issue: Regulatory Reform

How Belgium Survived 20 Months Without a Government

Posted on by The Progressive Policy Institute

If you think a few days of “government shutdown” in the U.S. is bad, consider that in 2010-2011, Belgium had a political crisis that prevented formation of a government for 589 days. What may be most surprising, though, is that the Belgians found a way to keep their government programs and services running without serious interruption.

Belgians are far more divided than Democrats and Republicans in the U.S., split between a wealthier Flemish-speaking north with 60 percent of the population and a less prosperous French-speaking south. The cultural distinctions, linguistic antagonism, and regional separation between the two halves of the nation have long made it difficult to create a coherent majority in a parliament full of multiple small parties split along communal lines.

But the nation’s long-running divisions hit an all-time-low when the prime minister resigned in April 2010 and no new parliamentary majority could be established. Round after round of fruitless negotiations went on for the rest of 2010 and most of 2011. No faction or party was willing to compromise, nor could any single politician emerge as a unifying figure.

So what happened to the crucial work of Belgium’s government? Nothing much at all – things mostly went on as usual. The prior government stayed on in a “caretaking capacity” and the bureaucracy continued to hum along. As a report in Time put it: ” the absence of a government makes little difference to day-to-day life in Belgium…. Belgium deftly helmed the presidency of the E.U. in the second half of 2010, and the caretaker government last month headed off market jitters over its debt levels by quickly agreeing on a tighter budget. The country is recovering well from the downturn, with growth last year at 2.1 percent (compared with the E.U. average of 1.5%), foreign investment doubling and unemployment at 8.5 percent, well below the E.U. average of 9.4%. ‘By and large, everything still works. We get paid, buses run, schools are open,’ says Marc De Vos, a professor at Ghent University.”

Continue reading at the Washington Monthly.

Stumping Patent Trolls On The Bridge To Innovation

Posted on by The Progressive Policy Institute

President Obama brought much needed attention this June to “patent trolling,” a growing area of litigation abuse vexing America’s high-tech industries. In these lawsuits, shell businesses called Patent Assertion Entities (PAEs) or Non-Practicing Entities (NPEs)—some of which have been nicknamed “patent trolls”—game the patent and litigation systems. They purchase dormant patents, wait for others to independently develop comparable technology, and assert patent infringement suits. As the President explained, PAEs “don’t actually produce anything themselves.” Their quest is to “see if they can extort some money” by claiming they own the technology upon which the other companies’ products are built.

An attorney who used to defend these claims, Peter Detkin, is generally credited with popularizing the “patent troll” moniker. For software, consumer electronics, retail and the many other companies on the receiving end of these lawsuits, PAEs are reminiscent of the mythical trolls that hide under bridges they did not build, but nevertheless require people to pay them a toll to cross. Patent trolling, it turns out, is a better path to the holy grail than hiding under bridges. An oft-cited economic study pegged the overall impact of PAEs in terms of “lost wealth” at $83 billion per year, with legal costs alone amounting in 2011 to $29 billion, up from $7 billion in 2005. At least fifteen PAEs are now publicly traded companies.

This policy brief seeks to address three questions: what caused this recent and rapid rise in PAE litigation, what can be done to stop it, and what is the role for progressives? First, it identifies the confluence of factors that have come together in the past two decades to create the patent equivalent of a 100-year flood, focusing mostly on the explosion of new, widely used technologies, increasing ambiguity in the boundaries of today’s patents, and a litigation system incentivizing “ransom” settlements for even questionable infringement claims.

The brief then examines the adverse impact PAE litigation is having on the development and use of innovation, as well as on traditional patent cases brought by inventors the patent system was created to protect. It discusses the rich history of progressives in leading efforts to stop litigation prospecting, concluding that progressives should be at the forefront of this reform too. It then explores specific proposals the President, Senators Schumer and Leahy, and others have offered to safeguard the patent system from trolling abuse.

Download the memo.

Can the Internet of Everything Help Cities?

Posted on by The Progressive Policy Institute

Local governments are about delivering services and getting things done: Fixing highways, running buses, picking up trash, ensuring public safety, educating children. To do their job in an era of tight finances, what’s needed are technologies that make public services better and cheaper, and improve the quality of life for urban Americans without increasing costs.

