While the chemical weapons attack in Syira was terrible, it is regional strategy, rather than chemical weapons use, that should drive the level and nature of American involvement in the Syrian conflict. Brad has written previously about why chemical weapons are the wrong Red Line, a point that remains true today. Before we begin striking targets inside Syria, we need to have an earnest conversation about core U.S. interests in the Middle East and how we can best promote them. If Assad’s ouster is our policy goal, than we should be pursuing actions designed to bring that about. The strikes being currently discussed won’t accomplish that end, however. Similarly, if our goal is narrowly to defend the international norms against using chemical weapons, it’s unclear that it would be a useful precedent to establish that the response to chemical weapons use is a handful of perfunctory military strikes explicitly not designed to dole out existential costs upon the culpable government.
In the coming days we will have more analysis on the need to view our engagement strategically rather than tactically. Stay tuned.
Today, the Bureau of Economic Analysis (BEA) will put in place a set of critical changes in how it measures America’s Gross Domestic Product (GDP). The most important change reclassifies what businesses spend on research and development, which now will be counted as economic investments rather than ordinary business expenses. By so doing, the country’s official national accounts finally recognize that ideas play the same role in prosperity and income growth as new factories and equipment. More important, the change signals that Washington – or at least its accountants –accepts that the United States has an idea-based economy.
I was present at the creation of these changes. In the late 1990s, while overseeing the BEA as Under Secretary of Commerce for Economic Affairs, I helped them set up the first tests of how to approach R&D as an investment. Then as now, this shift was a no-brainer. Those of us who study what makes economies grow all learned as students that innovations drive growth even more than new capital investments. Based on the strict patent protections which the United States has embraced since the time of the Constitution, Americans have always known this intuitively. So for more than 200 years, the world’s most market-based economy has granted temporary monopoly rights to anyone who comes up with a new invention.
Investors clearly believe in the value of patents and the inventions they animate. A new study covering more than eight decades of U.S. patents (1926-2010) has found that when a company receives a new patent, its stock market value increases on average by $19.2 million (measured in 2013 dollars). Even setting side such blockbuster patents as the core innovations from Apple or Google, the researchers found that the medianbump in a firm’s stock market valuation after receiving a patent was $5.9 million.
In fact, intellectual property and, more broadly, intangible assets now dominate American business. Since the mid-1990s, American firms have invested more in new, intangible assets – databases, brands, worker training and competencies, as well as R&D and patents – than they have in new physical assets. That tells us that businesses now expect to earn more from ideas in their various forms than from their plant and equipment.
Here, too, investors agree. In 1984, the “book value” of the 150 largest U.S. corporations – what their physical assets would bring on the open market – was equal to about three-quarters of their stock market value. So, nearly 30 years ago, large American businesses were worth about one-quarter more than the plant, equipment and real estate which generated their profits. By 2005, the book value of America’s 150 largest companies equaled just 35 percent of their stock market value. By that time, about two-thirds of their value came from their intangible assets, because those assets had become the main source of the value and profits which large companies generate.
This shift to intangible assets is not confined to popularly-recognized “idea-based” industries such as information technologies and biotechnology. A 2011 analysis by Kevin Hassett and myself found that by 2009, intellectual property strictly defined accounted for at least half of the market value of not only the software, telecom and pharmaceutical sectors, but also such disparate industries as food, beverages and tobacco, media, healthcare, professional services, household and personal products, consumer services, and autos. And when we expanded the category to all intangible assets, broadly defined, those idea-based assets accounted for at least 80 percent of the market value of all of the industries just mentioned, plus capital goods, materials, transportation, and consumer durables and apparel. That covers every major industry except retail, real estate, banking, energy, and utilities.
Now that the official accounts for the American economy finally treat the R&D that leads to most patents and innovations as economic investments, we can also better track and compare their value. For instance, we now know that U.S. businesses have spent less on R&D in recent years than they did in the 1990s – and that nevertheless, the United States spends more on R&D than all of Asia and Europe combined.
Turning to the results, we find that about 25 percent of the world’s patents are held by U.S. companies and individuals, a share close to America’s 22 percent share of worldwide GDP. America’s real advantage, however, probably lies in its outsized willingness to fund the young enterprises that often develop new, patented advances. So, while the United States claims 25 percent of all patents, the Organization for Economic Cooperation and Development (OECD) reports that we also account for roughly half of all worldwide venture capital investment.
