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John Bolton’s job isn’t policymaking, but restoring the National Security Council’s roots - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 04/09/2018 - 19:10

On Monday, John Bolton begins work as the United States’ 27th national security adviser. He will head the National Security Council, a body which formed for the first time only in 1947 as President Harry Truman sought to better coordinate defense, foreign affairs, economic policy, and intelligence as, in the wake of World War II, the United States assumed its place as a truly global power.

New National Security Adviser John Bolton listens as President Donald Trump holds a cabinet meeting at the White House in Washington, April 9, 2018. Reuters

After President Trump announced Bolton’s appointment, many former officials and journalists expressed concerns about the policy positions Bolton had previously taken on issues such as the United Nations, Iran, Iraq, and Russia. The adage “personnel is policy” is true, but much of the hand-wringing about Bolton’s appointment misunderstands what the NSC is, or at least what it is meant to be. The 1947 National Security Act charged the NSC with three tasks:

1. advise the president with respect to the integration of national security tools to a greater whole;
2. assess objectives, commitments, and risks; and
3. make recommendations based on the common interests of the various agencies involved in national security.

Simply put, the NSC was never meant to be a policy-making body. It was instead supposed to coordinate agencies. Bolton’s greatest accomplishment could be returning the body to its roots rather than using it as a platform for personal policy priorities. There are a lot of departments, agencies, and offices of national security in the federal government, but only the NSC exists solely to support the president’s national security decision-making, and only the NSC can take a truly interagency approach to that task.

It is anathema to many in Washington, but a key to NSC success will be to shrink it. In 1991, the NSC had 40 men and women among its staff; by the Obama administration, that number had increased tenfold. The NSC became not simply a body to coordinate policy and strategy, but rather just one more bureaucracy whose seats were awarded as political patronage. And as it drifted into a policy-making body on its own, its role as a trusted coordinator fell by the wayside. During the George W. Bush and Obama administrations, the willingness of NSC staffers to utilize an 8,000-mile screwdriver and second guess commanders in the field first in Afghanistan and Iraq, and then in Libya and Syria, meant that the NSC was not adding value. Instead, with the growth of its size, reach, and activity, the NSC was actually undermining the Pentagon and Central Intelligence Agency and preventing officers and soldiers in the field from doing the jobs they had been tasked and trained to do.

Luke Strange, my colleague at the American Enterprise Institute, has penned a thoughtful essay about NSC reform that should be a must-read for anyone, regardless of which side of the aisle they sit. After all, in the hyperpolarized atmosphere in which the United States now finds itself, the need for NSC reform is one of the few areas on which foreign policy and national security professionals across the political spectrum can agree.

With China, Russia, and Iran resurgent, the United States faces a renewed period of competition on both the regional and global levels, and the National Security Council needs to be up to the task. A disciplined, effective process that is grounded in the NSC’s statutory framework and the lessons of its history can give the president a chance to make good decisions.

Here, Bolton should focus on how he can remake the NSC to maximize its value not only to Trump but to those who succeed him. Rather than treating the NSC as a superagency for national security matters, Bolton should return the NSC to what it should be: a tool to help presidents make decisions and then coordinate the policies which result. The national security adviser in particular should be an agent of the president. To the extent that he becomes an advocate for a particular approach, he becomes just another player at the table, rather than a coordinator acting on behalf of the president.

While it is natural human behavior for executives to want to pull decision-making into as close a circle as possible, the national security adviser shouldn’t close him or, in the future, herself off from necessary information. When he or she does, it contributes to a breakdown in trust among his advisers, which in turn increases infighting and factionalism. A better approach is to include the relevant players — whom the president has appointed or hired — in the process by implicating them in decisions and holding them accountable for results. Certainly, in this day and age the risk of leaks is high. But if the president and his national security adviser take a no-nonsense approach and fire those even suspected of leaking, officials who want to trade on such information for the sake of ego or sense of power will soon think twice.

Trump’s administration has been more chaotic than most, and the National Security Council has suffered disproportionately. Trump now has had three national security advisers (not counting one acting national security adviser after Michael Flynn’s resignation), a number surpassed only by Ronald Reagan (who by this point in his administration was just starting his second). If Trump wants to implement his agenda, such as it may be, and steer the United States through a world more dangerous than perhaps any time in a half century, it is essential that he utilize the NSC for what it was supposed to be. As Strange concludes, it is better to fall back on statutory foundations, best practices of prior administrations, and restrict the NSC to doing only those things that only it can do.

Bolton offers a fresh start to what has over the past quarter century become a national security bureaucracy run amok. Whether one agrees or disagrees with Trump’s policies, it is essential to right the NSC back on its rails.

(Full disclosure: Bolton was a colleague of mine at the American Enterprise Institute, albeit someone with whom I did not work closely.)

Paid family and medical leave legislation: Evidence from employers - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 04/09/2018 - 17:41

While there have been numerous studies of the impacts of paid family and medical leave on employees and their families, there is little information on how employers — particularly small businesses — view these policies. To fill this gap, Ann Bartel, Maya Rossin-Slater, Christopher Ruhm, and I looked at Rhode Island, whose Temporary Caregiver Insurance policy became law in 2014. The TCI program provides up to four weeks of wages to employees who require time away from work to care for a seriously ill family member.

In early 2015, we surveyed small- and medium-sized food services and manufacturing employers in Rhode Island about the impacts of the TCI on profitability and employee productivity. We expected that if any employers would be adversely affected, it would be small firms in these fast-paced environments. To our surprise, we found that a solid majority of small firms — 61% — favored or strongly favored the program (with about 15% neutral, and just under 25% opposed).

In the fall of 2016, we surveyed small- and medium-sized employers in two additional states to examine their views of paid family leave: New Jersey, which has had its paid family and medical leave law in place since 2009; and New York, where a new law had been enacted, to go into effect in 2018. We surveyed more than 2,400 small- and medium-sized employers in these states asking about their opinions of their state’s paid family leave legislation. Unlike our work in Rhode Island, this survey included businesses across all industries.

The findings echoed the results of the Rhode Island survey. In New Jersey, 63% of small- and medium-sized employers were very or somewhat supportive of their state’s program. New York employers were equally supportive, with 63% either strongly or somewhat supportive of their upcoming program. In both states, about 20% of respondents stated they were neutral, while about 15% opposed the laws. Interestingly, in both states there were no significant differences across firms of different sizes, nor between firms with different proportions of part-time or female employees.

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Finally, a common — and important — takeaway emerged: Most employers revealed that they do not have major problems handling their employees’ absences. In fact, 61% of employers in New Jersey and 56% in New York said it was not difficult at all or only a little difficult to cover a female employee’s work while on leave after a birth (with 10% in New Jersey and 12% in New York reporting it was difficult or very difficult). Responses regarding other types of family and medical leave were similar.

A frequent concern raised about paid family and medical leave policies is that small businesses may be burdened with extra costs, even though employers are not responsible for paying leave benefits directly; those costs are typically funded through payroll taxes. However, employers may face costs from rearranging workers’ schedules and covering the work of employees on leave. These trepidations have been voiced by both industry leaders and the American public.

