AEIdeas The public policy blog of the American Enterprise Institute Sun, 21 Sep 2014 23:38:12 +0000 en-US hourly 1 Video Saturday Sat, 20 Sep 2014 13:22:34 +0000 read more >]]> 1. Second City: Help Obama Kickstart World War III, from the “Friends for Whatever Barack Obama Wants.”

2. Bill Maher responds to Charlie Rose’s comparison of Islam to Christianity.
“I think liberals should stop bullying me for pointing out that Islam is not like other religions. To claim that this religion is like other religions is just naive and plain wrong. They do behead people [in Mecca]. Now if they were beheading people in Vatican City, which is the equivalent of Mecca, don’t you think there would be a bigger outcry about it? This is the soft bigotry of low expectations with Muslim people. When they do crazy things and believe crazy things, somehow it’s not talked about nearly as much.”

3. Brigitte Gabriel responds to a Muslim woman claiming Muslims are portrayed badly. “It is time we take political correctness and throw it in the garbage where it belongs.”

]]> 23
What we’re reading today: September 19, 2014 Fri, 19 Sep 2014 20:50:54 +0000 read more >]]> Check out the top pieces we’re reading today on the economy, technology, education, and more.

1.) Quartz has the 17 most important economic charts of this week.

2.) UN predicts new global population boom, reports the MIT Technology Review piece.

3.) Climate change is an opportunity to dramatically reinvent the economy, according to this interview with Naomi Klein in The Atlantic.

4.) Here are 3 key questions about the slowdown in emerging markets from Sweta Saxena in iMF direct.

5.) Urban Institute provides a new view of the housing boom and bust.

6.) From Pew: Hispanics are the only group to see its poverty rate decline and incomes rise.

7.) Google works with NASA to test cars without backup drivers, says IEEE Spectrum.

8.) “The exurbs are starting to make a comeback, signaling that the housing market’s recovery is slowly spreading beyond major cities,” notes Kris Hudson in WSJ.

9.) From Brookings come the top 10 global hometowns of America’s foreign students. Guess which city is number one.

10.) With the new health law, shopping around can be crucial, comment Margot Sanger-Katz and Amanda Cox in The Upshot.

11.) Bitcoin is plunging again, according to Quartz.

12.) Urban Institute has a new report out on federal expenditures on children through 2013.

Follow AEIdeas on Twitter at @AEIdeas, and Natalie Scholl at @Natalie_Scholl.

]]> 0
Turkish First Lady plagiarizes… Michelle Obama’s name Fri, 19 Sep 2014 19:55:45 +0000 read more >]]> When it comes to respect for Intellectual Property Rights, Turkey ranks quite poorly. If Turkey wants to reform, perhaps they should start at the top. When Recep Tayyip Erdoğan assumed the presidency last month, his wife Emine became first lady. It seems Emine models herself after Michelle Obama, right down to her twitter account.

The description on Michelle’s twitter account reads, “This account is run by Organizing for Action staff. Tweets from the First Lady are signed -mo.”

Now here’s the description from Emine Erdoğan’s twitter feed: “Emine Erdoğan Resmi Twitter Hesabı This account is run by Organizing for Action staff. Tweets from the First Lady are signed -mo.”

Then again, maybe it’s not shameless plagiarism in Turkey’s presidential palace. Maybe Emine Erdoğan really does use the initials ‘mo.’ And as for suggesting any impropriety that might undercut Emine’s vestal image, I’m sure we’re only a Turkish press conference away from blaming this scandal on Jews, the interest rate lobby, yours truly, that well-known personification of subversion Steven Cook, or the Gülenists.

But, let me propose one other possibility. With tongue firmly in cheek, when was the last time that anyone saw Michelle Obama and Emine Erdoğan together in the same room and the same time? Conspiracy theorists might question President Obama’s birth certificate, but perhaps it’s time they dig deeper to expose whether Emine Erdoğan is simply Michelle Obama in disguise.

Follow AEIdeas on Twitter at @AEIdeas.