America’s shift to an idea-based economy will shape much of our economic future. The information and Internet technologies so integral to creating and managing ideas have spread across every economic sector. Within each industry, those firms most adept at applying those technologies to their operations will, on balance, be the ones most likely to succeed. That has already become a gauge for investors to use and watch. More important, a widening gap has opened between the incomes of most Americans and the incomes of roughly the top 20 percent of workers who are already adept at creating and managing ideas, or at least operating in workplaces dense with information and Internet technologies. Finding news way to enable most Americans to prosper in an idea-based economy will be the most pressing economic challenge facing Washington policymakers over the next decade.
Now that the debate over immigration reform has moved from the Senate to the House, Simon will be offering weekly seminar-style presentations of an updated version of a PowerPoint we’ve been giving around town these last few months: “The Border Is Safer, The Immigration System Is Better, and Mexico Is Modernizing and Growing.” This fact-filled presentation showing how successful the Obama Administration has been in managing the complex US-Mexico border and improving our immigration system is increasingly important as the border emerges as the center of the whole immigration debate.
We've conducted three of these briefings in the past few weeks, and have one left - Thur, August 8th, noon. Please RSVP here. Lunch will be served at 12noon, the presentation will begin promptly at 12:15. The half hour presentation will be followed by a half hour Q&A session.
At its core this presentation is a refutation of the border hysteria far too common in our politics today, a hysteria that has been largely abandoned, for example, by the Republican Party of Arizona, the state perhaps most responsible for exporting this politics to the rest of the country. Among the statistics we will cover in the presentation tomorrow:
In recent years spending on border security has tripled, the number of border patrol agents has doubled.
The net flow of unauthorized immigrations to the United States is now ZERO.
Crime on the US side of the border has plummeted, and is violent crime rates in the 2 largest border cities, San Diego and El Paso are one third of what they were a decade ago.
Apprehension rates in 2 of the 5 high traffic corridors are already over the Senate goal of 90%, and 2 are over 80%.
Due to the drop in flow and huge increase in border patrol, the apprehension rate per border patrol agent has dropped from 327 in 1993 to 19 last year, or one every two to three weeks.
Meanwhile, trade with Mexico across this very same fortified border has exploded, growing from $300b in 2009 to $536n in 2012. Mexico is now the US’s third largest trading partner, and second largest export market.
For more of our analysis about the border and immigration reform, visit this page on our site, which includes a link to an earlier version of this presentation and related materials. Also see Simon’s op-ed in The Hill, "On the Border, DHS Has Earned Congress' Trust," arguing that the Republican party must acknowledge the positive work done by the Department of Homeland Security at the border in order set realistic and achievable goals for immigration legislation.
We hope you can join us for this timely and informative discussion. And please don’t be shy about forwarding this information, which is so important to the current debate, to others you think might be interested.
Now in the last stretch of her tenure as Secretary of Homeland Security, Janet Napolitano, set out for meetings with Mexican officials this week to discuss increased US-Mexico border security cooperation. She was accompanied by U.S. Customs and Border Protection Acting Commissioner Thomas Winkowski, Assistant Secretary of International Affairs Alan Bersin, Ambassador to Mexico Anthony Wayne, and legal advisor John Sandweg.
They began Tuesday in Matamoros, Tamaulipas, across the border from Brownsville, Texas, where they met with Mexican Secretary of the Interior Miguel Ángel Osorio Chong, other members of the Mexican Security Cabinet, local law enforcement officials, and the South Texas/Tamaulipas Border Violence Prevention Group. Secretaries Napolitano and Chong signed an agreement on a US-Mexico Cross Border Security Communications Network. It establishes the framework for increased intelligence sharing and a more efficient response by law enforcement and public safety on both sides of the border. They also announced the inauguration of a program of coordinated patrols between the US Border Patrol and Mexican Federal Police along the US-Mexico border. In view of the legal and human rights challenge of the increased flow of US-bound migrants from other countries across Mexico´s southern border, Napolitano and Osorio Chong discussed the intention to strengthen that border as well. Though they did not provide specifics, this objective will include a critical focus on regional economic development in relatively poor southern Mexico.