Our research across states with active or soon-to-be-implemented programs reveals that these worries are unfounded. The potential adverse financial impact of paid family and medical leave on small businesses does not accurately reflect the views from the majority of businesses in the states we surveyed. Researchers Eileen Appelbaum and Ruth Milkman found similar results through their earlier work in California. So, too, did the Small Business Majority, which found that 70% of small business owners and operators support legislation establishing a national paid family and medical leave insurance program.

As more states adopt and prepare to implement new paid family and medical leave policies, there will be additional opportunities to investigate the impact of those policies — both on employers as well as the families these policies seek to support. But our research shows that the consensus sentiment from states that already have programs on the book is positive.

Jane Waldfogel is the Compton Foundation Centennial Professor for the Prevention of Children’s and Youth Problems at Columbia University School of Social Work. The research reported here was conducted in collaboration with Ann Bartel, Maya Rossin-Slater, and Christopher Ruhm.

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On Donald Trump and Russia - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 04/09/2018 - 16:10

Let’s talk about Donald Trump and Russia, shall we? The president has made no secret of his character. He is thin-skinned, his mind perpetually peripatetic, his interests and understandings shallow and without nuance. This sort of pop analysis is worthless in normal political times. (Yes, Barack Obama seemed a narcissist, but within a generous range of normal, and anyway who cares?) But in the case of Russia and Trump, it provides a worthy framework for understanding the strange divergence between what Trump says and what he does.

US President Donald Trump shakes hands with Russian President Vladimir Putin during the their bilateral meeting at the G20 summit in Hamburg, Germany July 7, 2017. REUTERS/Carlos Barria

Let’s start with what he says: All are variants on his “I would love to get along with Russia” pronouncement one month into his presidency. That is manifest. That means he doesn’t pop off about Putin in the way he does about, say, Rex Tillerson. He’s been congenial — way, way too congenial according to the judgment of our esteemed press corps and various pundits. After all, it’s fine to call Putin and congratulate him on his stolen election, but does one really have to add the cherry on top with an invite to the White House mere days after the Russia autocrat ordered a hit on one of his ex-spies in the UK? Short answer: No. Clearly, the president believes that he and Vladimir Putin should get along, whether for strategic reasons or because of some inexplicable desire to confound his critics.

Add to this the accusations of Russia collusion, which seem somewhere between mildly credible and freaking loony. That’s not to say Russia didn’t want Trump to win, or interfere in the election to try to help. But so far, it’s not looking like Donald Trump signed the Russians up to defeat Hillary. Nonetheless, this Russia cloud makes Trump’s rhetorical weakness on Putin all the more questionable. (Yes, yes, sometimes he says the right thing, as he did last weekend accusing Putin of responsibility for yet another chemical attack in Syria via Twitter.)

“This administration has moved faster than any administration I have seen on Congressionally-mandated sanctions.”

Finally, there’s what the Trump administration is doing on Russia. I have said on repeated occasions (to the repeated and boring horror of Twitter drones) that this administration has moved faster than any administration I have seen on Congressionally-mandated sanctions. I worked on Capitol Hill for many years, and wrote plenty of sanctions legislation. Whether Iran, Iraq, China, Pakistan, Russia or terrorist groups, every administration has moved either willfully slowly (check how much time between Iran sanctions legislation and Clinton, Bush or Obama action) or legally slowly, burdened by the requirements of our democracy that a case against an individual, a company, a group, or a nation be airtight. Sometimes frustratingly, we do actually need to make a real case against bad guys, despite the fact that everyone on Twitter just knows they’re bad people.

Last Friday, the Trump administration issued another wave of sanctions against close Putin cronies. That makes almost 200 Russian individuals and entities sanctioned by the Trump administration. Yes, that is much much more than the Obama administration did. Yes, Obama had all the necessary authorities to do these things. No, the administration did not have to levy these sanctions, and could have used the waivers, carve-outs, evasions and slow-roll tactics favored by Trump’s Republican and Democratic predecessors. Ultimately, they didn’t. And the week before, the Trump administration expelled 60 Russian diplomats, action coordinated with allies in response to the Skripal attack. (Yes, the Russians can replace those diplomats, similarly to the expulsion by Obama of Russians in 2016.)

These actions put Trump agonistes in a bind. They engage in tortured efforts to slice the Gordian knot. They insist the president isn’t paying attention to the sanctions otherwise they wouldn’t happen. That the solid men and women at Treasury are working around their fearless leader. This is pathetic. I did not like Obama’s foreign policy, but when the man made a good decision, I applauded it. It’s time to man up and admit, 1) the Trump administration is hitting Russia hard where it hurts, and 2) satisfying rhetoric (see Obama, Barack) is not a substitute for real policy. Sure, I’d like Trump to stop fawning over Putin. But I’d prefer to sock him and his cronies right where they feel it most.  This, not stern words and meaningful frowns, may cause Russia to reassess its dangerous neo-Soviet adventurism.

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Could the United States and Turkey go to war? - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 04/09/2018 - 16:04

It was the stuff of nationalist drivel and mad conspiracy, but in Turkey it was an instant best-seller. Almost 15 years ago, Turkish novelists Orkun Ucar and Burak Turna penned a thriller titled Metal Storm, which describes a U.S.-Turkey war in which the United States occupies Istanbul, a Turkish agent detonates a stolen nuclear warhead in Washington, and Russia and China ultimately come to Turkey’s rescue. While the premise was far-fetched, many Turkish commentators at the time suggested a U.S.-Turkey conflict could become reality. It is time to recognize that they were right.

No, the United States is neither going to launch a surprise attack on Turkey nor engage its putative NATO ally in the next several years, but the trajectory that President Recep Tayyip Erdogan has taken Turkey suggests that enmity and conflict, rather than partnership and cooperation, are inevitable. While unlikely, it is no longer inconceivable that Turkey and the United States would one day be shooting at each other.

Consider the path down which Erdogan has taken Turkey:

