Posts tagged reports
The Density Divide: Urbanization, Polarization, and Populist Backlash

In this new paper, I weave recent research in political science, economics, psychology and more into an account of political polarization and the rise of populist nationalism as a surprising and overlooked side-effect of urbanization.

I claim that we've failed to fully grasp that urbanization is a relentless, glacial social force that transforms entire societies and, in the process, generates cultural and political polarization by segregating populations along the lines of the traits that make individuals more or less responsive to the incentives that draw people to the city. I explore three such traits — ethnicity, ideology-correlated aspects of personality, and level of educational achievement — and their intricate web of relationships. The upshot is that, over the course of millions of moves over many decades, high density areas have become economically thriving multicultural havens while whiter, lower density places are facing stagnation and decline as their populations have become increasingly uniform in terms of socially conservative personality, aversion to diversity, and lower levels of education. This self-segregation of the population, I argue, created the polarized economic and cultural conditions that led to populist backlash.

Because the story of urbanization just is the story of a strengthening relationship between density, human capital and economic productivity, it's also the story of relative small town and rural decline. The same process that has filtered better-educated, more temperamentally liberal whites out of lower density places has left those places with less vibrant economies, but also with more place-bound, ethnocentric populations.

Read the paper at the Niskanen Center.

Five economic development takeaways from the Amazon HQ2 bids

Amazon’s decision to cancel its New York headquarters investment has led to intense debate among academics, politicians, and civil society. The split culminated Amazon’s very public search process in which 238 U.S. cities submitted detailed bids to the company to host its “second headquarters,” or HQ2. Many of these bids remain secret, shielded from public records laws due to exceptions to public disclosure of economic development projects, or the use of non-public entities, such as Chambers of Commerce, to submit the bid. But for 26 publicly-released bids, we have a rare opportunity to peek under the hood of U.S. regional economic development. Here are five main takeaways from a review of these bids.

1. WE KNOW MORE ABOUT HQ2 THAN MOST ECONOMIC DEVELOPMENT DEALS.

Many journalists and civic leaders expressed frustration over the lack of transparency in the HQ2 process. Few cities provided the full details of their offers during the process, and cities such as Austin, Denver, Indianapolis, Houston, Los Angeles, and Miami have still not made their proposals public.

Yet the reality is that most corporate site selection processes remain outside the public eye. The fact that Amazon made this a public competition led to additional scrutiny of the site selection process. Numerous local journalists, such as those in the Dallas and Denver areas, were able to explore local proposals and reveal more about this process than most other economic development deals. …

Read the rest at Brookings.edu

Top 10 reform options from the CBO

The independent Congressional Budget Office recently released a report offering 121 options for reducing spending or increasing revenues. It’s a cornucopia of fiscal responsibility. Whether your goal is reducing unsustainable deficits, strengthening existing social programs, or saving the planet, there’s something for everyone. Here’s my top 10 list (in no particular order):

1). ELIMINATE ITEMIZED DEDUCTIONS

Estimated revenue change: $1.312 trillion over 10 years

Itemized deductions are one of the main reasons the federal tax code looks like Swiss cheese. Eliminating deductions such the state and local tax deduction and mortgage interest deduction, which are regressive and distortionary, would be the more efficient way to reduce the deficit without raising marginal tax rates.

2). INCREASE INDIVIDUAL TAX RATES ACROSS THE BOARD

Estimated revenue change: $905.4 billion over 10 years

Nobody likes to see their taxes go up but a broad-based increase of 1 percentage point across the board would be one of the more sustainable deficit reduction strategies. It would have minimal impact on most taxpayers and leave the overall tax-burden distribution unchanged. …

Read the rest at NiskanenCenter.org

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.

How the Medicaid Expansion fuels the politics of austerity

The Government Accountability Office recently released a report looking at Medicaid’s effects on access to medical care in expansion and non-expansion states. They found that low-income adults in expansion states were less likely to report having unmet medical needs than those in non-expansion states. Like the Oregon experiment study finding Medicaid expansion reduced financial strain on beneficiaries, expansion advocates interpreted this study as clear evidence of the benefits of expanding Medicaid as widely as possible. Because of this, these same advocates are often at a loss to explain why 17 states have chosen not expand to Medicaid or why 21 states have applied for section 1115 Medicaid waivers to enact work requirements, eligibility restrictions, or benefit restrictions.

One common explanation is what could be called the “mean Republican” theory of Medicaid. The only conceivable reason why states might not expand Medicaid or might restrict access in light of its obvious benefits is because callous Republican policymakers in these states hate Obama, poor people, or both. Does this theory fit the evidence? After all, many of the most restrictive states are deep red southern states with histories of limiting social programs for the poor.

Yet looking non-expansion states through the lens of partisan control misses a crucial confounding factor: Non-expansion states are also deeply poor. Mississippi’s per capita GDP, for example, is less than half that of Massachusetts, while its poverty rate is double. …

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.

The Free-market Welfare State

Today I’m proud to release my latest paper for the Niskanen Center, “The Free-Market Welfare State: Preserving dynamism in a volatile world.” You can find it here.

The paper proposes a set of principles for a “free-market welfare state” research and reform agenda, based around a simple but provocative thesis: America’s historical combination of free-markets and limited income security is fundamentally unstable. Either we get better at complementing markets with comprehensive income and re-employment supports, or the forces of creative destruction will generate anti-market backlashes with lasting political consequences:

The fallout from China’s entry to the World Trade Organization (WTO) in 2001 is a clear case in point. Cheaper imports benefited millions of Americans through lower consumer prices. At the same time, Chinese import competition destroyed nearly two million jobs in manufacturing and associated services—a classic case of creative destruction. Yet rather than help those workers adjust, our social insurance system left them to languish. In the regions of the United States most exposed to import competition, Social Security Disability Insurance (SSDI) was more than twice as responsive to the economic shock as unemployment insurance and Trade Adjustment Assistance (TAA) combined, even though it is one of the most restrictive disability programs in the developed world. Indeed, while critics of the welfare state often argue the United States spends a trillion dollars a year on social programs, only about a quarter of this comes close to anything resembling cash or quasi-cash income support—about the same annual amount spent subsidizing employer-based health insurance.

Read the rest at NiskanenCenter.org