“Bidenomics is Working: The President’s Plan Grows the Economy from the Middle Out and Bottom Up — Not the Top Down” is the lengthy title of a concise mid-June paper summarizing the White House view of the mid-2023 American economy, the role of policies to date in creating it, and the ways to build on success. The document — BiW for short — is a mix of political “messaging,” data points, and policy advocacy organized as follows:
1.Our successes so far: The strong 2023 economy, with its post-COVID recovery, its low unemployment rate and new manufacturing jobs, and its strong wage growth, emerged not by accident, but as the intended consequence of “Bidenomics.”
2.Their gloomy alternative, summarized as “the failed trickle-down policies of the past” — BiW uses the phrase “trickle-down” five times to make sure you’ve noticed — and specifically dates this “past” in President Biden’s accompanying July 6 speech to a point forty years ago, somewhere in the first Reagan term, at which Americans “walked away from how this country was built.”
3.The next phase: A “three-pillar” program to seal the achievement: (a) revival of large-scale public investment, (b) worker empowerment, particularly through encouraging labor union organization, and (c) promoting “competition” in the domestic economy.
3a.A fourth policy point, not labeled a “pillar” or highlighted at the top of the document, and so looking a bit sad and alone: deficit reduction and inflation-fighting.
Taken together with the July speech, BiW represents the first draft of the administration’s economic case for re-election — and a lot of it is very good. BiW effectively describes the role of the Biden administration’s policies in reviving the COVID-stricken economy of 2020. It selects the right audience in America’s large and somewhat disaffected working class. And its policy “pillars” are an interesting start with some useful new mid-tier ideas.
But BiW also has gaps. Its vision of the “working class” focuses so intently on manufacturing and construction workers that it mostly misses the much larger non-industrial working class. Its take on the 2024 Republican alternative is off — the opposition’s program is much more likely to be a Trumpist “big-government right” program than Reagan-era budget cutting and market fundamentalism — and its description of the past 40 years as an unbroken period of “trickledown” is intellectually lazy and carries some political risk. Finally, BiW’s policy “pillars” are only a start; while they do showcase some good mid-tier ideas, they’re a bit thin, overly skewed toward government solutions, and unfortunate in the second-class status they implicitly assign to fiscal responsibility and inflation-fighting. What follows are unsolicited but friendly thoughts on ways to fill the gaps, as the administration’s economic wonks and messaging experts develop the second draft.
Today, Ed Gresser, Vice President and Director for Trade and Global Markets at the Progressive Policy Institute (PPI), testified during the U.S. House Committee on Ways and Means Subcommittee on Trade hearing on reforming the Generalized System of Preferences (GSP). Gresser oversaw this program from 2015 to 2021, as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR).
GSP is a 50-year-old set of tariff waivers for 119 low- and middle-income countries, from small Pacific and Caribbean islands to larger countries, such as Brazil and Pakistan. In exchange for waiving tariffs on about 3,600 goods, GSP imposes a list of 15 eligibility criteria ranging from market access to labor standards, resource cartels, and intellectual property rights.
In his testimony, Gresser argues that Congress should reauthorize the program, which lapsed in 2020, and proposes updated improvements to better serve Congress’ top policy goals.
“GSP plays an important role in development and poverty alleviation as countries across the world diversify their economies and create new job opportunities. GSP also helps the U.S. government achieve policy goals in a number of important areas and provides options for American buyers hoping to diversify sourcing beyond China,” said Ed Gresser. “I hope Congress will quickly reauthorize GSP, as it works to improve and update the program.”
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C., with offices in Brussels, Berlin and the United Kingdom. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
FACT: The U.S. Generalized System of Preferences program has been expired for nearly three years.
THE NUMBERS: Random sample of GSP imports, 2020 –
Armenia
486 tons of jam & $9.5 million in golden jewelry
Belize
$6.5 million of cane molasses
Bolivia
32,700 wooden doors
Cambodia
49 million handbags
Georgia
11,900 liters of wine
Haiti
567 tons of fresh mangoes, 870,000 woven flags
Liberia
5.7 tons of spices
Namibia
$5 million in stonework
Pakistan
$25 million in sports equipment
Solomon Islands
500 tons of canned tuna
South Africa
217 tons of essential oils
Thailand
27.3 million orchids, 10.6 million rulers & tape-measures
Timor-Leste
15 tons of vegetable oil from Timor-Leste
Tonga
411 tons yams, 182 tons taro root
Ukraine
8 tons of pickles, 316 tons of titanium-based paint
Uzbekistan
430 tons dried peppers, 19 tons dried apricot
WHAT THEY MEAN:
Live now at 2 p.m. EST: PPI’s Ed Gresser is testifying at the House Ways and Means Trade Subcommittee. Watch the live stream.
Background: The Subcommittee’s hearing is on the revival of Generalized System of Preferences, or GSP, a program Gresser oversaw as a civil servant from 2015 to 2021. This is a 50-year-old set of tariff waivers for 119 low- and middle-income countries, from small Pacific and Caribbean islands to big Brazil and Pakistan, for which Congress’ authorization lapsed at the end of 2020. The U.S. for the moment is the only developed country without such a system.
Some specifics: GSP tariff waivers apply to 3,616 of the U.S.’ 11,414 tariff “lines”* for all the countries on the list, and 5,138 “lines” for the 42 least-developed countries in the group. Real-world cases, noted above, range from Ukrainian paint and Armenian jewelry, to Haitian mangoes, Thai orchids and mirrors, Fijian ginger candy, Mongolian pine nuts, South African citrus, Cambodian backpacks, and South Pacific yams and taro root. The tariff rates on these lines average about 4.8%, and peak at above 20% for backpacks and luggage. Balancing the additional bit of opportunity are 15 eligibility criteria — providing “reasonable assurance of access to markets” and “adequate and effective protection of intellectual property,” “taking steps to afford internationally recognized labor rights” — which Congress asks participating countries to meet.
During its last year in effect, depending on one’s point of view GSP trade made up (a) an impressive $17 billion in imports, or (b) a modest 11% of imports from the relevant countries (given some exclusions of products, the permanently duty-free status of most energy and resources, and some other factors ) or (c) a modest-almost-to-the-point-of-chastity 0.8% of that year’s $2.35 trillion in U.S. imports. Two policy points for the Committee as Congress considers re-upping and revising it this fall:
1. Set clear priorities: If Congress’ main goals are encouraging supply-chain diversification and alternatives to Chinese sourcing, the GSP program’s benefits probably should be more significant and need to be pretty stable. So: long new authorization; consider upgrading benefits either by adding products, revising the arcane ‘Competitive Need Limit’ system, or other options; and make sure removals of benefits on eligibility grounds are last resorts for severe non-compliance. Alternatively, if the top goals are encouraging countries to work on particular policies through the eligibility criteria, think also about adding some value, and about limiting the number of new eligibility criteria and keeping them specific so that administration officials and GSP country governments can focus on the relevant topics.
2. Act with some urgency: GSP’s Congressional ‘authorization’ lapsed at the end of December 2020, and so the program has not provided benefits for three years. As we noted a couple of weeks ago with respect to the Solomon Islands and canned tuna, this means countries in the program, especially smaller and poorer ones, risk losing exports and employment as trade shifts back to larger and often non-GSP sources. At the same time, U.S. government hopes to use the program for particular policy goals, or to encourage diversification of sourcing and reduce China-reliance, remain on hold. So, act expeditiously.
* See the tweet below for an especially kooky real-life example of these “lines,” with a screenshot of the Borges-like list of wild animal tariffs on HTS pg. 12.
FURTHER READING
Live now, the Ways and Means Committee hearing page.
The U.S. Trade Representative’s GSP Guidebook explains GSP program goals, product coverage, eligibility rules, and country participation.
The Obama administration (2016) evaluates U.S. trade preference programs (including GSP, the African Growth and Opportunity Act, and the Caribbean Basin Economic Recovery Act) and their records on development, poverty alleviation, and policy.
And some international comparisons:
Japan’s Ministry of Foreign Affairs explains the Japanese GSP.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
Writing in retirement at Saladin’s court in 1185, the 90-year-old aristocrat ibn Munqidh goes in for some moping. In his youth, ibn M. recalls, he cheerfully rode off on weekends to spear Crusaders, political rivals, and charismatic megafauna. Now he’s worn out by a bit of calligraphy:
When I wake up I feel like a mountain is on top of me
When I walk, it’s like wearing chains
I creep around with a cane in my hand …
My hand struggles to hold up a pen, when it once
Broke spears in the hearts of lions.
