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AEI Political Report: The moral fabric and social norms - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Wed, 12/27/2017 - 05:01

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In the January issue of AEI’s Political Report, we look at how the public assesses the country’s moral fabric and how public views are changing on the moral acceptability of various behaviors and issues. With sexual harassment in the news, we also look at what the polls show about women’s experiences and how men and women view various actions.

 Moral values 

  • In questions asked across many decades, starting in the 1930s, people have worried that morals are getting worse. Today, the view that morals are deteriorating is widely shared among social conservatives, social moderates, and social liberals (Gallup).
  • The strong concern about eroding moral values does not mean Americans want the government weighing in on them. In a 2017 Gallup question, 45 percent say the government should promote traditional values, but 51 percent believe the government should not favor any particular set of values.

Social norms 

  • Gallup’s extensive battery of questions about what is morally acceptable shows growing acceptance of several behaviors once considered taboo, such as gay or lesbian relations and having a baby outside of marriage. Similarly, NORC surveys dating to the 1970s show Americans have become more accepting of sexual relations between two adults of the same sex (78 percent in 1974 said it was always or almost always wrong, compared to 42 percent in 2016) and of premarital sex. Both Gallup and NORC’s surveys show a strong majority continue to say extramarital relations are wrong.
  • The number of Americans who never attend church rose from 13 percent in 1999 to 24 percent in 2017 in NBC/Wall Street Journal polling. Today a majority, 56 percent, say “it is not necessary to believe in God in order to be moral and have good values,” up from 49 percent in 2013 (Pew).

Sexual harassment 

  • A scarcity and lack of continuity in polling makes it difficult to compare the percentages of women over time who say they have been sexually harassed at work. In recent polls, the share of women who said they had been harassed at work ranged from 22 percent (Pew) to 48 percent (NBC/The Wall Street Journal). A majority of men and women say that recent allegations reflect widespread problems in society (Pew). Men and women are mostly in agreement about which behaviors constitute sexual harassment (Economist/YouGov).

To view past issues of AEI’s Political Report, visit our archive here.

How to defund the UN - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 12/26/2017 - 20:51

As an assistant secretary of state in the George H.W. Bush administration, I worked vigorously to repeal a hateful United Nations General Assembly resolution equating Zionism with racism. Foreign diplomats frequently told me the effort was unnecessary. My Soviet counterpart, for example, said Resolution 3379 was only a piece of paper gathering dust on a shelf. Why stir up old controversies years after its 1975 adoption?

We ignored the foreign objections and persisted because that abominable resolution cast a stain of illegitimacy and anti-Semitism on the U.N. It paid off. On Dec. 16, 1991, the General Assembly rescinded the offensive language.

Now, a quarter-century later, the U.N. has come close to repeating Resolution 3379’s original sin. Last week the U.N. showed its true colors with a 128-9 vote condemning President Trump’s recognition of Jerusalem as Israel’s capital.

Full content is available to Wall Street Journal subscribers here.

Discussing the next steps for the tax bill: Pethokoukis on CNBC’s ‘Squawk on the Street’ - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 12/26/2017 - 15:15
DeWitt Wallace Fellow James Pethokoukis discusses the intended and unintended consequences that could result from the newly passed tax bill.

Discussing the 2018 Republican agenda: Pethokoukis on CNBC’s ‘Power Lunch’ - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 12/26/2017 - 07:00
DeWitt Wallace Fellow James Pethokoukis discusses the economic outlook for the upcoming year, including the likelihood of an infrastructure plan and the impact of the tax bill.

Time to reform renewable fuel policies for the public interest - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 12/26/2017 - 05:07

Many members of Congress have serious concerns about the Renewable Fuel Standard (RFS) authorized by the 2007 Energy Independence and Security Act. Skeptical officials have questioned whether the RFS mandates generate substantive environmental benefits, or only impose costs on consumers and the economy as a whole. But thank heavens for small mercies!

The Environmental Protection Agency (EPA), which oversees the use and consumption of all renewable fuels, recently announced that next year’s RFS mandates will again waive the requirement that American drivers use 7 billion gallons of cellulosic biofuel. The EPA projects that cellulosic biofuel will make up less than one-hundredth of 1 percent of gasoline consumed.

Cellulosic biofuel was once hailed as the magic transportation fuel that would dramatically reduce greenhouse gas emissions. But while cellulosic biofuel can be produced from inedible plant sources such as switchgrass and corn stover, currently no commercially viable technology exists to produce it.

So instead of cellulosic biofuel, today, American cars burn a lot of ethanol made from corn, up to 15 billion gallons in 2018. That’s a lot of ethanol, but American consumers have reached the “blend wall” which is the maximum amount of ethanol that can be combined inexpensively with petroleum-based fuel.

Most gas stations are unable to store and sell gasoline with more than 10 percent ethanol, and many car owners worry that their vehicles will be unable to burn such fuel safely. In the case of snow blowers, for instance, the presence of any ethanol causes them to cough, splutter and cease to shift the white stuff from our driveways.

To avoid busting the blend wall, the fuel industry will use more biodiesel, some of which is made from domestic soybeans and some of which is imported. Some of the world’s biodiesel is made from palm oil from Malaysia and Indonesia, where large areas of tropical forest are cleared to make way for palm plantations. The biodiesel the U.S. imports may not include palm oil, but a U.S. policy that raises global demand for biodiesel raises global production of palm oil.

