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Is democracy actually in retreat? There’s some evidence to the contrary - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Wed, 04/04/2018 - 17:17

One could fill a library with the books and reports regarding the ongoing “crisis” of democracy. But what if democracy is not in decline? A new dataset appears to show quite the opposite.

Catastrophes and crises, real and imagined, trigger avalanches of proposed solutions. The most recent offer is “Constitutional Localism,” the idea that a devolution of power to local communities will solve the frustration and anger of the American voter.

Leaving aside my immediate questions and concerns about this proposal, Americans should take a step back and ask if proposed solutions to a perceived crisis are based on a false premise. What if democracy is actually doing fine and it is something else that needs correcting?

The REIGN (Rulers, Elections, and Irregular Governance) dataset by Curtis Bell at One Earth Future (OEF) Research would seem to show a twenty-year global expansion of democracy, directly contradicting Freedom House’s finding of a twelve-year democratic crisis. Whose data is more believable?

To unpack that charged question, first understand that methodologies produce the outcomes they are designed to.

Freedom House’s methodology is thorough, transparent, and has undergone stringent review processes. But the data points are ultimately generated from the assessments of “a team of in-house and external analysts and expert advisers from the academic, think tank, and human rights communities.”

The REIGN dataset was built from a variety of other widely-used datasets (Polity, Archigos, LEAD, and Geddes Wright Frantz) that were also ultimately created from expert assessments. REIGN is also different from Freedom House in that it measures by the month rather than the year, drills into the diversity of autocratic regime types, and recognizes that some forms of government are provisional.

My point: I am skeptical of all data, especially those claiming to measure highly politicized conceptual constructs like “democracy” or “freedom.” Perhaps before setting about to change the political order to favor more of something, we should consider the very real possibility that our thinking is based on a false premise.

In other words, we all should be very careful about drawing sweeping conclusions from datasets like Freedom House, REIGN, and others, which can lead analysts to radically different conclusions that stem from perfectly valid methodological differences.

Note: Jay Ufelder shared the REIGN dataset on Twitter, bringing it my attention.

Learn more:

Social and emotional learning | In 60 seconds - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Wed, 04/04/2018 - 14:13


The push for “social and emotional learning,” or SEL, could be part of a healthier vision of schooling that moves beyond America’s testing mania. Yet, as AEI’s Rick Hess argues, a true consensus on such an important issue will require honoring traditional values, not just progressive enthusiasms. If SEL winds up hijacked by well-meaning ideologues, a promising cause will morph into a divisive educational culture war.

Can Hungarian democracy survive? - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Wed, 04/04/2018 - 14:03

The upcoming parliamentary election in Hungary appears only marginally more exciting than the recent Russian presidential election. Although the number of undecided voters is substantial, it would require a minor miracle for the ruling Fidesz Party to be voted out of power this Sunday.

Polls from last month indicate that between 41 percent and 54 percent of voters support Fidesz, followed by the far-right Jobbik with 15 percent to 25 percent, and only then by the largest center-left opposition party, MSZP, with 12 percent to 18 percent. While telling, that alone does not make the election a foregone conclusion. Earlier this year, an independent candidate, Peter Marki-Zay, surprised everyone by winning the municipal election in Fidesz’s stronghold of Hodmezovasarhely. The lesson for opposition parties was obvious: Fidesz will lose if opposition parties unite behind strong candidates.

A newspaper shows Hungarian Prime Minister, Viktor Orban as a man reads at a campaign forum of the right-wing Fidesz party in Ercsi, Hungary, March 9, 2018. Picture taken March 9, 2018. Reuters

In its 2012 reform of the electoral system, Fidesz has strengthened the majoritarian elements of Hungary’s electoral system by increasing the number of single-member constituencies and redrawing the electoral map in its own favor. Unsurprisingly, in 2014 Fidesz emerged from the parliamentary election with a supermajority.

But, as Marki-Zay’s example showed, Fidesz’s electoral weapon can be turned against it. Zoltan Kesz, a lone classical liberal MP from Veszprem, has long argued that the opposition, including the far-right and historically anti-Semitic Jobbik, must work together if Fidesz is ever defeated under the current electoral law. The two parties have followed opposite trajectories during their existence. Fidesz (acronym for “Alliance of Young Democrats” in Hungarian) was founded as a free-market and Atlanticist movement and only in the mid-2000s it embraced nationalism and began to rethink its pro-Western leanings. And Jobbik, which started as a neofascist movement, has been moving to the center lately, as Orban’s Fidesz has left it with little breathing space on the populist right.

Still, for many, a united opposition with Jobbik is a bridge too far. “Although everyone is talking about having one candidate,” says Kesz, “no one is doing it. There have been some candidates who stood back, but not too many. Not enough.”

Hungarians, meanwhile, have plenty of reasons to be dissatisfied with the status quo. Hungary was once hailed as one of the most successful post-Communist economies. Under Orban’s watch—and largely as a result of his statist policies—it has become the poorest among the four Visegrad countries. Hundreds of thousands have left in the aftermath of the 2008 crisis, settling mostly in Austria and Germany—but also in the U.K. where the Hungarian diaspora is estimated at around 95,000 Half of Hungarians between the ages of 15 and 29 are considering leaving for another country, according to a recent poll.

In the weeks before the election, media outlets owned by the former Fidesz grandee Lajos Simicska have started publishing information about high-level corruption in government, funneling as much as 4 billion euros in EU funds outside of the country and laundering it through banks in the Middle East.

Somewhat surprisingly, Orban is showing little signs of moving to the defensive. Notwithstanding the fact that immigration into Hungary is essentially nonexistent, Fidesz’s campaign has focused relentlessly on the so-called “Soros Plan“—that is, the Hungarian-American’s alleged plot to flood Europe with millions of illegal immigrants from Muslim-majority countries. Last year, every Hungarian household received a personalized letter from the prime minister, making the most grotesque of accusations against Soros, including his supposed proposal to force EU member states to pay 28,000 euros in welfare (far more than the average per-capita income in the country) to each asylum seeker.

If Fidesz indeed wins a third term in office, opposition leaders have to do some serious soul searching. Not so long ago, for example, hopes were running high for the Momentum Movement, founded by a group of young Hungarian professionals who successfully derailed Orban’s bid to host Olympic games in Budapest. Similar in substance and note to Emmanuel Macron’s La Republique en Marche, the movement has talked about a bottom-up renewal of politics. However, it lacks a leadership figure that could credibly rival Hungary’s strongman and the discipline needed to run countrywide political campaigns. It is currently hovering at around 3 percent in the polls.

With each new term won by Fidesz, its hold on power is becoming more entrenched. That includes the party’s financial backing by a network of oligarchs who are awarded an overwhelming proportion of government contracts, usually involving EU funds, but also the presence of party loyalists at all levels of government administration and the judiciary—not to speak of public broadcasting and the fact that the vast majority of media outlets are owned by Fidesz supporters. To be sure, Hungary is not Russia or Turkey, but its current direction of travel is unmistakable. One hopes that April 8 will not mark the last free election in Hungary’s post-1989 history.