So far the Internet and the shift to digital has boosted the efficiency of smart local governments, increased transparency, and made it easier to communicate with local residents. In many cities and towns it’s possible to look up property tax records online, for example; download essential forms and documents; or learn when the town dump is open. New York City is a leader in this area: its “OpenData” catalog contains more than one thousand data sets available to the public.

But the mere upload and download of data is not enough to get cities and towns out of their fiscal squeeze. That’s why, if we want to truly transform the delivery of public services, we need to look to the coming wave known as the  “Internet of Everything.”

What is the “Internet of Everything?” As I write in my new report, the Internet of Everything (IoE) is about:

…building up a new infrastructure that combines ubiquitous sensors and wireless connectivity in order to greatly expand the data collected about physical and economic activities; expanding ‘big data’ processing capabilities to make sense of all that new data; providing better ways for people to access that data in real-time; and creating new frameworks for real-time collaboration both within and across organizations.

In other words, IoE links things in the physical world with data, people, and processes, so that better decisions can be made in real-time.

On a national level, IoE can provide a tremendous boost to growth. We estimate that the Internet of Everything could raise the level of U.S. gross domestic product by 2%-5% by 2025. If this gain from the IoE is realized, it would boost the annual U.S. GDP growth rate by 0.2-0.4 percentage points over this period, bringing growth closer to 3% per year.

Part of these gains from the Internet of Everything would show up in the form of better and cheaper services provided by local governments. The key here is better decisions in real-time. One clear example comes out of the horrific flooding in Colorado. Having been hit by a devastating flood in 1997, the city of Fort Collins, CO, maintains a network of rainfall gauges and stream sensors which deliver real-time information on the potential for flooding both to a city website and to smartphones via an app. This connection with real time sensors enables both city officials and local residents to make better real-time decisions about when and whether to evacuate.

Cities can also use the Internet of Everything to help improve the mundane service of trash pickups. As my report notes:

The ‘smart’ trash and recycling stations from BigBelly Solar can sense how full or empty they are, and communicate wirelessly with the trash collection agency. Armed with this information, pickup trucks can go directly to the bins that are full, while skipping trash and recycling stations that are empty. The result: Cleaner streets, lower fuel usage, and fewer greenhouse gas emissions.

An essential service that is usually handled at the local level is transportation. Already more and more cities are using GPS systems to track buses and provide the information to passengers via apps. The next stage is to provide sensors that monitor waiting passengers, with the possibility of rerouting buses or having them skip stops in order to provide better service.

Or consider noise complaints, one of the most pervasive problems of big city living.  Noise can often be intermittent, making it very hard for local governments to adequately respond. However, smartphones are able to measure local noise levels, making it possible to build ‘noise complaint apps.’ Alternatively, low-cost sound sensors could help track troublesome noises in real time.

Finally, there is the most crucial local service of them all, education. Let’s focus on career/technical education. Businesses continue to complain about not getting enough skilled workers, but schools have been cutting back on CTE. Moreover, what they do offer is less directly relevant to today’s rapidly changing workplace, because it’s too expensive for most school districts—and CTE teachers–to keep up to date.

The Internet of Everything offers the possibility of lowering the cost of career/technical education by building sensors right into the equipment, which can offer immediate feedback to students. One offbeat example comes from Cisco, which built sensors into a basketball. In theory, that means someone trying to learn to play the game can automatically get corrections about how to shoot the basketball, enabling them to learn faster. The same principle can eventually be applied to career/technical education, lowering costs and speeding learning.

City officials face a historic challenge, and a historic opportunity.  With less resources, can they provide better services at lower cost? The Internet of Everything is no panacea, but it can assuredly help.

Continue reading at Techonomy.

The New Politics of Production: A Progressive High-Growth Strategy

Posted on by The Progressive Policy Institute
Will Marshall’s piece, excerpted here, was part of the Policy Network’s recent publication “Progressive Politics after the Crash: Governing from the Left.”

