Globalization Initiative

NDN's Globalization Initiative was established to promote economic growth and restore broad-based prosperity in our globalized economy. Chaired by Dr. Robert Shapiro, Under Secretary of Commerce for Economic Affairs under President Bill Clinton, the program works to address the structural changes affecting the American and global economies. NDN argues that a "lost decade," marked by declining household incomes, remains the most important factor in the American economy and politics.

Our agenda for addressing the structural changes inherent in the era of globalization includes three key components: modernizing our healthcare and energy policies, investing in 21st century skills and infrastructure, and accelerating innovation across the economy. NDN also continues to play a major role in the debate over how to best manage the Great Recession and fosters dialogue around renewing the national consensus on global economic liberalization.

Papers and Memos

A New, Progressive Economic Strategy for America released 5/11: By Robert J. Shapiro
Written over a series of weeks in April 2010, this collection of four pieces lays out a new economic strategy for America that creates broad-based prosperity and addresses the America's great economic challenges in the era of globalization.
Building on recent struggles in Congress to do more for the economy than pass the extension of unemployment insurance, NDN outlines a political and policy framework to take steps in 2010 that promote near-term job creation and economic growth.
In this white paper, Globalization Initiative Deputy Policy Director Jake Berliner describes the rise of new economic powers and the challenges and opportunities they are presenting the American and global economies.
Keeping the Focus on the Struggle of Everyday People: 2010 Edition 1/26/10: By Simon Rosenberg
This memo argues that the nation would benefit from a shift to economic rhetoric and policy geared towards the struggle of everyday Americans. 

Crafting an American Response to the Rise of the Rest 1/21/10: By Simon Rosenberg  Cross posted on and
Simon argues that the second generation Obama narrative must be a strategic response to the most significant transformation taking place in the world today, what Fareed Zakaria has called the “rise of the rest.” While the true scope of this transformation is only really becoming apparent now, it leaves our new President with the historic opportunity, and tremendous responsibility, to craft a comprehensive strategic response to this global “new politics” of the 21st century.
A Lost Decade for Everyday Americans 12/17/09:  By Jake Berliner
In this paper, Jake Berliner, Deputy Policy Director of NDN's Globalization Initiative, argues that everyday Americans are at the end of a “lost decade” and explains the still misunderstood causes of the virulence of the recession.
The Key to the Fall Debate: Staying Focused on the Economy 9/03/09: By Simon Rosenberg
The last few months have not been good ones for Democrats, but there is a road map for how they can get back on track, and it revolves around staying relentlessly focused on the economy and the struggle of every day people.
A Stimulus for the Long Run 11/14/08: By Simon Rosenberg and Robert J. Shapiro
Congress and President-elect Obama can use the stimulus not only to create more jobs, but to do so in ways that will drive the development of a 21st century economic infrastructure.
This narrative setting essay argues that leaders must do more to staunch the foreclosure crisis, which was at the heart of the financial meltdown.
The Idea-Based Economy and Globalization 1/23/08: By Robert J. Shapiro
U.S. companies and workers lead the world in developing and applying new intellectual property, a critical advantage in innovation that policymakers should seek to advance in the age of globalization.
Investing in Our Common Future: U.S. Infrastructure 11/13/07: By Michael Moynihan
Michael Moynihan looks at the current state of public investment in infrastructure and proposes a set of measures to restore our national political will and improve funding mechanisms to rebuild and advance U.S. infrastructure.
This presentation details the results of extensive polling conducted by NDN and Benenson Strategy Group in October of 2007 on the American public's opinions about globalization and the changing economy.
NDN Poll: Americans’ Views of the Present and Future Economy - Anxiety and Opportunity 11/6/07: By Pete Brodnitz
NDN, a progressive think tank and advocacy organization, completed a national survey on the economy and globalization on October 15th. This memo is the second of two memos outlining key findings and analysis from the poll.
NDN Poll: Clamoring for Change, Persistent Pessimism, Democrats Dominating on Economic Issues
11/2/07: By Pete Brodnitz
NDN, a progressive think tank and advocacy organization, completed a national survey on the economy and globalization on October 15th. This is the first of two memos outlining key findings and analysis from the poll.