Biodiesel has benefited from another handout. Until the end of 2016, fuel blenders received a $1 per gallon tax credit against their U.S. federal tax liability for blending biodiesel into petroleum diesel. There were even instances where the expired tax credit was reinstated retroactively. Today, it is rumored that Congress will once again reinstate the 2017 biodiesel tax credit. Those eager for a biodiesel windfall can’t wait for the next bill.

A further concern is that there is widespread agreement that the Renewable Fuel Standard mandates have expanded corn and soybean production and increased fertilizer and other chemical use by farmers. The result has been increased pollution in U.S. waterways that has to be mitigated by many communities, cities and towns that range from the Midwest to the Louisiana Gulf.

The most sensible policy would be to abandon the “conventional fuels RFS,” as the corn-based ethanol is described, and let the marketplace determine how much ethanol to use as a gasoline additive. Climate change is real, but corn ethanol does little if anything to slow it down. Let’s go back to a pre-2007 world before policy makers were sold an “ethanol is environmentally wonderful” bill of goods.

The biodiesel RFS is a tougher proposition. Using some of the potential sources of biodiesel, such as animal fats and waste cooking oil, significantly reduces greenhouse gas emissions, but is expensive. Other sources such as palm oil are environmentally damaging.

No one knows the future. Cellulosic biofuel may turn out to be the clean fuel option for the future, or maybe solar powered electric cars will be the dominant technology. Further research and development of cellulosic technology should be encouraged, but there is no sense mandating its use before it is ready to be produced and consumed efficiently in greater scale.

In many ways, the Renewable Fuel Standard mandates are a case study in how not to structure government policy. They clearly benefit well-defined and well-funded special interest groups: the farm lobbies and ethanol and biodiesel producers. It is time for the country’s renewable fuels policies to be reformed in ways that serve the public interest instead of catering to the wants of special interests.

Aaron Smith, Ph.D., is professor of agricultural and resource economics at the University of California in Davis.

Vincent Smith, Ph.D., is a visiting scholar at American Enterprise Institute and professor of economics at Montana State University.

Save the Veterans Choice Program - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 12/26/2017 - 04:49

Veterans have become a political football in the national debate over government’s role in health care. In 2014 President Obama signed the Veterans Access, Choice and Accountability Act, giving a select number of veterans access to private medical care. Prompted by the scandal over veterans’ deaths due to appointment wait times, the bill received bipartisan support. Veterans Affairs Secretary David Shulkin has been working on a new, streamlined Veterans Choice Program since taking office earlier this year.

But it hasn’t gone smoothly. The House this summer initially failed to pass a funding increase to keep the program afloat, holding it hostage to a different debate about the role of government in health care generally. Last week Congress passed an additional $2 billion, but a long-term fix still awaits.

The program needs additional money because its popularity depleted the allocated funds more quickly than anticipated. Patient visits through the program increased more than 30% in the first quarter of fiscal year 2017, according to the VA. Yet Democrats and several veterans service organizations oppose further investment in the program, arguing that it’s a first step toward privatizing the VA. They demand that funding for VA health-care programs for veterans outside of VA facilities be predicated on additional funding for VA’s in-house care capacity.

Full content is available to Wall Street Journal subscribers here.

Trump should make vulnerable Democrats who opposed his tax cuts pay the price in 2018 - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Sat, 12/23/2017 - 17:30

President Trump raised eyebrows when he invited Democratic Sen. Heidi Heitkamp to fly with him aboard Air Force One for a tax-reform rally in her home state of North Dakota earlier this year. For a vulnerable Democrat running for reelection in a deep-red state that Trump won by 36 points, appearing with the president was a political gift. Trump called Heitkamp up on stage, shook her hand and heaped praise on her, describing her as a “good woman” — the perfect visuals for campaign ads portraying her as a moderate willing to defy the “Resistance” and work with the president.

The move puzzled Republicans, who wondered why Trump was giving a boost to one of their principal targets in the 2018 midterm elections. But then came the moment that Heitkamp must now regret. As he made his case for the tax bill, Trump turned to her and said, “Are you listening, Heidi?” And then he added this blunt message: “Do your job to deliver for America or find a new job.”

Heitkamp did not deliver, nor did the four other Senate Democrats running for reelection in states Trump won by double digits: Joe Manchin III of West Virginia (a state Trump won by 42 points), Jon Tester of Montana (by 20), Claire McCaskill of Missouri (by 19) and Joe Donnelly of Indiana (by 19). Now it’s time for Trump to make good on that threat.

With Trump’s national approval rating averaging at just 38.5 percent — among the worst of any president in the first year after his election — some might suggest that he is in no position to impose political costs on his opponents. But his approval rating is between 50 and 60 percent in the five states where these vulnerable Democrats are running (except in Indiana, where it is 41 percent), making him a formidable adversary.

Trump should spend the coming weeks and months holding nonstop rallies in every one of these states to promote his tax reforms and how they will benefit ordinary Americans. He should tour companies that are using their savings from the corporate tax cuts to hire more workers, and businesses who are investing in new plants and equipment because the tax bill now allows them to write off those investments. He should visit small businesses who will benefit from the lower pass-through tax rate, so they can explain what it will mean to their workers. And he should hold town halls with middle-income families who will benefit from the individual rate cuts in the bill, so they can share what an extra thousand dollars in their pockets every year will mean to their families.

In each case, he should demand to know why their senator voted against the bill that made these things possible.