Yes, well, happens to us all these days. In that era, and for most of human history, not so much. Until the 19th century life expectancy at birth was about 30 — that is, only half the public got to 30 — and a 25-year-old expected (on average) to live to 50. Ibn M. was an extreme outlier, having avoided first the pre-1800 40% child mortality rate and then the high chance of getting carried off later on by plagues, accidents, predators, or competent enemies, and making it to his 10th decade.
Today, by contrast, the elderly demographic — already with 150 million people over 80 — is the world’s fastest-growing. This, plus the fact that birth rates have fallen by nearly half since the 1970s, means that humanity is aging. Our World in Data’s tabulation finds this year’s global “median age to be 30 1/2, meaning that (a) more than half of us are over 30, and (b) the person exactly in the middle was born in 1992. Our World’s figure is about ten years older than the 20-year median of 1970 and five years older than the 25-year median of 2000, and is projected to creep up by three months per year for the next half-century. The worldwide medians over the last 50 years, with a tentative estimate for 2050, look like this:
2050 36?
2022 30
2010 27
2000 25
1970 20
Worldwide averages, of course, conceal lots of variation. Details by region below; but in general, East Asia and Europe are “old,” with median ages over 40; Japan is currently the “oldest” country* at 49. Africa is “youngest” with a median age of 19 (and turbulent Niger is the world’s single “youngest” country at 14 and a half), with the Pacific islands second-youngest. The other regions are in the middle, with Latin America and the Caribbean exactly at the world’s 30-and-a-half-year average (but aging fastest of all), and South Asia, Southeast Asia, and the Middle East a bit below. The U.S. is above the world average at 39, but aging only about 2 and a half months per year, while Europe adds about 3 and a half months, Asia 4 months, and Latin America 5 months.
So: In Europe and East Asia especially, the next decades’ experience will probably be one in which people (whether or not they start wistfully putting down their spears) start getting tired as they push around the modern equivalents of calligraphy pens. Economists accordingly predict rising demand for health equipment and telemedicine services; labor shortages in western countries and East Asia, combined with lower GDP growth rates with which to pay the new workers; production and consumer booms in India, Africa, and parts of the Middle East; and politics increasingly dominated by arguments over how to pay for health and pensions. Still, as ibn Munqidh might reluctantly agree, better than any realistic alternative.
* Counting countries with populations above 100,000. The Vatican, with about 800 people, is technically the oldest country, with its various Cardinals, secretaries, and Swiss Guards at a median age of about 58.
FURTHER READING
Our World in Data’s interactive table of median ages by country, region, income group, etc., from 1950 to the present with projections to 2100.
The CIA’s World Factbookranks countries by life expectancy.
The International Monetary Fund has thoughts on aging, growth rates, and finance,
And Usama bin Munqidh on old age, medieval battle tactics, poetry, calligraphy, Crusaders’ odd gender habits and loony “trial-by-ordeal” and “trial-by-combat” legal theories, the mighty Saladin, etc.
Detail by region
Oldest: Europe is the world’s “oldest” region with a median age of 42 — that is, 12 years above the world median. Italy, with a median of 47, has Europe’s oldest population with Portuguese, Germans, Greeks, and Bulgarians next at 45. East Asia, at 40, is almost as venerable at Europe, and Japan is currently the world’s “oldest” country,* with a median age hitting 49 this year. (Japanese also have the world’s longest lifespan, at 87.) A bit north, Koreans are slightly more youthful at 43 but aging faster, with Korea likely to pass Japan by 2040 and hold the “world’s-oldest country” status for the rest of the 21st century. Mainland China’s median age of 38 — exactly equal to America’s — is the region’s youngest but rising fast. China is likely to catch Europe in the next decade and pass Japan somewhere around mid-century, as this fall’s Shanghai elementary schoolers begin contemplating retirement.
Youngest: If the median Asians and Europeans are middle-agers thinking about young children and home payments, the “median” African is a buoyant 19-year-old just starting a career. In the world’s “youngest” country, the median Nigerien (hopefully steering clear of Niamey’s edgy military patrols last month) is a 14-and-a-half-year-old high school freshman born in the spring of 2008. Eight of sub-Saharan Africa’s 49 countries have median ages below 16, and 36 below 20. The Pacific Islands are just slightly “older” as the world’s second-youngest region, with the Solomon Islands and Vanuatu at medians of 19 years, and Samoa and Timor-Leste at 20.
Middle-aged: Other regions cluster closer to the world average. In South and Southeast Asia, median ages for India, Bangladesh, Indonesia, Malaysia, and Burma are all just a bit below the world average at 28 or 29. The Philippines and Pakistan are “young” at 24; Sri Lanka and Vietnam a bit older than average at 32. Singapore and Thailand are the region’s seniors, with the median Singaporean now 42 years old and the median Thai 40. In the Middle East and near neighbors, the age range is similar but skews a bit younger: median ages are in the teens in Yemen, the Palestinian territories, and Iraq; 28 or 29 in Egypt, Jordan, Israel, Morocco, and Lebanon; and 31 and 32 in Azerbaijan, Turkey, and Iran. Latin America and the Caribbean, finally, perfectly match the worldwide median at 30 and a half, with Cuba the “oldest” at 41 and Haiti and Honduras “youngest” at 23; Brazil is 32, Mexico 29, and Peru 28.
The United States: The U.S. can look quite young, or a bit “tempered by experience,” or right in the middle, depending on what group you put it in. Three options:
As a “western” country joined with the EU, Canada, the UK, Switzerland, Japan, Korea, Taiwan, Australia, New Zealand, etc., the U.S. is very much on the youthful side. All the Asian democracies are “older” than the U.S.; and in Europe, only Albania, Iceland, Ireland, Armenia, and Georgia have lower median ages than the U.S., and none of them by much.
As a “Western Hemisphere” country, the U.S. remains for now on the older side, eight years above the Latin/Caribbean average. Over the next 20 years, though, norteamericanos will age only gently while Latin America’s age at the world’s fastest pace. By 2040, the U.S./Latin age gap will be only four years, and Brazil, Colombia, and Costa Rica will all be “older” than the U.S.
Finally, in an “Anglosphere” group with Canada, New Zealand, Australia, the U.K., and Ireland, the U.S. looks pretty much average. As of 2023, this group bunches closely together, in a range from New Zealand’s 36-and-a-half median to Canada’s 40-and-a-half, with the U.S. exactly in the middle. Projections to the 2040s find them even closer, all within 2.5 years of one another, with the U.S. “youngest.”
ABOUT ED
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
FACT: First intercontinental submarine cable message: August 1858.
THE NUMBERS: Cable data capacity –
2Africa, 2023: 180,000,000,000,000.0 bytes per second
TAT-8, 1988: 280,000,000.0 bytes per second
Atlantic Telegraph, 1858: 0.1 bytes per second
WHAT THEY MEAN:
It’s been 165 years since the first shout across the oceans: The submarine cable joining the United States and the U.K. in 1858, via terminals at Newfoundland and Valentia Bay in Ireland, was as thick as a finger and weighed a ton per mile. The inventors coated a core of seven copper wires with waterproof gutta-percha (the dried sap of a Malaysian tree, used then to make golf-balls and piano keys), then wrapped it in hemp and sealed the hemp with tar, and finally covered the whole assemble with iron wire cladding. Two newly designed steam warships, U.S.S. Niagara and HMS Agamemnon, unspooled the wire and met in the middle to splice the wire together. The cable’s first message, a suitably austere 657-character note from the mighty Queen Victoria to the less admiringly-remembered President James Buchanan, arrived on August 16th after a sixteen-hour transmission:
TO THE PRESIDENT OF THE UNITED STATES, WASHINGTON: The Queen desires to congratulate the President upon the successful completion of this great international work, in which The Queen has taken the deepest interest. The Queen is convinced that the President will join her in fervently hoping that the electric cable, which now connects great Britain with the United States, will prove an additional link between the nations, whose friendship is founded upon their common interest and reciprocal esteem. The Queen has much pleasure in thus communicating with the President, and renewing to him her wishes for the prosperity of the United States.
