NDN Blog

Export-Import Bank Chairman and President Fred Hochberg to Speak at NDN on June 10

Fred HochbergThe Great Recession precipitated the sharpest decline in world trade since the end of World War II and saw the threat of the complete stall of global commerce. Out of that decline has come the great challenge and opportunity of putting the global trade system back on track in a manner that benefits both America and our trading partners. At the core of this effort is the Export-Import Bank of the United States, which, along with many others, has undertaken the work of meeting the ambitious goals of President Obama's National Export Initiative (NEI). 

NDN is pleased to invite you to an address on June 10 from the Chairman and President of the Export-Import Bank, Fred Hochberg, who will speak about the National Export Initiative and the work of the Export-Import Bank. NDN Globalization Initiative Chair Dr. Robert Shapiro will moderate a discussion and Q&A following the Chairman's remarks.

June 10 @ 12pm
NDN - 729 15th St NW, First Floor
Washington, DC 
Click here to RSVP 
A live webcast will begin at 12:15

 

Two Must Reads on the Economy: Leonhardt on "Jobs Bill v. Deficit" & President Obama in Pittsburgh

All else equal, I consider myself a pretty strong believer in balanced budgets. Here’s the thing, all else isn’t equal in the short term. As David Leonhardt writes in the New York Times, unemployment is at a 27 year high, and there’s a proposal moving through Congress to help address this in a responsible, economically literate manner. Leonhardt’s column explains why it’s a no-brainer.

A highlight, but the full column is worth a read:

There are two arguments for more stimulus today. The first is that, however hopeful the economic signs, the risk of a double-dip recession remains. Financial crises often bring bumpy recoveries. The recent troubles in Europe surely won’t help.

The second argument is that the economy has a terribly long way to go before it can be considered healthy. Here is a sobering way to think about the situation: If the next four years were to bring job growth as fast as the job growth during the best four years of the 1990s boom — which isn’t likely — the unemployment rate would still be higher in 2014 than when the recession began in late 2007.

Voters may not like deficits, but they really do not like unemployment.

Looking at the problem this way makes the jobs bill seem like less of a tough call. Luckily, the country’s two big economic problems — the budget deficit and the job market — are not on the same timeline. The unemployment rate is near a 27-year high right now. Deficit reduction can wait a bit, given that lenders continue to show confidence in Washington’s ability to repay the debt.

As a result, Congress does not have to choose between the problems. It can pass the jobs bill, putting people back to work, and even pass a separate bill to help struggling states. History has shown that state aid, which prevents layoffs of teachers, emergency medical technicians and other workers, is the single most effective form of stimulus.

Additionally, yesterday in Pittsburgh, President Obama gave perhaps his best economic speech yet. Coupled with the recently released National Security Strategy, the President has given a pretty clear sense as to where his administration is headed on the economic front. 

Again, a highlight, but read the whole speech:

In the immediate future, this means doing whatever is necessary to keep the recovery going and to spur job growth.  But in the long term, it means recognizing that for a lot of middle-class families -- for entire communities, in some case -- a sense of economic security has been missing since long before the recession began. 

Over the last decade, these families saw their income decline.  They saw the cost of things like health care and college tuition reach record highs.  They lived through a so-called economic “expansion” that generated slower job growth than at any prior expansion since World War II.  Some people have called the last 10 years “the lost decade.” [note: for background on the lost decade, read "A Lost Decade for Everyday Americans"]

So the anxiety that’s out there today isn’t new.  The recession has certainly made it worse, but that feeling of not being in control of your own economic future -- that sense that the American Dream might slowly be slipping away -- that’s been around for some time now.  And for better or for worse, our generation of Americans has been buffeted by tremendous forces of economic change.  Long gone are the days when a high school diploma could guarantee a job at a local factory -- not when so many of those factories had moved overseas.  Pittsburgh, a city that once was defined by the steel industry, knows this better than just about anybody.  And today, the ability of jobs and entire industries to relocate where there’s skilled workers and an Internet connection has forced America to compete like never before. 

From China to India to Europe, other nations have already realized this.  They’re putting a greater emphasis on math and science, and demanding more from their students.  Some countries are building high-speed railroads and expanding broadband access. They’re making serious investments in technology and clean energy because they want to win the competition for those jobs. 

So we can’t afford to stand pat while the world races by.  The United States of America did not become the most prosperous nation on Earth by sheer luck or happenstance.  We got here because each time a generation of Americans has faced a changing world, we have changed with it.  We have not feared our future; we have shaped it.  America does not stand still; we move forward.