School-choice supporters should drop the overheated rhetoric - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Wed, 04/04/2018 - 12:34

The school-choice movement features more than its share of alarmist rhetoric and extravagant boasts. U.S. Secretary of Education Betsy DeVos has opined that school choice is necessary because millions of students “are trapped in schools that fail to meet their needs.” Proponents boast that “like Uber disrupts the transportation industry, charter schools and private schools can and are disrupting the education industry.”

@JulieK via Twenty20

The presumption is that parents are dissatisfied with their children’s neighborhood school, and with the American education system as a whole. Advocates for charter schooling, school vouchers, and education savings accounts seem convinced that they are well-served by creating a stark contrast between what they’re offering and the familiar status quo — that talk of failing schools and promises of disruption will help win over parents and voters.

And school choice has been on quite a run, leaving advocates confident that their message is working. After all, three decades ago, there were no charter schools or school-voucher programs in the United States. Today, more than 40 states have adopted charter-school laws, with 7,000 charter schools enrolling more than 3 million students. Additionally, 29 states have adopted some kind of private-school choice program.

Yet this remarkable legislative success has not been matched by similar shifts in public opinion (as we’ll note in a moment). Thus it’s worth asking why school choice’s political accomplishments appear to be outpacing its success in winning hearts and minds. Indeed, what if school choice is succeeding not because of its advocates’ rhetoric, but despite it? What if proposals to give parents, educators, and communities more options have simply been buoyed by their innate moral and practical resonance and savvy coalition-building? And what if, in fact, superheated rhetoric has done more to alienate potential supporters than to woo them?

While there’s evidence that support for school choice has broadly increased over time, the trend is far more muddled than a casual observer might imagine. PDK International’s annual survey of the public’s views on education has asked the same question on school vouchers for 25 years. At first, views on vouchers rose steadily: from 24 percent positive vs. 74 percent negative in 1993, to 46 vs. 52 percent, respectively, in 2002. Since 2002, however, support has stagnated; in 2017, it stood at 39 percent — lower than it had been 15 years before (opposition held steady at 52 percent). Education Next’s annual survey has asked about vouchers since 2011, finding that support for vouchers has stayed roughly constant, hovering between 43 and 50 percent between 2011 and 2017. (Full disclosure: Co-author Hess is an editor of Education Next.)

On charter schools, generally regarded as a cuddlier and less polarizing alternative to school vouchers, there is more growth — but then a similar stagnation. PDK’s annual survey found that support for charters increased from 42 percent in 2000 to 70 percent in 2014 (the last year the question was asked). That story is complicated, however, by the annual Education Next poll, which started asking about charters in 2008. Ed Next found that support for charter schools was at 42 percent in 2008, grew to 55 percent by 2014, but then fell back to 39 percent between 2014 and 2017. Even if one opts to toss in a recent poll that used Ed Next’s charter-school question and found a sizable bump in support, from 39 percent in 2017 to 47 percent in 2018, charters are still down markedly from 2014

In short, the extraordinary growth of school choice isn’t showing up in public opinion — and there’s evidence that support has plateaued (or even declined) in recent years. How to make sense of these findings? Well, while Americans like school choice, they also like their local schools and are uncomfortable with proposals to radically transform schooling.

Between 1974 and 2017, when asked by PDK International’s annual survey to rate their community’s schools, nearly half of Americans typically gave their local schools an A or a B. Forty-nine percent did so in 2017; the same number that did so when the question was first posed in 1974. During the 21st century, the share of respondents giving their local schools an A or a B has consistently been over 40 percent — with a high of 53 percent in 2013.

More tellingly, when asked about their own child’s school, parents expressed high levels of satisfaction. Between 1985 and 2017, when PDK asked parents to grade their oldest child’s school, more than three in five offered an A or a B. The lowest level of support was 62 percent, in 1998; in 2017, 71 percent gave their kid’s school an A or a B.

This affection for neighborhood schools is understandable. After all, parents tend to know and like their schools, and that most have already chosen their schools in some fashion. Schools also serve as valued community hubs, an experience that children and parents share, a place to hold social gatherings and civic events, and a unifying force where people build relationships and community.

But while Americans are happy with their schools, they are harshly critical of the nation’s public schools as a whole. Between 1981 and 2017, PDK asked Americans to rate the nation’s public schools, and the grades have been consistently dismal. In 1981, just 20 percent of Americans gave the nation’s schools an A or B; in 2017, it was still only 24 percent. The number fell as low as 16 percent and never exceeded 28 percent. One gets the sense that choice advocates tend to look to this number when they blast “failing schools” and call for bold disruption.

Whatever their concerns about the nation’s schools, though, most parents do not want their own kids’ schools boldly disrupted. A 2017 Associated Press–NORC Center for Public Affairs poll asked how students should be assigned to schools: 67 percent of respondents wanted students to attend schools based on their neighborhood. In short, two-thirds expressly endorsed the kind of “zip-code schooling” that choice advocates routinely denounce. Just 8 percent of respondents wanted students assigned to school via a lottery (the way charter schools, for instance, admit students).

The latent tension between affection for neighborhood schools and support for school choice may be most evident when Americans are asked what should be done about “failing” schools. For instance, between 1999 and 2002, PDK asked, “Which one of these two plans would you prefer — improving and strengthening the existing public schools or providing vouchers for parents to use in selecting and paying for private and/or church related schools?” Each time PDK asked the question, between two-thirds and three-quarters of respondents endorsed “improving public schools,” rejecting the more disruptive option. In a one-off question asked in 2013, PDK found that 84 percent of respondents opposed closing a school that has been failing “for a number of years.”

For all this, Americans strongly favor less disruptive choice proposals. In 2002, for instance, 86 percent of respondents told PDK that they would allow students to transfer out of a school that is not making progress. In 2011, 74 percent said that parents should be able to pick a public school in their community. Americans may hesitate when it comes to proposals that promise to disrupt their own communities and schools, but they embrace the principle that parents should be able to choose their child’s school — and agree that no child should be trapped in a lousy school.

Much of the bold rhetoric employed on behalf of contemporary school choice may do more to alienate than to attract supporters. Talk of failing schools, Uber-style disruption, and market competition is off-putting to parents and voters who support choice in principle but also like their local schools, are skeptical of educational disruption, and don’t want to see children shuttled about like freight. And we’ve seen plenty of first-hand evidence that the more aggressive talking points can drown out arguments better calibrated to connect with those parents and voters who have a soft spot for both school choice and their local schools.

School choice may fare best when presented as an opportunity for those who want it rather than an agenda to radically transform schools. And the dirty little secret is that such rhetoric doesn’t actually involve giving up much, because successful choice proposals show a practical bent and aren’t designed to spur the transformation or Uberization of schooling. A more grounded message may not feel quite as stirring for passionate pundits, urgent advocates, and enthusiastic funders, but may ultimately be a more promising path forward.

Trump’s populism is not the same as Reagan’s populism - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Wed, 04/04/2018 - 10:30

For a while, a set of liberals has argued that Donald Trump isn’t an aberration from other Republican presidents. Now, some surprising conservatives, including friends and colleagues of mine, are starting to agree.

The conservative arguments take several forms, but a key point shared by all of them is that there’s nothing new about Trump’s melding of populism and conservatism.