Tapping the Resources of America’s Community Colleges: 7/26/07: By Robert J. Shapiro

Young Americans are increasingly adept at working with computers, but many American workers still lack those skills. Here, we propose a direct new approach to giving U.S. workers the opportunity to develop those skills.

We can address the challenges of the 21st century economy without sacrificing the benefits of globalization and technological advance, principally by expanding public investments in critical areas and reforming health care and energy policies.
A Laptop in Every Backpack 5/1/07: By Simon Rosenberg
We believe that America needs to put a laptop in every backpack of every child. We need to commit to a date and grade certain: we suggest 2010 for every sixth grader.
Voters Deliver a Mandate for a New Economic Strategy 11/10/06: By Simon Rosenberg
The American people want the new Democratic majorities in the House and Senate to focus and pursue an aggressive strategy to help them and their families get ahead.
Crafting a Better CAFTA 6/9/05: By Simon Rosenberg
We believe that an agreement with Central America is so important to how Americans approach the 21st century that we must commit ourselves to help negotiate and pass a better CAFTA.

Major Events

Growing the Next Economy 12/7/11
On Wednesday, December 7th, NDN hosted the Director of Multi-State Initiatives in the Office of Oregon Governor John Kitzhaber and Karl Agne, a partner at GBA Strategies, for a lunchtime discussion about bottom up economic growth, accelerating the ideas that work, and creating the Next Economy. Joining us were 

A Look at Current Global & Domestic Economic Challenges 7/26/11
On Tuesday, July 26th NDN hosted a morning conversation about the economic challenges facing America and the world featuring views from the United States Senate, House and the British House of Commons.

Under Secretary of Commerce for International Trade Francisco J Sanchez at NDN 4/26/11
On Tuesday, April 26, NDN hosted Under Secretary of Commerce for International Trade Francisco J Sanchez. Sanchez was joined by NDN Globalization Initiative Chair and former Under Secretary of Commerce for Economic Affairs Dr. Robert Shapiro.

National Economic Council Deputy Director Jason Furman on Winning the Future 2/22/11
Following the release of the President's budget, Jason Furman, the Principal Deputy Director of the National Economic Council joined NDN for a discussion of the budget, the economy, and the President's strategy to make America competitive in the global economy of the 21st century.

Under Secretary of State for Economic Affairs Robert Hormats on Global Economic Challenges 11/15/10
On November 15, NDN hosted Under Secretary of State for Economic, Energy, and Agricultural Affairs Robert Hormats for an important address on global economic challenges.

US Ambassador to the OECD Karen Kornbluh on Jobs for the Future 7/27/10
On July 27, NDN hosted the United States' Ambassador to the Organization for Economic Cooperation and Development (OECD), Karen Kornbluh. Ambassador Kornbluh, who previously served as Senator Barack Obama's Policy Director and as Deputy Chief of Staff at the Treasury Department, discussed a wide range of issues in creating "Growth and Jobs for the Future," from youth unemployment, to innovation, to U.S. engagement at the OECD.
On Wednesday, June 16, NDN hosted a speech by Congressman Ron Kind (WI-3), Vice-Chair of the New Democrat Coalition and Co-Chair of the NDC Task Force on Innovation and Competitiveness. Kind spoke about the value of innovation to the American economy and the recently released New Dem Agenda for Innovation and Entrepreneurship. Kind was joined by NDN President Simon Rosenberg.
Fred Hochberg, Chairman and President of the Export-Import Bank of the United States, Speaks at NDN. 6/10/10
On June 10 NDN hosted a speech from the Chairman and President of the Export-Import Bank, Fred Hochberg, on the National Export Initiative and the work of the Export-Import Bank. NDN Globalization Initiative Chair Dr. Robert Shapiro moderated a discussion and Q&A following the Chairman's remarks.
Senator Mark Warner on Economic Competitiveness and Innovation 3/18/10
On Thursday, March 18, Senator Mark Warner joined NDN to address America's economic competitiveness in a rapidly changing global economy. He discussed the role of innovation in creating prosperity and offered his perspective on the Senate's work to craft a new economic strategy for America, which includes reforming the nation's health care and financial sectors.
FCIC Chairman Phil Angelides on “Examining Our Financial Past to Secure Our Economic Future” 2/2/10
On Tuesday, February 2, NDN hosted an address from Phil Angelides, Chairman of the Financial Crisis Inquiry Commission. Formerly the Treasurer of the State of California, Mr. Angelides has been charged by Congress to lead the effort examining the causes of the worst financial crisis since the Great Depression. He discussed the commission's work, which began in earnest in February with much anticipated hearings. NDN Globalization Initiative Chair Dr. Robert Shapiro introduced Mr. Angelides and opened the event with contextual remarks.