The US is struggling to find a way out of overlapping economic crises. One is cyclical: a painfully slow, jobless recovery from a recession magnified by the 2008 financial crash. The other is structural: US economic output and job growth have fallen well off the pace of previous decades. Although liberal commentators seem preoccupied with rising inequality, America’s fundamental economic problem is slow growth.

Even before the recession struck, the once-mighty American job machine was sputtering. Between 2000 and 2007, the US posted its worst job creation record in any decade since the Great Depression. Not only have many good jobs vanished, but also real wages have fallen or turned stagnant for all but the top US earners.

Overall economic growth has been declining steadily since the halcyon years after World War II, when the babies boomed and GDP grew at a robust average of 4 per cent per year. National output fell to 3 per cent during the 1970s and 1980s, before picking up in the late 1990s. Since 2000, the economy has downshifted again, averaging under 2 per cent growth per year. Research from the Kauffman Foundation also suggests a loss of entrepreneurial verve. The number of business start-ups, which Kauffman says generate most of US net job growth, has plummeted by about a quarter since 2006.

If there is a bright spot in the US economy, it is the rebound of corporate profits and stock prices since 2009. Yet these gains also highlight a stark inequity: returns to capital are up, but returns to labour are down.

In President Kennedy’s day, US prosperity really did lift all boats. Today, however, productivity gains do not automatically translate into higher pay for workers, especially people with middling skills. ‘This is America’s largest economic challenge’, says the economist Robert J.  Shapiro. ‘People can no longer depend on rising wages and salaries when the economy expands.’

Amid such dismal conditions, Obama’s re-election by a comfortable margin (5 million votes) was an astounding political feat. Despite Republican challenger Mitt Romney’s claims that Obama fumbled the recovery, swing voters credited the president with having prevented the economy from capsizing during the perfect storm of 2008–9. It helped too that Romney offered no theory of his own for rekindling growth beyond hackneyed calls for lower taxes and regulation.

Unfortunately, little has happened since Obama’s victory to dispel the pall of economic pessimism that hangs over America. A late spring poll, for example, found that nearly 60 per cent of Americans worry about ‘falling out of (their) current economic class over the next few years’. No doubt subpar job growth is chiefly responsible for such unwonted gloom. According to preliminary figures, the number of people with jobs grew by only 28,000 (0.02 per cent) during Obama’s first term.

And there is little relief in sight. The Congressional Budget Office forecasts weak GDP growth and abnormally high unemployment persisting to the end of Obama’s second term. America is stuck in a slow-growth rut. While liberal Keynesians are calling for more shortterm spending to kick-start the pace of recovery, what progressives really need is a bolder plan for overcoming structural impediments to more robust growth.

Instead of devising one, Obama is bogged down in Washington’s endless trench warfare over taxes, spending and debt. True, the president won a tactical victory in averting the ‘fiscal cliff ’ and forcing Republicans to swallow higher tax rates on wealthy households. Yet this modest blow for tax fairness did little to fix the nation’s debt or stimulate growth. In fact, distributional politics distracts progressives from a truly historic opportunity to lay new foundations for US prosperity in the twenty-first century.

To inspire hope for such a change, the US president must broaden his message from fairness to growth: he must put America back on a highgrowth path. By setting audacious goals – say, doubling the growth rate and halving unemployment by the end of his second term – Obama
would convey the requisite sense of national urgency

A clarion call for renewed growth would create political space for progressive initiatives – public investments in training and education, broad tax reform – intended to spread economic gains more widely. And, by fanning hopes for a reversal of America’s economic decline, such a call could help Democrats make inroads among white working-class voters.

These voters, once the backbone of Democrats’ New Deal–Great Society coalition, have since defected en masse to the Republican camp. A conscious campaign to start winning them back, while retaining the Democrats’ strong advantages with young and minority voters, is the key to building a durable progressive majority and ending the 50:50 polarisation that has paralysed Washington.

Read the entire piece by Will Marshall.

Forbes: The Net Neutrality Parable Provides Clues Of How To Fix The FCC

Posted on by The Progressive Policy Institute

The net neutrality debate reached a fever pitch last week when the D.C. Circuit heard oral arguments in Verizon v. FCC. Although many pundits have predicted what the appeals court will do, let’s search instead for an instructive lesson for reforming the FCC, something that policy wonks on all sides of the debate agree is necessary.