]]> 0
On Kurds and terror lists Fri, 19 Sep 2014 19:52:43 +0000 read more >]]> Two years ago, John Hannah, formerly Vice President Dick Cheney’s National Security Advisor, took to Foreign Policy to reveal a particularly counterproductive aspect of Washington idiocy, the fact that through some careless legislative language, the United States government had labelled the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic Party (KDP) to be terrorist groups:

Incredibly, under existing immigration law, members of Iraq’s two main Kurdish parties — Barzani’s Kurdistan Democratic Party (KDP) and Iraqi President Jalal Talabani’s Patriotic Union of Kurdistan (PUK) — are classified as terrorists when seeking visas to enter the United States. As modified after 9/11, the Immigration and Nationality Act (INA) uses a definition of terrorism so broad that virtually any resistance group that in the past engaged in armed conflict against its government is considered a so-called “Tier III” terrorist organization. Membership in such a group is automatic grounds for denial of admission to the U.S., treatment that extends to the member’s family as well. That’s right: The KDP and PUK for years worked hand-in-glove with the United States to bring down the tyrannical regime of Saddam Hussein. After 2003, they served as America’s most faithful allies in efforts to stabilize Iraq. And for all their trouble fighting alongside U.S. forces they got . . . well, they got labeled as terrorists, of course.


That’s still getting worked out, but it’s not only the KDP and PUK for which ham-handed terror designations undercut American interests.

The Kurds are—or could be—our best friends inside Syria. They are secular, tolerant, and aspire to democracy. Alas, because of their links to the Kurdistan Workers Party (PKK), the United States considers them terrorists.

The PKK began an insurgency against the Turkish army in 1984, but it was only in 1997 that, largely out of deference to Turkey, the State Department designated the PKK a terrorist group. (I’ve discussed this a bit more, here). The PKK—unlike the Mujahedin al-Khalq which the State Department de-listed in 2012, has never targeted Americans. Regardless, the Turkish government and PKK have agreed to a ceasefire and entered talks. At the same time, it seems a bit self-defeating to defer to Turkey on the PKK when Turkey rebuffs anyone concerned about its ties to Hamas, its ambassador’s endorsement of Al Qaeda in the Islamic Maghrib, and its now president’s (and his son’s) embrace of a man designated by the US Treasury Department as an Al Qaeda financier.

When looking at the Kurds from an American policy perspective, it’s important to recognize that they are faction-ridden and often become so focused on their own internal politics and financial competition that they lose sight of how years of badmouthing Kurdish competitors have undercut their collective standing. This is the case with the KDP’s constant labeling of the PKK to be a terrorist group. Doing so wins the KDP favor in Turkey and also undermines the PKK’s position in areas where the two groups compete. But ultimately, as with the battle against the Islamic State, it results not in KDP victory but tragedy for the Kurds.

Consider the following comparisons:

Kurdish table to accompany Rubin blog post

None of the Kurdish groups are saints, but all of them are potential allies. Indeed, any of the Kurdish groups could arguably make better allies than the Turks, not that the United States should get into an either-or situation. Nevertheless, perhaps it’s time not only to resolve the Immigration and Nationality Act problem that afflicts the KDP and PUK, but also to reconsider our default “PKK is a terrorist group” position given that the facts no longer merit that designation, nor does US interest.

Follow AEIdeas on Twitter at @AEIdeas.

]]> 1
The minimum wage and Social Security Fri, 19 Sep 2014 19:02:11 +0000 read more >]]> In his race for the open Iowa Senate seat, Democratic Rep. Bruce Braley has put great emphasis on Social Security. That’s good – Social Security is a crucial program for millions of Americans and the biggest domestic line item in the federal budget.

But Braley’s political focus on Social Security doesn’t mean he actually has a policy in mind to fix it. According to the DesMoines Register, Braley “believes raising the federal minimum wage would add billions of dollars to the Social Security trust fund and extend its solvency.” But would it?

The Congressional Budget Office estimates that raising the minimum wage to $10.10 would boost earnings for around 16.5 million workers, while causing up to 1 million jobs to be eliminated. To me that’s not a great trade-off: according to CBO, the typical family living below the poverty line would see its annual income rise by only around $300, or about 2.8%. But for up to 1 million workers, their salaries would go to zero. Since most minimum wage workers receive a raise within one year anyway, eliminating jobs and cutting off from the first run on the ladder of job promotion seems too high a price to pay.