Visit the Globalization Initiative blog for more of our ongoing work.

Visit Globalization Initiative Chair Robert Shapiro's blog.

Visit Globalization Initiative Deputy Policy Director Jake Berliner's blog.

Special Event: MON 5/24 - Ambassador Sarukhan and Commissioner Bersin on US-Mexico Relations

On Monday, May 24th at Noon, NDN will host Ambassador of Mexico to the United States, Arturo Sarukhan and Commissioner of U.S. Customs and Border Protection, Alan Bersin for a discussion of the unprecedented cooperation between the United States and Mexico in both seizing opportunities and better managing the challenges of the region along the common border.

In addition to their general remarks, Ambassador Sarukhan and Commissioner Bersin will reflect upon the discussions this week between the U.S. and Mexican governments during President Calderon's State Visit this week.

While this is a private event, you may watch via our live webcast beginning at 12:15pm.  The event is open to the press.


Lost Decade Narrative Picks Up Steam, NYT Worries About Another

In December, NDN made the decision that the most appropriate term to describe the last decade was as a lost decade for everyday Americans. I blogged on this topic on December 3 and published a white paper on December 17 entitled, A Lost Decade for Everyday Americans.

Since that time, the lost decade narrative has been discussed in a variety of other sources. On Saturday, Neil Irwin in the Washington Post covered the lack of job growth over the last decade:

It was, according to a wide range of data, a lost decade for American workers. The decade began in a moment of triumphalism -- there was a current of thought among economists in 1999 that recessions were a thing of the past. By the end, there were two, bookends to a debt-driven expansion that was neither robust nor sustainable.

There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well.

Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999 -- and the number is sure to have declined further during a difficult 2009. The Aughts were the first decade of falling median incomes since figures were first compiled in the 1960s.

Paul Krugman called the decade a “Big Zero,” and yesterday, the New York Times editorialized on the need for the next decade to avoid looking like Japan’s Lost Decade and worried that not enough is being done to avert such a scenario. 

Thankfully, 2009 ended better than it began. Economists talk about green shoots of recovery taking hold. Consumer confidence has improved. Equity markets have soared. But for all the progress, the American economy remains extremely vulnerable.

To understand those economic risks, it is worth considering Japan’s experience in the 1990s. A bursting housing bubble there sparked a banking crisis that was followed by a decade of economic stagnation.

The Japanese government lacked the resolve to do what was necessary. It failed to fix its banks and stopped its early fiscal stimulus before recovery had taken hold, leaving the economy all too vulnerable to outside shocks, including the Asian currency crisis and the dot-com collapse in 2001. Japan’s annual growth rate — which had averaged 4 percent since 1973 — slowed to less than 1 percent, on average, from 1992 to 2003.

While obvious, it bears repeating that American economic policy must, first, account for fact that the last decade was already lost for everyday Americans, and, second, do everything to avoid another one. The economic, social, and political consequences of back-to-back lost decades would be catastrophic, and such a scenario is a legitimate possibility. 