For years, I have been peddling a “compromise” on net neutrality between the folks who want to level the playing field for websites (or “edge providers”) and the folks who want to turn down the lights at the FCC.

Before explaining the idea, a quick backgrounder is in order: In December 2010, the FCC issued its Open Internet Order, which effectively proscribed certain practices by Internet service providers (ISPs), including selectively blocking traffic and contracting for priority delivery with websites. Rather than imposing an outright ban on “pay for priority” contracts, the FCC sternly warned ISPs that “as a general matter, it is unlikely that pay for priority would satisfy the ‘no unreasonable discrimination’ standard.” Put differently, such arrangements would presumptively violate the FCC’s new “non-discrimination” rule, and the burden would be on the ISP to reverse that presumption if it was ever foolish enough to try such a thing.

Of course, these rules have nothing to do with discrimination in the classic sense—that is, treating someone or something differently on the basis of some exogenous attribute (such as age, race, or lack of affiliation). For example, under the FCC’s Open Internet Order, if Time Warner  (an ISP) entered into a pay-for-priority arrangement with Sony (a website) to support a Sony online-gaming application, that contract would presumptively violate the FCC’s “non-discrimination” rules even if Time Warner stood ready to extend the same economic terms to all comers. Calling these rules the “zero-price rule” or the “no-economic-relation” rule would have been more accurate, but less politically appealing.

Continue reading at Forbes.

Let Everyone Bid in the Spectrum Auction

Posted on by The Progressive Policy Institute

In our new paper released today, we examine the economics and policies related to an upcoming spectrum auction by the Federal Communications Commission, illustrating that a more efficient regulatory system that facilitates competition and innovation can also provide essential consumer protection.

The auction, which the FCC hopes to conduct next year, is designed to enable continued expansion of mobile broadband and other wireless services by buying back spectrum now belonging to TV broadcasters and making it available to wireless service providers. As often happens in Washington, there’s a fight over how the auction should be structured—specifically a push by some smaller competitors to limit bidding by the largest providers, AT&T and Verizon. Such limits would effectively set aside a portion of low-frequency spectrum for the smaller rivals at discounted prices.

But we argue that such regulatory structures would needlessly complicate the auction process, undermine competition in the overall broadband marketplace, and make it difficult to meet consumers’ expectations for wireless service. Moreover, putting a thumb on the scales of the auction process is unnecessary. Rather than achieve the goal of enhanced innovation, we show that the rules proposed by smaller competitors could make innovation more difficult. Continue reading “Let Everyone Bid in the Spectrum Auction” →

How a Regulatory Improvement Commission Can Improve SBA’s Disaster Response

Posted on by The Progressive Policy Institute

Last week, New Jersey Governor Chris Christie blasted the Small Business Administration for being a “disaster” in providing disaster relief to New Jersey’s businesses after Hurricane Sandy.

At issue? According to the Governor, SBA’s disaster loan programs were too complicated for residents and business owners that needed a fast, simple funding stream to recover and rebuild. The Star Ledger article noted these words from Gov. Christie to a Jersey Shore crowd:

“Basically, the Small Business Administration is a disaster,” he [Gov. Christie] said to an appreciative crowd. “We should send FEMA to the Small Business Administration to clean up after the disaster that is the Small Business Administration and what they did to small business people in this state.”

“The good news is the Small Business Administration has left New Jersey and we are stationing troopers on every border to make sure they do not come back,” he added.

Does the Governor have a point – are there too many rules and regulations on SBA disaster programs hampering the effectiveness of the federal government’s disaster response?

An effective federal disaster relief system is essential to having economic continuity after a disaster hits. If the disaster loan application process is overly cumbersome, and not being utilized while residents and businesses flounder, it’s worth taking such claims seriously.