  • Erdogan is now friendlier toward Russia and Iran than the United States. There’s a tendency in Washington to self-flagellate and assume deterioration in relations is our fault, but it’s not. Erdogan’s shift toward Russia had nothing to do with U.S. support for the Kurds. After all, Moscow has welcomed Syrian Kurdish political leaders while Washington has acceded to Ankara’s request to keep them isolated. And when Syrian Kurds have killed invading Turkish troops, they have done so with Kalashnikovs and RPGs, weaponry they had received from Russia or its clients, not the United States. Rather, Turkey’s turn toward Russia is driven by deep-seeded and ideological anti-American animus among Turkey’s top leaders. Anti-American, anti-Western, and anti-NATO incitement are daily themes of Erdogan’s speeches.
  • The Turkish military is now an engine for Islamism rather than a bastion of secularism. Every officer up to lieutenant colonel has now arisen in the Erdogan era and, because of Erdogan’s manipulation of promotions, pretty much every flag officer with two, three, or four stars is now Erdogan’s man as well. Hulusi Akar, the Turkish General Staff’s commander, betrayed both colleagues and oaths for the sake of personal ambition. In recent weeks, Fetih TV showed pictures of hardline Islamist mullahs visiting Turkish military units. Dogu Perincek, the Turkish military’s philosophical guide, is a former Maoist who is fiercely anti-NATO and pro-Russian. Adnan Tanriverdi, Erdogan’s military counselor, is an Islamist who founded SADAT, which now forms the core of Erdogan’s personal militia, the Turkish equivalent of Iran’s Islamic Revolutionary Guard Corps.
  • There is very little discipline left in the Turkish military. Erdogan has purged most of the professional officers. Those left behind are now making videos honoring convicted mafia leaders like Sedat Peker or gang leaders like Burak Doner. While the United States may not want a shooting war with Turkey, it is conceivable that a radical Islamist within the military’s midst will undertake an action that will solicit a response.
  • Turkey has become a terror sponsor. Erdogan embraces Hamas’ most militant leaders and arms them. There would have been no Islamic State in Iraq and Syria had it not been for Turkey’s open door to tens of thousands of foreign fighters. Erdogan’s own son-in-law’s emails show he profited off the Islamic State while thousands perished at their hands. When Turkish journalists provided photographic proof that Erdogan was arming an al Qaeda affiliate in Syria, he had the journalists jailed. The West may cheer Saudi Crown Prince Mohammad Bin Salman for cracking down on extremism after decades of its Saudi sponsorship, but Turkey is picking up the slack in Asia, Africa, and Europe. Turkey’s financing of radical mosques now means that it is indoctrinating, funding, and training the next generation of extremists.
  • Turkish threats against the United States and its allies are becoming commonplace. After Houston-based Noble Energy began drilling in Cypriot waters in September 2011, Turkish Minister Egemen Bagis warned U.S. personnel not to enter the region, and said, “This is what we have the navy for. We have trained our marines for this; we have equipped the navy for this. All options are on the table; anything can be done.” Erdogan’s recent suggestions to create “an army of Islam” are, in Erdogan’s mind, not simple rhetoric.
  • Turkey has always been revanchist, but as Turkey’s economy falters (Turkey’s currency has lost more than half its value under Erdogan’s leadership) Erdogan has upped his claims to neighboring territory. Consider the following: Turkey occupies one-third of Cyprus, and occupies territory in both Iraq and Syria against the wishes of both those governments. In recent months, Erdogan has also laid claims to parts of Greece and Bulgaria. Again, this is not mere rhetoric: Incidents between Greece and Turkey have skyrocketed. 

The West has a Turkey problem, and it is silly to pretend otherwise. Yes, Turkey is strategic, but it is lost. It has flipped into Russia’s camp, just as Egypt and Libya did during the Cold War. The difference then was that the West recognized the setback and moved to contain it; they did not pretend the alliance persisted and allow enemies open access to defense secrets nor share intelligence or latest-generation aircraft with an enemy.

While it is fashionable among diplomats and some analysts to argue that the transactional nature of Erdogan’s Turkey requires more and targeted engagement rather than coercion, such efforts have a very poor track record. Indeed, for much of the past 15 years, Turkish enmity has grown against the backdrop of NATO denial and Bush and Obama-era denial, coddling, and engagement. Rather than smart diplomacy, efforts to engage Erdogan now uncomfortably appear like efforts to coddle Saddam Hussein into moderation three decades ago. On June 15, 1990, the late Sen. Arlen Specter explained his opposition to military sanctions on Iraq. “There is an opportunity, or may be an opportunity, to pursue discussions with Iraq,” he said, “And I think that it is not the right time to impose sanctions.” When Specter took to the floor of the Senate, the notion of war with Iraq was considered crazy. But less than two months later, Saddam’s actions put the United States on war footing. What once was unimaginable became a possibility.

As Erdogan chooses his path, it behooves the United States and Europe to recognize that what once was outside the realm of possibility is now possible. And while all efforts should be taken to prevent such a scenario, at a minimum it is time to isolate rather than partner with Erdogan. It is time to remove all American personnel (and any remaining nuclear warheads) from the Incirlik Airbase and find another home, before repelling nationalist mobs at Incirlik itself becomes a flashpoint for conflict. It is essential for U.S. national security to cut Turkey off from intelligence sharing and military technology, including the F-35 Joint Strike Fighter, and recognize that prevention of conflict mandates better preparing regional states like Greece, Cyprus, Israel, Romania, Kosovo, Bulgaria, Iraq, as well as Syrian and Iraqi Kurds, to also counter the Turkish challenge. Historians can debate who lost Turkey, but what is obvious is that Turkey is not simply no longer a friend and ally, but rather it has become an adversary and potential belligerent.

Exposing the myth of widespread medical bankruptcies - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 04/09/2018 - 14:34

In 2005 and 2009, Elizabeth Warren and her co-authors released two papers claiming that more than 50 percent of all bankruptcy filings in the U.S. were caused by medical debts. I wrote about the problems with these studies when they first came out, and even testified in Congress against reading too much into the findings of these studies because they suffered from several biases. Now an academic study published in the New England Journal of Medicine is skeptical of these results as well. The study tracks a stratified sample of adults between the ages of 25 and 64 who were admitted to the hospital for non-birth-related reasons between 2003 and 2007. It finds that fewer than 4 percent of hospitalizations resulted in bankruptcies, far lower than the 2009 study’s claimed 62 percent.

@Mr2EL via Twenty20

Sample selection

A major shortcoming with both the 2005 and 2009 studies is what economists call a “sample selection issue.” The Warren studies conducted a survey of bankruptcy filers from public court records for the years 2001 and 2007, respectively. Based on a sample of about 1,000 debtors, they concluded that more than 50 percent of these had filed for bankruptcy due to debt from medical problems. But this approach is inherently flawed. By limiting the sample to those who had already filed for bankruptcy, the study overstated the incidence of medical debt. To truly establish causation, the study sample should have, at the very least, included a “control” group of medical debtors who did not file for bankruptcy. In other words, if the authors were trying to establish whether medical debts cause bankruptcy filings, the appropriate sample should have included households with and without medical debt, and households who filed or did not file for bankruptcy. In short, what the authors have established is some correlation, but not causation. This is why the NEJM study is better. It tracks people with hospitalizations and medical bills, and then figures out whether they filed for bankruptcy.

An easy way to think about this is what happens on the Food Network show “Diners, Drive-ins and Dives.” After the chef cooks his specialties for Guy Fieri, Fieri asks people sitting inside the diner what they think of the food.  Not once has anybody said (on camera at least) that they don’t like their meals. The simple explanation is that these people have already decided that they like the restaurant. They are already in; this is the sample selection bias. We get no further information from them about the diner beyond the fact that they like one dish over another. It would be far more interesting to survey people who know about the diner (maybe standing outside the diner) but are debating whether to go there or go elsewhere. How many people choose this diner over another? That’s a much better question.

This is also the problem with the Warren studies. They look at people who already filed for bankruptcy, and then try to figure out why. But the right way to really get at the answer is to look at a random sample of people with medical debt (and even without medical debt) as the NEJM study does, to see in how many cases people filed for bankruptcy.