WSJ Graphic: New Companies, Regions Dominate Global Economy

The Wall Street Journal recently published this fascinating graphic (h/t Bill Easterly):


Energy and ICT are truly dominant as this decade comes to a close, and the three largest banks are (with HSBC's headquarters move to Hong Kong)  now based in China. Certainly global competition will only continue to intensify over the next decade. I'd venture a guess that the chart in 10 years will include more Asian companies and perhaps more from Latin America (and fewer from Europe). Will it include an energy company whose business relies on alternatives, or will fossil companies continue to dominate? Will state-owned enterprises continue to grow? Will one be the biggest company in the world? 

New NDN White Paper: A Lost Decade for Everyday Americans

NDN President Simon Rosenberg just sent out this note alerting people to the release of a new paper from NDN:

In recent weeks, policymakers in Washington have begun to take a new look at the American economy and the increasing struggle of everyday people in this new era of globalization. 

To help inform this conversation, NDN will be releasing a series of targeted "white papers" over the next few months designed to highlight particularly significant aspects of this important debate.  

We proudly release the first in this series, A Lost Decade for Everyday Americans.  This new paper, written by Jake Berliner, Deputy Policy Director of NDN’s Globalization Initiative, makes the point that over the last ten years the typical American family has seen their incomes decline; and, that for many, economic hardship had come long before the recent recession began. 

Read the paper here on the NDN website.

Best regards,
Simon Rosenberg
President, NDN

From the introduction:

To ensure the success of the economic strategy the government adopts next year, it is imperative that the plan accounts for and explains the underlying economic weakness that affected everyday Americans in the years prior to the Great Recession. As this paper illustrates, this past decade in America has been a lost decade for ordinary Americans.

Marked by stagnating wages, declining median household income, rising living costs, abnormally slow job creation, and then capped by the destruction of many trillions of dollars in personal wealth held in housing and stocks, the decade has left most everyday Americans worse off than they were ten years ago. Too little of our national dialogue has focused on the intense struggle of everyday people prior to the Recession, yet understanding that struggle is critical to formulating an adequate response to this great economic challenge.

Read on.

Two Thoughts for President Obama on his Way to Copenhagen

With the President getting ready to go to Copenhagen, the EPA did what Congress wouldn’t: It put in place a policy that ultimately would sharply reduce carbon emissions.  The EPA finding that greenhouse gases (GHG) pose a health threat and thus trigger a process to reduce the risks through direct regulation has become the president’s “deliverable” in Copenhagen.  More important, the only forces that will ever prod Congress to take action on climate are broad public opinion and pressures from powerful groups – and that’s the real importance of the EPA finding and a series of additional rule-makings scheduled over the next year.  The finding and prospective rule-makings should bolster the public’s existing opinion that serious measures to reduce greenhouse gas emissions action are required, and put the fear of God in many business executives (or more precisely, the fear of unaccountable government regulators).  And the threat that the EPA may directly regulate the greenhouse gas emissions of every company in America is a credible one, given the Supreme Court’s recent holding that the law requires that EPA come to some finding about the dangers of those emissions.  The only course left for all the powerful groups that work so hard to stop or profoundly weaken climate legislation –their most recent handiwork is evident in the effective gutting of Waxman-Markey – is to enact a serious program that would preempt EPA.  Are you listening, big coal?  And climate activists should be on the same mission, once they consider what EPA regulation could look like under the next conservative Republican president.

CopenhagenThe finding also could accelerate the search for new approaches to climate change, broadening the debate beyond the cap-and-trade model which Congress has already rejected three times and, if Kerry-Boxer ever comes to a vote, will almost certainly defeat again.  The leading alternative, of course, is a carbon-based tax with the revenues going to cut payroll or other taxes.  It’s an approach that’s worked well in Sweden and now is being considered in France, Ireland and Denmark.  Economists like it, because it doesn’t introduce additional volatility to energy prices as cap-and-trade does; and environmentalists like it, because a stable price for carbon is a prerequisite for businesses to invest large sums in developing and adopting alternative fuels and technologies.  Now, if businesses can come to dislike the prospect of direct EPA regulation with enough fervor, a new consensus could emerge around a new way to address climate change.