The cable broke down in September and wasn’t replaced until after the Civil War. By 1880, though, second-generation copper wires centered on London connected not only the UK, continental Europe and North America, but China, Australia, India, Egypt, South Africa, Singapore, Russia, Japan, and South America. The first trans-Pacific cable, from San Francisco to Honolulu, went live in 1902. The first fiber-optic cable, TAT-8, lit up in 1988; by 2002, the modern ultra-pure glass network had replaced copper entirely.
Seventeen decades after the Queen’s first tweet-like message, 60 specially-designed cable-laying ships are busily unspooling new and more powerful cables at a pace of about three per month. Cable specialists Telegeography report 552 active fiber-optic cables as of mid-2023, together making up about 1.4 million kilometers of wire, and 35 new ones this year. These are about the same size as the 1858 cable – about a finger’s width, and weighing more or less the same, but replacing (a) the chubby copper wires with up to 96 hair’s-width fibers of ultra-pure glass, (b) the electric Morse pulses with modulated laser light, (c) the gutta-percha, hemp, and tar with a silica cladding, and (d) the iron sheath with plastics. A selection of cables lighting up this year:
* 2Africa, circumnavigating Africa from the Mediterranean around the Cape and back up to the Red Sea across 45,000 kilometers, with 48 terminals in 33 countries including Italy, Ghana, Nigeria, Congo, South Africa, the Comoros, Somalia, Pakistan, UAE, etc., is said to be the longest cable in the world. It has a capacity of 180 terabytes of data per second, about a million times the capacity of now-antique TAT-8, and 2 quadrillion times that of the 1858 Atlantic cable.
* FISH (“Fiber Internet Serving Homes in Alaska”), with a more modest length of 276 kilometers, connecting the Alaska mainland with islands.
* Amitie, linking France with Lynn, Massachusetts, across 6,792 kilometers, with a branch to the UK.
* Topaz, a Google cable connecting Vancouver and Japan, length not yet reported to Telegeography.
* Natitua Sud, a 2,680-km wire connecting Tahiti with southern islands in French Polynesia (and building on the earlier Natitua connection to the Marquesas).
Moving from physical infrastructure to daily life, submarine cables are often said to carry about 99 percent of all internet traffic. Telegeography tried to verify this factoid a few years ago and found the last FCC pronunciation on the matter dating to 2013. But they thought it wasn’t a unreasonable guess (though satellite deployment probably brings the share down a bit each year). Whatever the right figure, submarine cables remain the big arteries of the global information economy, carrying most of the $10 trillion in daily currency transactions; most of the U.S.’ $700 billion in annual digitally enabled services exports; and most of the world’s on-line exchanges. The latter includes this email, which has more bytes than Queen Victoria’s message, but by traveling via glass and laser as opposed to copper and electrical pulse took (assuming an average email speed) required not 16 hours but about 1/10th of a second to reach you this afternoon.
… and a painting version of HMS Agamemnon, one of the two original cable ships, and as a first-generation steamship a maritime innovator in its own right.
On MOSAIC’s monthly podcast, PPI’s Ed Gresser joins FCC alumna/telecom policy expert Meagan Bolton and Alaska broadband advocate Christine O’Connor to learn about what’s coming next, closing the digital divide as modern civil rights, broadband deployment in Native American communities and more.
And the U.K.’s Royal Trust reprints the August 1858 message and its arrival on tickertape. (And a little cheekily defines Buchanan as a “subject”. Obvious response from the left side of the Atlantic: ‘we’re not amused’.)
ABOUT ED
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
Estimates from ILO, World Employment and Social Outlook 2023; the 2020 total is artificially depressed, down from 3.465 million in 2019 due to temporary Covid-19 pandemic closures.
WHAT THEY MEAN:
The International Labour Organization’s 2023 “World Employment and Social Outlook” reports that each day around the world this year, about 3.43 billion workers arrive at offices, labs, fields, home computers, construction sites, schools, restaurants, market stalls and the like. Adding in the 0.21 billion currently unemployed, this makes for a world labor force of 3.60 billion. This total is up by (a) a third from the 2.75 billion of 2000, (b) 300 million from the 3.12 billion workers of 2010, and (c) by 37 million, or 100,000 workers per day, since last year. Divided by region, the ILO finds 2 billion workers in Asia, 650 million in Africa and the Middle East, 300 million in Latin America, and 500 million in North America, Europe, and the Pacific (with the U.S. labor force, as measured by the Bureau of Labor Statistics, at 167 million). A quick snapshot of the working world of 2023 this Labor Day:
Total world labor force, 2023: 3.640 billion
Employed : 3.430 billion
‘Informal’ sector: 2.100 billion
‘Extreme working poverty’*: 214 million
Unemployed: 211 million
* ILO’s definition for extreme working poverty is work at $1.90 per day or less, in constant 2012 dollars
Looking more closely, the ILO’s report suggests three big things about working life: the sharp decline of extreme working poverty; the lag in ‘governance’ and worker protections (though noting better performance in the ‘globalized’ international supply-chain workforce than in purely domestic industries); and the shift of work towards Africa, South Asia, and the Middle East:
1. The recent past and the decline of deep working poverty – The fortunes of the world’s least privileged workers brightened in the last generation. Per ILO’s data, 667 million workers were extremely poor in 2000 – just over a quarter of that year’s 2.58 billion people with jobs – earning less than $1.90 per day in constant dollars. By 2010 this army of destitute labor had shrunk to 406 million, and as of 2022 (the last year for which ILO has an estimate) it was 214 million, or about one-sixteenth of all workers. From 2000 to 2010, the decline in extreme working poverty was concentrated in East Asia and Southeast Asia. These regions have now nearly eradicated deep working poverty, and the sharpest current decline is in South Asia, whose count of working poor has fallen from 131 million in 2010 to 52 million in 2020, and 34 million in 2022. Most of the world’s very poor workers – 152 million, about two-thirds of the total – are in Africa, but here too trends are promising, as the share of African workers in deep poverty has dropped from 57% in 2000 to 44% in 2010, and 35.5% in 2022.
2. The present and the persistence of ‘informality’ – Set against a very positive poverty-reduction story is the big ‘policy and governance’ job that hasn’t been done. This is to provide workers with legal rights and protections. The ILO believes 58% of all workers, or 2 billion people, are working ‘informally’ – that is, in jobs either formally excluded from labor laws or de facto outside the labor-law world. This share has barely changed from the 60% estimate for 2010. By occupation, the highest rates of informality are in farm labor (92% of all workers), domestic service (84%), construction (74%), accommodation and food service (61%) and repair shops (60%); so a less technical picture of the world’s informal work is one of 500 million farmworkers, 61 million maids and nannies, and similar armies of day-laborers at construction sites, cooks and dishwashers working ‘under the table’ in small restaurants, and so on. In legal terms they lack holidays, family leave rights, minimum wages, health and safety inspections, and so on. More practically, they are at higher risk (whether to health and safety, or to secure earnings) than their 1.4 billion formal-sector colleagues, and are a lot poorer, earning by the ILO’s estimate 56% as much as formal-sector workers.
Here Asia’s remarkable achievement record in growth and poverty reduction has a shadow in lack of governance and legal protections: East Asia’s informality rate has dropped only from 55% to 48% since 2010, and Southeast Asia’s from 79% to 70%. In South Asia, the ILO’s estimate of informality has actually risen slightly, from 86.3% to 86.8%, meaning formal legal work in India, Pakistan, and Bangladesh remains the province of a small and privileged labor aristocracy. North America (which in ILO regional terms means the U.S. and Canada; Mexico is in ‘Latin America and the Caribbean) has the world’s lowest informality rate at 9% of all workers, and western Europe’s is a bit higher at 13%.
2a. … with a note on ‘globalization’ and supply chains: ILO’s report views economic integration and the development of international supply chains as contributing significantly to the improvement of working life over the last generation, both by providing higher wages and creating an outpost in which ‘informality’ is less common than in purely domestic jobs. Reviewing data for 24 middle-income countries, they conclude that:
“[S]ectors with higher GSC [“global supply-chain”] integration tend to have a larger share of wage and salaries employment, a lower incidence of informality and a lower proportion of low-paid employment – and hence in principle a higher quality of employment.”