“I think people who see Trumpism as something aberrant in the Republican Party haven’t thought much about the history of the Republican Party. Unless they’re NeverTrumpers, in which case they’re in a state of denial,” Sean Trende of Real Clear Politics argued in a much-discussed Twitter peroration. “Successful Republican campaigns and presidencies have always involved an integration of the party’s populist and establishment wings.”

Supporters wave signs as US President Donald Trump speaks in support of Republican congressional candidate Rick Saccone during a Make America Great Again rally in Moon Township, Pennsylvania, March 10, 2018. Reuters

Henry Olsen, a scholar at the Ethics and Public Policy Center, has been arguing for quite a while that Trump is a more authentic incarnation of Reaganism, because “Trump’s active leadership style and his combination of populism with market economics is far closer to Reagan’s words and deeds than anything House Speaker Paul Ryan of Wisconsin or Senate Majority Leader Mitch McConnell of Kentucky offer.”

Rich Lowry, my boss at National Review, agrees. Writing in Politico, he recounts Reagan’s and other past Republican presidents’ deft use of populist issues and themes to win both the GOP nomination and the White House. “We can argue about what role populism and nationalism should have in conservative politics,” Lowry said, “but that they have a place, and always have, is undeniable.”

Lowry is right. It is undeniable. It is also undeniable that Democrats from Andrew Jackson to FDR to Barack Obama have used populism to galvanize their candidacies and presidencies. This fact alone should tell you something: Not all populisms are the same, because though they all claim to be the voice of the people, they invariably speak with a specific voice for a specific subset of the people.

Or as then-candidate Trump put it in May 2016: “The only important thing is the unification of the people — because the other people don’t mean anything.”

Populism is a bottom-up phenomenon, but it is shaped and defined by rhetoric from the top. And just as there are differences between Left and Right populism, there are different kinds of conservative populism.

Until recently, right-wing populism manifested itself in the various forms of the tea party, which emphasized limited government and fiscal restraint. That populism was not only very different from the populism of Occupy Wall Street, it is very different from Trump’s version.

It is true that Reagan championed populist themes, but no one can seriously dispute that Reagan’s themes and rhetoric were decidedly un-Trumpian. The conservative populist who delivered “A Time for Choosing” used broadly inclusive language, focusing his ire at a centralized government that reduced a nation of aspiring individuals to “the masses.”

This was a running theme of Reagan’s rhetoric. “I’ve been privileged to meet people all over this land in the special kind of way you meet them when you are campaigning,” he said in a 1978 radio address. “They are not ‘the masses,’ or as the elitists would have it — ‘the common man.’ They are very uncommon. Individuals each with his or her own hopes and dreams, plans and problems, and the kind of quiet courage that makes this whole country run better than just about any other on place Earth.”

Reagan’s populist rhetoric was informed by a moderate, big-hearted temperament, a faith in American exceptionalism, and a fondness for immigration. He warned of concentrated power that corrodes self-government.

“From time to time we’ve been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people,” Reagan declared in his first inaugural. “Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else?”

Trump rejects American exceptionalism, saying that other nations have outsmarted us. His indictment of our own government is that it is too weak and dumb. His solution: “I alone can fix it.”

I’m not merely indulging in Reagan nostalgia. Every president enlists populist passion, but to leave it at that ignores the purpose of that passion and reduces “the people” to nothing more than the masses.

To bring attention to the 31% gender commute time gap, ‘Equal Commute Day’ for US women will occur on June 6 - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 04/03/2018 - 23:33

Starting this week, there will be a lot of fanfare, hand-waving, hand-wringing, and calls for corrective legislation leading up to Equal Pay Day on April 10, which is supposed to represent how far into this year the typical woman has to continue working full-time to earn what her male counterpart/co-worker earned in 2017. That annual day is supposed to be determined by the most recent gender earnings gap comparing unadjusted median earnings for year-round full-time workers (BLS data here show an 18.1% gender earnings gap in median weekly earnings for 2016, the most recent year available).

Actually, if you do the math, a gender earnings gap of 18.1% would mean that Equal Pay Day actually fell several weeks ago on March 20, a full three weeks before the day designated by the organization behind the annual event – the National Committee on Pay Equity (NCPE). Alternatively, using Census Bureau data for 2016, the slightly higher gender earnings gap of 19.5% for full-time, year-round workers would mean that Equal Pay occurred on March 27, two full weeks before the official day. And yet the NCPE declares authoritatively that “Tuesday, April 10, 2018, symbolizes how far into the year women must work to earn what men earned in the previous year.” Except that it really doesn’t, it’s a day that already occurred ….

One implication of Equal Pay Day is that blatant, widespread and illegal gender discrimination in the labor market is one of the main reasons for the gender pay gap, which can only be corrected with increased regulatory action and equal pay legislation at the federal and state levels. But economists have pointed for many years that there are many factors that explain gender differences in earnings including hours worked (“full-time” is defined as 35 hours per week or more, and men working full-time put in more hours per week on average than women), occupational and career choices, characteristics of occupations (risk of injury/death, family friendliness, flexibility in hours worked), and family and childcare choices among many factors.

And here are two more factors that haven’t received much attention but might help explain some of the unadjusted gender earnings gap: a) the 16% “geographical gender gap” that reflects the gender difference in the average distance that male and female college graduates move from their university for their first jobs after graduation (an average of 318 miles for women vs. 370 for men, suggesting that young men on average consider a wider geographical area for post-college employment, possibly resulting in higher pay) and b) the 31% “gender commute time gap” in the US that reflects the longer daily commute time on average for men (25.3 minutes) vs. women (17.4 minutes), see table above for 26 Organization for Economic Co-operation and Development (OECD) countries including the US. The average daily commute times by gender are from the OECD Family Database (available here, see Excel file for “LMF2.6 Time spent traveling to and from work”) and a summary of those data are displayed in the table above for 26 OECD countries.

Some observations:

  1. For all 26 OECD countries in the table above, men spend more time on average commuting to and from work each day, and the “gender commute time gap” ranges from as little as one extra minute of commuting time each day for men in Estonia to as high as 29.3 additional minutes each day for men in Japan. On average, men in the OECD countries spend 11.1 minutes more per day commuting to and from work than women, which works about to 46.25 hours more commute time annually for men than women, based on 250 work days per year. Expressed as a percent, there is an average “gender commute time gap” of 31.1% in favor of OECD women, who commute 68.9 minutes to work on average for every 100 minutes men spend commuting.
  2. The difference in average commute times in the US by gender – 17.4 minutes for women vs. 25.3 minutes for men – represents a 31.1% “gender commute time gap” in favor of women, who spend only 68.9 minutes commuting to work for every 100 minutes men spend commuting on average (same as the OECD average). That gender gap is much greater than the 18.1% “gender pay gap” that the National Committee on Pay Equity should have used to calculate its Equal Pay Day this year to bring attention to the dubious claim that “because women earn less, on average than men, they must work longer for the same amount of pay.”
  3. Following my introduction in 2010 of the “Equal Occupational Fatality Day” to highlight the “gender occupational fatality gap” in favor of women, I introduced the “Equal Commute Day” several years ago to highlight the significant “gender commute time gap” in favor of women. As displayed in the top table above, “Equal Commute Day” in the U.S. will fall this year on June 6 and represents how far into 2018 women will be able to commute to work before they “catch up” and spend as much time commuting to work as men did in 2017. “Equal Commute Days” for other OECD countries are also displayed in the top table above, and range from January 12, 2018 for Estonia to May 17, 2019 for Japan, where women can commute to work for 350 additional days this year and next year before they spend as much time commuting as Japanese men spent last year. (See note below the post for details on the calculation of “Equal Commute Day.”)