After their border meetings, the US team proceeded to Mexico City to meet with Mexican President Enrique Peña Nieto, as well as Secretary Osorio Chong and the Security Cabinet. Peña Nieto affirmed Mexico´s commitment to the strengthened bilateral real-time communication and coordinated border patrols.
As the US legislative debate on immigration reform continues to return to questions of border security, this new level of binational cooperation among security personnel could be key to achieving real security results on the US-Mexico border. Representatives from both countries hope that a safer border will be a more dynamic one that allows for mutually beneficial growth in trade and tourism. US lawmakers should also rejoice at the focus on strengthening Mexico´s southern border. Firming up Mexico’s border with Guatemala and Belize will ultimately diminish the flow of undocumented migrants, trengthening the rule of law throughout Mexico and along the US southern border where Mexican as well as non-Mexican would-be immigrants are stuck in a dangerous holding pattern.
As Secretary Napolitano stated: “The United States and Mexico have taken unprecedented steps in recent years to deepen our cooperation along our shared border. We are committed to working together to support economic competitiveness by creating an environment in which our citizens and businesses continue to feel safe and secure, while reducing violence and increasing security.”
Acknowledging the reality of this increased US-Mexico collaboration should help the immigration debate move forward, since its results will strengthen a common border that catches security threats and expedites beneficial trade and travel.
In case you missed the event and live webcast, here is a brief summary of the event on a “North American Energy Community.” A full video of the event is available here.
On Wednesday, NDN/NPI hosted a high level conversation about the changing energy landscape in North America.
Special guest and friend of Gov. Bill Richardson, Congressman Joe Garcia (FL-26), introduced Mr. Richardson who is the former Governor of New Mexico, Secretary of Energy under Bill Clinton, and U.S. Ambassador to the UN. Richardson offered his perspective on the shale revolution and North American energy prospects, and was careful to point out that while regional cooperation is critical, we must not think of complete energy independence is a viable option. The high level of engagement by the U.S. with the international community means it will always be affected by global energy prices and whether its allies also have access to energy resources in other parts of the world. He also expressed optimism about energy reforms passing in Mexico, observing that Mexican President Peña Nieto “has the right stuff” to garner political support for the game-changing reforms.
Duncan Wood, Director of the Mexico Institute at the Wilson Center, said there are two movements that will be transformative for North American energy: the shale revolution and the revolution in thinking in Mexico that will make it a much more collaborative energy partner. He also made the point that it is in the U.S.’ best interest to increase energy trade with Canada and Mexico, or those countries will need to find other customers for their resources, for example China.
Rick Van Schoik, Director of the North American Research Partnership, showed us the ways in which the U.S. has collaborated with Mexico and Canada on energy issues in the past. He offered up recommendations for national, subnational and task-force level energy discussions to improve our transborder grids and other renewable energy transmission networks. His presentation emphasized that these three countries should approach energy challenges and solutions from a continental standpoint.
Time Magazine DC Bureau Chief Michael Scherer recently wrote about the impact of NDN’s work, citing a chart from developed by our team as the “most important chart in American Politics:”
"There is a single chart — three colored lines on a grid — that shapes the political reality of this country. During the 2012 campaign, one of President Obama’s senior strategists called it “the North Star” and started his internal PowerPoint presentations with it…The chart was originally created by NDN and the New Policy Institute, and it helped Democrats change the way they talked about the frustration of the American people.”
This article, and the impact it describes, is the best way to understand what we do – through powerful ideas, cutting edge analysis, and relentless advocacy. It is in this way, through these means, that the team at NDN/NPI has done much this past decade to lead the center-left to a much better day.
Our summer fundraising drive is off to a good start, having brought in close to $40,000 in our first few weeks. But our goal is to raise another $60,000 before August to bolster our programs for the rest of the year. We hope you will do your part and support us today.
“This diagnosis draws on many of the ideas bubbling away in Mr Miliband’s unabashedly academic salon of economists, politicos and philosophers. One chart in particular informs its arguments. Devised by Simon Rosenberg, the founder of the NDN, “the most important chart in American politics” shows that US household incomes have lagged behind GDP and productivity growth since the early 1990s. The same observation, reckon senior Labourites, lies at the heart of Britain’s woes, too.”