A quick look at SBA’s website shows 80 rules (consisting of 7 subparts of Title 13, Chapter 1, Part 123) in the Code of Federal Regulations that apply to their disaster loan programs, and SBA’s Standard Operating Procedure for disaster loans is an impressive 269 pages. Of course, federal loans backstopped by taxpayer money should enforce responsible lending and credit-checking criteria. But in times of disaster it may be sensible to simplify the process.

It’s examples like this why PPI proposed Congress authorize a “Regulatory Improvement Commission” (RIC), an independent Commission with the explicit purpose of reviewing outdated or duplicative federal regulations. The Commission, authorized only on an as-needed basis, could review the rules and regulations that govern SBA’s disaster loan programs and provide suggestions to improve or remove them. Their recommendations would then go to Congress for an up-or-down vote.

In the case of SBA’s disaster loan programs, the RIC could improve the speed at which disaster aid is distributed while still protecting taxpayers. For example, perhaps the number of required application forms – 6 for businesses – and corresponding financial documentation could be consolidated. In times of disaster, especially natural disasters like Hurricane Sandy, local business owners may not have immediate access to all of the required documentation which could impose major delays in aid. Likewise, some legal restrictions on disaster loan eligibility may not be feasible or practical and merit review. For example, requiring borrowers in designated “special flood hazard areas” to purchase flood insurance to be eligible for aid may be prohibitively expensive.

There is currently no effective process in place on the federal level to retrospectively review and improve such regulations. Yet the build-up of regulations over time is plaguing many U.S. businesses, and in cases like this, homeowners, which could have long-term economic affects. The RIC would address this problem, and as an independent body would do so in a politically viable way.

Regulation Nation: Obama rule-making seen as deeply flawed

Posted on by The Progressive Policy Institute

The Hill quotes PPI’s Diana G. Carew in a recent piece on federal regulation and cites PPI’s Regulatory Improvement Commission proposal being championed by Sen. Angus King.

Democrats, unions and public interest groups, meanwhile, say agencies are already hamstrung by existing restrictions on their authority, and argue that open-ended White House reviews have led to a pattern of delays in important protections.

“It’s definitely the way you approach the issue,” said Diana Carew, an economist at the Progressive Policy Institute, which aligns itself with pro-business New Democrats.

“So what’s basically happened is that nothing’s happened, and now we see this massive buildup of regulation over time, and it is actually causing a hindrance on business and business growth, and for small businesses.”

Read the entire piece at The Hill.

Tax Reform – Make It Simple, Use Common Sense

Posted on by The Progressive Policy Institute

Our tax code is broken. It’s a simple fact, yet year after year our government leaders fail to address it. Meanwhile, the consequences of the overly complex and poorly designed system are felt by middle-class families and entrepreneurs alike. They benefit little from the existing array of incentives and loopholes, which are mainly targeted to special interests and the wealthy.

This week, House Ways and Means Chairman Dave Camp, R-Mich., and Senate Finance Committee Chairman Max Baucus, D-Mont., are visiting San Francisco and Santa Clara to hear directly from the California high-tech community about the inefficiencies of the system, and the potential effects of several of the proposed reforms.

One thing everyone agrees with is the need for simplification, especially simplifying everyday provisions that would make tax reform real for most taxpayers. Not only would a simpler code reduce red tape, it would also create a better economic environment for businesses of all sizes, raise revenues for deficit reduction and incentivize urgent investments in our nation’s future.

Simplification, however, should never abandon the principle of progressive taxation. One example of a misguided reform is what’s called the “flat tax.” It sounds simple, but in order to keep tax revenue stable the rate would be considerably higher than the 15 percent rate most taxpayers pay today. That means the majority of Americans would pay higher taxes in the name of simplification.

Also in the mix are political gimmicks such as “return-free filing,” in which the IRS would calculate your taxes for you. Such a system would only hide the inefficiencies and dysfunction of the system from many Americans, reducing support for desperately needed reform. In addition, there is an inherent conflict of interest in having the tax man do your taxes: If there’s any question about how to apply the tax code, the IRS is likely to choose the interpretation that brings in more taxes.

If Congress and the Obama administration are serious about simplifying the tax code, any plan must:

Promote economic efficiency and growth to help speed economic recovery, bring down unemployment and shrink the national debt.