Bottom Line: Behind the drive by gender activists and progressives for closing the “gender pay gap” – presumably to zero – is often the mistaken assumption that men and women are, or should be, completely interchangeable in their labor market and family roles. Those assumptions defy innate biological differences and the forces of Mother Nature. It’s an empirically supported fact that men have a much greater tolerance for (and attraction to) risk than women in many areas of life. For example, 91% of motorcycle deaths in 2016 were male, 92.5% of workplace fatalities in 2016 were men (and see table below of the male overrepresentation in the 20 most dangerous jobs), 93.2% of the current federal prison population is male, and more than 90% of climbers attempting to climb Mount Everest between 1990 and 2005 were men. That higher male tolerance for risk helps explain some of the gender differences in pay – dangerous, higher risk jobs that are more physically demanding in harsh outdoor work conditions pay more on average than safer, lower risk jobs that are less physically demanding and are in pleasant, air-conditioned indoor offices. It’s also a biological reality that men can’t get pregnant and can’t breastfeed, which means that men and women will always play different family roles in childbirth and breastfeeding, and other nurturing childcare responsibilities.

We learn about other gender differences for workplace preferences and for family roles from the OECD “gender commute time gaps.” In all 26 OECD countries in the table above men are disproportionately more tolerant of longer commute times than women, who on average prefer to work closer to home at job locations with a shorter commute. To the extent that longer commute times are associated with a greater selection of higher-paying jobs, longer average commute times for men would be another factor that would explain some of the aggregate, unadjusted gender differences in pay favoring men. Further, while having children has no effect on men’s average commute times (and in fact increases their commute times slightly), having children, especially when they are “under school age,” does affect women’s preferences for shorter commute times compared to when they are childless (see Table LMF2.6.A at the link above). This might suggest that women want more flexibility and shorter commute times after they have children so that they can more effectively and efficiently provide family and child care services. In conclusion, the OECD data suggest that women on average place a premium on shorter commute times to work, and therefore may be willing to voluntarily accept fewer job options and lower pay for being able to work closer to home, especially after they have children.

Q: To completely close the “gender earnings gap” American women would have to be willing to spend a lot more time commuting to higher paying jobs and close the 31.1% “gender commute time gap,” which is currently 1,925 minutes annually, or 32 hours per year in additional compute time for men. Would that increased commute time really be worth it to most women? Based on their current “revealed preferences” for shorter commute times than men according to the OECD data, I think the answer is obviously “No.”


Note: To calculate the “Equal Commute Day” for the US, I took the daily “gender commute gap” of 7.9 minutes and multiplied that by 250 days [5 work days per week X 50 weeks of work per year, to get 1,975 extra commute minutes per year for men (7.9 minutes extra commute time X 250 commute days). Then I divided 1,975 extra minutes of commute time per year by the average daily commute time for women (17.4 minutes) to determine the number of extra days women would have to commute this year to equal the same amount of time men spent commuting to work last year: 1,975 / 17.4 = 113.4 days.)


Why Utah adopted the nation’s first “free-range parenting” law - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 04/03/2018 - 21:02

It’s been two weeks since Utah became the first state to pass a “free-range parenting” law, which will allow kids to do certain activities unsupervised without their parents getting in trouble. State Sen. Lincoln Fillmore, a sponsor of the bill, told ABC News:

Kids need to wonder about the world, explore and play in it, and by doing so learn the skills of self-reliance and problem-solving they’ll need as adults. As a society, we’ve become too hyper about ‘protecting’ kids and then end up sheltering them from the experiences that we took for granted as we were kids.

A casual observer might be surprised that Utah is leading this experiment. Aren’t religious parents typically the ones who are most likely to keep their kids on a tight leash? In fact, there are a number of reasons why a state with a high concentration of highly religious people, and Mormons in particular, would favor such a law.

The first is that Mormons tend to be fairly libertarian in their political outlook. Their religious narrative is one of being exiled to the Western part of the country and their political narrative is one of the federal government trying to impose its will (particularly with regard to polygamy) on the community. Mormons are notoriously distrustful of Washington. And even when it comes to state and local authorities, the church has set up its own safety net—complete with large storehouses of supplies in case of natural disaster—rather than rely on the public ones. All of this suggests a general suspicion of too much state involvement in private life and certainly the ability of bureaucrats to make determinations about whether and when children can be trusted on their own.

Almost as strong as Mormons distrust of the government is their trust of each other. A 2009 Gallup poll found that “Utah and South Dakota residents are the most likely to express trust in their neighbors, with 85% in these states saying they would expect a neighbor who found a lost wallet or purse containing $200 to return it.” If you are going to pass a law that gives children the ability to be on their own in parks or walk to school by themselves, the likelihood is that you trust your neighbors and other members of your community to help look out for your children.

But Mormons’ family structure also makes it less likely that they would take a “helicopter approach” to parenting. According to a 2009 Pew Survey, “half of all Mormons (49%) have children under age 18 living at home, with one-in-five (21%) saying they have three or more children at home.” For the general population, those numbers are 35% and 9%, respectively. More children inevitably lead to less hovering over each individual child. Older children are generally trusted at younger ages to care for younger siblings.

Even the fact that Mormons tend to get married and have children at younger ages than the average American man and woman also probably leads to a different parenting approach. Older parents with only one or two children are more likely to be overprotective. It’s not that younger parents care less about their children, but older parents may be less adventurous themselves. Moreover, they may have had to try to have children (often with medical help), which likely leads to a more protective attitude when the children finally arrive.

Finally (and yes, I realize I’m engaging in some serious generalizations here), the Mormons I’ve interviewed tend to be very confident about their parenting abilities. They are not looking for anyone to second-guess their decisions and they’re not looking to second-guess their neighbors.

The new law is great news for the free-range parenting movement, but supporters should also be aware that Utah is sui generis.

Trump’s Twitter tirades just fuel the left’s rise in Mexico - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 04/03/2018 - 19:39

Judging by President Trump’s latest Twitter storm about Mexico, it would seem that no one has informed him about the forthcoming Mexican presidential election. Nor does he seem to have been informed that a troubled Mexican economy is hardly in the United States’ long-term economic interest.

Had he been so informed, the president would not be going out of his way to weaken the current Mexican government and thereby increase the chances of a populist leader coming to office south of the border.

Leftist front-runner Andres Manuel Lopez Obrador of the National Regeneration Movement (MORENA) party gestures during a campaign rally in the municipality of Santa Catarina, on the outskirts of Monterrey, Mexico April 2, 2018. Reuters

The truth of the matter is that Mexico’s July 1 presidential election could result in a significant deterioration in both U.S.-Mexican relations and Mexico’s economic performance.