Zakaria - "America is No Greece"

Fareed Zakaria gets it just about right in the Washington Post. America is no Greece

Perhaps the largest difference [between the US and Greece] is that the United States has solid growth prospects, based on economics, technological productivity and demography. That may be why the country seems to have little problem financing its debt. Demand for U.S. Treasury bills remains robust, and foreign governments, including China, have increased their purchases recently. The truth is, if you are a foreign central bank and you want to invest large sums of cash -- tens of billions -- and you need an investment that is reasonably safe and liquid (that is, you can sell it off quickly), there is no better place to put it than American government bonds. It is striking that today America spends less to service its debt, as a percentage of GDP, than it did in 1999 when Bill Clinton's administration was posting budget surpluses. (The reason, of course, is that interest rates are much lower today than they were in 1999.)

...

Events have conspired to give America some breathing room. Leaders in Washington should take the current climate as a godsend and use it to start retooling the American economy. Everyone knows what needs to be done -- restructure entitlements (including state pensions, which are the next catastrophe); force down health costs; reform immigration, taxes and regulation -- and thus restore the country's competitiveness. Or our leaders could sit around and put off all the hard decisions until America finally does look like Greece.

There are many, many more differences between the U.S. and Greece, and Zakaria is dead-on in arguing that the key to American prosperity in the near and long terms is growing a 21st century economy. 

The Practical and Economic Bankruptcy of Rand Paul’s Lunch Counter Libertarianism

Cross-posted at the Huffington Post

Last night, on the "Rachel Maddow Show" (of all places for this to happen), Rand Paul said that he wasn't necessarily comfortable with the government telling private businesses how to deal with race. Specifically, he didn't seem particularly favorable to desegregating lunch counters. 

Pretty much everyone is rightfully offended by this sentiment. The question of whether or not it is an overreach of government to desegregate lunch counters is long settled. What still exists is the sort of economic libertarianism that drives one to Paul's conclusion. 

Paul's beliefs about constrained government – one so limited that it can't enforce basic rules that serve the good of society – translate on the economic front into a free market responsible for virtually everything. In this case – theoretically – if the market was not amenable to segregated lunch-counters, people would stop buying food at segregated diners, and the hidden hand would have cured racism. 

What we know from actual experience is that, in some parts of this country, things just did not work that way. Cultural norms allowed discriminatory practices for generations until the federal government stepped in.

It seems obvious, but it's worth saying: there are lots of other important functions the free market can't fulfill. We look to the government to provide infrastructure, schools, national defense, public health and emergency services, etc. One of the best parts of living in a modern, advanced industrialized nation is that life doesn't have to be nasty, brutish, and short. And with the protection and services of organized government come certain responsibilities for the private entities that enjoy said benefits.

Is there a legitimate debate about the proper role of government in the economy and our everyday lives? Of course. And the ideological consistency of Paul and other libertarians has its attractions, especially when contrasted with the Republican party, which wants "liberty" in some places (taxes) and the heavy hand of government in others (the bedroom). 

But the fact is that, as America enjoys its place as the one true global superpower, we no longer have the luxury of a government that sits idly by and allows the free market to solve every problem, whether of civil rights or economic prosperity. While competition and markets have been key to allowing the innovation that has driven American prosperity, so too have crucial pieces of government investments. From decisions over two centuries to build a world-class Navy capable of allowing the U.S. to be a titan of global commerce, to Eisenhower's National Highways, to the creation the Internet, to preventing a second Great Depression, key, responsible government actions have not only not impinged on our economic freedoms, they have enabled the prosperity that has made us not just free, but truly great.

In the months ahead, we will hear plenty about freedom from those who claim its mantle. But right now, the great economic challenges that face the nation do not arise from the heavy hand of government in the affairs of the private sector, but instead from the potential economic catastrophe that government action is required to avert. So consider – what sort of economic stewardship would Rand Paul's ideological consistency offer us? What would he and those who agree with him have done over the last two years as the American and global economies melted down? 

There can be only one conclusion: While Paul's lunch counter libertarianism disgusts us, it is his economic libertarianism that truly imperils us.

Why are Americans Upset With Their Government?

Senator Judd Gregg's theory is below:

Gregg says Americans are frustrated with Washington and are lashing out at incumbents because of high spending and deficits. He's not the only one voicing this theory. Is he right? What is his evidence? Is spending more of an issue than high unemployment and a decade of stagnating wages and declining incomes?