The problems don’t end there. The Warren sample also seems skewed towards debtors with high medical debt. The Department of Justice did a similar survey of bankruptcy filers between 2000 and 2002, which included a much larger sample of 5,203 filers, and found that 90 percent of filers had medical debts less than $5,000, and 54 percent had no medical debt. The 2009 Warren study reports nearly 35 percent of filers with more than $5,000 in medical debt, and a much smaller fraction with no medical debt or other medical reason to file for bankruptcy. The authors make no attempt to reconcile or explain their findings or reveal the distribution of medical debts across filers in their sample. So is it truly representative even of people in bankruptcy?

Definition of medical filers

Finally, the 2005 study used an overly broad definition of “medical filers,” which included people with any sort of addiction or uncontrolled gambling problems. The 2009 study removed these clauses but still claimed that nearly 62 percent of bankruptcy filings are due to medical reasons. This high number is partly driven by the fact that the authors attribute any remotely medical factor as the cause of the bankruptcy filing, not just medical debts. Even though their own survey results show that only 29 percent of the respondents believed that their bankruptcy was actually caused by medical bills, the authors chose to add to this number the percent of people who lost any weeks of work due to their own or a spouse’s illness, the percent of people with more than $5,000 in medical bills, and the percent of people reporting any medical problems. This is clearly an overstatement of the problem. Because the respondents themselves do not believe that these other factors caused the bankruptcy filing, it seems wrong to ascribe the additional bankruptcy filings as due to these other medical reasons.

Other Factors?

The Warren studies also should have allowed for the possibility that other household characteristics, such as the filer’s work status and other kinds of debt, could have influenced the filing. Broader economic conditions could have played a role as well. The 2007 sample was likely affected by the beginning of the Great Recession, as well as the changes to bankruptcy law in 2005. What else is going on in the household, and in the economy, that could have driven individuals to file for bankruptcy? The answer is unclear; none of this is included in the limited multivariate regression analysis presented in the paper.

Medical costs, ill-health and bankruptcy are serious issues for families and deserve thoughtful attention. But good solutions can only come when we understand and state the problem accurately. It is heartening to note that exaggerated claims are often just that, and can be debunked with good analysis, better data and, most importantly, common sense.

Oklahoma’s intoxicating teacher walkout - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 04/09/2018 - 14:32

Oklahoma’s teachers have just completed the first week of a statewide “walkout,” with no resolution in sight. (It’s a “walkout,” not a “strike,” as public-employee strikes are illegal in Oklahoma.)

Ironically, the state’s teachers had won much of what they wanted before the walkout even began. On Friday, March 23, the Oklahoma Education Association (OEA), the state’s largest teachers union, issued an ambitious list of demands: a $10,000 pay raise for teachers; $5,000 raise for school-support personnel; $200 million over three years in additional local-school funding; a 5 percent cost-of-living increase for retirees; and $500 million over three years to “fully staff state agencies” and raise state employee pay by $7,500 a year. In OEA’s estimation, this total package would cost more than $1.4 billion over three years.

A teacher stands next to a music stand holding a sign during a school walkout in Tulsa, Oklahoma, April 4, 2018. Reuters

In response, on Thursday, March 29 the Oklahoma legislature enacted a new teacher-pay scale that boosted average teacher pay by $6,100 — or 16 percent. This represented a remarkable win for teachers: In 2016, Oklahoma’s average teacher salary of $45,276 ranked 49th nationally, according to the National Education Association (NEA). The raise was funded via new taxes on gas, tobacco, and oil production, along with a new limit on income-tax deductions.

Yet, teachers were not placated — and on Monday, April 2, they started the walkout. The next day, Oklahoma Governor Mary Fallin signed a $2.9 billion appropriations bill for education funding in fiscal year 2019 — a 19.7 percent boost in spending over the current fiscal year, which ends June 30. The legislation includes $353.5 million for teacher pay (funding the $6,100 average raise); $52 million for support personnel pay; $50 million for textbooks and general state aid; and $24.7 million for health-care benefits. Fallin signed additional legislation providing a $1,250 annual pay bump for school-support personnel and tiered raises for state employees ranging from $750 to $2,000.

Still, the walkout continues, with teachers seeking additional concessions. Their stance has garnered widespread support and glowing media coverage. And while the sympathy is easy to understand, it should be noted that, after the 16 percent boost, average teacher pay in Oklahoma will next year exceed the state’s median household income of $50,943.

Indeed, the new average teacher salary of $51,376 will vault Oklahoma into the very middle (29th) of NEA’s teacher-salary rankings, with Texas the only bordering state with higher average salary — by about one percent. Add the fact that Oklahoma boasts the third lowest cost of living in the U.S, and it’s fair to say that Oklahoma’s teachers will now be reasonably well-compensated relative to their peers across the country.

It’s also worth noting that base salary doesn’t take into account health-care, retirement, and other benefits, which amount to about 24 percent of Oklahoma teachers’ total compensation, according to federal data. As former Obama administration appointee Chad Aldeman has documented, teachers have the highest retirement costs of almost any public-sector profession — and that public sector employees generally enjoy health and retirement benefits that dwarf those of their private sector counterparts.

Of course, Oklahoma does spend less per-pupil than other states: The NEA reports per-pupil spending in Oklahoma was $9,036 for the 2016-17 school year, down from $9,056 in 2008-9 (all in inflation-adjusted dollars). This is less than other states spend, though it still amounts to more than $225,000 a year for a class of 25 children. While more dollars can only help, that amount would seem to go farther than it has, if spent wisely and well.

After all, between 1992 and 2014, inflation-adjusted per-student spending in Oklahoma increased by 26 percent, even as average teacher salaries rose only 4 percent. If teacher pay had merely kept up with per-pupil spending, average teacher salaries would be more than $56,000 today — even before the bump contained in the new legislation. Meanwhile, as public-school student enrollment in Oklahoma increased by 17 percent from 1992 to 2015, teacher-workforce growth lagged behind — but non-teaching staff increased by 23 percent.

The same district leaders who have added outsized numbers of non-teaching staff and failed to rein in benefit costs are now finding it convenient to stand shoulder-to-shoulder with their teachers in pursuit of additional funds. Rather than seeking to force teachers back to work, superintendents have closed their schools and cheered them on — protecting teachers from the need to officially break the law or even sacrifice personal days. At least 50 school districts have been closed across the state, including those in Tulsa and Oklahoma City, the state’s two largest districts. The consequences of this for children and working parents are severe, even if they’ve drawn little attention amidst a narrative focused on the heartwarming story of middle-class earners winning an overdue raise.

“There are broader implications going forward for any more days canceled,” said Oklahoma City Public Schools spokeswoman Beth Harrison, “because it starts to impact instructional time, which starts to impact families.” After five days, the walkout has consumed most of the six extra days built into the calendar to account for emergencies like weather-related closings, with many school systems now looking at adding additional minutes to the school day or pushing back the last day of the year to make up for lost time.

Meanwhile, as veteran teacher-union reporter Mike Antonnuci has observed, as was the case in West Virginia, “no one is losing pay for going on strike.” Following the wholesale triumph of West Virginia’s teachers in their recent strike, which was likewise accompanied by widespread support and adoring press, superintendents see which way the wind is blowing. Doubtless, school leaders in Kentucky, Arizona, and other states at-risk for teacher strikes are also taking notice.