This would seem to be especially the case considering that the left-leaning populist candidate, Andrés Manuel López Obrador, has a commanding 18-point lead in the polls. As Trump’s anti-Mexico rhetoric intensifies, it is only likely to strengthen support for Lopez Obrador.

One would think that Lopez Obrador’s ascension to the Mexican presidency would be bad for the Mexican economy, which is highly dependent on its trade with the United States.

Lopez Obrador is running his campaign on a nationalist platform that is highly critical of the current government’s handling of U.S.-Mexican relations in general and the North American Free Trade Agreement (NAFTA) negotiations in particular.

He also remains committed to rolling back much-needed economic reforms, especially in the country’s energy sector, which is at the center of the current Mexican government’s economic policy agenda. A less market-friendly and confrontational Mexican president must be expected to deal a body blow to both domestic and foreign investor confidence in the Mexican economy.

Seemingly oblivious to Mexican electoral risk, President Trump is now hardening his stance on the NAFTA negotiations. He is doing so by explicitly threatening to pull out of NAFTA should Mexico not show greater commitment to stopping the flow of people and drugs across the border.

The hardening of President Trump’s stance is heightening the chances that López Obrador will win the forthcoming Mexican election. It is doing so by adding grist to his mill that Mexico needs a president who will stand up to United States’ bullying.

Even without the NAFTA issue, the Mexican elections are taking place against the backdrop of an anemic Mexican economy that is being adversely impacted by U.S. economic developments. The recent U.S. tax reform has created strong incentives for investors to relocate from Mexico to the U.S.

The U.S. government has done so by cutting the federal corporate income tax rate to 21 percent, which is now well below the 30-percent rate in Mexico. At the same time, the Federal Reserve’s efforts to normalize U.S. interest rates is creating incentives for capital to return from Mexico to the United States.

The last thing that Mexico now needs is increased doubts about NAFTA, which is of critical importance to the country’s economy.

This is not simply because exports are the lifeblood of the Mexican economy, accounting for more than one-third of GDP. It is also because the U.S. is by far Mexico’s largest trade partner, accounting for around three-quarters of Mexico’s export market.

Because of Mexico’s reliance on NAFTA and the close links between Mexican and U.S. supply chains, ending NAFTA would most likely destroy millions of Mexican jobs as well as jeopardize the country’s economic future.

A weakened Mexican economy would not be in the U.S. interest, especially at a time that the threat of a world trade war is already undermining global economic confidence. This is not simply because that country remains our third-largest export market and is a vital part of the U.S. automobile supply chain.

Rather, it is because a weakened Mexican economy is bound to add fuel to populist forces already far too much in evidence south of our border. That in turn is almost sure to further weaken U.S.-Mexican cooperation in limiting the flow of drugs and people across our border.

Sadly, it is very likely too much to expect that President Trump will have the insight to grasp that the same sort of nationalist sentiment and economic resentment that brought him to power might propel a bellicose populist from assuming power south of the border.

For this reason, we should brace ourselves for yet another potential source of disruption to the U.S. and global economic recoveries.

Desmond Lachman is a resident fellow at the American Enterprise Institute. Ryan Nabil is a global macroeconomy researcher with AEI’s Economic Policy Studies department.

The bizarre Trump-Putin summit - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 04/03/2018 - 17:46

For every Soviet or Russian leader since Stalin, no single diplomatic success has ever matched a summit with a US president in terms of the domestic political boost it generated. (Lenin died before there were diplomatic relations between the US and the USSR.) For both the leaders and the people, America has been the only country in the world the Soviet Union or Russia considered its equal, whether as a friend or a foe, and, ideology aside, in many respects wanted to emulate. Which is why respect by America — and there is no greater sign of esteem than a summit with a US president — translates into admiration and allegiance at home.

It is impossible to see how President Trump’s open-ended White House invitation to Vladimir Putin any time soon would advance US national interests. REUTERS/Jorge Silva

American presidents have understood that they were in possession of this very precious political currency and have generally expended it carefully and almost always as a reward for furthering some US vital interest. The summits with Stalin in Tehran, Yalta, and Potsdam were during the anti-Nazi alliance; Khrushchev’s summit with Eisenhower was a reward for the post-Stalin “thaw”; Brezhnev came amidst the first nuclear arms control agreements and détente; Gorbachev agreed with Reagan to eliminate mid-range nuclear weapons; Yeltsin had jettisoned communism and started an epochal experiment in democracy and free-markets; Putin’s visits in 2001 and 2005 were in return for Russia’s post 9/11 solidarity and a common front against Islamist terrorism; and Medvedev was invited to sign a key strategic arms control agreement.

It is impossible to see how President Trump’s open-ended White House invitation to Vladimir Putin any time soon would fit into this tradition of advancing US national interests.

Because in politics, as in diplomacy, timing is everything — or almost everything. Just three weeks prior to his re-election, Putin turned his annual state of Russia address to the Federal Assembly into the most belligerent and chauvinistic oration by a Soviet or Russian leader since Stalin, complete with the videos of nuclear-tipped missiles streaming toward Florida. He almost certainly authorized the nerve gas attack on the former Soviet intelligence officer Sergei Skripal in Great Britain. And he chose to celebrate his victory at Manezhnaya Square at a concert called “Russia. Sevastopol. Crimea.” To make the message clearer still, the election was held on the same day, March 18, as Crimea’s “admission” into the Russian Federation in 2014. Russian commentators described this election campaign as “militaristic and imperial mobilization,” “manufactured hysteria along the entire spectrum of the relations with the West,” and a “militaristic plebiscite legitimization.”

Bemoaning a Russia before he took over, Putin said in his March 1 speech: “Nobody wanted to listen to us.” And then proudly added “You hear us now!”

And it seems like America has heard you, Mr. Putin. And here is America’s response: Fan the flames of war hysteria to scare your people into supporting you as a de facto wartime president and a savior of the motherland; re-coronate yourself president (almost certainly for life); kill former Russian citizens in NATO countries; celebrate the seizure of your neighbor’s territory; supervise the construction of apocalyptic weapons to turn America into a heap of radioactive ash (in the words of a host of one of the highest rated Russian television talk shows, who has been duly rewarded by being appointed the head of state-owned propaganda network Russia Today) — do all this and you’ll be granted the ultimate diplomatic coup, a White House summit.

Congratulations, Vladimir Vladimirovich!

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From Spark Tank to think tank: A conversation with Secretary of the Air Force Heather Wilson - Prioritization: Moving past prejudice to make internet policy based on fact

Tue, 04/03/2018 - 17:36

Last fall, the US Air Force announced its first “Spark Tank” competition to crowdsource innovative and cost-effective solutions from airmen for increasing the force’s lethality. After the congressional budget deal reached earlier this year, the service is poised to implement these ideas and resource a return to great-power competition, but a battery of strategic questions remains. How will the Air Force maintain air dominance against increasingly sophisticated adversaries? Should the military create a new service to fight wars in space? Given the military competition with Russia and China, what is the service’s future in Iraq and Afghanistan?

Please join Mackenzie Eaglen for a conversation with the Honorable Heather Wilson — a Rhodes scholar, CEO, university president, former member of Congress, and the 24th secretary of the Air Force.

 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.