Reduce the number of tax incentives to rebuild the nation’s revenue base. Each tax loophole is fiercely guarded by the special interests whom it benefits. Closing tax breaks en masse will not be easy, but it is essential both to lower tax rates for middle-class families today and to whittle down public debts that impose harmful tax burdens on our children tomorrow.

Maintain progressivity. Most tax incentives today make it less progressive, not more. Eliminating many tax incentives and using the savings for lower rates can, in conjunction with maintaining (and maybe even expanding) the Earned Income Tax Credit, maintain or improve progressivity in the tax code.

Reduce errors and avoidance. Tax law complexity often leads to perverse results. There are 14 different incentives for college, 11 types of IRAS, and three major incentives to help defray the cost of raising children. Common-sense simplification would make tax reform meaningful for average working American families.

Better align federal and state tax rules. Simplification will never be maximized unless federal and state governments can work together to reduce paperwork, streamline the filing process and create less opportunity for gaming the tax system.

There is a moment of opportunity in this Congress and this administration to do great good in making our tax system more rational, understandable and effective. We need to seize it.

Find the article at San Francisco Chronicle.

Senators King and Blunt Introduce Regulatory Improvement Commission, Modeled After PPI Proposal

Posted on by The Progressive Policy Institute

Today Senators King and Blunt introduced the Regulatory Improvement Act of 2013, which “would create a Regulatory Improvement Commission to review outdated regulations with the goal of modifying, consolidating, or repealing regulations in order to reduce compliance costs, encourage growth and innovation, and improve competitiveness.”

The framework for this new commission is modeled after PPI’s proposal for an independent Regulatory Improvement Commission (RIC). Under this proposal the RIC would review duplicative and outdated federal regulations as submitted by the public with the intention to either remove or improve them. The Commission would be authorized by Congress on an as-needed basis, with bipartisan participation, and would require complete transparency during each stage of the review process. At the end of the review, the RIC would submit a package of regulatory changes to Congress for an up or down vote.

The Regulatory Improvement Act of 2013 is a significant proposal that could have a tremendous economic impact. Regulatory accumulation – the natural accumulation of federal regulations over time – imposes an unintended but significant cost to businesses to businesses and economic growth. No satisfactory process currently exists for retrospectively improving or removing regulations.

PPI congratulates Senators King and Blunt for introducing a bill that could finally address this long-standing issue that affects the ability of America’s businesses to grow, invest, innovate, and succeed.

PPI’s complete proposal for a Regulatory Improvement Commission is outlined in the report “Regulatory Improvement Commission: A Politically-Viable Approach to U.S. Regulatory Reform.”

Who Says Tech Innovation Moves Too Slowly?

Posted on by The Progressive Policy Institute

In his article for the July/August issue of the Washington Monthly, Barry Lynn correctly notes that the slow pace of technological progress in many fields could help explain many of the ills of today’s economy. That’s an absolutely key point. Faster, broader innovation could help create more jobs at higher pay, and help the United States escape the slow-growth trap.

But having identified the right field of battle, Lynn points his rhetorical guns at the wrong target. What’s worse, they are loaded with the wrong policy ammunition.

Lynn argues that technological stagnation is due to “a concentration of economic control that enables a few corporate bosses to manipulate technological advance entirely outside of any open and competitive marketplace.” Looking back to Franklin Delano Roosevelt and the New Deal, Lynn’s solution seems to be “stepped up antitrust enforcement with the forced licensing of key patents held by monopolistic enterprises.”

In the current day, Lynn’s prime examples of innovation-sapping monopolies are drawn from the tech industry. He spends some time on Monsanto and Pfizer, but he primarily focuses on tech companies such as Microsoft, Intel, Oracle and Google. Drawing the analogy with the 1911 antitrust case against Standard Oil, he notes that “it’s not hard to identify which corporations could be renamed Standard Operating System, Standard Semiconductor, Standard Enterprise Software, Standard Storage, and Standard Search.”