There’s an important conversation to be had about teacher pay, benefit costs, and how to attract and honor terrific teachers — and pay fairly professionals who put in a solid day’s work. And, like many, we think the gains that Oklahoma’s teachers have now won are reasonable and appropriate.

But it appears that, even more than in the case of West Virginia — where teachers returned to work with a comparatively Spartan 5 percent pay bump — Oklahoma’s walkout is quickly becoming detached from efforts to ensure that dollars are spent responsibly. When teachers who have already claimed a massive win are shuttering schools over demands for retiree cost-of-living-adjustments and the need to “staff-up” other state agencies, it seems farfetched to say that student concerns are still front and center.

Rather, teachers and taxpayers alike will be well-served if the push for more school spending is approached with an eye toward managerial discipline and what Oklahoma’s families can reasonably bear, so that this intoxicating, feel-good moment doesn’t end with a nasty hangover.

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Ep. 96: Ask an economist - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 04/09/2018 - 14:30

On this special episode of Political Economy, we structured the podcast around one theme: “Questions you always wanted to ask an economist, but were too afraid to ask.” After soliciting questions from friends, family, and Twitter, we posed them to AEI economist Stan Veuger.

Dr. Veuger is a resident scholar at AEI, where his research is in political economy and public finance. He is also the editor of AEI Economic Perspectives.

You can subscribe to this podcast on iTunes or Stitcher, or download the podcast on Ricochet.

Discussing the chemical attack in Syria & negotiations with North Korea: Thiessen on Fox News’ ‘America’s Newsroom’ - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 04/09/2018 - 14:04
Resident Fellow Marc Thiessen discusses possible responses to the latest suspected chemical attack in Syria and the risks posed by withdrawing US troops from the region.

Minimum Wage Analysis Using a Pre-Committed Research Design: Evidence through 2016 - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 04/09/2018 - 13:57

Abstract:

This paper presents results from the first year of a multi-year, pre-committed research design for analyzing recent state-level minimum wage changes. Through 2015 and 2016, we estimate that relatively large statutory minimum wage increases have reduced employment among low-skilled population groups by just under 1.5 percentage points. Our estimates of the effects of smaller minimum wage increases are more variable and include both moderately large positive values and modest negative values. Our estimates of the effects of increases linked to inflation-indexing provisions are also quite variable, taking a small positive value on average across specifications. Results including 2016 diverge nontrivially when we compare estimates using the American Community Survey (ACS) to estimates using the Current Population Survey (CPS), with estimates tending to be more negative in the ACS. Analysis of future data will be needed to determine whether this difference across surveys is most appropriately attributed to sampling variations or to some other cause.

 

Read the PDF.

 

Fiscal implications of Social Security-financed parental leave - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 04/09/2018 - 12:07

In this article, Strain and Viard examine the recent proposal to allow workers to receive paid family leave through the Social Security system in exchange for reduced retirement benefits. They conclude that the proposal would have significant problems.

 

This article appeared in Tax Notes on 4/9/18. It will be published here on 5/7/18.

Read the full article in Tax Notes.

Tax Analyst Contact:
John C. Bell (jbell@tax.org)
Assistant Editor, Tax Notes
Permissions and Agreements Editor, Tax Analysts
703-533-4678 | 703-533-4660 (fax)

Five questions Facebook should ask - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 04/09/2018 - 10:00

Facebook has growing political problems because it has business problems. The company appears to have committed errors that almost every business does — namely, overextending its product lines and over leveraging switching costs.

Via Twenty20

Overextension occurs when companies think that every competency can be a product: Many electric utilities went into the telecom business in the 1980s and early 1990s because they already had poles, fiber networks, etc. So why not leverage them? They were rarely successful.

Switching costs are the costs that customers incur to switch brands or products. For example, once it developed Windows, Microsoft knew it would be costly for people to switch to say Apple because they would lose access to old files. The company leveraged this for years with less than stellar versions of Windows. Customers found alternatives.

It appears too late for Facebook to divert the political backlash by addressing business problems, but politics will be the least of the company’s worries unless it asks itself and others at least five key questions:

Question 1: Why is now different?

Facebook is no stranger to troubles — it was caught running psychology experiments on users, it ran those infamous Russian ads, research has shown that it has negative psychological impacts on users, etc. — but it has never lost users. Until now.

In 2017, the company lost almost 10 percent of its users in the 12- to 17-year-old demographic. Its daily active user count recently declined in the US and Canada, the first time that has happened in any market.

Why now? Maybe the constant drumbeat of negative news has caught up with the company, affecting how users feel. Or users are starting to feel like they are not Facebook’s customers, but its product. Or competition is growing. If the company doesn’t understand the answer to this question, the decline will accelerate.

Question 2: Why is there only one artificial intelligence in Facebook?

Facebook uses artificial intelligence (AI) to learn about users and direct content to them. Its algorithms have drawn criticism for being biased, but AI is biased by definition. So the problem isn’t bias per se but the nature of the bias.

What if customers were allowed to choose which AI algorithm(s) applied to them? Could there be categories, such as one biased toward recent events, one biased towards positive news, and one biased toward Asia? What if customers switched algorithms whenever they liked?

Question 3: Why do advertisers pay Facebook?

Currently, customers give their attention and data to Facebook in exchange for various forms of dopamine rushes. This gives Facebook an incentive to grow how long users stay on the site any way it can. According to a former Facebook executive, the company did exactly that a few years ago, using psychological tricks to get people to spend more time on Facebook.

Learn more:

Are there other ways for Facebook to develop a valuable user base? How would Facebook change if it had a cryptocurrency that advertisers could use to pay users for their data or time? What if the tokens were redeemable or exchangeable or given to charities? How would it affect users if Facebook’s financial arrangement with advertisers was scored like the SAT used to be graded, where Facebook was paid for ad placements that hit and paid users or advertisers for those that didn’t?

Question 4: Why is Facebook individual centric?

Facebook’s mission statement is about building communities, but at the user level, it is really a system of links and nodes, with users serving as nodes that have links to other people and to Facebook Groups. This isn’t how traditional communities work.

What if Facebook looked more like the physical world where people associate by going places? Could there be virtual Facebook taverns where people chat, private clubs with more exclusive, private rooms where content is confidential, and media rooms where people catch up on news of their choice?

Question 5: What will destroy Facebook?

According to Abraham Lincoln, “An Eastern monarch once charged his wise men to invent him a sentence, to be ever in view, and which should be true and appropriate in all times and situations. They presented him the words: ‘And this, too, shall pass away.’”  This probably holds for Facebook.

Some companies delay their demise by looking at themselves from the outside, asking questions about avenues for competitive entry, about what could change industry paradigms, and about what they are not seeing from their current vantage points.

How can the company effectively reflect on itself? Royal Dutch Shell once took up scenario planning to get outside itself. The content was generated in part by outsiders, sometimes by the company’s harshest critics, and the company stayed in a learning mode. Perhaps interesting scenarios would be: What if governments took control of data? Or what if half the world’s work moved to a gig-economy system?