Heitkamp explained in a statement that she voted against the tax bill because, among other complaints, “middle income families lose out in the long-term because the relatively modest tax cuts they initially receive will expire after 2025.” This is patently dishonest. Everyone knows the tax cuts for middle-income families won’t ever expire. Even if Democrats are in power eight years from now, there is no way they won’t extend the Trump tax cuts for middle-class Americans, just as Barack Obama extended all the George W. Bush tax cuts except for those at the very top.

According to the Tax Policy Center, 91.3 percent of Americans making between $48,000 and $86,100 will get an average tax cut of $1,090 next year. By the time the tax cuts require an extension, most will have saved nearly $9,000 cumulatively on their tax bills. That’s real money. For those in the next income bracket — households making $86,100 to $149,400 — 92.5 percent will receive an average tax cut of $2,070. That’s more than $16,500 in tax savings before the cuts are set to expire. Are Democrats really going to take that money away?

It was a big mistake for these vulnerable Democrats to vote against tax reform. They had an opportunity to work with the president and make the effort bipartisan — but to do so they had to go against their party. Instead, they cast their lots with the anti-Trump Resistance. Before the tax vote, Manchin dismissed from the pressure his constituents to support the president. “I just don’t give a s—,” he said, “Don’t care if I get elected, don’t care if I get defeated, how about that?” If he does not care whether he returns to Washington, then come next year the 68 percent of West Virginia voters who supported Trump may give him his wish.

This time is not different - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 12/22/2017 - 17:32

Back in 1933, renowned investor Sir John Templeton famously said that the investor who says that “this time is different,” when in fact it is virtually a repeat of an earlier situation, has uttered among the four most costly words in the annals of investing.

He might very well have been speaking about economic policymakers and investors today who try to convince themselves that the bubbles in today’s global economy will have a happier ending than previous bubbles because “this time is different.”

They do so despite the fact that there are a number of good reasons to fear that if today’s global bubble situation is indeed different from 2008, it might be because it is more dangerous.

The most obvious way in which today’s global economic situation would appear to be more worrying than that in 2008 is the increased pervasiveness of bubbles today than before. In the run-up to the 2008 Lehman crisis, the bubbles were contained to the U.S. housing and credit markets; today, they appear to be found in almost every corner of the world economy.

It is not simply that we are witnessing egregious bubbles of historic proportions in exotic markets like the Bitcoin market or the Leonardo da Vinci art market. Rather, it is as the former Federal Reserve Chairman Alan Greenspan recently warned, years of highly unorthodox monetary policy by the world’s major central banks has created an unprecedented global government bond bubble, with long-term interest rates plumbing historically low levels.

Greenspan might have usefully added that the bubble has hardly been confined to the sovereign bond market. Indeed, global equity valuations are at lofty levels that have only been experienced three times in the last century. At the same time, housing-price bubbles are all too evident in key countries like Australia, Canada, China and Britain, while interest rates have been driven down to unusually low levels for the high-yield debt and emerging-market corporate debt markets.

If one had any doubt that global credit markets have lost touch with reality, all one needs to do is to consider a number of recent international bond issues. How is it that a country like Argentina, which has distinguished itself by defaulting no less than five times in the last hundred years, has managed to place a 100-year bond on good terms in the market? Or how is it that war-torn Iraq or little-known Mongolia not only can place bonds in the market but can have these bonds several times oversubscribed?

It also does not help matters that the bursting of bubbles today would be taking place in the context of a world more indebted than it was on the eve of the Lehman crisis. Particularly troublesome on this score are the very high levels of Chinese non-public sector debt, Italian sovereign debt, and emerging market corporate dollar-denominated debt.

Yet another reason to fear that if this time is different, it could be for the worse is the likely policy response to the bursting of bubbles this time around.

With the changing of the guard at both the Federal Reserve and the U.S. Treasury, we no longer have experienced hands at those institutions, who could craft and lead a swift and decisive international response to the bursting of the global bubble. Worse yet, there is reason to fear that an American First Trump administration would have an ideological aversion to orchestrate an international response in the event of a global market panic.

Those who argue that this time is different for the better seem to rest their argument on the stronger regulatory system that is now in place for the U.S. banking system. They argue that as a result of the Dodd-Frank Act, U.S. banks are very much less leveraged than they were before and very much less prone to taking on excessive risk.

While there is certainly much truth to these claims, the key point that the optimists overlook is that today the major part of U.S. credit is intermediated by the shadow banks rather than by the regulated banks. They also seem to forget the 1998 Long Term Capital Market experience that shook the global financial system to its core. That experience should have taught us that hedge funds and other parts of the shadow banking system, like the private equity funds and the money market funds, are highly interconnected and can be subject to the same sort of deposit runs as the banks themselves.

Well before Sir John Templeton issued his “this time is different” warning, Tolstoy wrote that happy families are all alike while every unhappy family is unhappy in its own way. When we look back on today’s unusually frothy global financial markets, we might find that Tolstoy’s dictum was as relevant as that of Sir John as a cautionary tale for both investors and economic policymakers.

Desmond Lachman is a resident fellow at the American Enterprise Institute. He was formerly a Deputy Director in the International Monetary Fund’s Policy Development and Review Department and the chief emerging market economic strategist at Salomon Smith Barney.


How the tax bill will affect the 2018 midterm elections - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 12/22/2017 - 17:01

Since the passage of the tax reform bill, supporters and opponents have been bellowing about the bill’s effects on the 2018 election. Democrats argue it will be an albatross around the GOP’s neck, while some Republicans expect it to boost support for their party’s fortunes. Here’s why these expectations are overblown.

