? If you point out to somebody that there’s a problem, is there anybody that can respond?”






…






The Progressive Policy Institute’s Mandel worries about red tape stifling innovation in ways that we don’t even see. As an example, he offers arguably the biggest consumer technology breakthrough of the past decade—the smartphone. Mandel points out that when Apple partnered with AT&T to bring out the first iPhone in 2007, the companies were able to negotiate their original deal for the uniquely data-heavy iPhone, including an unlimited data plan, without regulators looking over their shoulders. “Suppose that you’d had to have hearings? And how long it would have taken, and how many objections would there have been?” asks Mandel, exploring the hypothetical. “How much growth would have been lost by that?”






…






Mandel says the current system of retrospective review hasn’t made an impact. Along with Diana Carew, a colleague of his at PPI, he has proposed the formation of a Regulatory Improvement Commission that would be authorized by Congress for a fixed period to identify regulations that should be eliminated or changed to encourage innovation. A version of the proposal has been introduced in the Senate and House in the past couple of years, but has yet to gain traction.






Read more at Fortune.


			


	

			




			
				


	

		
The FCC and the Set-Top Box Rule: A Headscratcher

				

			Posted on  by The Progressive Policy Institute		

			


	

		
The FCC chose to ‘delete‘ (their word) discussion of its “set-top box rule” from today’s meeting. As we wrote two weeks ago, the FCC’s proposed rule appeared to put the commission in the position of rewriting copyright law and setting up a licensing board for apps.  The licensing board for apps is particularly disturbing, because it represents an entirely new layer of regulation on an innovative sector that has produced more than 1.6 million jobs in the US alone.


But we’re left with a headscratcher. The truth is that no one–including members of Congress–really knows at this point what Chairman Tom Wheeler and the FCC commission are thinking, or how the FCC has modified its plan.  Rather than having to guess, we favor transparency–the FCC should announce its current proposal, and give an opportunity for public comment, meaningful review by Congress, and real economic analysis of the rule’s impact on jobs and innovation.  That’s the right way to move forward.


 


			


	

			




			
				


	

		
Does the FCC Have the Authority to Rewrite Copyright Law and License Apps?

				

			Posted on  by The Progressive Policy Institute		

			


	

		
Does the Federal Communications Commission (FCC) have the authority to rewrite copyright law and license apps? This Thursday the Senate Commerce Committee will hold an oversight hearing for the FCC, giving the committee members the opportunity to ask FCC Chairman Tom Wheeler this very relevant question.


Wheeler has proposed a plan by which payTV operators will be required to offer their shows through an app, which can be used on any device. The goal of this plan is to wean consumers off set-top boxes and home television sets, and encourage them to watch their favorite shows on their phones or tablets.


In the process, however, Wheeler is also mandating that the copyright holders for movies and television shows can no longer control where their material appears. That dramatically changes established copyright law, which gives copyright holders effectively unlimited discretion over how and where to sell and distribute their content.


Moreover, the FCC would set up a licensing board to certify the apps, setting an unfortunate precedent where any app that provided video content could presumably come under government control about how and where it could provide that content (or else it would be easy to circumvent the FCC’s rules). In effect, the FCC is setting itself up as the gatekeeper of the App Economy, which has been a tremendous job producer so far for the United States.


As we discussed in our 2015 paper, “Copyright in the Digital Age: Key Economic Issues,” significant changes in copyright law should be evaluated by three metrics:


    

  • Do they promote the creation of new artistic works?
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  • Do they allow creators and authors to benefit from their artistic endeavors?
    • 

  • Do they stimulate jobs and economic growth?
    • 



There is no evidence that the FCC did any economic analysis of these copyright metrics to justify its proposal. Moreover, app licensing by the government could dramatically slow down the rate of innovation in apps


PPI is in favor of competition in the set-top box market, including the delivery of content through apps. But the FCC’s attempt to squeeze out set-top boxes by rewriting copyright rules and licensing apps has the potential to have wide-reaching negative economic consequences.


 


			


	

			




			
				


	

		
Goldberg for The Hill: Are Federal Agencies Putting Science Over Fear-Mongering?

				

			Posted on  by The Progressive Policy Institute		

			


	

		
This summer, during one of the least productive sessions in recent history, a rare bipartisan achievement slipped through Congress under the political radar. Democrats and Republicans came together with environmentalists and chemical manufacturers to reform the Toxic Substances Control Act (TSCA).


So, what was the secret to TSCA’s success? All of these groups were unified behind a common regulatory vision: chemical regulation must be based on scientific risk alone. TSCA requires EPA to integrate scientific determinations of a chemical’s hazard, use and exposure potential so that facts, not political or fear-based agendas, are the driving force behind chemical regulations.

To be sure, TSCA is a compromise. No one thinks it is perfect. EPA gained authority over chemical regulations, and industry got a streamlined regulatory process. The Environmental Defense Fund called TSCA “a major improvement.” The Society of the Plastics Industry said consumers can have “confidence in the products they depend upon each day, while giving companies a more predictable regulatory system that is based on science rather than rhetoric.”


Read more at The Hill…