We are known for many things at NDN/NPI, including groundbreaking work on immigration, the Middle East, the role of technology in our lives and American demographics. However, I believe that it our economic work - guided by former chief economic advisor to Bill Clinton, Rob Shapiro - which has had the most impact on the politics on both sides of the pond these last few years. We can only do this work with your support, and I hope we can count on you, today to keep this essential work flowing.
Renowned thinker and writer Moises Naimjoined us at NDN to discuss the future of power and the international political landscape. He unpacked some of the themes of his latest book, The End of Power, and presented a vision that drew a through-line between the events of the Arab Spring and many other emerging global trends.
This wide-ranging conversation was moderated by NDN’s Simon Rosenberg and explored economic and institutional challenges that are coming to define our globalized world. You can watch the full video at our YouTube channel and pick up a copy of his new book here.
I have a new op-ed running on the Huff Po home page. Check it out and let me know what you think. A version can also be found below:
Immigration Reform Is Very Much Alive
Contrary to recent news accounts, we are closer to passing a meaningful immigration reform bill than at any point since John McCain and Ted Kennedy introduced their bill in 2005. Consider:
The Senate passed a bill with 68 votes, the most any immigrant reform bill has received since this process began. The last time an immigration bill passed the Senate it was in 2006, and it received just 62 votes.
The House, whose last major vote on immigration reform was in 2005 and called for the deportation of the 11 million unauthorized migrants in the U.S., has already passed five immigration and border related bills out of committee. Last week Speaker John Boehner said he believed the House needed to do something on immigration reform this Congress, and next week Republicans are having a public hearing on the DREAM Act.
While much has been written about the need Republicans have to support immigration reform to get back in the game with Latino voters, I think an equally compelling reason why the House is already taking significant strides towards passing an immigration reform bill is the pressure they feel to meet the very high bar set by the Senate "Gang of Eight" framework. Their framework will give the country a better legal immigration system, one more based on bringing growth producing skilled labor. It will close some of the holes in our interior enforcement system, build on the significant gains made in border security in recent years and make the border region even safer. It will make needed investments in 47 ports of entry with Mexico, facilitating more trade and tourism, creating more jobs on both sides of the border. It creates an arduous but achievable path to citizenship for the 11 million unauthorized immigrants already in the country. And remarkably, it will grow the economy, create jobs and lower the deficit by a $1 trillion over 20 years.
In a time where Americans have so little faith in their government to meet the emerging challenges of our time, the Gang of Eight framework is a bit of a political miracle: incredibly thoughtful public policy, broad bi-partisan support, a deep and diverse political coalition backing it. It just is very hard for the House Republicans to walk away from all that too.
And they haven't. In the last few months the House Republicans have passed bills relating to border security, interior enforcement and changes in the legal immigration system. They are talking about the DREAM Act and a "path to legalization." The Border Caucus is floating smart proposals to invest in our ports of entry, something that could help bring border state Republicans along. Some House Republicans have even said they expect a bill with citizenship to eventually pass and be signed into law.
The characterization of the House Republicans as standing in the way of immigration reform is only half right. They are, as the Founders intended, moving this issue through their chamber at their own pace. This is to be expected, frankly. Unlike the Senate the House hasn't really debated the issue since 2005, and there are many new members particularly in the Republican Conference. There just isn't a lot of institutional knowledge about the issue. Institutional bluster, perhaps, but not a lot of knowledge or understanding. So they need time.
Another reason the House Republicans need time to work through the issue is the House chamber's unique history with immigration reform. Just a few months after Senators McCain and Kennedy introduced their thoughtful bill in 2005, the House voted to arrest and deport the 11 million unauthorized immigrants in the U.S. In 2006 when the Senate passed McCain-Kennedy, the House refused to even consider it. The default position for many in the House GOP -- that the solution to the 11 million is for them to all leave the country -- was in the platform of the Republican Party in 2012, and carried by its nominee. While there have been immigration reformers like Bush and McCain in the GOP over the past decade, much of the Republican Party has strongly held views that what the unauthorized immigrant population did by jumping the immigrant line was wrong, and that as a matter of policy, the nation cannot reward bad behavior. Getting those who hold this position to change is not, and was never going to be, easy. If dozens of Republicans are to sign on to a bill that has provisions they have said they will never support and deeply oppose, that too will require time.
