Posts in public investment
How Opportunity Zones Can Help the South Reach Its Full Potential

Economic divergence between urban and rural economies is as much a story about the South as the struggling Rust Belt. As the Wall Street Journal highlighted in a recent feature, the South’s decades-long convergence to the rest of the country has halted since the Great Recession:

In the 1940s, per capita income in the states historians and economists generally refer to as the South — Louisiana, Mississippi, Alabama, Georgia, the Carolinas, Virginia, West Virginia, Oklahoma, Arkansas, Tennessee and Kentucky — equaled 66.3% of the national average, according to historical data reconstructed by University of Kent economist Alex Klein and The Wall Street Journal. By 2009, that had climbed to 88.9%. That was the high-water mark. By 2017 it fell back to 85.9%.

It is true that incomes in the South have stopped gaining ground on the rest of the country, but the story is more complicated. The South is also home to some of the fastest-growing cities in the country, among them Atlanta, Charlotte, Raleigh, and Charleston. While their West Coast and Northeastern counterparts have enacted restrictive zoning laws that drive up the cost of living and deter in-migration, these fast-growing metros have so far avoided that temptation and remain magnets of economic opportunity. At the same time, places outside these cities have been struck by high poverty, job loss, and other forms of social hardship, driving overall regional economic outcomes away from the rest of the country.

The self-sorting of workers from struggling towns to places offering higher wages and living standards is an important driver of national growth. Policymakers in the South should continue to facilitate the migration of workers to the booming cities of the Sun Belt, but they must also pursue smart place-based policy to assist the communities that migrants leave behind. It is not a fact of life that vast swaths of the region are destined to succumb to stagnation and lag the rest of the country, and with a careful reconsideration of longstanding economic development practices, the South can reverse their divergence and spur more broad-based growth.

Read the rest at the Niskanen Center.

The Smart City: The Rise of Dockless E-Scooters

Much less than a “thing” or a “place,” a Smart City is the concept of integrating technology into the public realm and built environment. The deployment of sensors or other data-generating tools, and the collection, monitoring, processing of that data, will increasingly impact cities across multiple domains, from transportation, housing, and water to health and education. This blog series explores recent policy developments in the march towards smarter cities, with a special focus on transportation and information and communication technology (ICT).

The deployment of dockless transportation services across U.S. cities, from bikes to e-scooters, has elicited widespread excitement from early adopters, transportation wonks, and city governments alike. Each in their own way see dockless services as a promising solution to the nagging problems of congestion, vehicle emissions, and limited transportation options in low-income neighborhoods.

Yet dockless e-scooters, in particular, have also been met with considerable public and political opposition. E-scooters took advantage of a gap in the market, aided by the lack of regulatory barriers to dockless technologies. Cities, provider companies, and the public are now struggling to achieve an acceptable balance between an e-scooter Wild West and regulations that would threaten their very existence. The path forward lies in collaboration among all interested parties. As with any new technology being deployed in the public realm, robust public engagement and public-private cooperation is essential to address concerns and find an optimal solution. There is evidence that the policy process is moving in this direction, but not without growing pains.

Read the rest at the Niskanen Center.

Rethinking American Investment in an Intangible Age

At The Wall Street Journal’s 2017 CEO Council meeting, Gary Cohn—then the director of the White House National Economic Council—spoke to the Trump administration’s tax reform efforts. “We want companies to invest back in the economy,” he said, “not give money back, or sit on money because they don’t think there’s anything to do with it.”

Moments later, the Journal’s John Bussey turned to the audience and asked for a show of hands: “If the tax reform bill goes through, do you plan to increase investment, your companies’ investment, capital investment?” In the crowd of over 100 top corporate executives, only two or three hands could be seen rising on the C-Span recording.

“Why aren’t the other hands up?” Cohn asked through nervous laughter, before the moderator deftly changed the topic.

Opening with the transcript of this exchange, a new report from Senator Marco Rubio, “American Investment in the 21st Century,” suggests it knows the answer to that question. But in a compelling shift from the usual Republican focus on taxes and regulation, it points the finger squarely at over-financialization and the notion that corporations exist to maximize returns to their shareholders.

Shareholder primacy, the report argues, “tilts business decision-making towards returning money quickly and predictably to investors rather than building long-term corporate capabilities, reduces investment in research and innovation, and undervalues American workers’ contribution to production.”

Read the rest at the American Conservative.

The Hamiltonian Approach To Reparations

Reparations are now a consensus position within the 2020 Democratic primary.

Let that sink in. From the central plank of Rev. Jesse Jackson’s presidential platform in 1984 and 1988, to Ta-Nehisi Coates’s blockbuster Atlantic essay in 2014 — reparations for the descendants of slavery have gone from fringe to mainstream in roughly a generation. What Bernie Sanders called “divisive” only a few short years ago now even finds support among thoughtful conservatives like David Brooks and Michael Brendan Dougherty.
Yet behind the moral clarity of reparations is immense disagreement about what form it ought to take. Should reparations be direct cash payments or land grants? Does a race-neutral “Baby Bond” or refundable tax credit count if white families also benefit? Most Democratic primary candidates have kicked the can to an independent commission. “I support that we should study it,” in the words of Kamala Harris. While that may be smart politics, a backlash is already brewing among activists who insist reparations should be, by definition, directed to American descendants of slavery only.