  • The November 2018 election is light-years away in public opinion terms. Trump’s record setting unpopularity, not the decision to move ahead on tax reform, largely explains the Democrats’ growing advantage on the generic ballot question that asks people for whom they would vote if the election were held today.
  • Since 1984, when the question has been asked on exit polls, “taxes” has never been the top issue for voters. Voters who do say it’s the top issue for them cast their votes in substantial numbers for Republicans.
  • In polls, Republicans generally make taxes a higher priority than Democrats do. Somewhat worrying for the GOP then is that in recent polls they appear to be losing their advantage as the party better able to handle the issue. In June, the Republicans had a 4-point advantage on the issue in the NBC News/Wall Street poll. In their December poll, the Democrats had a 4-point advantage. These responses could be read as a commentary on the tax bill, but it is more likely that they reflect more generally negative views of the GOP.
  • A large number of people don’t have an opinion of the bill. This isn’t surprising given its complexity. In early December, when CBS News asked people if they had a good understanding of the Republican tax plan, 43% said they did, but 56% said they hadn’t heard enough to say. Bare majorities of Republicans and Democrats said they hadn’t heard enough, as did 61% of independents. After the passage of Reagan’s tax bill, after the long years of work that went into its creation and into selling it, 65% in a Lieberman Research poll told pollsters they didn’t know enough about it to have an opinion. The “don’t know” responses were high throughout the 1986 debate, as they have been during this debate. People don’t follow tax debates the way they follow debates about health care. To the extent there are hard opinions about the bill, they mostly reflect the partisan divisions in the electorate.
  • Americans simply don’t believe the tax promises of politicians, and they almost always think their taxes will be going up. Virtually every polling question asked on politicians’ tax promises since 1958 shows that Democrats and Republicans and Congress as a whole have very little credibility.

In short, it’s premature at best to make the claims either party is making about the bill’s effects, if any, on the 2018 elections.

See also:

Trump’s national security strategy | In 60 seconds - Trump's national security strategy | In 60 seconds - AEI

Fri, 12/22/2017 - 16:38


How do the goals of President Trump’s new national security strategy compare to those of past presidents, and those he outlined as a candidate? AEI scholar Gary Schmitt gives his take on those questions.

Democrats may soon regret their lockstep opposition to the tax bill - Trump's national security strategy | In 60 seconds - AEI

Fri, 12/22/2017 - 15:12

It’s surprising how little commentary there has been about the real politics of the Senate tax bill vote. Yes, of course, many commentators have noted how important it is for Republicans to show that they can govern when they are given a majority. The tax bill will cement their base and energize their donors.

Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi succeeded in holding a unified front against the tax bill, but more vulnerable Democrats may regret their opposition come November 2018. REUTERS/Joshua Roberts

But the truly significant political fallout from the tax bill will be determined by how the economy reacts between now and November 2018, when the 10 Democratic senators from states Trump carried — all of whom voted against the bill — face re-election. Undoubtedly, Chuck Schumer and his whips pressed the Manchins and Heitkamps to create a solid Democratic opposition. How else could the party sustain the brave fiction that this tax cut is a gift to the rich and a disaster for the country?

Still, given the exuberance of the stock market throughout the year that the bill was germinating, this was a very risky vote — not only for Mr. Schumer as leader but especially for the Trump-state Ten, who may now be wondering where their leaders have taken them.

A roaring stock market says much more about what will happen in the economy than the predictions of the economists and media analysts who predicted little if any benefit for economic growth. If the economy charges ahead as investors are anticipating, those experts will still be around in 2019, but the Senate and House Democrats who voted against the bill may be looking for jobs as lobbyists.

Still, one has to admire the ability of the Democratic leaders to keep their Senate members in line. In 2010, the vote for the Affordable Care Act was toxic, but every Democrat stepped up. Many Senate and House Democrats were swept away in the Tea Party election that year, and by 2014 almost half of all Democrats who had voted for Obamacare had retired or lost their seats.

If the stock market is any guide, the tax bill vote may end up, once again, as a suicide pact for those who followed their leaders off the cliff.

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Santa’s 2017 naughty and nice list for education - Trump's national security strategy | In 60 seconds - AEI

Fri, 12/22/2017 - 13:00

Santa rang the other night, in a state of frustration. To make a long story short: He’d gotten a Gates grant to hire a big-shot education consulting firm to help flag who’d been naughty and who’d been nice this year (in years past, he said, he’d just winged it). As Santa put it, “Everyone’s in such a state, I thought it’d be a lot easier if I just had a clean rubric—a quick-and-easy way to determine who in education was naughty this year, and who was nice.” The problem, he said, was the firm had delivered the promised PowerPoint—”and it wasn’t cheap!”—but it had left him nonplussed. He said he was reaching out to see if I’d take a look and offer any thoughts. (We’d served on a commission together a while back and hit it off.) Anyway, I figured I’d also share it for your consideration.

Nice Naughty It’s nice when parents are engaged and support their children’s education. But it’s naughty when parents hover, helicopter, or help their children at the expense of others. It’s nice when personalized learning allows students to pursue their passions at their own pace. But it’s naughty when it yields anything-goes curricula that abandon rigor and permit students to lag behind. It’s nice when big foundations diligently refine their strategy based on experience But it’s naughty when they cartwheel from one strategy to the next, leaving a trail of disruption in their wake. It’s nice to set ambitious, aspirational goals for student achievement. But it’s naughty to set ludicrous, unreasonable targets for student achievement. It’s nice to passionately fight “for the kids” against those who are, you know, fighting “against the kids.” But it’s naughty to spew venomous, ad hominem vitriol and contribute to our political polarization. It’s nice to thoughtfully embrace social and emotional learning. But it’s naughty to recklessly embrace faddish SEL enthusiasms that sacrifice real learning. It’s nice to fight for social justice and call out the forces that contribute to inequity and poverty. But it’s naughty moralizing to say that out-of-wedlock births or lack of personal responsibility can contribute to inequity and poverty. It’s nice to eliminate policies that entrench privilege or exacerbate class divides. But it’s naughty to support tax reform which would curtail the privileges accorded to graduate students and deep-pocketed colleges.