Unfortunately for Lynn’s analysis, the tech sector is the one part of the economy where innovation is proceeding at a breakneck pace. In particular, the introduction of the iPhone by Apple in 2007, followed by the release of the Android mobile operating system by Google, rapidly transformed the way that people in the U.S. and around the world do business and live their lives. Continue reading “Who Says Tech Innovation Moves Too Slowly?” →

PPI Releases New Report on Broadband Policy

Posted on by The Progressive Policy Institute

New PPI Report by Ev Ehrlich Outlines Progressive Agenda for Broadband Policy

Economic and Consumer –focused Objectives Key to Progressive Broadband Agenda

WASHINGTON – The administration and Congress need to adopt a progressive broadband policy agenda that balances respect for the private investment that has built the nation’s broadband infrastructure with the need to realize the Internet’s full promise as a form of social infrastructure, says a new report released today by the Progressive Policy Institute (PPI).

The report, Shaping the Digital Age: A Progressive Broadband Agenda, is authored by Ev Ehrlich, president of ESC Company and former Undersecretary of Commerce for economic affairs in the Clinton Administration and current PPI fellow.

According to Ehrlich, for many progressives, “getting the Internet right” means addressing what they see as undue market power in the provision of broadband and the potential for the abuse of that market power, as the Internet is seen as a landmark tool for social and political empowerment.

Ehrlich’s progressive broadband policy agenda consists of five key objectives:

  • Extending the combined wired/ wireline broadband network to all Americans;
  • Creating an active market for spectrum;
  • Using broadband to advance if not revolutionize key non-market sectors of the economy, particularly education, health care, environmental protection and government;
  • Protecting personal privacy in broadband-based interactions;
  • Defining the role of the FCC as a catalyst, honest broker and market enabler rather than a regulatory implementer

“The fact that the Internet has become a driving force in shaping daily life doesn’t mean that it can’t be governed primarily by market forces. In fact, those forces have already delivered a competitive, innovative, and rapidly disseminating broadband network,” said Ehrlich. “There is a more appropriate policy agenda for progressives that would achieve important progressive goals in a way that “neutrality” and other regulatory forays cannot and will not.”

“Ev Ehrlich is a leading progressive economist and a key architect of the policies that nurtured the Internet’s early development,” said Will Marshall, president PPI. “In this trenchant new analysis, he urges progressives to stop fighting old regulatory battles, and instead champion a forward-looking agenda for ubiquitous, high-speed broadband as a tool for social empowerment as well as economic innovation and growth.”

 

Shaping the Digital Age: A Progressive Broadband Agenda

Posted on by The Progressive Policy Institute

The broadband Internet is an epochal technology. It is transforming the economy and changing the nature of everyday life. Its construction and development requires large quantities of resources, and its existence generates substantial innovation and economic growth.

What is the public sector’s best policy approach to this burgeoning phenomenon? Views differ across the political spectrum. The conservative vision of policy regarding the Internet is to leave it alone. Progressives find that view wanting, but what is their corresponding vision?

The answer is unclear. To some advocates, it involves an aggressive regulatory stance, whether in the form of “net neutrality,” “common carriage,” limitations on the sale of spectrum, or other policies that limit that latitude and operations of the companies that build and manage broadband networks. The most recent example of this type of advocacy is Susan Crawford’s Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age. To others, this agenda seems excessive, but plays to an innate skepticism about large (and older) companies in general–particularly when contrasted to such new corporate Goliaths as Apple, Google, or Facebook, which have made their fortunes by existing on the Internet, rather than by providing it.

What should the progressive agenda be? Are our choices either to embrace this aggressive regulatory agenda or to accede to conservative laissez-faire? This essay argues that there is a third, and far more promising, option for such a progressive broadband policy agenda. It balances respect for the private investment that has built the nation’s broadband infrastructure with the need to realize the Internet’s full promise as a form of social infrastructure and a tool for individual empowerment. It turns away from problems we may reasonably fear but that simply do not exist–most importantly, the idea that the provision of broadband services is dominated by an anti-competitive “duopoly” that stifles the broad dissemination of content. And it forthrightly addresses the new ones–such as the need to create mechanisms to develop broadband as a ubiquitous social asset, to create institutions that do not second-guess its unpredictable and burgeoning growth, and to protect consumer privacy and users’ right to control the use of their personal information.