This raises an unsettling question about the U.S. government’s approach to international labor issues. U.S. policy focuses intensely on policing supply chains and enforcing labor features of trade agreements. The ILO data, though, suggest that these are already areas where (overall) job quality and pay are well above average. This in turn implies that the U.S.’ work may be missing the areas of greatest current need, and that over-reliance on penalties and sanctions might push poor-country workers into sectors where conditions are generally worse.
3. Towards the future and the geography of job growth: Finally, turning from the past generation and present challenges to look ahead, the ILO’s report answers a simple question – how many jobs? – with a relatively simple answer ‘34 million more than in 2022’. By region, though (and moving a few pieces around to merge the ILO’s “North Africa” region with its “Arab States”, and combining its counts for North America, Europe, and the Pacific), the answers to this question sharply diverge:
Job Growth 2022- 2023
World +34 million
Sub-Saharan Africa +14 million
South Asia +12 million
Southeast Asia +5 million
Arab states +3 million
Latin America and Caribbean +3 million
North America, Europe, Pacific -1 million
East Asia -1 million
Mirroring demography, these figures show labor force growth slowing in Latin America, turning negative in Europe and East Asia (though still growing a bit in North America), still strong in Southeast Asia and rapidly accelerating in Africa and South Asia. Or, more directly, as Africa has been adding 40,000 jobs per day this year and South Asia 33,000, Europe and East Asia have been dropping about 8,500 jobs daily. All suggesting that the center of growth for the next decade’s world economy, and for the urban working world, is shifting away from traditional ‘developed’ countries and Pacific Rim sites, and toward India, Pakistan, the Middle East, and Africa.
And an in-depth ILO look at informal workers and businesses.
And the International Monetary Fund has perspective on informality and economic development.
Perspectives around the world –
PPI’s Taylor Maag on American job quality, and apprenticeships as a way to accelerate blue-collar wage growth.
New Delhi-based Just Jobs Network’s Sabina Dewan on technology, equity, and job quality in South Asia and Southeast Asia (together the sites for half of this year’s new jobs).
Cornell prof./former trade/labor negotiator Desiree Leclercq on trade, labor, and the Biden administration.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
FACT: First round of the globalization debate: 90 BC.
THE NUMBERS: Dates –
Lao Tzu: 300 BCE?
Sima Qian: 90 BCE
WHAT THEY MEAN:
A “globalization” exchange from the Chinese classics A-list:
Writing in the seventh Han Dynasty reign (~90 BCE by the western calendar), Grand Historian Sima Qian takes a tolerantly pro-consumer “neoliberal” position as he pans a famous romantic-localist passage from the Tao Te Ch’ing:
Sima Qian: “There must be farmers to produce food, men to extract the wealth of mountains and marshes, artisans to process these things, and merchants to circulate them. There is no need to wait for government orders: each man will do his part as he gets what he desires. So cheap goods will go where they fetch more, while expensive goods will make men search for cheap ones. When all work willingly at their trades, just as water flows ceaselessly downhill day and night, things will appear unsought and people will produce them without being asked.
“[But] Lao Tzu has said that under the ideal form of government:
‘Though states exist side by side, so close they can hear the crowing of each other’s roosters and the barking of each other’s dogs, the people of each state will savor their own food, admire their own clothing, be content with their own customs and delight in their own occupations, and will grow old without ever wandering abroad.’
“Yet if one were to apply this type of government, striving to draw the present age back to the conditions of primitive times and close the eyes and ears of the people, I doubt one would have much success. From ancient times to the present, eyes and ears have longed for the most beautiful forms and sounds, bodies delighted in pleasure and luxury, and hearts swelled with pride at the glory of power and ability. So long have these habits been allowed to permeate the lives of the people, that even if one were to go from door to door preaching [Lao Tzu’s] most subtle arguments, he could never succeed in changing them. Therefore, the highest type of government accepts the nature of the people, the next best leads the people to what is beneficial, the next gives them instruction and orders, and the very worst compels them to act against their nature.”
FURTHER READING
From the 90 BCE debate to a 2023 summer-reading reprise –
Historian Tara Zahra’s Against the World: Anti-Globalism Between the Wars (PPI trade staff’s choice for best 2023 global-economy book) looks at anti-globalization’s advocates, critics, and effects in the 1930s.
… and Financial Times columnist Rana Foroohar’s Homecoming pitches industrial anti-globalism as a 2020s program.
And back to the classics –
Lao Tzu’s Tao Te Ch’ing(Waley translation, see chapter 80 for the roosters and dogs).
Sima Qian on kings, sages, assassins, merchants, tyrants, economics, and more (Watson translation; see Shi Ji Chapter 129 for the Lao Tzu evaluation and Sima’s survey of early-empire economics and business).
The same author’s panoramic look at the Warring States, the First Emperor (the one with the terra-cotta army), and the rise and fall of the Qin Dynasty.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
The decade’s glamor rocket launch paid off: American- and Canadian-designed James Webb Space Telescope, pushed into space by a European Space Agency-built Ariane 5 two years ago, now sits contentedly far above the Earth at “Lagrange 2”* a million miles away, sending back messages about star formation, dark matter, exoplanets and the odd phenomena of early galaxies.
The Webb’s passage through the ionosphere brought it through a cloud of about 5000 smaller satellites — weather and climate monitors, maritime and automotive GPS guides, gaming stations, governments’ spying eyes, cable television forwarders — in low-earth orbits ranging from 300 kilometers to a few thousand kilometers above the earth. Twenty months later, this satellite cloud is appreciably thicker, numbering nearly 7,000. In a sense, as the Webb opens up a large high-altitude bay window on the universe; far below, massive growth in private-sector launches of small, disposable commercial means the sky is filling up with eyes and voices.
Some data: Forty years ago in 1993, about 510 satellites were in orbit. By 2000, the total was just about 1,000; then each year from 2000 through 2010, about 100 satellites went into orbit. During the Webb launch year 2021, 1,400 smaller satellites went up, matching the entire decade-long total for the 2000s, and last year’s 2,000 was another 40% jump. Thus the count of working satellites has doubled since the Biden inauguration ceremony, and this year promises pretty much the same.
And some recent and near-future launches to illustrate:
Diversity: Rocket Lab, from New Zealand’s Mahia peninsula on July 17, puts up (a) four NASA satellites meant to guide small fleets of future space vehicles; (b) a LEO (“low-earth orbital”) satellite for Canadian communications operator Telsat, and (c) two 3U satellites for Spire Global, a weather and maritime services provider.
Commerce: Space-X Starlink launch, from Vandenberg Space Force Base (previously Vand. Air Force Base) a week from Friday (Aug. 17). This one carries 15 small satellites, weighing about 260 kilos each and meant for a 550-kilometer high orbit. A twin Space-X/Starlink launch from Cape Canaveral on the same day will add 22 more. Starlink’s eventual goal is a network of 42,000 small satellites providing “video calls, online gaming, streaming, and other high data rate activities” to areas the global fiber-optic cable system that carries most Internet traffic does not reach, at a cost of about $10 billion, more or less the same as the JWST’s one-satellite price.
Science: Nine days later on the 26th, from Tanegashima, Japan’s space agency launches a moon-landing vehicle known as SLIM (“Smart Lander for Investigating the Moon”), weighing 450 pounds and packed with cameras and mineralogical survey material and meant as an initial demonstration of returnable moon-exploration devices. The rocket is a Mitsubishi H11A, first used in 2001.
The Union of Concerned Scientists, which does a running count of active satellites, reports that the very large majority of these satellites are American (in some way): 4,529 of the 6,718, including 3,996 private commercial satellites, 260 civilian government, and 247 military, carry a U.S. flag of some sort. China operates 590, Russia 174, and other countries 1,425. About 88% — 5,938, by UCS’s very specific count — are in low-earth orbits. The largest single contributor to the growth is the “Starlink” internet service run by Space-X, which has put up about 4,698 satellites as of mid-2023 and ultimately hopes for a fleet of 42,000. These last for about five years, then fall down and burn up on impact with the atmosphere. Webb’s lifespan is uncertain, but should be “significantly more than 10 years.”
FURTHER READING
Union of Concerned Scientists counts working satellites.
NASA passes on the latest James Webb Space Telescope observations.