Public opinion on the Russia investigation | In 60 seconds - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 04/03/2018 - 14:45


What do the American people think of the FBI Special Counsel’s investigation into Russian interference in the 2016 election? AEI Senior Fellow Karlyn Bowman breaks down the polling data.

Is Michigan a bellwether for teachers’ unions nationwide? - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 04/03/2018 - 14:08

Last week, the Michigan Supreme Court affirmed teachers’ right to leave their unions whenever they want. The court decided not to weigh in on a union appeal of a 2015 decision that struck down the ’s (MEA’s) “August window,” which had helped retain members by requiring that they either leave in August or wait another year to do so. This decision is another blow to the state’s unions. Moreover, its similarity to another case making its way to the U.S. Supreme Court could prove that for teachers’ unions, as goes Michigan, so may go the nation.

@kristen.r via Twenty20

This is not the first blow to Michigan teachers’ unions. In 2012, Michigan became a right-to-work state when it passed legislation prohibiting contracts that include agency fees. While all teachers’ union members pay dues, the MEA had been allowed to compel all teachers, including non-members, to pay agency fees — a portion of dues that cover costs of contract representation but not political activities. This was meant to prevent teachers from “free-riding” or getting representation for nothing. Agency fees prop up total union membership because they effectively reduce membership cost. Losing them hit Michigan’s teachers unions hard: Five years later, the MEA had shrunk by 25 percent.

This June, the Supreme Court will rule in Janus v. AFSCME on whether agency fees — still legal in 21 states and D.C. — are constitutional. MEA membership losses are a preview of what could happen nationally if the court rules in favor of Janus. If the pattern established in Michigan after 2012 holds true, national teachers’ union membership could decline between 20 and 25 percent. This is arguably a conservative estimate since, if the August window had not been in place in Michigan in 2012, the MEA’s membership decline would likely have been even more substantial.

While Janus could bring an end to agency fees nationwide, another case — Yohn v. CTA — could bring an end to opt-out restrictions like the August window. Waiting in the wings until after Janus is decided, Yohn v. CTA was brought by Ryan Yohn and seven other California teachers who claim that the California Teachers Association’s (CTA) opt-out restrictions are overly burdensome and unconstitutional. “The opt-in/opt-out issue is just as much a First Amendment issue as the compulsory dues issue,” Yohn argues.

With Justice Neil Gorsuch’s appointment reestablishing the Court’s conservative lean, unions are already preparing for a post-Janus world without agency fees. The American Federation of Teachers and National Education Association (NEA) are pushing local affiliates to bolster enrollment through more aggressive recruiting and tactics, such as extended due-paying agreements, that make it harder for members to opt out of unions. However, a ruling in Yohn that lifts opt-out restrictions would also undermine some of these preemptory states could look more like Wisconsin’s than Michigan’s.

Union-adverse rulings in Janus and Yohn could ultimately lead to much greater losses for national unions than already seen in Michigan. Take Wisconsin, which not only eliminated agency fees but also passed 2011 legislation that enacted a bundle of other policies weakening unions. Wisconsin’s NEA membership decline approached 60 percent after five years, dwarfing those in Michigan. If the Supreme Court strikes down both agency fees in Janus and opt-out restrictions in Yohn, membership losses in agency-fee states could look more like Wisconsin’s than Michigan’s.

By ending key supports for union membership, Janus and Yohn could certainly create a strong headwind for teachers’ unions and result in significant membership losses. While teachers’ unions will surely survive, the question is, what will they look like? In anticipation of losing agency fees, Mary Kay Henry, president of the Service Employees International Union, has reportedly been “preparing [her union] to become a voluntary organization.” Teachers’ unions will likely have to do the same, which could require reprioritizing their activities, perhaps by reducing national political advocacy and redoubling their efforts to serve members at the local level. It’s impossible to predict exact outcomes, but if they follow Michigan’s path, America’s teachers’ unions will look markedly different tomorrow than they do today.

Worried about US tribalism? Go see Springsteen - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 04/03/2018 - 13:39
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There’s a moment in his Broadway show when Bruce Springsteen steps away from the microphone in the middle of a song. He continues to play his guitar, continues to sing, and walks to the edge of the stage. What’s he doing? It took a moment for me to realize that he was trying to create a sense of living-room community in a theater on 48th Street. He wanted his audience to hear him singing directly. With no filter. Nothing but air between his mouth and our ears.

The notion of community permeates the show. At the beginning, Springsteen describes his “magic trick” as his ability to demonstrate that “us” actually exists. The specific “us” — the specific community — to which he is referring is not entirely clear. But for the artist who describes his life’s work as “judging the distance between American reality and the American dream,” my mind immediately turns to the U.S. as a national community.

I’ll admit that I’m more skeptical today of the viability of that “us” — of an American community — than I’ve been in a long time.

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The bonds that hold the American community together are not a shared religion or a shared ethnicity. They aren’t even a shared life experience — lives are different across a continental nation and, increasingly, across a widening income distribution.

Degree inflation and discrimination - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 04/03/2018 - 13:00
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It’s become a common observation among older white-collar workers: “I wouldn’t have been hired today.” This often doesn’t have anything to do with their ability to perform their jobs. Rather, it’s a function of “degree inflation”—employers demanding a baccalaureate degree for middle-skill jobs that previously did not require one.

Some 61% of employers have rejected applicants with the requisite skills and experience simply because they didn’t have a college degree, according to a 2017 Harvard Business School study. If current trends continue, the authors found, “as many as 6.2 million workers could be affected by degree inflation—meaning their lack of a bachelor’s degree could preclude them from qualifying for the same job with another employer.”

The pernicious effects of degree inflation are obvious, as tuition and student debt rise and qualified workers arbitrarily lose employment opportunities. But the practice also flouts federal law.

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Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating on the basis of race, color, religion, sex or national origin. In Griggs v. Duke Power (1971) the Supreme Court unanimously interpreted this to mean that when minority groups are disproportionately affected—or suffer a “disparate impact”—from the selection process, employers must show that any requirements are directly job-related and an accurate predictor of job performance. This standard, which Congress made explicit in 1991, applies to any selection procedure used for employment decisions, including educational requirements. Employers that require IQ tests, for example, must use approved tests and justify IQ thresholds.

The great education pendulum swing of 2018 - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 04/03/2018 - 12:00

It’s a funny thing about pendulums. Once they switch direction, they go for a good while. And it looks like we’re in the midst of an implacable post-testing, post-accountability swing. Ideas that five years ago were hurting for oxygen are suddenly all the rage. Social and emotional learning and personalization are feeling the love, while the darlings of 2013—I’m looking at you, teacher evaluation—have been consigned to a box in the basement. Given the grisly denouement of a bunch of formerly beloved reforms, it’s easy to understand why those focused on the next wave might be tempted to turn the page and not look back. Yet, in doing so, they risk repeating some of the avoidable missteps that helped undo potentially promising reforms.