Today @ 3:30 - Electricity 2.0: Envisioning the Future of Electricity w/ Chairman Ed Markey

Today, NDN will host an important and groundbreaking event focused on charting a course to the electricity future. Entitled Electricity 2.0: Envisioning the Future of Electricity, the event will feature remarks by:

  • Congressman Edward Markey, Chairman of the House Select Committee on Energy Independence and Global Warming and Chairman of the Subcommittee on Energy and the Environment

and a panel discussion with:

  • Clem Palevich, former President and CEO of Constellation New Energy 
  • Nick Sinai, Director of Energy and Environment for the Federal Communications Commission 
  • Jigar Shah, founder of Sun Edison and now CEO of the Carbon War Room 
  • Michael Moynihan, author of the recent policy paper from NDN & the New Policy Institute, Electricity 2.0 

In addition to protecting our climate and enhancing energy security, clean electricity has the potential to power a new wave of prosperity. It can serve as a platform for entrepreneurs and innovators to create new jobs and build new industries.  

In order to meet this challenge and achieve clean electricity's promise, the United States must update our antiquated grid and add dramatically more renewable resources. The US currently supplies 3.5% of power from renewables, compared with 28% in Denmark. 

Electricity 1.0 helped secure reliable, universal power. But with R&D in the electricity industry having dwindled to less than 1% of sales, utilities constrained from offering new products and services, renewable generators unable to get their product to market, and consumers unable to control their energy destinies, it is time for an upgrade to Electricity 2.0. With a new open architecture in place and the right incentives to restore innovation and revive investments, Electricity 2.0 promises to do for energy what the Internet did for communications.  

Electricity 2.0: Envisioning the Future of Electricity
Tuesday, May 11 @ 3:30 p.m.
U.S. Capitol - Room HC-6 (access through South Entrance)
A live webcast will begin at 3:45 p.m. ET
RSVP  :  Watch Webcast

We are on the cusp of a revolution in how the world creates, trades, and consumes energy. However, for that revolution to occur we need to create a new modern, open, and secure electricity architecture that allows innovation to flourish.

What to Make of Today's Jobs and Unemployment Data

This morning’s April jobs numbers can only be viewed as a positive development for the national economy. 290,000 jobs gained, one hundred thousand more than expected, and 231,000 of those jobs were in the private sector. The remainder is comprised of roughly 60,000 census jobs, which are serendipitously timed. Additionally, February and March jobs numbers were revised up.

According to a blog by Council of Economic Advisors Chair Christina Romer:

The job gains were spread widely across sectors. Construction, manufacturing, professional and business services, education and health, and hospitality and leisure all added jobs. Indeed, the rise in manufacturing employment of 44,000 was the largest since August 1998. One area of weakness was state and local government, which reduced employment by 6,000. Temporary help employment grew more slowly than in previous months (+26,000), suggesting that firms may be moving to more permanent hiring. The average workweek for all employees on nonfarm payrolls increased by 1/10 of an hour and is up 3/10 of an hour since December.

This is all good news – we knew the area of weakness was in state and local governments – and the federal government can and should do more to help here. (States have to have balanced budgets, so in times like these, they end up firing people – a scenario that is highly counterproductive.) The increase in work hours is also good, as that tends to precede job growth.

At the same time as this rosy jobs news, the national unemployment level rose to 9.9 percent. Confusing, right?

Well, not really. The commonly cited unemployment rate is merely one statistic of many to help us understand the employment picture, and it’s an imperfect one. If you’re not looking for a job, you don’t play into the calculation. The virulence of this recession caused many to grow frustrated and stop looking for a job – in fact this recession has seen the highest long-term unemployment (6 months or more) of any recession since the great depression. From a statistical perspective, this uptick in the unemployment rate was unavoidable and should be seen as a positive sign – those who have been out of work for a while have grown more optimistic and are therefore out there looking. 

This isn’t to say that the economy is anywhere near out of the woods – we do have lots of people out of jobs who want them, and the economy remains vulnerable to additional shocks. The Greek debt crisis could spread; the oil spill in the Gulf could get caught in the gulfstream and end up on the East coast, hampering commerce; or we could make some foolish policy decision, like stopping stimulus spending or starting a trade war. These scenarios are unlikely, however, and we can continue to hope for continued positive employment data in the future. 

NDN to Host Electricity 2.0: Envisioning the Future of Electricity w/ Rep. Ed Markey

In addition to protecting our climate and enhancing energy security, clean electricity has the potential to power a new wave of prosperity. It can serve as a platform for entrepreneurs and innovators to create new jobs and build new industries.  

In order to meet this challenge and achieve clean electricity's promise, the United States must update our antiquated grid and add dramatically more renewable resources. The US currently supplies 3.5% of power from renewables, compared with 28% in Denmark. 