… while the European Space Agency explains “LaGrange 2” (a stable orbital point, about four times as far from Earth as the moon, one of five such spots discovered through calculations by 18th-century mathematician Joseph LaGrange, a Paris resident and Torino native).
On-line journal Spaceflight Now tracks launches and payloads.
A United Nations index of 16,327 “objects launched into outer space” since 1957 (their 2021 count was 8,089).
And last… Which generation-old sci-fi show got it right?
“Boldly go”: The public sector and, international cooperation for deep-space exploration, expanding frontiers of knowledge, and a search for the common good in Star Trek.
“20 minutes into the future”: Ruthless media conglomerates and vast fleets of disposable low-orbit satellites, floods of addictive low-quality information, and social collapse in The Max Headroom Chronicles.
ABOUT ED
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
This week, Ed Gresser, Vice President and Director for Trade and Global Markets at the Progressive Policy Institute (PPI) submitted comments to the Office of the U.S. Trade Representative (USTR) on ways trade policy can advance racial and gender equity, as well as support historically underserved communities.
Gresser outlines how the U.S. tariff system is an unusually regressive part of the tax system, highlighting the fact that tariff rates are much higher on cheaper, mass-market consumer goods such as clothes, shoes, silverware, and home linens than on expensive luxuries, and so impose higher costs on low-income families.
“There is strong evidence that the tariff system has some detrimental effects in several areas, and in some ways, it presents an unfortunate contrast with other American taxes. Specifically, it taxes cheap and simple consumer goods much more heavily than analogous luxuries, and taxes many women’s clothing products at higher rates than analogous men’s clothes. This makes the tariff system an unusually regressive part of the American tax system, and likely the only one with an explicit gender bias,” Gresser writes.
Gresser notes the “Pink Tax” in clothing tariffs, pointing out that the tariff system taxes women’s clothing at higher rates than men’s. He and PPI Summer Policy Fellow, Elaine Wei provide a detailed review of gendered clothing tariff rates, comparing men’s and women’s coats, suits and ensembles, shirts and blouses, and underwear. Lastly, he writes that communities most often impacted by tariff disparities rarely know they are affected, and are thus less likely to respond to government requests for public comment or even to direct outreach. Gresser urges policymakers as a first step to develop more detailed and contextual publications on the way these systems function and how they affect different communities across the country.
“Many of the peak tariff lines apply to products not made in the United States, and could be revised without harm to U.S. growth or existing employment though at some modest cost in revenue,” Gresser continues.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
Submitted to the Office of the U.S. Trade Representative in Response to June 11, 2023, Request for Public Comment on Ways Trade Policy Can Advance Racial and Gender Equity and Support Historically Underserved Communities
Thank you for this chance to offer suggestions on ways trade policy might better meet the needs of America’s underserved families and communities. I am Vice President of the Progressive Policy Institute (PPI), a 501(c)(3) nonprofit think tank established in 1989, which publishes on a wide range of public policy topics. My research focuses principally on U.S. international economic policy, with a particular focus on trade issues. I previously served for nine years at the Office of the U.S. Trade Representative, including as agency speechwriter (1998-2001) and as Assistant U.S. Trade Representative for Policy and Economics (2015-2021). In the latter capacity I oversaw USTR’s economic research and use of trade data, administration of the Generalized System of Preferences, and policy coordination work including concurrent service as Chair of the Trade Policy Staff Committee.
I would like to focus on two questions USTR poses in its June 12 Federal Register notice:
“Are there trade policies, provisions, or actions which are detrimental to advancing racial and gender equity, equality, and economic empowerment?”
and
“What best practices should USTR consider to ensure that advancing equity, equality, and economic empowerment is standardized in community and stakeholder engagement regarding the development and implementation of U.S. trade and investment policy?”
As a point of departure, I applaud Ambassador Tai’s sustained interest in understanding any detrimental effects trade policy may have on underserved Americans, and finding ways policy might more effectively meet their needs. There is strong evidence that the tariff system has some detrimental effects in several areas, and in some ways, it presents an unfortunate contrast with other American taxes. Specifically, it taxes cheap and simple consumer goods much more heavily than analogous luxuries, and taxes many women’s clothing products at higher rates than analogous men’s clothes. This makes the tariff system an unusually regressive part of the American tax system, and likely the only one with an explicit gender bias. Many of the peak tariff lines apply to products not made in the United States, and could be revised without harm to U.S. growth or existing employment though at some modest cost in revenue.
The second question, on ways USTR might draw more advice from lower-income and underserved communities is more challenging. Trade agreements are often intensely debated and sometimes termed “non-transparent.” The permanent systems an agreement modifies, though, are typically far less frequently debated and seem to be largely opaque not only to the public but to many experts. This means communities affected badly by these systems rarely know they are affected, are thus relatively unlikely to respond to solicitations for advice, and may have difficulty even responding to direct outreach. U.S. officials hoping to encourage their participation in policy development might as a first step develop more detailed, regular, and contextual publications on the way these systems function and how they affect different groups within American society. This would help build understanding at least within the government, Congress, and academic communities, perhaps elicit ideas and ways to improve them, and likely encourage more informed discussion with underserved communities.
A more detailed discussion of these topics follows: first, on the regressivity of consumer goods tariffs and their consequent impact by income level and race/ethnicity; second, the gendered nature of the clothing tariff schedules, and the unintended but explicit bias this has created; and third, the challenge of drawing advice on policy from “underserved” communities.
How did vanilla get a reputation like this? A look at the facts argues pretty strongly that vanilla isn’t boring, plain, or conventional at all; rather it is exotic and expensive, hard to find and even harder to grow, and maybe a bit scandalous. You be the judge:
Origins and chemistry: Like chocolate, vanilla is native to Mexico and was originally cultivated around Vera Cruz. Popular among the Aztec nobility as a flavoring for high-end drinks and sweets, it comes from the treated “pod” of an orchid pollinated by local bees and hummingbirds. The main active ingredient is a phenol-based chemical compound informally termed “vanillin.”
“Globalization” and modern production: Vanilla cultivation outside Mexico is challenging because no one so far has discovered another natural pollinator. Nonetheless, the 19th-century French empire found an alternative way to do it: the hand-pollination technique invented in 1841 by an enslaved 12-year-old farmhand named Edmond Albius on Reunion (then a French Indian Ocean possession, now an overseas department), and introduced to Madagascar after the colonial conquest in the 1890s. Dutch colonials later introduced the same technique to Indonesia (or more specifically, the southern Sunda island group). Together Madagascar and Indonesia now produce about half of the world’s roughly 7,600 tons of natural vanilla each year. Mexico adds about 500 tons; other outposts in Papua New Guinea, Tahiti, and Uganda account for most of the rest. To put this in context, each year the world’s farmers produce 25,000 tons of sugar, and 500 tons of the cocoa-bean precursor to chocolate, for every ton of natural vanilla.
Cost: Scarcity and difficulty of production make vanilla, in most years, the world’s second-most-expensive agricultural product. (As measured by price per kilo.) Saffron at $500/kilo is easily the priciest; vanilla beans usually come at about $50 per kilo depending on annual marketing and harvest. Cardamom sometimes puts up a fight for second, though.
Trade: Americans bought about a quarter of the world’s 2022 vanilla crop, or 1,989 tons in total. Most — 1,448 tons — came from Madagascar, followed by 207 tons of Indonesian vanilla (Flores, Sumba, west Timor) and 172 tons from Uganda making up most of the rest. Other suppliers included 39 tons from Papua New Guinea, 36 tons from India, 24 tons from the Comoros Islands, and 0.5 tons from Tahiti. The harvested, dried, and washed pods arrive in cans, often groups of six weighing 48 kilos, mostly by air cargo. Total import value was $345 million — about two minutes worth of America’s year-long $3.27 trillion in total goods imports — and vanilla, like most spices, has no U.S. tariff.
Sexual reputation: Vanilla is sometimes said, maybe most frequently by vanilla marketers, to have a natural aphrodisiac effect. Though obviously a convenient sales pitch, this may have a factual base at least in the case of some rodents. A 2012 paper (Maskeri et al.) from the Pharmacognosy Journal: “Vanillin in the dose of 200 mg/kg demonstrated aphrodisiac properties in male wistar rats.”