As someone who has worked on immigration reform since the summer of 2005, I don't think the immigration bill is dead -- it is very much alive. You can see the outlines of an eventual deal. The House will likely accept much of the Senate enforcement framework, dropping the expensive and reckless border surge but adding to the interior enforcement provisions. Dems might have to accept more W low skilled visas to get the House to go along with the Senate vision for the new skills-based legal immigration system. Adopting some of Senator Cornyn's savvy proposals on border infrastructure investment could help bring him back to the table, and entice more border and growth oriented GOPers to sign on.
This of course leaves us with the 11 million, and legalization and citizenship. My own read of the situation is the House Leadership knows it must do something here, that leaving the 11 million or even a large potion of the 11 million in limbo just won't fly. As we saw in the Senate process the GOP was willing to trade and deal on citizenship. With the House GOP talking about DREAMers, Ag workers and legalization the elements of an eventual deal are on the on table. The Washington Post's Greg Sargent reported yesterday that the bi-partisan "gang" in the House has worked out a path to citizenship, adopting a new trigger process, recasting the early stages of the path, and making it longer. So it is possible to for House Republicans to craft a citizenship path that the president and the Dems can support if all the parties can sit down and work it all out.
Reports of the death of immigration reform are premature. The Senate Bill may be dead in the House, but immigration reform isn't. What the House comes up with will be different than the Senate, but that's why we have conference committees. I don't think the differences between the two chambers are as great as many believe; the Senate bill provided an extraordinary framework to build from; and the House needs time to work through it in their own way. Of course it is possible that the House conservatives block any progress on immigration reform this year, but I think their arguments will weaken over time, not strengthen. Why? Simply, they just aren't very good, and the politics of recent years has made them jarringly obsolete. Being on the side of fixing the broken immigration system, creating jobs and reducing the deficit is just better politics than once again doing nothing about a very challenge facing the country -- even if it means citizenship for the 11 million.
Something will pass the House this year. Whether it is good, and can become something signed by the president will depend to a great degree on how well our leaders work together to bring this tough process to conclusion. But a deal is out there to be made. I hope the tribes of Washington can seize this moment and give America a far better immigration system than we have today.
October 18 Update - Rep. Bob Goodlatte's recent floating of the idea of "no special path" for undocumented immigrants is a promising development. By allowing qualified undocumented immigrants legalization and then the ability to apply for a green card and legal permanent residence as any other immigrant, it shows the House GOP might be able to get to a place that allows legal status and citizenship for most of the 11m undocumented immigrants.
Again, looking at this through a negotiator's eye, the House GOP has moved, is playing ball, and one can see a deal struck between the two parties this fall. Byron York's new article reports that the House GOP leadership is working on a bill despite the fallout of the shutdown fight. The House Democrats came closer to the House GOP's approach by smartly dropping the border surge in their new leadership bill. And with 87 House GOP Members choosing a different path than the House radicals, it is further evidence that with the right kind of patient leadership, a deal could be struck.
The economic recovery is now four years old -- the anniversary comes this month – yet job growth remains a big problem. Since the recession technically ended in June 2009, American businesses have expanded their workforces at an average annual rate of 1.4 percent, creating some 6.1 million new jobs. The good news is that we’re creating new jobs at twice the rate seen in the first four years of the last expansion. Nevertheless, the job gains are much smaller than those seen in the early years of the expansions of the 1980s and 1990s. So, is this ongoing problem simply a feature of the slower economic growth of this cycle, or have American businesses lost some of their storied capacity for generating new jobs? The answer is, some of both – and over the next decade, new technologies could further aggravate the problem.
To get at why this is happening, you have to first take account of the character and basic features of these economic cycles. For example, job creation bounces back more sharply after a deep recession than following a milder downturn. So, we start by comparing the job gains seen over the last four years, following the Great Recession of 2007-2009, with those following the deep downturn of 1981-1982. The gap is very large: The 1.4 percent annual growth in private employment over the last four years is 61 percent less than the 3.6 percent annual job gains seen during the first four years of the 1982-1989 expansion. We see a similar disparity between job creation in the first four of the two most recent expansions that followed more moderate recessions. The 0.7 percent annual rate of job growth over the first four years of the 2002-2007 expansion was 68 percent less than the 2.2 percent annual job gains seen in the first four years of the 1991-2000 expansion. Something has changed.