Electricity 1.0 helped secure reliable, universal power. But with R&D in the electricity industry having dwindled to less than 1% of sales, utilities constrained from offering new products and services, renewable generators unable to get their product to market, and consumers unable to control their energy destinies, it is time for an upgrade to Electricity 2.0. With a new open architecture in place and the right incentives to restore innovation and revive investments, Electricity 2.0 promises to do for energy what the Internet did for communications.  

On May 11, NDN invites you to attend an important and groundbreaking event focused on charting a course to the electricity future. Entitled Electricity 2.0: Envisioning the Future of Electricity, the event will feature remarks by:

Congressman Edward Markey, Chairman of the House Select Committee on Energy Independence and Global Warming and Chairman of the Subcommittee on Energy and the Environment

and a panel discussion with:

Clem Palevich, former President and CEO of Constellation New Energy 

Nick Sinai, Director of Energy and Environment for the Federal Communications Commission 

Jigar Shah, founder of Sun Edison and now CEO of the Carbon War Room 

Michael Moynihan, moderator and author of the recent policy paper from NDN & the New Policy Institute, Electricity 2.0  

We are on the cusp of a revolution in how the world creates, trades, and consumes energy. However, for that revolution to occur we need to create a new modern, open, and secure electricity architecture that allows innovation to flourish.

Electricity 2.0: Envisioning the Future of Electricity
Tuesday, May 11 @ 3:30 p.m.
U.S. Capitol - Room HC-6 (access through South Entrance)
A live webcast will begin at 3:45 p.m. ET
RSVP  :  Watch Webcast

Please join us for this important discussion.

Economy Continues Positive Growth in First Quarter of 2010

Today's Q1 GDP numbers convey continued, positive growth for the economy. Here's what Council of Economic Advisors Chair Dr. Christina Romer had to say on the White House blog:

Statement on the Advance Estimate of GDP for the First Quarter of 2010

Posted by Christina Romer on April 30, 2010 at 09:46 AM EDT

Today’s GDP report shows important signs of continued recovery.  Real GDP grew at a solid 3.2 percent annual rate in the first quarter of 2010.  This is the third consecutive quarter of positive growth.  To put the rate of growth into perspective, real GDP fell at a 6.4 percent rate in the first quarter of 2009.  There is no question that the economy has improved dramatically over the past year.

Each additional quarter of GDP growth is a welcome sign that the economy is healing from a severe recession that cost over eight million jobs and wiped out trillions of dollars in household and family wealth. Given the severity and depth of the recession, it will take a number of quarters of robust growth and strong employment gains to return the economy to full health and full employment.

The most encouraging news in the report was the strong growth of key types of private spending by consumers.  Personal consumption expenditures grew at an annual rate of 3.6 percent, suggesting renewed confidence among households.  This growth is also consistent with the rise in tax refunds in the first quarter due to the Recovery Act (see the CEA’s Third Quarterly Report on the Economic Impact of the American Recovery and Reinvestment Act of 2009 for more information on the surge in Recovery Act tax relief in the first quarter).  Business investment spending on equipment and software rose strongly as well, increasing at a 13.4 percent rate.  Businesses also increased their inventory investment substantially, suggesting they are more optimistic about future sales.

While there is much to be encouraged by in the report, there were two areas of notable weakness.  First, both residential and non-residential structures investment declined, reflecting continuing slack in the housing and commercial real estate markets.  Second, state and local government purchases fell at a 3.8 percent rate, more than offsetting a small rise in Federal purchases.  This fall in state and local government spending was the largest since 1981, and is consistent with the continuing severe budget shortfalls in many states.

The Administration continues to work with Congress to take responsible actions that will help the private sector create jobs and speed the recovery.

WH chart

The Presidential Entrepreneurship Summit and the Rise of the Rest

Today, President Obama and the Departments of State and Commerce host the Presidential Summit on Entrepreneurship. The summit, which features top administration officials and private sector innovators, focuses mainly on how the entrepreneurs and business leaders in the U.S. and Muslim communities can better be linked. Take a look at the agenda here and watch the whole summit live here.

This summit is part of an important part of the administration’s outreach, which began with the President's Cairo speech, to the Muslim world. Importantly, it conveys an understanding of the power of economic connectivity to prosperity and peace. Perhaps the best resource on the topic of the power of economic connectivity and the Muslim world is Vali Nasr’s Forces of Fortune. Another resource that I highly recommend (and I might be a little biased) on the power of economic connectivity to bring people, businesses, and nations into global marketplace is a white paper I released on Friday called The Rise of the Rest: How New Economic Powers are Reshaping the Globe.

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