Real vs. artificial: The 7,600-ton total output is far too little to meet the world’s flavoring and aromatic needs. Most vanilla used in sweets and cooking, therefore, is not the natural hand-pollinated stuff but artificial “vanillin.” This is the same active molecule, but extracted by chemistry-industry professionals in five factories — three in China, one in France, one in the United States — and not from delicate orchids but “wood pulp.” a substance with a more convincing claim to plainness, ordinariness, and conventionality than vanilla itself.
FURTHER READING
Merriam-Webster’s “vanilla” site — see uninspiring adjective definitions, also scroll down for the startling etymology.
Origins and production:
The origin: NPR reports on Mexico’s troubled vanilla industry.
The inventor: Child laborer, enslaved farm-worker, and agricultural revolutionary Edmond Albius invented hand-pollination of vanilla orchids and so founded the modern global vanilla industry.
… and Reunion, now an overseas French Department, pitches the product 180 years later.
The top producer: Le Monde on an oversupply crisis this summer in Madagascar.
… and direct to Madagascar’s GEM (Groupement des Exporteurs de Vanille de Madagascar).
And the University of Florida explains attempts to grow it here.
Cost:
A list of the world’s most expensive (per-kilo) ag products places vanilla second after saffron.
A modern-day marketer enthusiastically details vanilla’s supposed aphrodisiac effects.
… and a scientific paper provides some backup, at least for “male wistar rats.”
And another thing:
“Chocolate” is originally an Aztec word, recalling the cocoa bean’s original Native American cultivators. (The cocoa tree’s modern scientific name, Theobroma cacoa, means food of the gods” and is one of the original Linneus’ species-names.) Chocolate’s first documented use, confirmed by archeologists in the early 2000s, was about 2,600 years ago in Guatemala. Nineteenth-century colonial entrepreneurs, mainly Brits in contrast to the French and Dutch vanilla-propagators, introduced cocoa trees to West Africa. This region remains the main cocoa-bean producer, particularly centered in Ghana and Cote d’Ivoire, and accounts for about 70% of modern cocoa-bean production. Other production spreads around the Caribbean littoral, Indonesia, and Papua New Guinea. The Ghana Cocoa Board.
ABOUT ED
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
*Census for goods trade, BEA for digitally deliverable services. Definitions of “manufactured goods,” “energy,” and “agriculture” overlap; figures above include NAICS for manufacturing, USDA for agriculture, and HTS-27 for energy. BEA’s “ICT” and “potentially ICT-enabled” services include computer and telecommunication services, intellectual property revenue, finance, and insurance, “cultural and recreational” services such as entertainment and media, business & professional services such as architecture, accounting, advertising, research & development, etc.
WHAT THEY MEAN:
A late-June comment from the National Security Council’s “International Economics” Deputy: Asked at a Carnegie Endowment event what “compelling practical value proposition” the U.S. has to offer developing countries on trade, the NSC officer tells them they should be thinking about something else. Our transcription:
“[W]e’re at a place where average U.S. tariffs are at historic lows, still 2.4% … in a lot of ways we don’t see tariffs as being at the core of trade policy, and we don’t see trade policy as being at the core of international economic policy. What needs to be at the core of international economic policy? Well, an emerging set of challenges that haven’t been addressed — things like supply chain fragility and resilience, things like climate and clean energy, things like anti-corruption, things like global tax. Those are the kind of pressing economic issues internationally right now.”
Japanese Prime Minister Kishida, speaking across the street at Johns Hopkins/SAIS a few months earlier during his January visit, sees a quite different “core.” His counterpoint:
“[T]he core of what creates an economic order in the region [i.e., Asia-Pacific] is a framework with market access for goods and services. In the Asia-Pacific region, we indeed have such a framework, the Trans-Pacific Partnership. The TPP was originally initiated by the United States, and then was eventually launched without U.S. participation. Now, the United Kingdom, China, Taiwan, and others have expressed their intention to join this agreement. Against the backdrop, let me state that the United States’ return is of paramount importance.”
A couple of cautions before over-interpreting anything: While context suggests that the NSC Deputy is making a general statement about the non-“coreness” of trade policy, he is responding to a question specifically about economic relationships with developing countries and perhaps meant something less sweeping. Likewise, it isn’t exactly clear who his “we” includes (the NSC staff as a group?), as policy statements by administration Cabinet departments, by neighboring EOP “components” with economic or trade authority such as the Council of Economic Advisers and the U.S. Trade Representative Office, and by independent agencies like the Ex-Im Bank, et al, don’t typically reach such a Lao Tzu-like plane of inertness. But these cautions noted, two observations:
1. Foreigners looking at the U.S.: As we noted last month, NSC’s “2.4%” average tariff rate isn’t factually correct and (more important) wouldn’t be very relevant if it were. In general, tariffs as taxation of imported goods are one component of a larger “market access” concept — that is, the policy-induced cost and ease or difficulty of selling something to a foreign customer — which also includes quota limits, import licenses, some types of regulatory approvals and services policies, customs efficiency, and so on. Foreigners often have good reason to view this set of issues as important, and American policymakers can’t easily disentangle them from ‘core’ issues such as supply-chain fragility and resilience. As a mini-case study, the ‘average’ U.S. tariff rate on imports from New Zealand was 2022 was a modest 1.0%, but Kiwis are more concerned about restrictive dairy quotas and illogical inspection rules. These, together with tariffs of 17.5% (under quota) and “13.6% + $1.035/kg” (above quota), make it nearly impossible for American grocery stores to buy New Zealand infant formula. This in turn the main reason the U.S. “supply chain” for formula is fragile, non-“resilient,” and prone to shortages and hardships for moms when one of the dozen or so U.S. formula plants runs into trouble.
With respect to tariffs as such, few countries see a “2.4%” average. U.S. tariff rates vary by product (as do those of other countries), from mostly zero or near zero for energy and natural resources, to low to medium for industrial inputs, and high for lots of consumer goods. Thus by country, rates run in a continuum from near-zero for resource exporters (say, Saudi Arabia, Greenland, Kazakhstan) and countries exempted from tariffs through free trade agreements or “preference” programs, to an 8%-15% range for low-income Asian countries specialized in clothing (Cambodia, Pakistan, Bangladesh, Sri Lanka). So foreigners often have reason to view “market access” generally, and sometimes tariffs specifically, as important or even “core.”
2. Americans looking outward: The same applies in the other direction. NSC’s interest in anti-corruption and global tax issues isn’t trivial; neither, however, are more local questions about American job quality, growth sources, and inflation-fighting. For example, the United States has its own large but troubled export sector, measured at $3 trillion last year. Among much else this sector provides 20% of American farm income; creates markets for $1.6 trillion in U.S.-produced airplanes, cars, semiconductor chips, MRI machines, and other manufactured goods abroad; sends $720 billion in digitally deliverable services abroad via wire and satellite beam; makes up a ninth of Oregon’s GDP and a fifth of Texas’; supports 21,000 women-owned exporting businesses with over a million employees; and, in macro terms, presents ways to help the U.S. sustain growth as government fiscal stimulus fades and Federal Reserve interest rates cool off U.S. demand.
The export sector has lots of headaches though, and it could use policy help. To draw a few from various government sources:
Gloomy statistical trends: The Census Bureau’s tally of exporting U.S. firms has dropped by about 12%, from a peak of 305,000 late in the Obama administration to 278,000 as of 2022. Meanwhile, the U.S. share of world exports has dropped by WTO count from 9.1% to 8.3% in goods, and 15.2% to 12.8% in services.
Policy problems not rare: The 2023 edition of the U.S. Trade Representative Office’s 467-page “National Trade Estimate Report on Foreign Trade Barriers” recounts objectionable policies whose revision might help a bit, ranging from mandatory Tunisian “import license” rules for automobiles, through Nigerian bans of American chicken and beef, to an Indian “simple average” tariff rate of 18.3%, seven pages of European Union ag policies, Chinese subsidies, and lots more.
Foreign tariff and “market access” arrangements: Few foreign governments share the view that trade is not a core part of international economic policy. As they continue reducing barriers to one another’s products via the “Regional Comprehensive Economic Partnership,” the CPTPP Prime Minister Kishida cites, European and Chinese agreements with South American countries, etc., the policy landscape is tilting against American businesses and their workers.
Against this background, P.M. Kishida looks tactful and correct as he gives his own view of what might be at the “core” of international economic policy. The NSC’s approach, whether in terms of international economic order or more local concerns about jobs, inflation, and growth, looks very much in need of its own rethink.