There were a lot more, but you get the idea.

What frustrated Santa, he said, was that the rubric just isn’t all that clear about how to tell naughty from nice. When does parental support cross the line? When does personalized learning go from invaluable to insipid? When do ambitious goals morph into frivolous targets? Santa pleaded, “With all this, how will I ever be able to make a list—or check it twice?!”

I sighed. I told Santa that I got his problem but didn’t know what to do about it. After all, the longer I’m in education, the more I’m struck by the thunderous assurance with which the same exact things get denounced as naughty or celebrated as nice, based on nothing more than word choice, inflection, audience, or the mood of the moment. Though, in the spirit of the holidays, I reminded Santa that one of the nice things about education is that precious few people really are “against the kids.” And that’s nice.

This post originally appeared on Rick Hess Straight Up.

Five questions for Hal Varian: A short-read Q&A with Google’s chief economist - Trump's national security strategy | In 60 seconds - AEI

Fri, 12/22/2017 - 11:00

The Wall Street Journal has described Hal Varian as the Adam Smith of Googlenomics. As the tech giant’s chief economist, he revolutionized Google’s business strategy, and is known now as perhaps the most prominent skeptic of America’s official, sluggish productivity numbers. He joined the podcast to discuss the tech industry, the future of the economy, and much more.

Below is an abbreviated transcript of our conversation. You can read our full discussion here. You can also subscribe to my podcast on iTunes or Stitcher, or download the podcast on Ricochet.

JAMES PETHOKOUKIS: You are well known for arguing the official productivity numbers significantly understate the productivity gains the US is making, especially in the tech sector. If we solved the mismeasurement problem, does that get us back to the healthy productivity growth we saw before the slowdown?

HAL VARIAN: So it’s a piece of the action, but it’s not the entire action.

If you ask what’s left over, I can’t say I’m going to give you an entire solution, but I’ll give you a good place to look. A good place to look is to look at the leaders and laggards. If you look at the leading companies that are doing the best, that are the most advanced at using these new technologies, they’re doing pretty well in terms of productivity, where we think of output per worker, output per hour worked.

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But then there are still a lot of laggards who aren’t really adopting the new technologies and aren’t as productive as the leading firms in their industry. And there, I think, what we rely on or we hope for is diffusion of this knowledge through the different indices, and we need to take advantage of the potential productivity gains that are there.

So we’re now in a situation in which we’re on our way, we believe and hope, to a more productive economy, but it just hasn’t sprung up everywhere.

Throughout history people have worried about technology displacing jobs, and yet the end result has always been more jobs and higher living standards. Will this time be different?

Well, everybody wants more jobs and less work. And that’s pretty much what technology has delivered. You look over the last 200 years, we had a working week of 70 hours a week a couple of hundred years ago and now we’re down to 37 in the US. We’re down to 29 hours a week in the Netherlands, a whole day less than we’re working.

So technology has delivered on that promise. We’ve got more leisure. We’ve got more time. We’re not working in dangerous, physically stressful, difficult activities to the extent that we were a couple of centuries ago. So when we look at work, we want less of it. And jobs — meaning the income-producing activity — we want more of it.

Well, I would say our challenge for the next couple of decades, because it’s pretty hard to look out much further than that, is actually the topic you raised originally, the productivity issue.

Bill Gates has talked about a robot tax, in part as a way of slowing down progress and giving workers a chance to adjust. So do we need this fast productivity growth, or is it maybe moving too fast and we have to slow it down so workers can adjust?

Well, next decade, the 2020s, we’re going to see the lowest growth in the labor force since we started measuring it at the end of World War II.

So what that means is we’ve got the population to labor force balance shifting in favor of more retired people, more non-working people and fewer working people. So how do we deal with that? That’s pretty close — the 2020s, only in a couple of years from now.

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So we’ve got to really think about improving productivity now, not delaying it. Now, I grant you, if there’s some fantastic new technology that suddenly explodes and sucks a lot of jobs out of the market, that’s reason for concern. We should be aware of that possibility, but overall when you look at the next 25 years, we’re going to be facing tight labor markets. And that simply comes from looking at the demographic statistics. . . .

We’re going to have tight labor markets for the next 20 or so years. And that means we’d better get some productivity boost there or else we’re going to have problems.

Do you think the big technology firms are in any way part of the innovation problem in this country?

No. You look at these large technology companies and what critics leave out of the picture is the fact that they are competing very intensely among themselves.

Imagine a world where Apple only made devices, where Google only provided search, where Microsoft only made operating systems — that would be a very different world than what we have now because you’d have these silos that in that case, in that potential world, really were monopolizing a sector. . . .

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Now, the exit question that people have raised, what you mentioned of acquisitions, well, as you know, I’m sure, that there has been a great reluctance for IPOs over the last several years. Companies want to mature much longer before they do an IPO and several of those companies would rather have an acquisition IPO. There are four times as many — four times as many — acquisitions as IPOs.