But that’s not the question here. What matters is Braley’s claim that raising the minimum wage would increase Social Security’s revenues by billions and extend the solvency of the trust fund. CBO’s figures don’t directly address those claims, but we can put together a guestimate.

CBO projects that a minimum wage increase would slightly reduce the budget deficit for the first few years, then generate small increases in the budget deficit thereafter. But the key word is “small”: for instance, CBO estimates that in 2016 average family incomes would increase by around $2 billion. By contrast, the total wages subject to Social Security taxes in 2016 are estimated at $7.317 trillion. If you think that a 0.03% increase in average wages is going to save Social Security, you need to think again.

And even if you disagree with CBO and think the income effects of a minimum wage increase would be larger, it still doesn’t matter. Make the annual income increase 10 times larger, $20 billion, and the taxes collected on this amount would fill only 3.4% of the payroll tax deficit Social Security will face in 2016. You’d be almost as effective attacking the Social Security deficit with harsh language.

Moreover, when low-wage workers pay more into Social Security, the system will owe them more benefits in the future. And since Social Security is progressive, the benefits the system owes them will be larger than the taxes these workers paid. There’s nothing wrong with that – Social Security is designed to be progressive – but this would further reduce any positive effects on the system’s solvency.

Simply put, the idea that raising the minimum wage would significantly improve Social Security’s funding is a pipedream. A best-guess is that its effect on Social Security’s solvency would range from tiny to miniscule. Rep. Braley is free to favor a minimum wage increase but that doesn’t get him off the hook in having ideas for fixing Social Security, particularly when his own campaign has put such great emphasis on the issue.

Follow AEIdeas on Twitter at @AEIdeas.

]]> 0
Creating alternatives for students seeking a postsecondary education Fri, 19 Sep 2014 18:58:03 +0000 read more >]]> A few years ago, it would have been almost heretical to suggest that college is not worth the investment, but a recent article by Berkeley professor and former labor secretary Robert Reich did just that, arguing that college, in particular a four year liberal arts degree, is a complete waste of time. Reich points out that most students who go to college drop out because they are either unprepared or unsuited for a traditional general education. Since the payoff for college comes from actually completing a degree, college is a poor option for such students.

Reich argues that a degree from a four year college is usually thought of as the only gateway to the middle class, but surely there should be another option for these students. Community colleges or vocational and technical training programs are possible options, but they are underfunded and underdeveloped. Rather than promoting the pursuit of four year degrees, we should develop alternate paths for weaker students.

Community college and vocational and technical training programs are affordable because they avoid costs of amenities provided at four year colleges and universities, and teach students relevant labor market skills. Not only do they present a great opportunity for students, but they also provide an opportunity for higher education institutions to respond to the demands of employers.

By teaming up with community colleges and vocational and technical training programs, employers can ensure that students are being adequately trained to meet their needs, which increases the likelihood of finding a job for students and providing more qualified workers for employers. The new Engineering Product Innovation Center (EPIC) at Boston University is a prime example. It is the result of collaboration between BU and four big industry partners (General Electric Aviation, Schlumberger, Procter & Gamble and technology company PTC) to produce students who are equipped for their workforce. This program has great prospects of teaching students the skills they need to find a job in their industry. If the program proves to be successful, then implementing a similar program at community colleges and vocational and technical training programs would be worth considering. Other examples include the partnership between SUNY Canton with Subaru and Volkswagen with Chattanooga State, where automotive technology students can receive a combination of academic and practical training in preparation for jobs in the automotive industry.

Unsurprisingly, many people are opposed to this point of view. S. Georgia Nugent, Senior Fellow at the Council for Independent Colleges, published a response to Reich in which she exclaims that a vocational or technical education is not an “inspirational dream for young Americans.” She draws on quotes from people with careers in technology to show that a technical education is not sufficient to survive in the “real world.”

I agree that vocational and technical education should be supplemented with a relevant liberal arts education, but students shouldn’t have to spend half their postsecondary career taking unnecessary general electives to have a sufficient liberal arts background. Taking my undergraduate institution as an example, students majoring in Mathematics are required to take six credits of a foreign language. This forces students to spend time, money, and energy on classes that are highly unlikely to help them in establishing their career. Forcing students to pay for classes that they do not want or need is inefficient. One way to avoid this while still ensuring liberal arts exposure is by imposing a required number of liberal arts classes that every student must take. But rather than dictating which courses students must take, allow them the freedom to choose.