This paper consists of three sections. The first discusses what progressives should want from the Internet, the second examines the true state of competition in the broadband sector, and the third lays out a progressive agenda.

Download the entire report.

The Great Disrupters of Silicon Valley

Posted on by The Progressive Policy Institute

Last week, the Pepperdine School of Public Policy gathered an eclectic crew of economists (including your fearless blogger) and high-tech entrepreneurs to discuss tech policy over dinner in Silicon Valley. Among the entrepreneurs were startups like mobile-payment company Ribbon, voice-recognition-software maker Promptu, and mobile-platform provider Appallicious, as well as established players like portable-device maker Lab126 (think Kindle).

These entrepreneurs shared stories about spontaneous collaborations being struck over morning coffee at University Cafe. (Note to joggers: After taking out University Avenue on day one of your trip, make sure to hit the Dish near Stanford on day two.) To succeed here, one needed to tap into this vibe. Unlike the keep-your-head-down mentality of Washingtonians, strangers in the Silicon Valley are inclined to interact based on a common mission to design the next great thing.

After being plied with a local Cabernet (or three), and without any prior warning, the economists were asked a difficult question: What role, if any, does tech policy have in promoting startups like the ones gathered around the table? Continue reading “The Great Disrupters of Silicon Valley” →

The History of Gubernatorial Senate Appointments

Posted on by The Progressive Policy Institute

Including yesterday’s appointment of Jeffrey Chiesa, there have been 21 gubernatorial appointments to fill U.S. Senate seats since 1993 — nine resulting from deaths and 12 from resignations. So how does the New Jerseyan fit into the overall pattern?

In 18 of the 20 appointments before Chiesa, the newly named Senators were of the same party as their predecessors. So replacing an archliberal Democrat with a self-described conservative Republican, as is happening in New Jersey, is a real break in usual practice.

However, this is not particularly hard to explain. In only 3 of the 20 cases of vacancies were the Governor and the outgoing Senator of different parties, as with Chris Christie and Frank Lautenberg.

Chiesa fits more comfortably into another emerging pattern: he is a “placeholder” Senator who indicates that he will not run for the seat and who is not really a political figure in his own right. (Although Chiesa was the sitting state Attorney General, New Jersey is one of seven states that fills the AG job by means other than popular election.) Of the 20 other Senators appointed since 1993, seven broadly fit into the placeholder category, with six of these having been appointed just since 2009. Continue reading “The History of Gubernatorial Senate Appointments” →

Wireless Competition Under the Senate’s Microscope

Posted on by The Progressive Policy Institute

Today the Senate will convene a distinguished panel of experts to discuss the state of wireless competition in America. Although it is trendy among the cognoscenti to complain about the wireless industry, the reality is that wireless competition is vibrant here, and U.S. carriers are leaving their European counterparts in the dust.

A common refrain among those calling for regulators to “level the playing field” is that two carriers—AT&T and Verizon—are running away from the pack, due to their allegedly superior spectrum holdings. The resulting imbalance in competition can be remedied, they claim, by capping the spectrum holdings of the larger carriers and steering newly available spectrum to smaller carriers. Any relative improvement in the smaller carriers’ networks would attract more customers, which would reduce wireless concentration.

One problem with this story is that wireless concentration—a very fuzzy indicator of competition when it comes to wireless services—is not climbing as predicted. In fact, U.S. wireless concentration as measured by the FCC has held steady since 2008, indicating that Sprint and T-Mobile are not losing ground. Indeed, 2012 was a particularly good year for these carriers, as both enjoyed significant subscriber gains. T-Mobile recently completed its merger with MetroPCS, giving the combined company access to more subscribers and more spectrum.

Perhaps the best indicator of the smaller carriers’ prospects is the bidding war for Sprint that has erupted between Softbank and Dish Network. If Sprint stood no chance to compete with AT&T and Verizon due to its allegedly inferior spectrum, then these savvy investors would not be so bullish about Sprint’s future. Put differently, Sprint’s spectrum holdings are valued dearly in the marketplace despite their “high-frequency” nature.

Read the remainder of the article at Forbes.