And so how could you imagine that innovation would be improved if you tried to restrict acquisitions? You see, it’s the acquisitions that are providing the payoff to the innovation investment.

When you hear the phrase pro-growth or pro-innovation policy, what do you think about?

Well, my favorite example is, of course, the internet, as you might guess. That was funded by NSF and DARPA. They also funded the Autonomous Vehicle Program; it was funded by DARPA. It was patient money in a sense that they funded five or six universities to do research on autonomous vehicles for 10 years. They’re now funding robotic surgery. There was in fact a digital libraries program. There were three search engines that came out of the digital libraries program. That was Inktomi, Lycos, and Google. So Google got its start basically from that funding for basic research.

So, from my point of view, the answer to your question is absolutely we have to keep funding basic research. China is funding basic research.

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Republicans have reformed taxes — will they fix 1970s budget rules next? - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Thu, 12/21/2017 - 22:58

The Republicans have passed their tax bill, without a single Democratic vote, despite low to dismal poll ratings. It’s reminiscent of the passage by Democrats, without a Republican single vote, of Obamacare in March 2010.

Democrats lost 63 seats and their House majority that fall. Republicans hope they won’t follow suit. They argue, accurately, that their bill will lower taxes on almost all taxpayers and that it will stimulate economic growth, which already has risen above the Obama years.

The effects of Obamacare, in contrast, were harder to model, and some backers’ claims — if you like your insurance, you can keep it — soon were revealed as glaringly untrue. We’ll see if the greater simplicity of the tax bill makes a difference in political fallout.

One thing in common between the two laws is that voters seem congenitally skeptical about the claims of the party in power. Obamacare continued to be unpopular until, presto, Donald Trump took office and Republicans threatened repeal.

A second thing in common is that the details of both signature pieces of legislation — details that weakened their appeal and provided ammunition for opponents — were the result of legislative straitjackets created in the 1970s.

The restrictions of the 1974 Budget Control Act and the cost estimates of the Congressional Budget Office it created were intended to provide clarity and restraints on presidents and Congresses. Ironically, we had mostly balanced budgets before 1974 and mostly budget deficits since.

Another 1970s reform that has proved counterproductive involved changes in Senate filibuster rules. The number of votes to end a filibuster was reduced from 67 to 60, and filibusterers were no longer required to hold the floor, speaking all night if need be, to block passage of legislation. The result: many more filibusters than before and an effective requirement — unimagined when I was writing the first edition of The Almanac of American Politics in 1970-71 — of a supermajority of 60 votes to pass major laws.

As any student of political behavior might have predicted, both parties have learned to game these systems. Obamacare and the tax bill provide many examples.

Democrats got the CBO to count the revenue generated by Obamacare’s Community Living Assistance Services and Supports, or CLASS, Act taxes, fully aware that program’s postponed and unsustainable costs would never be incurred. Republicans likewise took some $300 billion of savings, suddenly available when CBO revised its clearly mistaken estimates of costs of repealing Obamacare’s individual mandate, to pay for tax cuts it couldn’t otherwise get.

This is not a criticism of CBO, which has remained properly nonpartisan and which was designed to estimate revenue flows, not personal choices — such as how many young people would rather pay small individual mandate penalties rather than expensive Obamacare health insurance premiums.

It’s a criticism of the notion that you can create neutral rules that will guide elected politicians to desired results. Politicians and the voters they represent have policy goals they believe important and they have their own ways — fallible, but subject to criticism and debate — to estimate the likely effects of particular policies.

My observation over the years is that systems intended to be failsafe are sure to fail. Forty years of the Budget Control Act regime and 30 years of the opaque Byrd Rule (which allows some Senate measures to pass with 50 votes while others require 60) have shown that both parties have figured out how to game the rules enough to foil those the intended purposes.

The Constitution provides rules enough by allowing one Congress to repeal the laws enacted by a predecessor (rendering Obamacare’s yet-unimplemented Independent Payment Advisory Board unconstitutional) and by allowing each house to set its own rules. The Senate has enough other dilatory procedures to fit Thomas Jefferson’s description as the saucer in which coffee can cool, and any House majority is subject to recall in less than 22 months.

Economic conditions often veer from CBO’s predicted flight paths and foreign developments or domestic attacks can change national priorities. Congress should be free to respond.

The Republican tax bill is vulnerable to attack because it cuts the corporate rate from 35 percent, the highest among developed countries. Economists of every stripe have said it must be lowered. So did former President Barack Obama in 2012, but he failed to fashion a bipartisan deal.

Surprisingly, Republicans in the Trump era took the responsible step of cutting that rate, at some political risk. Any chance they’ll next clear away the detritus of the long since dysfunctional 1970s reforms and relegate them to the fate of bell-bottom pants and disco music?

‘Equal Pay Day’ this year was April 4 — the next ‘Equal Occupational Fatality Day’ will be on May 30, 2028 - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Thu, 12/21/2017 - 22:08

Every year the National Committee on Pay Equity (NCPE) publicizes “Equal Pay Day” to bring public attention to the gender earnings gap. According to the NCPE, “Equal Pay Day” fell this year on April 4, and allegedly represents how far into 2017 women will have to continue working to earn the same income that the men earned in 2016, supposedly for doing the same job. Inspired by Equal Pay Day, I introduced “Equal Occupational Fatality Day” in 2010 to bring public attention to the huge gender disparity in work-related deaths every year in the United States. “Equal Occupational Fatality Day” tells us how many years into the future women will be able to continue to work before they will experience the same number of occupational fatalities that occurred for men in the previous year.