@fraserpearson via Twenty20

For instance, I recently spent a day in an intimate convening for a new effort focused on finding ways to rethink the use of time in schools. This is a terrific, commonsense, remarkably untapped opportunity. Yet the enterprise kept getting framed around an explicitly romantic notion of choose-your-own-adventure-style “student-centered” pedagogy. Now, don’t get me wrong: “student-centered” pedagogy is fine by me—it can work really well for some schools and for some kids, when it’s done skillfully. But it also has an unfortunate history of yielding chaos and dysfunction when done goofily. My concern was why a broad-based effort like this would bother taking sides in this divisive, age-old debate. And then, at day’s end, it turned out that the current plan was only to do this work in high-poverty schools. That was a head-scratcher, as the folks in charge said this was supposed to be universal, and that they didn’t intend for efforts to rethink time to be stigmatized or stamped only as a “gap-closing” reform.

When it comes to social and emotional learning, the Aspen Institute recently issued a heavily promoted “consensus” statement. The push for SEL is something that I, like just about every parent or teacher I know, endorse in principle. But Aspen’s document opened with five points of banal agreement (e.g., “Social, emotional, and academic development is for all students”), and then launched head-first into endorsing hotly contested notions like “restorative justice” and “culturally relevant” pedagogy. Now, reasonable people can (and do) disagree on the merits of these. Wrapping these ideologically charged reforms into an expert national “consensus,” though, forces those who have concerns about these strategies to look askance at the SEL agenda—when it might instead make clear that there’s room in the SEL coalition for those with diverse views on school discipline and instructional practice.

In personalized learning, the explosion of the gig economy, the siren song of AI, and the gleam of intriguing technology, have got lots of nice people fired up. Enthusiastic advocates, entrepreneurs, philanthropists, and governors are excited to birth a new era of learning. To help make this possible, they insist it’s time for states to stop letting concerns about student privacy get in the way when it comes to promoting personalized learning. Now, they know that some parent groups and right-wing bloggers have concerns, but when brainstorming on all this, the champions have trouble seeing this pushback as anything other than the maddening complaints of conspiracy-minded, parochial luddites.

This should all feel familiar from our long years with NCLB, teacher evaluation, the Common Core, and much else. Eager to seize on their “moment,” reformers tend to make the same mistakes time and again (if you want the long version of all this, check out Letters to a Young Education Reformer).

For example, reformers keep getting sucked into cultural clashes over pedagogy or philosophy even when their principles would seem to call for a more ecumenical stance. Why does this happen? Well, education is overstuffed with advocates, consultants, and ed-school experts eager to graft their own agendas onto popular new reforms. These folks have intense, sincerely held views, and many have been waiting for the opportunity to push their ideas forward. It’s only natural for them to rush forward to offer their assistance; but the result is that their beliefs color those larger efforts, frequently in ways that are unnecessary and unintentionally divisive.

Reformers have developed a 21st-century knack for reflexively focusing single-mindedly on high-poverty schools. This can unhelpfully narrow the reach of reform and the support for it, especially when there’s nothing uniquely “anti-poverty-ish” about the school-improvement strategy. After all, when large swaths of the nation decide that school improvement isn’t about their schools or their kids, it sabotages the opportunity to build a sustainable, broad-based coalition.

Would-be change agents tend to huddle with the rich and powerful who can “make things happen.” After all, there are coalitions to form, funds to raise, legislators to woo, conferences to attend, and only so many hours in a day. But this phenomenon fosters bubbles where reformers wind up tone-deaf to how parents and educators perceive what’s being offered. And all this high-level activity can signal to families that self-assured, far-off elites are doing this stuff to them—rather than with them.

While there’s a frustrating inevitability about schooling’s pendulum swings, it’s not inevitable that aspiring reformers will repeat yesterday’s miscues. As they look ahead, here’s hoping they make copious use of the rearview mirror.

This post originally appeared on Rick Hess Straight Up.

How to measure the digital economy — and close the massive information gap - How to measure the digital economy – and close the massive information gap

Tue, 04/03/2018 - 10:00

A new report from the Bureau of Economic Analysis (BEA) confirms what we see with our own eyes: a huge difference between technology and other sectors of the economy. I think this difference — what I call the “information gap” — is central to the big questions over productivity and wage growth. Understanding this information gap in greater detail thus also seems important. Almost by definition, the data and tools we use to measure the economy can never keep up with changes in the economy itself. In “Defining and Measuring the Digital Economy,” however, BEA makes good progress toward better understanding these unique industries.

The big take away is that the digital economy is growing much faster than the rest of the economy. Between 2005 and 2016, output in the digital economy grew 5.6

percent per year. Annual growth in total US GDP, by contrast, was just 1.5 percent.

In our report on “The Coming Productivity Boom,” Michael Mandel and I used a broad measure of the digital economy, which included not just information technology itself but industries that intensely utilize infotech — industries, in other words, that are already “digitized” and make up around 30 percent of US economic output. By comparison, BEA’s definition is narrow, with the “digital economy” comprising 6.5 percent of GDP. But BEA’s “initial report” is just the start of its efforts to update the government’s data in this arena.

BEA’s broad conceptual definition of the digital economy is made up of three categories. These are the activities it would like to include if it had perfect data:

  • Digital-enabling infrastructure, which includes computer hardware and software, communications networks and broadband services, data warehouses and mobile cell towers, semiconductor “fabs,” and Internet of Things (IoT) devices and appliances;
  • E-commerce, which includes retail sales to consumers via the internet, business-to-business digital commerce, and peer-to-peer platforms or “sharing” economy services, such as ride-sharing; and
  • Digital media, which includes digital entertainment, news, videos, books, social networks, search, and other content, sold either item-by-item or by subscription or offered for free and supported by advertising, and in addition includes research services, such as the compilation and sale of large data sets.

Because of a lack of detailed data for every category and the difficulty in parsing some goods and services that may be only partially “digital,” however, BEA could not include every item that met its conceptual definition into this initial report. Many structures, such as data centers, and IoT appliances, therefore, are not included. Likewise, many large advertising-based Web services are not included because BEA cannot yet with confidence break out digital versus non-digital advertising. So the new report probably underestimates the size of the narrowly defined digital economy, perhaps by a significant amount. Over time, BEA may be able to break out tech activity from non-tech activity in existing sectors and perhaps make new categories altogether.


BEA also finds that prices in the digital and non-digital economies are moving in opposite directions. While prices in the overall US economy between 2005 and 2016 rose at a modest pace of 1.8 percent per year, prices in the digital economy fell 1.7 percent per year, again demonstrating the information gap.

Even this falling price index for digital goods and services, however, probably underestimates deflation in the sector. Consider, for example, a back-of-the-envelope price estimate for the iPhone. The official price index for “telephone hardware” shows a 50 percent price drop over the last 10 years. That’s wildly impressive. Using the 1991 prices of computer processing, communications, and storage, however, I estimated that the 2012 iPhone would have cost more than $3 million to build, while the 2016 iPhone would have cost more than $12 million. That’s a Moore’s law-like price decline of 75 percent in just four years. In more systematic research, the Fed’s David Byrne, AEI’s Steve Oliner, and Wellesley’s Daniel Sichel have shown that official government data dramatically underestimates the price drops of microprocessors, a key input for the digital economy.

As the BEA refines its research and data, it may thus find that the digital economy is even larger and faster growing than its good initial work shows. Such a finding would make efforts to get the rest of the economy to function more like the digital economy — to close the information gap in other words — even more crucial.