FURTHER READING
NSC’s Deputy at the Carnegie Endowment: The eight-minute exchange on the U.S.’ “practical value proposition” for developing countries, the non-core status of trade policy, etc., begins with a question at about 09:00, with the quoted passage at 16:00.
Six months earlier and across Massachusetts Avenue at SAIS, Prime Minister Kishida’s view of U.S.-Japan relations, Asia-Pacific security, market access, and economic order.
Case study:
Kadee Russ (UC-Davis) and Phillip Dean (Deakin University, in Australia), look at infant formula tariffs, quotas, trade, and shortages.
Elsewhere in the administration, some different emphases:
The U.S. International Trade Commission has U.S. import totals, tariff revenue, and average rates, from 1891’s 25.5%, through 2008’s 1.2%, to 2021’s 3.0%.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
Throughout his administration, President Biden has prioritized improving domestic supply chains and preventing supply chain disruptions. But China remains one of the United States’ biggest threats, as the country is both a strategic competitor and the U.S.’s largest trading partner outside of North America. President Biden’s industrial policy has been one of selective decoupling, rather than a complete decoupling of economic ties. This policy, however, does lead to vulnerabilities in both economic and national security, and managing these vulnerabilities is one of the Biden Administration’s biggest challenges when addressing supply chains.
Today, the Progressive Policy Institute’s (PPI) Innovation Frontier Project (IFP) released a new report, “U.S. Supply Chains and Biden’s China Challenge,” which offers a new approach based on a novel metric to respond to the vulnerabilities in the U.S.’s trade relationship with China. Report author Keith Belton introduces a new supply chain measure called revealed comparative dependence (RCD), which can be used to identify goods and industries where the U.S. is excessively dependent on Chinese imports.
“To fully address and strengthen the United States’ supply chains, we must first understand where the biggest gaps are, which is what the revealed comparative dependence (RCD) metric can help measure. The U.S.’s biggest vulnerabilities come when our domestic manufacturing capabilities are lacking and when our foreign dependence is significant, as well as concentrated in one region or country,” said Keith Belton, Senior Director of Policy Analysis with the American Chemistry Council. “Strategically investing in high vulnerability goods will better reduce the U.S.’ dependence on China and strengthen domestic supply chains.”
The report finds that the highest vulnerabilities in the U.S. over the last decade have been driven by a loss in domestic manufacturing, rather than dependence on China.
The report makes the following policy recommendations:
The Department of Commerce should annually identify and publicize high vulnerability goods by calculating the RCD, which will serve to educate and influence the private sector in the management of global supply chains.
The comprehensive analysis of traded goods should inform federal implementation of the Inflation Reduction Act, The Infrastructure Investment and Jobs Act, and the CHIPS and Science Act, which direct together $1 trillion to strengthen U.S. supply chains. The Administration should give greater weight to applications for federal subsidies that reduce high vulnerabilities.
President Biden should scale back the Trump 301 tariffs on the vast majority of Chinese goods, which often impose a burden on U.S. manufacturing. The scope of the tariffs should be narrowed to finished goods or high vulnerability goods.
Finally, President Biden should make it easier for the U.S. to attract and retain foreign workers that possess tacit know-how that is lacking domestically.
Based in Washington, D.C., and housed in the Progressive Policy Institute, the Innovation Frontier Project explores the role of public policy in science, technology and innovation.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org. Find an expert at PPI and follow us on Twitter.
This paper introduces a new supply chain measure called revealed comparative dependence (RCD), based on publicly available national and global trade data. The paper shows how high RCD can be used to identify product classes where the United States is excessively dependent on Chinese imports.
The paper suggests that RCD can be used to inform the Biden Administration’s industrial policy. The Department of Commerce can use RCD to publish a list of high-vulnerability goods. Policymakers can pay special attention to goods on the list to reduce dependence on China, while considering rolling back tariffs on goods not on the list.
INTRODUCTION
The Biden Administration wants to improve the resilience of U.S. supply chains — the ability to recover quickly from a supply disruption anywhere in the world. A key element is preventing a supply chain crisis “from hitting in the first place.”
But China is the elephant in the room. It is both a strategic competitor and the United States’ largest trading partner outside of North America. The concern is that China might weaponize its industrial might for geopolitical gain — something it may be doing now (Keeley 2018) and for which the United States is admittedly ill-prepared. The economic damage to the United States from a war with China5 would be considerable, as Babbage (2023) described:
U.S. supplies of many products could soon run low, paralyzing a vast range of businesses. It could take months to restore trade, and emergency rationing of some items would be needed. Inflation and unemployment would surge, especially in the period in which the economy is repurposed for the war effort . . . Stock exchanges in the United States and other countries might temporarily halt trading because of the enormous economic uncertainties.
To avoid such a scenario, some China hawks call for a complete decoupling of economic ties, but President Biden doesn’t want to eliminate the substantial economic benefits arising from international trade. His industrial policy is one of selective decoupling, focusing on foundational technologies, critical/essential goods, and goods made from forced labor.
Selective decoupling, however, implies acceptance of vulnerabilities in economic and national security. Managing these vulnerabilities is arguably Biden’s biggest challenge in enhancing the resilience of U.S. supply chains.
In this paper, we offer an approach, based on a novel metric, to characterize and respond to these vulnerabilities. We apply this approach to a subset of traded goods, advanced technology products — a focal point of industrial policy in both China and the United States. We derive lessons for policymakers and offer some policy recommendations consistent with Biden’s industrial policy. We make no presumption as to the merits of Biden’s policy; we take it as given, and our aim is to improve its effectiveness.
FACT: The U.S. GSP system has now been lapsed for over 2 1/2 years.
THE NUMBERS: Packaged tuna imported from the Solomon Islands –
2021 – 2023 None
2018 – 2020 440 tons per year
WHAT THEY MEAN:
A passage from State Department a briefing by two “senior official”-types, in the runup to Secretary Blinken’s trip a month back:
“…in competition with China … managing the competition responsibly … America’s ability to outcompete China … major strides … an approach that is competitive without veering into confrontation … as the competition continues … intense competition requires intense diplomacy … working with competitors when our interests call for it … competing vigorously and talking with the PRC on a range of issues … manage the competition, and work together when our interests align from a position of confidence…”
Point probably made … “competing in noun, verb, and adjectival forms. With that in mind, a depressing story featuring (a) a small Pacific island country currently an object of this “competition,” (b) 500 missing tons of canned tuna, and (c) the also missing U.S. Generalized System of Trade Preferences (“GSP”), a duty-free program for low- and middle-income countries which, launched in 1974, has been “lapsed” in the midst of Congressional arguments over eligibility rules since New Year’s Day 2021:
The country: Home to 708,000 people and one of the GSP’s 119 “beneficiary countries,” the Solomon Islands are geographically a string of six big islands and 986 smaller ones extending southwest from Papua New Guinea toward Vanuatu and Fiji. The Solomons’ economy mostly runs on three things: (a) tourism; (b) exports of rosewood, akua, and other local timber; and (c) fisheries for export and local use. The first pillar, tourism, went down under the COVID shock and has yet to recover. Since then, and with the caution that GDP data is jumpy for small island countries, the Solomons’ post-COVID economic figures look dire. The International Monetary Fund reports that after shrinking by -3.5% in 2020, the Solomons’ economy contracted again by -0.6% in 2021 and by -4.1% in 2022, though a small +2.5% rebound looks likely this year.
“Competition” (1): Meanwhile, the Solomons have won an uneasy place as a center of attention in the “competition” the two U.S. senior-official briefers were talking up in June. This has featured in sequence an early 2022 “security agreement” with China carrying murky hints of intelligence and naval strategy; controversy over it within both S.I. politics and the 16-country Pacific Forum (the principal regional association for Pacific Islands states); then the rapid opening of a new U.S. embassy in Honiara last February, all accompanied by strings of press releases from the U.S. and China announcing new aid programs, important visits, etc.