Learn more:

China trade basics amid the confusion - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Sun, 04/08/2018 - 21:32

Getting messy, isn’t it? Here are five observations cutting through US-China trade posturing. You could disagree, but you’d be wrong (about the first four).

1) China’s predatory trade practices are inextricably tied to its development model.

This is recognized, in part. The administration started its Section 301 inquiry focused on coercive technology transfer, then cited “Made in China, 2025” when culling imports for tariffs. China’s emphasis of technological parity or leadership in sectors it deems strategic implies the acquisition of foreign technology, coerced technology transfer, and outright theft.

However, the PRC’s development model goes further. State ownership is the means by which the Communist Party directs the economy. It features control of the bulk of financial institutions, enabling massive subsidization, while state-owned enterprises see financial support and regulatory protection from competition in two dozen sectors. That’s at least two dozen sectors where American goods and services can’t compete fairly.

2) Changing individual Chinese policies is therefore a waste of time.

If the PRC cuts all tariffs to zero, American exports of goods and services may not rise at all. If this seems implausible, consider that China can continue to under-price by hiking subsidies for domestic production. The financial burden would be higher but Beijing is already wasting far more money keeping commercially unviable state firms alive and growing. What’s a bit more?

Similarly, it’s essentially impossible to close all avenues for technology coercion. If the PRC continues to identify vital sectors and intensely subsidize them, profit opportunities will be much greater in those sectors. Profit-seeking companies will naturally want to participate but then would be required to share advances. The nature of the industrial policy itself is the coercion.

3) The US can force broader changes, but costs will be widespread.

Some argue China’s ability to intervene and its size limit its vulnerability to a trade conflict. This misses the point, which is financial. The PRC received $337 billion in hard currency from 2017 goods and services trade with the US (yet added only $92 billion to reserves). The US can threaten China’s balance of payments and, with the reserve currency, faces no equivalent threat.

Beijing can make adjustments but they would be exactly the kind of painful financial reform it has strenuously avoided. The catch: the American advantage lies in an intense, prolonged battle, which will go beyond rattling stocks and upsetting farmers. The US will do better than the PRC, but not well. Smaller economies caught in the crossfire could fare worse.

4) The Trump administration’s goals in the dispute are unclear, unwisely so.

Trump administration officials have emphasized the harm of Chinese practices, the failure of previous administrations to respond, and the need for strong corrective action. All accurate. The president’s stated preference for conflict can also be a diplomatic advantage up to a point, keeping the PRC off-balance.

However, the US must ultimately indicate what it finds acceptable, and in precise fashion. The President yesterday tweeted “China will take down its trade barriers” — not a sensible negotiating position. The US can communicate more clearly in private, but the public aspect of such a high-profile standoff is equally important, especially given how prickly Xi seems to be.

5) The US should push China to exclude more sectors entirely from industrial policy.

It’s possible President Trump just wants a guarantee the merchandise trade deficit will shrink to the levels of a few years ago, so he can declare political victory. The PRC could deliver that and retain its industrial policy entirely — economic victory. This would be an American failure, with China still able to target any sector with coercive technology policy and mass subsidization.

A true change would narrow the scope of Made in China 2025 and similar initiatives, present and future. The US should demand some sectors be excluded entirely from industrial policy — no subsidies or technology coercion — while China retains others. Negotiations to determine which. Only actions matter, not pledges, but such actions would be far more valuable than a smaller trade deficit.

Side note: a propaganda arm of the Communist Party will soon announce GDP growth of at least 6.8% (probably 7.0) and pundits will insist this shows China’s strength. One born every minute.

Learn more:

Discussing the US-China trade dispute: Zhong on VOA Mandarin’s “Eye on America” - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Sat, 04/07/2018 - 21:00
Research Fellow Weifeng Zhong discusses the impact of the bilateral trade dispute between the US and China.

Trump is threatening to repeat Obama’s mistakes in Syria - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Sat, 04/07/2018 - 12:00

During the 2016 campaign, Donald Trump excoriated President Barack Obama for “the way he got out of Iraq,” which Trump said “was the founding of” the Islamic State. As president, Trump reiterated during a meeting with Iraq’s prime minister that “we should never ever have left. A vacuum was created.”

Trump was right. Obama’s withdrawal did create a vacuum the Islamic State quickly filled. So why is Trump now threatening to repeat Obama’s mistakes by withdrawing U.S. forces from Syria?

The president recently announced that U.S. troops will be “coming out of Syria . . . very soon” because “we were very successful against ISIS” and it is time to “let the other people take care of it now.” That is exactly the rationale Obama used when he pulled U.S. forces out of Iraq. The terrorists had been driven from their strongholds, and, according to then-CIA Director John Brennan, they had just “700-or-so adherents left.” So Obama decided, with the Islamic State apparently defeated, that it was time for the United States to come out and let Iraqis “take responsibility for their country.” But when Obama took the boot off of the terrorists’ necks, it allowed the Islamic State to regroup and reconstitute itself.

Trump corrected this catastrophic mistake when he took the gloves off our military and drove the Islamic State from its physical caliphate. He deserves credit for this achievement. But the Islamic State is not defeated; it has simply reverted into an insurgency and remains a terrorist network with global reach. And it is not the only terrorist threat in Syria. Al-Qaeda also has an army there waiting in the wings to replace the Islamic State. According to the Institute for the Study of War and the American Enterprise Institute’s Critical Threats Project, “Al Qaeda . . . is more dangerous than ISIS,” because although they share “the same aims as ISIS, including the intention of attacking and destroying the West,” al-Qaeda is less focused on developing a physical caliphate and more on “insinuating itself inside Sunni insurgencies by harnessing popular grievances . . . while continuing to build capabilities that could be turned against the West.”

If Trump pulls out of Syria now, he will leave behind a haven for al-Qaeda. And his withdrawal could also precipitate the comeback of the Islamic State. The Trump administration drove the Islamic State from its strongholds by working with Kurdish proxies despised by Turkey. If the United States leaves, Turkey will go after our Kurdish allies, leaving the Islamic State free to regroup and reconstitute — just as it did after Obama’s disastrous withdrawal from Iraq.

That’s not all. A U.S. withdrawal would create an Obama-style vacuum that would be filled by Iran, Hezbollah, Russia and the Assad regime. Iran and Syrian President Bashar al-Assad would escalate their brutal campaign of atrocities in Syria — including crossing Trump’s red line on the use of poison gas — which would radicalize the Sunni population, driving them into the waiting arms of al-Qaeda. This could also create a new refugee crisis, with hundreds of thousands of Syrians fleeing to the West.

An Obama-style withdrawal from Syria could also free Iran to establish a massive military presence in southwestern Syria, which could spark a catastrophic war with Israel. Israel recently shot down an Iranian drone that had infiltrated its airspace from Syria and accused Iran of building sites in Syria to produce precision-guided missiles. Prime Minister Benjamin Netanyahu said that Israel “will not allow a regime hell bent on the annihilation of the Jewish state. . . to entrench itself militarily in Syria,” and warned that if Iran tried to do so, Israel would act “not only against Iranian proxies that are attacking us, but against Iran itself.” If our goal is to protect Israel and constrain Iran, withdrawal from Syria would do the opposite.