Speaking of Copenhagen, let’s also cut through the nonsense about the whole project foundering unless rich countries agree to pay for the climate efforts of poor countries.  Climate change is almost entirely the business of the world’s developed and large, fast-developing countries, because poor countries simply don’t have enough electricity generation, factories, capital-intensive farming, and automobiles to produce significant amounts of GHGs.  In fact, the world’s three economically-dominant places -- America, the European Union, and China -- account for 55.5 percent of all emissions.  Include twelve more nations -- Russia, India, Japan, Canada, South Korea, Iran, Mexico, South Africa, Saudi Arabia, Australia, Brazil, Indonesia, -- and you cover 85 percent of global emissions.  Among those twelve, the only, barely plausible cases for assistance are India and Indonesia, although both are on sharply-rising growth and development paths that could soon generate the incentives and resources required to become more climate-friendly on their own.  Ensuring that the world’s 120 or so other countries, most of them small and many of them poor, share some responsibility for addressing climate change is truly a secondary issue.

It’s also clear that at this time, virtually no country seems prepared to shoulder the cost of making even its own economy truly climate friendly, much less pick up the bills to make other countries less carbon-dependent.  The best course is probably a business form of technology sharing, in which governments support the formation of joint ventures between developers in the United States, the EU and the other dozen or so large GHG emitting nations –especially China and India – to develop, produce and sell climate-friendly fuels and technologies.  Then saving the planet could end up being good business for everybody.

How Wall Street Can Rescue Its Image in the US and Abroad

Back in April, Simon asked an important question:

As the American government struggles with what to do with its new ownership stake in storied corporate brands like AIG, Chrysler, Citigroup and General Motors, one of the fundamental questions that must be asked now is, can these brands - after months of stories about their insolvency - be saved?

Simon wasn't so sure, and neither am I. But if I were an executive at one of these banks, I would be doing everything I could to repair my brand. One of the worst problems these banks have caused is the global impression that America caused an international financial meltdown, which has been, to say the least, bad for both these banks and America’s interests abroad.

So what can they do? Here at NDN, and in particular Sam duPont's Global Mobile blog, we have been covering the role of mobile technology in what the State Department is calling 21st Century Statecraft. One of the most exciting innovations in this space is mobile banking, which Sam has been discussing quite a bit, and I blogged about a year and a half ago. (Sam recently posted a video of Alec Ross, the Senior Advisor on Innovation to Secretary Clinton, discussing this.)  MBanking has the potential to revolutionize standards of living globally by connecting some of the world’s poorest economies to modern financial services without needing to create the physical infrastructure of a bank. 

So here’s my modest proposal to American bankers, a group of people who’ve been particularly good at innovating over the last two decades: Call up State, say you want to build - for free - a modern, mobile communication device based banking system for less developed nations and that you want to put your best people on it. 

Imagine if every time a sizeable percentage of the world’s population did a financial transaction, they knew it was because of the American government and the American financial sector. There’s plenty of profit motive in it for banks, as the additional customers alone would be a boon. Not only would this be great for America’s standing in the world and help these banks repair their image, it would have that nice added benefit of dramatically improving people’s lives.

China's Currency Conundrum Continues

Martin Wolf in the FT sums up nicely the big problem with China’s currency practices:

At the conclusion of a European Union-China summit in Nanjing last week, Wen Jiabao, the Chinese premier, complained about demands for Beijing to allow its currency to appreciate. He protested that “some countries on the one hand want the renminbi to appreciate, but on the other hand engage in brazen trade protectionism against China. This is unfair. Their measures are a restriction on China’s development.” The premier also repeated the traditional mantra: “We will maintain the stability of the renminbi at a reasonable and balanced level.”

We can make four obvious replies to Mr Wen. First, whatever the Chinese may feel, the degree of protectionism directed at their exports has been astonishingly small, given the depth of the recession. Second, the policy of keeping the exchange rate down is equivalent to an export subsidy and tariff, at a uniform rate – in other words, to protectionism. Third, having accumulated $2,273bn in foreign currency reserves by September, China has kept its exchange rate down, to a degree unmatched in world economic history. Finally, China has, as a result, distorted its own economy and that of the rest of the world. Its real exchange rate is, for example, no higher than in early 1998 and has depreciated by 12 per cent over the past seven months, even though China has the world’s fastest-growing economy and largest current account surplus.