The Bureau of Labor Statistics (BLS) released data this week on workplace fatalities for 2016, and a new “Equal Occupational Fatality Day” can now be calculated. As in previous years, the graphic above shows the significant gender disparity in workplace fatalities in 2016: 4,803 men died on the job (92.5% of the total) compared to only 387 women (7.5% of the total). The “gender occupational fatality gap” in 2016 was again considerable — more than 12 men died on the job last year for every woman who died while working.

Based on the BLS data for 2016, the next “Equal Occupational Fatality Day” will occur more than 10 years from now ­­– on May 30, 2028. That date symbolizes how far into the future women will be able to continue working before they experience the same loss of life that men experienced in 2016 from work-related deaths. Because women tend to work in safer occupations than men on average, they have the advantage of being able to work for more than a decade longer than men before they experience the same number of male occupational fatalities in a single year.

Economic theory tells us that the “gender occupational fatality gap” explains part of the “gender earnings gap” because a disproportionate number of men work in higher-risk, but higher-paid occupations like coal mining (almost 100% male), commercial fishing (99.9% male), police officers (85.9% male), logging (94.9% male), truck drivers (94.0%), roofers (98.3% male), and construction (97.3% male); see BLS data here. The table above shows that for the 20 most dangerous US occupations based on fatality rates per 100,000 workers by industry and occupation in 2016 men represented more than 90% of the workers in 14 of those 20 occupations, and more than 85% of the workers in 18 of the 20 occupations.

On the other hand, women far outnumber men in relatively low-risk industries, often with lower pay to partially compensate for the safer, more comfortable indoor office environments in occupations like office and administrative support (72.1% female), education, training, and library occupations (73.1% female), and healthcare (75.6% female). The higher concentrations of men in riskier occupations with greater occurrences of workplace injuries and fatalities suggest that more men than women are willing to expose themselves to work-related injury or death in exchange for higher wages. In contrast, women, more than men, prefer lower risk occupations with greater workplace safety, and are frequently willing to accept lower wages for the reduced probability of work-related injury or death. The reality is that men and women demonstrate clear gender differences when they voluntarily select the careers, occupations, and industries that suit them best, and those voluntary choices contribute to differences in pay that have nothing to do with gender discrimination.

Related: Here’s a quote from Camile Paglia in 2013 writing in TIME (“It’s a Man’s World and It Always Will Be“) about men’s important, but mostly underappreciated role in the labor market and the importance of their willingness to do the dangerous work that makes us all better off:

Indeed, men are absolutely indispensable right now, invisible as it is to most feminists, who seem blind to the infrastructure that makes their own work lives possible. It is overwhelmingly men who do the dirty, dangerous work of building roads, pouring concrete, laying bricks, tarring roofs, hanging electric wires, excavating natural gas and sewage lines, cutting and clearing trees, and bulldozing the landscape for housing developments. It is men who heft and weld the giant steel beams that frame our office buildings, and it is men who do the hair-raising work of insetting and sealing the finely tempered plate-glass windows of skyscrapers 50 stories tall.

Every day along the Delaware River in Philadelphia, one can watch the passage of vast oil tankers and towering cargo ships arriving from all over the world. These stately colossi are loaded, steered and off-loaded by men. The modern economy, with its vast production and distribution network, is a male epic, in which women have found a productive role — but women were not its author. Surely, modern women are strong enough now to give credit where credit is due!

Bottom Line: Groups like the NCPE use “Equal Pay Day” to promote a goal of perfect gender pay equity, probably not realizing that they are simultaneously advocating an increase in the number of women working in higher-paying, but higher-risk occupations like logging, roofing, construction, farming, and coal mining. The reality is that a reduction in the gender pay gap would come at a huge cost: several thousand more women will be killed each year working in dangerous occupations.

Further, the proponents of “Equal Pay Day” are promoting a statistical falsehood by suggesting that women working side-by-side with men in the same occupation for the same company are making something like 25% less than their male counterparts, which causes them to have to work an additional 65 days (and 13.5 weeks) to achieve “equal pay.” The NCPE’s statement that “because women earn less, on average, than men, they must work [25%] longer for the same amount of pay,” implies that gender wage discrimination is behind the gender pay gap. Of course that would imply that some corrective action by government is necessary to address the gender pay gap, even though most studies find that there is no gender earnings gap after factors like hours worked, child-birth and child care, career interruptions, and individual choices about industry and occupation are considered. For example, a 2009 study by the Department of Labor concluded:

This study leads to the unambiguous conclusion that the differences in the compensation of men and women are the result of a multitude of factors and that the raw wage gap should not be used as the basis to justify corrective action. Indeed, there may be nothing to correct. The differences in raw wages may be almost entirely the result of the individual choices being made by both male and female workers.

Conclusion: I hereby suggest, that after adjusting for all factors that contribute to gender differences, Equal Pay/Earnings Day actually fell on about December 31 last year. Or maybe the first week of January…. but NOT the second week of April. Women should be embarrassed by the statistical falsehood that is annually promoted by NCPE’s Equal Pay Day that suggests that gender discrimination in the labor market burdens them with 13.5 additional weeks of work to earn the same as their male counterparts – when that’s not even remotely true.

Finally, here’s a question I pose for the NCPE every year: Closing the “gender earnings gap” can really only be achieved by closing the “occupational fatality gap.” Would achieving the goal of perfect pay equity really be worth the loss of life for thousands of additional women each year who would die in work-related accidents?