The bottom line is, the world is changing and our education system is not effectively adjusting to these changes. There is no denying that the disparity between earnings of college graduates and non-graduates is real—one study reckoned the median annual earnings of those with a bachelor’s degree to be $45,500, while those with only some college or a high school degree earned $30,000 and $28,000, respectively. Good students who graduate college will reap the benefits of getting a four year degree. Weak students who have a reason to believe that they will not graduate from college should have viable alternative, community colleges or vocational and technical education, which would also serve as a gateway to the middle class.

Follow AEIdeas on Twitter at @AEIdeas.

]]> 0
Here is the big driver behind government healthcare spending Fri, 19 Sep 2014 17:27:43 +0000 read more >]]> Charles Blahous makes a number of great points in an e21 essay on the fiscal future of Medicare — and the US budget. While it is true, as a recent New York Times piece notes, that the Medicare spending projections has declined quite a bit since 2006 (see above chart), the program’s financial problems are still enormous. The whole piece is worth reading, but this is a particularly noteworthy bit given all the attention on the need to reduce health cost inflation:

Health cost inflation is not and never was the biggest problem projected for Medicare; population aging was, and that problem remains. It is helpful to slow excess health cost growth but Medicare’s biggest source of financial strain is the sheer number of people coming onto its rolls. CBO estimates that only 33 percent of the growth in all major federal health program spending projected through 2039 is due to excess cost growth, population aging being a bigger factor. This is especially true for Medicare specifically because it serves the senior population.

Follow James Pethokoukis on Twitter at @JimPethokoukis, and AEIdeas at @AEIdeas.

]]> 0
Would Dodd Frank really prevent another massive megabank bailout? Fri, 19 Sep 2014 16:58:45 +0000 read more >]]> One of my favorite policy heuristics: “The history of big bank failure is a history of the state blinking before private creditors” – Andrew Haldane. Which leads me to this reality-based analysis by Adam White via his review of Tim Geithner’s book:

Geithner criticizes Dodd-Frank, too—but from precisely the opposite direction. He argues that Dodd-Frank gives the Fed and the Treasury too little discretion, not too much. He likes the SIFI-designation process but complains that it should be handled by the Fed, not by the interagency Financial Stability Oversight Council. More significantly, he approves of the “Orderly Liquidation Authority” but regrets that Congress combined it with a new limit on the Fed’s power to bail out individual companies. The Fed’s primary tool in the crisis, he explains, was Section 13(3) of the Federal Reserve Act, which empowered the Fed, in “unusual and exigent circumstances,” to lend directly to borrowers unable to obtain credit elsewhere. Dodd-Frank nominally pares back this power, by requiring that such lending be directed not to individual firms, but rather with “broad-based eligibility,” to prevent regulators from bailing out individual, politically favored banks. According to Geithner, this limit on Fed discretion, coupled with other limits on the FDIC’s power to backstop banks, “will hinder the response to the next crisis.”

Geithner’s criticism of these statutory limits is less surprising than his earnest suggestion that the statutes actually limit anything. Throughout the crisis, Geithner and his colleagues consciously pushed their authority as far as possible—if not by exceeding statutory limits on their powers (which he argues they never did) then by interpreting those statutes as generously as possible. We can trust his successors to interpret Dodd-Frank’s new “restrictions” with similar creativity, especially when a variety of commentators (including Richmond Federal Reserve Bank president Jeffrey Lacker, Harvard Law School financial systems professor Hal Scott, and House Financial Services Committee chairman Jeb Hensarling) argue that the amendment leaves more than enough room for the Fed to bail out specific firms.

Follow James Pethokoukis on Twitter at @JimPethokoukis, and AEIdeas at @AEIdeas.

]]> 1
Peter Thiel on when technology companies become antitechnology companies Fri, 19 Sep 2014 16:31:50 +0000 read more >]]> Venture capitalist Peter Thiel makes a great point in a Q&A with MIT Technology Review that reflects on economic dynamism and large companies (a favorite theme of mind):

Can technology companies that start out bold stay that way when they become established? Many large computing companies get cautious.