What should Trump be doing in Syria? He should maintain a U.S. presence to secure our military’s gains, protect our Kurdish allies, keep the Islamic State down and prevent al-Qaeda from capitalizing on the Islamic State’s demise. He should prevent Iran from entrenching itself in Syria, expanding its military presence and threatening Israel. And in the longer run, he should be working to separate the Sunni population from al-Qaeda by cultivating Sunni partners in Syria who are allied with the United States against the Salafi-jihadist cause, as well as the growing Iranian-Russian-Assad-Hezbollah alliance.

The temptation to declare victory in Syria and withdraw is understandable. But before he does so, Trump should ask himself: What would Obama do? Then he should do the opposite.

Is the pope Catholic? - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 04/06/2018 - 19:00


The latest Remnant invites New York Times columnist Ross Douthat, author of the newly-released “To Change the Church: Pope Francis and the Future of Catholicism,” to discuss Pope Francis and state of the Catholic Church.

You can subscribe to The Remnant with Jonah Goldberg on iTunesGoogle PlayStitcher, and TuneIn. You can also download this episode here.

This podcast was originally published by National Review.

In recognition of National Beer Day on April 7, the day in 1933 when beer was legal for the first time since 1920 - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 04/06/2018 - 16:08

Tomorrow is National Beer Day, which is celebrated in the US every year on April 7 marking the day in 1933 that the Cullen–Harrison Act was enacted to legalize the sale of beer in the US for the first time since 1920 (although it was limited to an alcohol content of only 3.2%) according to the Wikipedia entry for National Beer Day. Later that year, the Eighteenth Amendment of 1920 that outlawed alcoholic beverages was repealed on December 5, 1933, to officially end America’s first failed attempt at waging a War on Drugs (also known as Prohibition) that lasted from 1920 to 1933. Legalizing alcohol in 1933 also ended the deadliest and most violent period in US history for America’s law enforcement officers when more than 2,500 police officers were killed by gunfire at an average rate of 180 per year, or one every other day over that 14-year period (see chart below).

National Beer Day is a great time to recognize the Amazing American Beer Renaissance! The top chart above shows the annual brewery count in the US from 1873 to 2017, based on data from the Brewer’s Association here, and the bottom chart shows the annual change in the number of US breweries. The growth in America’s breweries over the last decade, especially the exponential growth in craft breweries, microbreweries, and brewpubs, has to be one of the most remarkable small business success stories in a generation or more. Except maybe for the American energy renaissance and the recent exponential growth in shale oil production in Texas and North Dakota, I don’t think there are very many other examples of a rise in output or number of US producers that can compare to the beer renaissance and the surge in American beer makers over the last decade.

Here are some beer facts to consider:

  1. The number of US breweries last year reached a new record high of 6,372, the greatest number of American beer makers going back to 1873 when the Brewers Association’s records start and there were 4,131 domestic breweries (see top chart above). Amazingly, the record brewery count in 2017 is a more than doubling of US breweries in just the last four years since 2013 when there were fewer than 3,000 breweries, and four times the brewery count ten years ago of 1,511 in 2007.
  2. Except during the “War on Beer” period from 1920-1932 (aka Prohibition), the number of US breweries reached a historic low of only 89 mostly “macro breweries” in 1978, before rebounding to nearly 6,400 mostly craft beer makers last year.
  3. The increase in the number of new US breweries last year – at 1,071 (nearly three every day) – was the largest annual brewery increase in US history (see bottom chart) topping the previous record increase of  1,032 breweries in 2016.
  4. From the Brewers Association, here’s a list of US microbreweries by state (breweries that produce less than 15,000 barrels of beer per year with 75 percent or more of its beer sold off-site) and here’s a list of US brewpubs by state (a restaurant-brewery that brews beer primarily for sale in the restaurant and bar), and here’s a list of regional breweries by state (breweries with annual beer production of between 15,000 and 6,000,000 barrels).
  5. If you’re considering taking a craft beer vacation (“beercation”) this year in the US, Mexico or Europe, here are some recommendations from American craft brewers.
  6. Find out about the many health benefits of beer here, here, here and here including its anti-cancer properties, a reduced risk of cardiovascular diseases, and an increased bone density!

MP: Thanks to the thousands of American “fermentrapreneurs” who have revitalized America’s now-booming craft beer industry, we have gone from a long period of limited choice among extremely low-quality, domestic macro-beer “swill” options to unlimited choices today for extremely high-quality domestic craft beer, which has become the envy of the world. Especially for those who love IPA-style beers, I don’t think you’ll find a better beer of that variety anywhere in the world, compared to what you can get today in America at almost any liquor store. To paraphrase Gregory Zuckerman’s description of the US shale revolution: For all of the criticism the US has fielded for losing its edge in innovation, surging American craft beer production is a reminder of the deep pools of ingenuity, risk-taking, Yankee ingenuity, and “fermentrapreneurship” that remain in this country – the new United States of Beer.

There’s never been a better time to be a beer drinker in America than today, given the awesome selection of craft beers from more than 6,400 domestic breweries in every part of the country. Welcome to the Golden Age of Beer – there’s certainly no “great stagnation” for this part of the US economy!

Carpe Fermentum

Why ‘opportunity zones’ could solve unemployment in slow growth areas - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 04/06/2018 - 15:41

Recent national economic reports point to a robust economic recovery. Employment is steadily increasing, and unemployment has fallen to a 17 year low. But obscured by the national averages are 52 million Americans still living in distressed communities, areas where poverty rates, unemployment, income, and business growth are far below the national averages.

This economic recovery has been unusual with its geographic concentration. Research by the Economic Innovation Group shows that just 73 out of 3,000 counties produced more than half the job growth in the first five years after the recession. A mere five metro areas were responsible for half the nation’s increase in new firms.

@ganzamadophotography via Twenty20

Outside of these prosperous metropolitan areas, the picture is grim. Two-thirds of distressed areas saw a decrease in jobs from 2000 to 2015, and 72 percent saw more businesses close than open. Labor force participation is lower and poverty is higher. There are more deaths due to alcohol, drugs, and suicide—characterized as “deaths of despair.” These Americans feel betrayed by trade agreements, vulnerable to globalization, and ignored by Washington, Wall Street, and Silicon Valley elites.

One reason for the slower recovery in these regions is that they lack the capital needed to start or expand businesses and revitalize their community. Data shows that 75 percent of venture capital goes to just three states, California, New York, and Massachusetts. Federal Reserve researchers found that in rural areas, bank loans of less than $1 million (after adjusting for inflation) are way below what they used to be before the recession.

That could change with the introduction of “Opportunity Zones,” a provision of the Tax Cuts and Jobs Act that gives investors the chance to reduce their capital gains tax when they invest in these distressed parts of the country. The program had broad bipartisan support, sponsored by Republican Tim Scott and Democrat Cory Booker in the Senate, and Republican Pat Tiberi and Democrat Ron Kind in the House.

There are two components to the program. First, governors are in the process of designating up to a quarter of their states’ low-income, high-poverty census tracts as Opportunity Zones.