Banter #296: Chris Karpowitz and Jeremy Pope on the 2017 American Family Survey - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Thu, 12/21/2017 - 19:41

In Banter’s sixth installment of the “Bridging the Dignity Divide” series, Chris Karpowitz and Jeremy Pope joined the show to discuss the results of the third annual American Family Survey, cosponsored by Deseret News and Brigham Young University. The survey covers a range of issues facing American families today, including economic challenges, cultural concerns, health care priorities, immigration, and addiction. Karpowitz and Pope are codirectors of the Center for the Study of Elections and Democracy at BYU. They participated in the survey release event at AEI, hosted by AEI Senior Fellow Karlyn Bowman. The link below will take you to the full event video.

About the “Bridging the Dignity Divide” Series

Over the next few weeks, Banter guests will address topics such as ending the opioid epidemic, expanding career and technical education, reintegrating the incarcerated into society, promoting work and family formation to overcome poverty, and uniting the country. This series is part of a broader institutional push to help close the dignity gap by creating a culture and economy where everyone is objectively and authentically necessary. The links below provide more information on AEI’s work promoting dignity.

Learn More:

The American family in the age of Trump: Release event for the 2017 American Family Survey (Full AEI event video)

2017 American Family Survey

AEI Spotlight on Human Dignity

The Dignity Deficit | Arthur Brooks | Foreign Affairs | March/April 2017

A Spotlight on Human Dignity | Arthur Brooks | AEI | November 8, 2017

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Why Trump and Haley’s tough talk on the UNGA vote is actually cheap - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Thu, 12/21/2017 - 19:28

Today’s “emergency” vote in the UN General Assembly on Jerusalem followed President Trump’s decision to deliver on the United States’ long-held promise to move its embassy in Israel. The result of this vote is interesting, not because of the predetermined outcome, but because it shows the limitations of using foreign aid as a political tool.

US Ambassador to the United Nations Nikki Haley speaks during the United Nations Security Council, December 18, 2017. REUTERS/Brendan McDermid

With theatrical flourish, President Trump and Ambassador Haley both issued warnings earlier this week on the vote, threatening that the United States “will be taking names” and might pull aid from countries voting to formally rebuke it in this setting.

That America expects a degree of loyalty from political allies and aid recipients should surprise no one. It has been US policy since at least Reagan. And for decades researchers have been studying the efficacy of linking US foreign aid and UN voting — helped by laws requiring the US State Department to report to Congress on voting practices in the UN.

See also:

This research suggests that countries receiving US aid generally tend to vote with the United States at the UN, but that the subject matter of the vote really matters. Governments with new leaders are more likely to support the United States on issues it considers important. But when the United States votes “no” on a resolution, as it did today, it is often isolated. This increases the value of attracting additional “no” votes.

One might expect that it’s easy to buy what are largely symbolic votes at the UN, but the evidence is mixed. The United States is unique among aid donors in its ability to leverage its foreign aid as an incentive for favorable UN votes. For example, countries that become rotating members of the UN Security Council tend to receive more US foreign aid than they otherwise would. But even poor countries, democracies in particular, are often willing to take a stand against the United States in the UN General Assembly, as today’s vote demonstrated. Others decided to take the safe route and abstain or not vote at all.

As to Trump and Haley’s threats, research suggests that the United States actually uses foreign aid reductions as a form of punishment sparingly. This is because most aid is controlled by Congress and strongly linked to US security interests. As a result, the countries that are most likely to be penalized for UN votes are the ones that receive relatively little US foreign aid anyway.

If the threats made by the Trump administration matter at all, they matter to the future of the UN. The United States contributed over $10 billion to the UN in 2016, $6 billion of which was voluntary. Haley’s assertion that the United States is “being asked to pay for the dubious privilege of being disrespected” suggests that today’s vote is about more than foreign aid, Israel, or the UN. It’s about respect for America’s leadership in the world and the extent to which it wants to continue funding this institution.

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A second chance for South Africa - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Thu, 12/21/2017 - 18:37

Liberation movements are often more effective in gaining independence than in governing. They also generally have more internal cohesion when united by a liberation goal than when they ultimately achieve that goal. South Africa’s African National Congress Party, or ANC, would seem to be no exception to the rule.

Hopefully, Cyril Ramaphosa’s election to head the ANC and effectively to become the country’s next president in 2019 will mark a turning point for the better in the country’s economic fortune and political governance. However, that is far from assured.

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Discussing tax reform’s effect on wages: Pethokoukis on CNBC’s ‘Power Lunch’ - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Thu, 12/21/2017 - 18:00
DeWitt Wallace Fellow James Pethokoukis discusses AT&T's decision to hand out bonuses to employees after the tax bill passed.

Right questions and wrong answers - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Thu, 12/21/2017 - 17:16

On January 8, Charles Murray will celebrate his 75th birthday and retire as the W. H. Brady Scholar, shifting to an emeritus role at AEI. In his lecture, Dr. Murray will reflect on his inner dialogue from Thai villages in the 1960s through landmark books such as “Losing Ground” (Basic Books, 1984), “The Bell Curve” (Free Press, 1994), and “Coming Apart” (Crown Forum, 2012) — and on how his values have shaped the questions he asked and how the answers he found have shaped his values. Please join AEI for a uniquely personal perspective on Charles Murray’s career as seen from the inside.

Join the conversation on social media with @AEI on Twitter and Facebook.

If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.


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