Do these policies matter for China and the world? Yes, is the answer. Mark Carney, governor of the Bank of Canada, notes in a recent speech, that “large and unsustainable current account imbalances across major economic areas were integral to the build-up of vulnerabilities in many asset markets. In recent years, the international monetary system failed to promote timely and orderly economic adjustments.”* He is right.

What we are seeing, as Mr Carney points out, is a failure of adjustment to changes in global competitiveness that has unhappy precedents, notably during the 1920s and 1930s, with the rise of the US, and, again, during the 1960s and 1970s, with the rise of Europe and Japan. As he also notes, “China’s integration into the world economy alone represents a much bigger shock to the system than the emergence of the US at the turn of the last century. China’s share of global gross domestic product has increased faster and its economy is much more open.”

Moreover, today, China’s managed exchange rate regime is quite different from those of other big economies, which was not true of the US when it rose to prominence. Thus, China’s managed exchange rate is shifting adjustment pressure on to other countries. This was disruptive before the crisis, but is now worse than that in this post-crisis period: some advanced countries, notably Canada, Japan, and the eurozone, have already seen big appreciations of their currencies. They are not alone.

China’s currency practices are hurting the United States far less than developing nations and the eurozone, amongst others, and the US government knows it. Two things are mind-boggling to me: why other countries don’t stand up to the Chinese more (I’m glad many have avoided the all-too-easy protectionist route, because that could be a disaster, but am not sure the current dialog on rebalancing is going to move the ball enough), but, more importantly, how the Chinese could possibly think that currency manipulation is a good long term strategy. Sure, it helps exports, and the CCCP has basically made a massive political bet on dramatic GDP growth based on exports, but it doesn’t have to be this way. 

For a so-called socialist country, China is barely one at all. The domestic social safety is virtually non-existent, and as badly as the U.S. needs to expand healthcare coverage, China needs to much more. A social safety net would lessen the incredibly high savings rates that Chinese operate with (because they have no choice), in turn giving China’s people a greater ability to consume, a positive outcome for both the Chinese economy and the rest of the world.

In America these days, it’s popular to agonize over the amount of money we owe China. But China is saving because it has to, not because it wants to. As the saying goes, when you owe the bank $100,000, the bank owns you, but when you owe the bank $1.6 trillion, you own the bank. (For more on this, read Christopher Hayes’ recent article in The Nation.)

One Way to Create More Jobs without Increasing the Deficit

At last week’s Jobs Summit, President Obama said he’ll consider any good idea to create jobs.  I heard him say it, and I believe him.  His speech yesterday at the Brookings Institution offered some decent, standard approaches, including more infrastructure spending and tax breaks for small businesses.  The President would be well-served to cast his policy net a bit wider.  Since the Great Recession began, the economy has shed an astounding 7.3 million private-sector jobs – and based on the last two recoveries, businesses could continue to cut back their labor forces for another year or longer.  The President and Congress can create more government jobs whenever they like, for example by giving states an additional $50 billion or so targeted to jobs.  But finding the right lever to get private companies to hire more people than they would otherwise is a lot harder. 

The most direct and sensible approach is to somehow reduce the costs of hiring for companies.  The unsurprising catch is that the incentives required to get them to hire a million or more new people, whom otherwise they wouldn’t have hired, are very expensive.  So, most serious jobs proposals would either drive up our already-mammoth deficits or require a significant new tax.  

Most, but not all, because there is one approach I know of that wouldn’t cost taxpayers anything.  The foreign subsidiaries of America’s multinational companies currently hold offshore an estimated $1 trillion in past earnings, because our tax laws defer the U.S. corporate tax on those earnings until the parent companies bring them back to the U.S. parent company.  The challenge is to leverage these funds for job creation at home, by creating a strong incentive for them to bring back a share of those earnings tied to a requirement that they use the funds to finance new hires.  It’s the closest thing to “found money” that this administration and Congress will ever find. 