Before going down that path, we should think carefully about what a program of direct cash payments to the descendants of slavery would signify. After all, an act of reparation is distinct from an act of restitutionor compensation. Reparations fall into the category of transitional justice — one part economic, one part symbolic redress for human rights violations that kicks-off a “reparative” process of truth and reconciliation. They are therefore as much about publicly confronting an injustice as repairing some discrete, calculable harm. A direct payment, in contrast, risks trivializing slavery as merely an issue of “unjust transfer and acquisition,” as if the stolen fruits of African American labor neatly correspond to an accounts payable hidden deep within the U.S. Treasury. 

Slavery was an act of theft, to be sure. But even moreso, it was an act of colonization — one that retarded the development of a population and entire region for generations after emancipation. To truly address that intergenerational legacy, struggling African American communities need investments in infrastructure and a strategy for developing a high-wage workforce. In other words, they need industrial policy.

Read the rest at NiskanenCenter.org.

Marco Rubio Wants a National Innovation Strategy

new report on China from the Senate Small Business Committee, now chaired by Senator Marco Rubio, is turning heads in the conservative policy world. The report details the “Made in China 2025” initiative, China’s national plan for technological and economic supremacy in a number of emerging industries. But what makes the report interesting, particularly from a Republican-chaired committee, is its suggestion that America shouldn’t merely punish China for unfair trade practices, but also should pursue a national innovation strategy of similar ambition.

“This report’s central conclusion is that the U.S. cannot escape or avoid decisions about industrial policy,” its authors write, after opening with an extended quotation from Alexander Hamilton’s “Report on Manufactures.” Then it explicitly rebukes the orthodox libertarian view that markets are “neutral” when government simply gets of the way:

States place great value on capturing high-productivity, high-labor content industries, or developing new ones. This is no new insight, for constraining the excessive possibilities of this behavior is arguably the orienting view of the World Trade Organization (WTO). States can attempt to redirect this fundamental interest by agreeing to “not select” industries, or at least not do so outside the bounds of reasonable policy difference. But even here, distinctions between competing decisions of economic value must be made.

Markets are always and everywhere structured by rules and institutions, the parameters of which shape final outcomes for society at large. That these rules should align with national priorities like strong families and decent wages for average people might seem obvious, but alas, too often it’s not…

Read the rest at NationalReview.com

The Policymaker's Guide to Emerging Technology

Part I outlines the foundational tenets of “soft law” and its impact on the governance of emerging technologies. This section frames the underlying rationale for many of the recommendations offered in the remainder of the Policymaker’s Guide. Marc Andreessen once wrote that software was eating the world; now, soft law is eating the world of technological governance. On net, we argue that’s probably a good thing.

In Part II, the discussion concentrates on issues that have their roots in the pre-digital era, but which purportedly present new challenges in the wake of an increasingly interconnected world. In particular, this section looks at the role that antitrust, privacy, and copyright play in current debates surrounding the digital economy.

Part III then narrows the focus further by diving deeper on the issues associated with seven new emerging technologies: genetic modification, the Internet of Things, autonomous vehicles, commercial drones, supersonic flight, commercial space, and climate engineering. It then offers specific recommendations to address some of the common concerns associated with their development and adoption.

Finally, Part IV examines the unique characteristics of an emerging technology that has wide-ranging implications for numerous industries, both within and beyond the technology sector: artificial intelligence (AI). As a “nexus technology” — one whose development and improvement will have an outsize impact on the development of other related technologies — AI deserves expanded consideration, with a specific focus on those areas most likely to have near-term, high-impact effects. To that end, we focus on recommendations for the use and application of AI in the areas of online digital advertising and medical device technologies, as well as a concluding section that offers a specific governance framework — “algorithmic accountability” — that can help address observable harms resulting from a misapplication or misuse of AI….

Read the rest at NiskanenCenter.org.

Supersonic: From White Paper to White House

As followers of the Niskanen Center know, over the past two years we have been tireless advocates for reforms to enable the return of civil supersonic aviation. We’ve made our case through a major white paperop-edsmore op-edsblog postsan educational websiteHill briefingspodcastsletters of support, and direct engagement with policy leaders in Congress and the FAA. Affordable supersonic transport, we have consistently argued, will help to connect the world through speed, and break us out of the deeper technological stagnation in aviation and atoms that have been with us for decades.

Now, with the FAA Reauthorization Act of 2018 (.pdf) passed and signed into law, our vision of a supersonic future is becoming a reality. Indeed, from white paper to White House, the supersonic provisions contained in this FAA Reauthorization represent the first legislation on civil supersonic aviation in nearly 60 years. Among other things, the law:

  • directs the FAA to exercise leadership on civil supersonic aviation, with an eye towards fostering the conditions for its return. This will prove particularly valuable on the international stage, where the United States, through the International Civil Aviation Organization, plays an influential role in shaping global aviation standards.

  • gives the FAA two years to issue a Notice of Proposed Rule Making to establish a new type-certification for civil supersonic aircraft. Careful analysis of the existing statute revealed existing type and airworthiness certifications only applied to subsonic aircraft, contrary to the FAA’s past interpretation. The creation of a new category for certifying civil supersonic aircraft will thus fill a major gap in existing regulation, and allow certification requirements to be crafted around the unique needs of supersonic aircraft. …

Read the rest at NiskanenCenter.org.