The most obvious change is that every successive expansion since the 1980s has seen progressively lower rates of economic growth, especially in the early years. U.S. GDP grew by an average of 5 percent per-year in the first four years of the 1980s expansion, followed by 3.4 percent annual gains in the first four years of the 1990s expansion, 3.0 percent growth per-year in the early years of the 2002-2007 expansion, and just 2.3 percent average annual growth over the last four years. As Keynesians have insisted, the slower economy should explain much of the recent slowdown in job gains – although not all of it.
We can calculate roughly how much of the slowdown in job gains can be traced to the slower economy by adjusting the rates of job creation for the rates of overall growth. Those calculations suggest that if the economy had grown as fast over the last four years as it did in the first four years of the 1980s expansion, we could have seen 3.0 percent annual job gains instead of just 1.4 percent average job growth. Since jobs actually grew in the early 1980s by an average of 3.6 percent per-year, as much as 80 percent of the current slowdown in job creation may simply reflect slower economic growth. So, while recent austerity measures – the sequester, increases in payroll and income tax rates, and so on – do not explain all of the slowdown in growth, their apparent impact on jobs is powerful testimony to how misguided those measures have been.
Thinking through job creation in this way, then, tells us that some 20 percent of our current employment problem, and perhaps more, is “structural.” Put another way, U.S. businesses now respond to economic growth by creating fewer jobs than they used to.
Technological advances, of course, are one of the driving forces at play here. The countless applications of information technologies (IT) across every industry and economic activity have created considerable wealth, but they also displace more jobs than they create. Consider our manufacturing workforce, which contracted nearly 28 percent over the last two decades, falling from 16,480,000 positions in 1992 to 11,951,000 in 2012. All of these job losses can be accounted for by workers with high school diplomas or less, whose number in manufacturing declined by more than 40 percent. The picture is different for workers with the skills to operate in an IT-dense workplace: Over the same 20 years, manufacturing jobs held by college graduates increased by 2.4 percent and the number with graduate degrees jumped 44 percent.
The latest threat to jobs, according to many technologists, is coming from robotics, the application of information technologies to new forms of kinetic hardware. Today, businesses worldwide employ some 1.4 million industrial robots, mainly in automobile and electronics assembly. Those numbers appear to be rising quickly. For example, FOXCONN, the Taiwan-based giant that assembles 40 percent of the world’s consumer electronics -- and employs 1.2 million workers around the world -- has announced plans to purchase 1 million new robots over the next three years.
A new report from the Atlantic Council catalogues the growing number of large-scale, public-private R&D programs underway. The U.S. effort is led by DARPA, NASA and firms such as Raytheon and iRobot, with grants from the NSF National Robotics Initiative playing a venture capital role. In Japan, the FANUC Corporation and the Ministry of Economy, Trade and Industry have taken the lead. In Korea, the Ministry of the Knowledge Economy is working with LG and Samsung. And in Europe, the European Network of Robotic Research is collaborating with companies such as Philips and the ABB Group.
No one can predict the direction or dimensions of robotics a decade from now. Nevertheless, the next generation of the technology will be able to draw on important recent developments, such as the first, open source Robot Operating System as well as advances that allow robots to retrieve and manipulate objects outside the structured environment of an assembly line. In the last year, for example, Willow Garage released a new personal robot that can fold laundry and pour beer, the French firm Robotsoft showcased robots that monitor elderly patients, Italian and Swedish firms offered robotic landscapers, a Japanese company unveiled its new robot teachers, and South Koreans developed robots to assist firefighters and provide basic child care. The first large-scale application of the technology may well involve transportation. Drone technology could force early retirement on thousands of pilots, and future variations of Google’s driverless car could displace tens of thousands of teamsters, cabbies and bus drivers. In any case, our structural problems with job growth are likely to worsen.
This post was originally published in Dr. Shapiro's blog
For the last few months, the Senate was at center stage of the immigration reform show passing its border and immigration bill, S. 744, through the Judiciary Committee and full Senate. The House Homeland Security and Judiciary Committees were also at work passing legislation, but somehow the spotlight seemed to ignore most of that activity. Now that all eyes are on the House, these bills are crucially important to the immigration reform process in the coming months.
In case you missed it, here are the five bills that have passed out of committee in the House.