You have to think of companies like Microsoft or Oracle or Hewlett-Packard as fundamentally bets against technology. They keep throwing off profits as long as nothing changes. Microsoft was a technology company in the ’80s and ’90s; in this decade you invest because you’re betting on the world not changing. Pharma companies are bets against innovation because they’re mostly just figuring out ways to extend the lifetime of patents and block small companies. All these companies that start as technological companies become antitechnological in character. Whether the world changes or not might vary from company to company, but if it turns out that these antitechnology companies are going to be good investments, that’s quite bad for our society.

Economic calcification, my friends.

Follow James Pethokoukis on Twitter at @JimPethokoukis, and AEIdeas at @AEIdeas.

]]> 0
Americans ‘surprisingly uncertain’ what their branches of government are, new survey reveals Fri, 19 Sep 2014 16:13:00 +0000 read more >]]> James Madison for sure would have greeted the Annenburg Public Policy Center’s recently released survey on the “surprising uncertainty” of Americans regarding basic civic knowledge as “but a prologue to farce or tragedy or perhaps both.” In the relatively short survey administered to 1,416 adults and published on September 17, 2014 (Constitution Day), the APPC found that 35% of respondents could not name even one branch of government in the US. Only a little more than a third of respondents (36%) could name all three branches of government.

When asked whether they knew “how much of a majority is required for the US Senate and the House of Representatives to override a presidential veto,” 47% of respondents answered that they did not know, or were not sure—compared to 43% who answered similarly to the identical question in 2011. And while presumably the respondents did know that Congress is composed of a House and Senate, 44% said that they did not know, or were not sure, whether Republicans or Democrats controlled the House; 42% responded similarly in regards to the Senate. (In 2011, those numbers read 27 and 27%, respectively.) Looked at another way, however, in 2014 only 17% answered falsely that Democrats control the House, while 20% believed that Republicans control the Senate.

And what about the public’s knowledge of the basic functions of the Supreme Court? Surely, with so much marquee time in the news the past few years, the public has grasped the meaning of a Supreme Court ruling…. When asked whether a 5-4 SCOTUS ruling is sent back to Congress for reconsideration, 21%—roughly one in five people—answered in the affirmative.

A people who aim to govern themselves, Madison cautioned, “must arm themselves with the power knowledge gives.” Madison, of course, was referring to the time-honored belief that a system of government, however well devised, must be well administered if it wants to make good on its guarantees of the equal pursuit of justice for all its citizens and the promotion of the general welfare. To be well administered by citizen-officials, those officials must understand the purposes and structure, allowances and inhibitions of republican government. But to understand, there must first be knowledge, and active remembrance or “frequent recourse” to fundamental principles.

The majority of public officials and education leaders today seem quite unenthused about reincorporating such a civic education mission, within public education at least. In 2013, the National Assessment of Educational Progress (NAEP) exams in civics, US history, and geography were indefinitely postponed, and replaced by a single, new test—technology and engineering literacy. Civics teachers increasingly feel marginalized in the age of STEM. And students increasingly exhibit the lack of exposure to civic education, both private and public.

A handful of lawmakers and civic leaders are making baby steps towards reversing that trend. On September 17, the same day as APPC released its troubling survey results, the Civics Education Initiative announced its intentions to introduce legislation in seven states—Arizona, Louisiana, Missouri, Oklahoma, South Carolina, South Dakota, and Utah—to require students to take and pass the same exam required for immigrants to become US Citizens before receiving their high school diploma or a general equivalency degree.

In each of the states, CEI has prominent co-chairs (several senators and a few governors) who will promote the legislation. CEI itself aims to have all 50 states adopt similar legislation by the 230th anniversary of the signing of the Constitution in 2017. But even while there is fine research recently published proving through data that consequential civics assessments (civics tests that are required for graduation) do have positive affects on civic knowledge, the question remains whether answering six civic questions out of 10 randomly selected from 100 possibilities is adequate for fostering civic knowledge. Something more, on the level of a civics curricula at least, is surely needed.

Follow AEIdeas on Twitter at @AEIdeas.

]]> 1