We actually tried this once before, in a fashion, and it worked reasonably well.  In 2004, Congress slashed the corporate tax on such “repatriated” earnings for one year, from 35 percent to 5.25 percent, and IRS data show that it increased net inflows of those earnings by $312 billion, including $252 billion by U.S. manufacturers.  The 2004 law also told companies they had to use the new funds they brought back to, among other things, finance new workers, new investment, or pay down domestic debt.  Recent surveys found $73 billion of the repatriated earnings went to create or retain jobs, $75 billion for new capital spending, and $39 billion to pay down domestic debt.   Here’s the free lunch: In the short run, the temporary program raised $34 billion in new federal revenues.  And it may not even have reduced revenues over the long-term, or not by much, since without the tax break, most U.S. multinationals keep their foreign-source earnings abroad indefinitely, or at least until they can be used to offset domestic losses for tax purposes. 

We can estimate what would happen if we tried this approach again.  A recent analysis I did with AEI’s Aparna Mathur found that such a policy could bring back $420 billion in foreign-source income now held abroad.  And if the program were targeted again in the same way as in 2004, it could mean $97 billion for new employment, or enough to create or save 2.6 million jobs over two years, as well as $101 billion for new capital spending, enough to produce long-term wage gains of 1.3 percent.  

Skeptics will claim that most companies would use their repatriated funds in other ways, such as stock buy-backs; and since money is fungible, the government couldn’t stop them.  Two academic studies built models which inferred that this happened last time; but there’s no real evidence that companies evaded the restrictions, and a recent academic survey suggests that most did follow the law.  Even if some didn’t, we can tighten the restrictions this time.  We could allow multinationals to bring back offshore earnings for one or two years and pay just 5 or 10 percent corporate tax on them here, so long as they use those funds only to create new, net jobs or increase their net investment.  That means they would have to not only hire new people, but expand their overall workforces. It might just help businesses create between 1 million and 2 million new jobs while actually reducing the deficit, which seems like the kind of new idea the President is looking for.

Where is Employment Headed?

Friday’s unemployment report of fewer jobs lost than expected surely beats the alternative, but that does not mean that the employment situation will improve significantly anytime soon. What it hopefully means is that things won’t get dramatically worse, although that certainly can’t be ruled out.

Calculated Risk, perhaps the most prolific chart maker and data analyst of all economics blogs, presents an analysis on the potential speed of the employment recovery. These estimates are based on Okun’s Law (an established relationship between GDP growth and job creation):

unemployment and GDP

In the 2010 budget, OMB projects real GDP growth of 3.5 percent from the fourth quarter of this year to next, meaning that, if Okun’s law were still operable, we’d be somewhere in the mid to high 9 percent unemployment range at the end of next year. (The Federal Reserve sees similar numbers.)

Having said that, many leading economists, including NDN’s Rob Shapiro and the Director of the National Economic Council Larry Summers, have argued that Okun’s law has broken down, making the relationship between GDP growth and employment weaker, which means these projections may be - sadly - optimistic. 

Understanding the Lost Decade for Jobs and Incomes

UPDATE: For more on NDN's Lost Decade narrative, read the new NDN White Paper entitled, "A Lost Decade for Everyday Americans."

With the White House Forum on Jobs and Economic Growth getting underway, now is a good time to note that the problem isn’t just jobs. As we’ve long argued and the Wall Street Journal pointed out recently, the last decade has been a lost one for everyday Americans. First, we generally note that, even as GDP and productivity surged, household income didn’t keep up. In fact, the average household income took more than a $2000 loss during the Bush presidency. 

A second point, illustrated by the Wall Street Journal, is that private sector employment has basically not grown in a decade.

It is difficult to understand how bad this recession has been without fully understanding the pre-recession weakness of the American consumer caused by dropping incomes and higher costs. NDN’s Dr. Rob Shapiro – who is at the White House Forum right now – has agued that structural dynamics in the American economy have broken down its job creation and wage growth capability. For NDN’s latest thinking on these important issues, please consult:

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