The second part is the creation of Opportunity Funds—a new class of investment vehicles that gives investors the chance to reduce their capital gains tax when they invest in projects located in these areas. That tax incentive increases the longer the investment is kept in the community. If the investment is held for more than ten years, the investor will pay no additional capital gains on investments made through the fund.

This should allow distressed communities to tap a multi-trillion-dollar pool of capital to support a wide range of economic development activities. Funds could be broad or narrowly focused, with an emphasis on a single sector, such as housing development, charter school facilities, or broadband expansion. Others might be designed to raise startup funding for local entrepreneurs or help workers who are seeking job retraining.

Capital incentives alone aren’t enough to boost these communities. Governors and mayors will need to leverage Opportunity Fund investments with other economic development reforms. Governors might give entities located in a zone a competitive preference in grant competitions for education funding. Occupational licensing reforms could help reduce barriers to entrepreneurship in these communities. Or Opportunity Zone projects could combine different incentives for a larger impact, such as combining an Opportunity Fund housing investment with the Low-Income Housing Tax Credit for a mixed-use development.

For decades Americans have had the chance to invest in emerging markets all around the world. Now they have the chance to invest in America’s own emerging markets and finance the comeback story so many communities have been waiting to write.

US response to security threats in the Americas | In 60 seconds - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 04/06/2018 - 14:16

With the pending appointment of Mike Pompeo as Secretary of State, AEI’s Roger Noriega explains how the Trump administration could finally take steps to address many issues plaguing Latin America.

From the archives: The other John Bolton - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 04/06/2018 - 13:00

Today, John Bolton leaves AEI to assume the post of National Security Adviser to President Trump. His long record and writings on foreign policy are well known. Less familiar is what brought him to AEI many years ago. His first contribution to the Institute came in October 1973 when he was a member of the Yale Law School’s class of 1974 and an editor of the Yale Law Journal. Campaign Financing and Political Freedom was a 35-page publication in AEI’s Domestic Affairs Study series, and this influential monograph was written by Yale Law Professor and AEI adjunct scholar Ralph K. Winter, Jr. in association with Bolton.

Read the 1974 publication:

Winter and Bolton argued that caution was warranted in expanding federal regulation of campaign finance, and in 1976 the Supreme Court struck down limits on campaign expenditures that had been imposed by the Federal Election Campaign Act Amendments of 1974.

In Buckley v. Valeo, the Court upheld contribution limits. The plaintiffs were an eclectic group including Senators James Buckley and Eugene McCarthy, the Mississippi Republican Party, the New York Civil Liberties Union, and the national Libertarian party. Winter led off the argument at the Court.

On the 40th anniversary of the decision, Bolton credited Winter as “the intellectual progenitor of the First Amendment arguments made in Buckley,” although Bolton, then a young associate at Covington & Burlington, spent many hours at AEI helping to prepare the briefs.

Related reading:

In 2014, Bolton, Norm Ornstein, Michael Barone, and the late Senator Fred Thompson participated in an AEI panel discussion titled, “Watergate revisited: The reforms and the reality, 40 years later.” During this spirited exchange, Bolton maintained that the ability to raise campaign funds was and is an important component of speech, and limiting it disproportionately favors incumbents.

We wish Ambassador Bolton the best as he begins this new chapter in his career of public service.



A response to Larry Berger’s ‘confession’ on personalized learning - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 04/06/2018 - 12:00

A few weeks back, before my recent break from RHSU, I ran a “confession” about personalized learning, penned by Amplify CEO Larry Berger. Larry’s funny, fascinating piece provoked a ton of reaction. One of the many who reached out in response is Joel Rose, CEO of New Classrooms, who shared a pithy, thoughtful response that seemingly spoke for many who took Larry’s point but were seeking ways to reconcile his cautions with their faith in the power of personalized learning. Here’s what Joel had to say:

Dear Larry,

I very much enjoyed your letter, which raised vital questions about the “engineering” model of personalized learning.

In fact, it inspired me to share my own confession and question.

When I taught fifth grade, I had to design a classroom experience for the 28 students in my class every day. They had a wide range of strengths, needs, interests, and motivations. I had a set of grade-level textbooks.

My confession: While sometimes I worked to plan great lessons involving lively discussion, multimedia, and peer collaboration, there were plenty of other times I defaulted to a lame lesson out of the textbook. And even my best lessons barely accounted for the unique strengths and needs of the students in my class.

I’m sure I could have designed a better, more personalized experience for each student each day. But like most teachers, I didn’t have the time.

You’re right that we have much to learn about skill maps and optimal learning progressions, especially outside of elementary reading and parts of mathematics. But, at the same time, my experience tells me it simply can’t be true that, even with the gaps in our knowledge today, teaching same-aged groups of students the same thing—and all in the same way—is the best we can do in the 21st century.

Which brings me to my question: Does the promise of personalized learning ultimately depend on our ability to redesign the classroom itself?

I wonder if an undue focus on technology has sometimes prompted us to ignore this critical point. Certainly if we’re defining personalized learning as students on computers interacting with “just right” digital content, there are real limits to the impact that can have. Students need to work together, learn from one another, and gain the collaborative skills we know are important in life. I can’t imagine having students in my class independently drifting from a video to a website to a set of online practice questions and then thinking they were getting an enriching, holistic, educational experience. Blech.

But I also can’t say that the fifth-grade classroom I ran each day reflected the educational experience I envisioned for my students. Despite my imperfect efforts to be engaging and dynamic, I was constrained because I was operating in a learning model over 100 years old that required I teach the same lessons to a group of same-aged students. Once that constraint was in place, there were limits to what I could do.

It’s true that technology-based products can only do so much. But what if we worked with teachers and technologists to redesign and modernize the classroom model itself? In this way, we can take into consideration the promising aspects of both traditional and personalized-learning classrooms. We can use those to incorporate different learning modalities, social and emotional skills, and a role for teachers that’s sustainable and fulfilling.

From the earliest days of New Classrooms’ work, this is what we’ve attempted to do. We’ve focused on using data to regroup students so they can engage with lessons that give them the best chance for success each day. We had to figure out how to integrate different learning modalities, different student starting points, and different academic objectives. That’s required a fair amount of academic design.

But we’ve also had to think through how homework would work, how grades could be calculated, and what would happen if there was a substitute teacher one day. We called this “operational design” and have found that teachers deeply appreciated this kind of engineering. With many products, these details are often left for educators to figure out on their own. In fact, it’s the exquisite attention to this kind of engineering that makes all the difference.

You’re right that overhyped “skill maps” and “learning objects”—no matter how well-engineered—matter far less to students than what inspiring teachers can do. But by working closely with educators to redesign the classroom itself, we may well find new learning models that work far better for both teachers and their students.

There’s a healthy tension between the promise of personalized learning and the perils of ill-conceived curricula, models, and pedagogy. I think Larry is absolutely right that faith in our ability to achieve personalization through miraculous Uber-ish software engineering is likely to disappoint and that Joel is right that personalization has great potential so long as it’s as much about rethinking classrooms and instruction as it is about pixels. And I think it’s safe to say that the more plainly, openly, and respectfully that we wrestle with all of this, the better off students and schools will be.

This post originally appeared on Rick Hess Straight Up.

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