“Competition” (2): With respect to the second and third growth drivers noted above, China buys most of the Solomons’ wood exports, valued at up to $200 million a year — half of the Solomons’ annual export earnings and an eighth of their $1.6 billion GDP. Until 2020, Americans were offsetting this, more in wage-paying employment than in dollars, through purchases of 400-500 tons of packaged tuna a year, from the cannery at Noro in New Georgia. Again noting that small-country economic stats can be blurry, an Australian press analysis asserts that the cannery contributes fully 18% of the Solomons’ national GDP. ILO figures, meanwhile, suggest that its 2,000 employees account for about one in thirty of the country’s 65,000 wage-earning, formal-sector workers.* Canned tuna is normally a very high-tariff product in the U.S., taxed at rates ranging from 12.5% to 35%, but through 2020 GSP was waiving these tariffs for least-developed countries like the Solomons and gave them a regular set of American buyers
The missing tuna: Not for the last three years, though. GSP benefits are not permanent, but have been periodically “reauthorized” by Congress for periods of ten years, three years, 1.5 years, and so forth. When the program lapsed at the end of 2020, canned tuna ceased moving from Noro to Hawaii and California. Since then, as Congress has argued over how many new eligibility rules to add, no more tuna has come in. Americans are actually buying more than before – about 210,000 tons per year before 2020, now about 240,000 tons — but buyers of the Solomons’ modest shipments appear to have shifted to larger Southeast Asian and Latin American sources.
Final thought: The “competition” in the briefers’ comments above is a metaphor drawn mainly from sports or games. “Competitors” who put only part of their teams on the field are typically at a disadvantage, and often don’t finish first.
* According to the International Labour Organization, the Solomon Islands have a “labor force” of 370,000, of whom 18%, or about 65,000, have wage-paying jobs. The other 305,000 are “own account” workers in agriculture, odd jobs, and temporary work. In American terms, 18% of GDP would translate to “the combined economies of California, Oregon, and Washington”, and 3% of wage-paying employment would be comparable to “all the workers in Georgia” or “all the workers in Michigan.”
FURTHER READING
GSP:
Reps. Jake Auchincloss (D-Mass.) and Neal Dunn (R-Fla.) with 64 others urge rapid GSP renewal.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
FACT: The number of poor countries has fallen by more than half since 2000.
THE NUMBERS:
2022 26
2012 36
2002 54
1992 55
*World Bank definition and estimate, based on per capita gross national income.
WHAT THEY MEAN:
Since the mid-1980s, the World Bank has been informally grouping economies into four tiers of wealth. They begin at “low-income” and ascend through “lower-middle income” and “upper-middle-income” to “high income”, divided by annually adjusted levels of Gross National Income per capita. The list comes out each year, with the thresholds slightly adjusted to take account of inflation and a few arcane macro-issues. It is meant less to measure inequality among countries (though it does offer some comparisons) than to give a stable definition of what it means for an economy to be poor, rich, or somewhere in the middle. Over time, it also allows you to see change — this year, with a vivid four-color visualization — as some countries rise, others descend, and the world as a whole changes. First the numbers, then the colors and the trend they show:
Numbers: In the 2023 list, a “low-income” economy has a GNI per capita of $1,135 or less per year. The Bank finds 26 such countries, from Burundi (the poorest country in the world at $240 per person per year, with Afghanistan and Somalia a bit above) to Ethiopia at $1,020. A “high-income” economy’s GNI per capita, meanwhile, is anything above $13,845. This group’s brackets are two small-island tourist favorites: Seychelles in the Indian Ocean at $14,340 and Bermuda at $125,240. (The U.S. is seventh at $76,370; more below.) In between are (a) lower-middle-income countries from $1,136 to $4,445 per person per year, in practical terms from Tanzania, Tajikistan, Nepal, and Myanmar just above the low-income line to Mongolia, Jordan, and Ukraine at $4,200+; and (b) upper-middle-income countries from Indonesia and the West Bank and Gaza a bit above $4,500 to China, Bulgaria, and pre-invasion Russia, each a few hundred dollars below “high-income” status.
The list changes a bit each year, sometimes to add some new economies but mostly to report shifts in classification. The 2023 list, for example, the Palestinian territories and El Salvador in upper-middle income territory for the first time, and restores Indonesia (which first entered this group in 2019, but temporarily fell back out during the Covid pandemic). Guinea and Zambia likewise cross from low-income to lower-middle income, and Guyana and American Samoa from upper-middle to high-income. More systemic changes show up over decades rather than years: taken in 10-year jumps, the last 30 years reveal a steady upward drift across the entire list:
1992: This early edition of the list, contemporary with the birth of the World Wide Web, the creation of the WTO, etc. included 204 economies. Of this total, 55 were low-income, 71 lower-middle income, 39 upper-middle income, and 39 high income. Using a simpler breakdown, the list was weighted toward the bottom, with 126 low- and lower-middle income states and 78 upper-middle and high-income economies. Thus about 62% of economies fell below the line separating the low and lower-middle income tier from the upper-middle and high-income region, while 38% placed above it.
2002: 209 economies, of which 64 were low-income, 54 lower-middle, 34 upper-middle, and 57 high income.
2012: 215 economies (larger in part because of a couple of declarations of independence, but mainly due to more complete coverage of small islands), of which 36 were low-income, 48 lower-middle, 55 upper-middle, and 76 high income.
2022: This most recent edition, out in early July, covers 217 economies, of which only 26 are low-income, 54 lower-middle, an identical 54 upper-middle, and 83 are high income. So 137 of them, or about 63%, are now above the “median” line and 37% below, reversing the 1992 proportions.
Colors: Accompanying this year’s release, a time-series map colors high-income countries dark forest green, upper-middles a lighter emerald shade, lower-middles a kind of lilac purple, and low-incomes dark purple or violet. The 1992 map has no green anywhere between Germany and South Korea; all the most populous countries in the heart of Asia — Pakistan, India, Bangladesh, Indonesia, Vietnam, and China — combine in a forbidding block of low-income violet, relieved only by lilac Thailand, emerald Malaysia, and tiny dark green dots for Brunei, Singapore, and Hong Kong. Africa meanwhile has some light green at the top and bottom, but apart from a bit more light green for oil-exporting Gabon and light purples for Namibia and Angola, it’s gloomy violet all the way from the Sahara to the Kalahari. In the Western Hemisphere, a light purple shading extends through nearly all of Latin America; and Western Europe’s, dark green ends at the eastern borders of Germany, Austria, and Italy, with a bit of light green for Hungary and everything else lower-middle income lilac.
As the time-lapse proceeds, Asia’s violet block fades to lilac for China and Southeast Asia by the 2000s, and then (with exceptions for Afghanistan and North Korea) goes green in the north and lilac in South Asia. Africa’s violet retreats from the continent’s maritime rim, and now concentrated in inland states and the Horn, is almost completely ringed by lilac. The light purples in Latin America mostly vanish (though Venezuela falls off the green map, and the Bank isn’t venturing a guess this year), and dark green high-income tones turn up in Panama, Chile, Uruguay, and five Caribbean island states. And the forest-green edge of western Europe flows east and south as EU and NATO membership grows, sequentially incorporating Poland, the Baltic states, the Czech Republic and Hungary, Croatia, and most recently Romania.
In practical human-being terms, as this has proceeded the number of people living in deep poverty has dropped from 1.995 billion of 5.3 billion people then – that is, 38% or nearly two-fifths of humanity — to 655 million of 8 billion, or about 8%, as of the last estimate covering the year 2018. Sometimes, things do get better.
* Technically by “Gross National Income Per Capita, Atlas Method.”
FURTHER READING
The WB’s visualization, with links to this year’s country income groups and explanations of the various calculations they involve.
The U.S. and the top end The U.S.’ 2022 ranking is seventh among the 216 economies by per capita income, just above Denmark and Qatar at $76,370 per person. The top six are Bermuda at $125,240, Norway at $95,610, Luxembourg at $91,200, Switzerland at $89,450, Ireland at $81,070, and the Isle of Man at $79,300. An alternative calculation, by purchasing-power parities, lifts Norway into first, followed by Qatar and Singapore, then Bermuda, Luxembourg, Ireland, the United Arab Emirates, and Switzerland with the U.S. ranked ninth.
The big economies — Among the world’s 16 largest economies (as measured by total GDP), the list reports nine in the high-income group, six at “upper-middle-income,” and one “lower-middle-income” economy, and no low-income economies. A list with these 16 and their “rankings,” along with Bermuda and Burundi in italics as the top and bottom bounds:
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