Learn more:

Twin deficit danger of ‘America First’ - How to measure the digital economy – and close the massive information gap

Mon, 04/02/2018 - 22:04

Economic policy consistency is not the Trump administration’s long suit. All one need do is look at how the administration’s China trade proposals conflict with its budget policy. That conflict is not likely to end well for the US and global economies.

A principal objective of President Trump’s ‘America First’ trade policy is to eliminate the US trade deficit in general and that with China in particular. To that end, President Trump has announced a large increase in steel and aluminium import tariffs as well as higher tariffs on $60bn of Chinese products. In addition, he is demanding that China takes measures to reduce its bilateral trade deficit with the US by $100bn.

While implementing his America First trade policy, President Trump is also pursuing an expansionary budget policy. He is doing so even though the Federal Reserve judges that the US economy is at or beyond full employment. He has introduced an unfunded tax cut that will increase the budget deficit by $1.5tn over the next decade, according to the Congressional Budget Office, and he has gone along with a Congressional bill that will increase public spending by $300bn over the next two years.

The Trump administration seems unaware that a necessary condition for the reduction of the US trade deficit is that the US must raise its savings rate relative to its investment rate. This holds true whatever the government might do regarding import restrictions and exchange rate policy. Overlooking this basic tenet of economics seems to blind the administration to the fundamental inconsistency between its trade policy objectives and its budget proposals.

According to the Committee for a Responsible Federal Budget, a Washington-based non-profit organisation, the tax and spending measures will increase the US budget deficit to more than $1.1tn as early as 2019, from $660bn in 2017. At a time when household saving has sunk to very low levels, the prospective widening in the budget deficit will almost inevitably reduce the overall level of savings. It will also cause the trade deficit to widen as it did in the time of the Reagan twin deficits, when the US experienced both a fiscal and a current account deficit.

A clear and present danger to the US and global economic outlook is that a widening of the US trade deficit would heighten the chances that the world will drift towards a destructive trade war. It would do so by raising the prospect that a misguided President Trump would double down on import restrictions as a response to further widening in the trade deficit.

Another area in which the administration’s China trade policy conflicts with its budget policy relates to the financing of the US budget deficit. One has to question the wisdom of picking a fight with China, the largest holder of US Treasuries, at a time when the US budget deficit is set to approximately double over the next two years.

With global asset prices having reached lofty levels, the last thing the Trump administration needs is a spike in long-term government bond rates that could roil US and global financial markets. Yet that is what the US seems to be inviting. Rather than being a large buyer of US Treasuries, the Federal Reserve has become a seller in an effort to shrink its bloated balance sheet. And the US is antagonising the largest holder of Treasuries while government borrowing is set to rise sharply.

Given the stakes involved, one has to hope that President Trump will find a way to back down from his unilateral America First stance. Judging by his past rhetoric and the recent changes in his economic team, I am not holding my breath.

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 to provide paid leave at an affordable cost: the social insurance model - How to measure the digital economy – and close the massive information gap

Mon, 04/02/2018 - 21:36

For 25 years, the Family and Medical Leave Act (FMLA) has been providing most workers leave from work to meet their own serious health needs or to care for newborns or family members with severe health conditions. Nationally, about 60% of workers are covered. While covered workers are provided job protection for qualified leaves — such as time to recover from a serious illness or to have a child — there is no cash benefit to provide working families with economic security during the time they need to take off from work.

In the quarter century since FMLA, several states have provided paid family and medical leave by expanding existing temporary disability programs for the workers’ own health needs to cover family care reasons and provide partial wage replacement to covered workers. We have learned that these programs in California, New Jersey, and Rhode Island are affordable and can be administered efficiently for the agencies that operate them. The vast majority of employers report positive or neutral impacts from the programs and are able to coordinate their own benefits with the programs. Covered workers receive partial wage replacement during leave. It is important to design programs with an adequate wage replacement level for low-wage workers — those least likely to take unpaid or partial paid time off from work — to maintain their families’ economic security while taking leave. For example, evaluations and research in California suggested that their initial benefit level was set too low and the state has subsequently increased benefits, especially for those earning near the minimum wage.

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The Institute for Women’s Policy Research (IWPR) has estimated the costs of a variety of options for implementing a national paid leave system, including applying the state programs (operating in 2017) to a national scale and estimating the costs of the FAMILY Act, which has been introduced in both sides of the US Congress (H.R. 947 and S. 337) to provide partially paid leave for family and medical leaves to eligible workers for up to 12 weeks in a calendar year. Using our paid leave economic simulation model, developed across 20 years by economists at IWPR, the University of Massachusetts-Boston, and Northeastern University, IWPR finds that providing benefits under this range of national paid leave policy models would cost between 0.45 and 0.63% of payroll. The FAMILY Act, also as a social insurance model, falls closer to the low end of the range, compared with the state programs modeled nationally.

IWPR’s most recent estimate of the cost of the FAMILY Act using updated labor force data finds that benefits would be provided for nearly 8 million leaves taken in a year. The average leave benefit would be $492 per week over 7.2 weeks, the average length of leave. Total benefits are estimated to cost $27 billion per year. Adding 5% of benefit costs ($1.3 billion) to cover program administration brings total program costs to $28.3 billion annually, or 0.47% of the Social Security taxable payroll — a little less than $5 per week ($4.89) for a worker with average weekly earnings in 2016, and those costs would be shared equally by workers and employers.

Using a social insurance model, paid family and medical leave can be implemented at an affordable cost, spread equitably among all employers and workers, and can provide vital benefits to many workers, especially those in lower wage industries who are the least likely to be able to take time off from work due to childbirth, illness, or caregiving. Such a system can build on our national experience with unpaid leave and draw on the range of state experience to design an affordable, sustainable system for the 21st century. These models are so successful that New York began providing paid family leave to workers in January; Washington State and Washington, DC are currently implementing programs that will start paying benefits in 2020.

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Present and future dangers on the eve of Vladimir Putin’s reelection - Present and future dangers on the eve of Vladimir Putin’s reelection - AEI Events Podcast

Mon, 04/02/2018 - 20:34

On this AEI Events Podcast, Rep. Seth Moulton (D-MA) joins AEI’s Leon Aron for the release of “To Have and to Hold: Putin’s Quest for Control in the Former Soviet Empire,” (AEI 2018), detailing the military, political, economic, and social vulnerabilities of six of Russia’s neighboring countries. Following opening remarks, a panel of experts weigh-in to address looming implications for US and European policy.

On the eve of his reelection, President Vladimir Putin has the world wondering what the political, diplomatic, and military fallout could be for the near future. Will the near-stagnant economy, Western sanctions, and diplomatic pressure lead to a more restrained Russian foreign policy? Or will Putin continue an aggressive, interventionist track to bolster his popularity at home? If aggression against post-Soviet states is key to Putin’s search for legitimacy, which countries are most at risk?

Leon Aron and Seth Moulton begin the conversation (1:01), audience Q&A (22:29), the panel discussion begins (30:50), and audience Q&A for the panel (1:11:01).

This event took place on March 14, 2018.

Watch the full event here.

Subscribe to the AEI Events Podcast on Apple Podcasts.


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