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Protecting our most economically vulnerable neighbors during the COVID-19 outbreak

While we are all adjusting to new precautions as we start to understand how serious the COVID-19 coronavirus is, we also need to be concerned about how to minimize the toll that such precautions will have on our most economically vulnerable citizens. A country with the levels of racial and income inequality that we have…

       




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How Can We Most Effectively Measure Happiness?


Editor's Note: At a Zócalo Public Square* event, several experts were asked to weigh in on the following question: How should we most effectively measure happiness? Here is Carol Graham's response-

We must make it a measure that’s meaningful to the average person

Happiness is increasingly in the media. Yet it is an age-old topic of inquiry for psychologists, philosophers, and even the early economists (before the science got dismal). The pursuit of happiness is even written into the Declaration of Independence (and into the title of my latest Brookings book, I might add). Public discussions of happiness rarely define the concept. Yet an increasing number of economists and psychologists are involved in a new science of measuring well-being, a concept that includes happiness but extends well beyond it.

Those of us involved focus on two distinct dimensions: hedonic well-being, a daily experience component; and evaluative well-being, the way in which people think about their lives as a whole, including purpose or meaning. Jeremy Bentham focused on the former and proposed increasing the happiness and contentment of the greatest number of individuals possible in a society as the goal of public policy. Aristotle, meanwhile, thought of happiness as eudemonia, a concept that combined two Greek words: “eu” meaning abundance and “daimon” meaning the power controlling an individual’s destiny. Using distinct questions and methods, we are able to measure both. We can look within and across societies and see how people experience their daily lives and how that varies across activities such as commuting time, work, and leisure time on the one hand, and how they feel about their lives as a whole—including their opportunities and past experiences, on the other. Happiness crosses both dimensions of well-being. If you ask people how happy they felt yesterday, you are capturing their feelings during yesterday’s experiences. If you ask them how happy they are with their lives in general, they are more likely to think of their lives as a whole.

The metrics give us a tool for measuring and evaluating the importance of many non-income components of people’s lives to their overall welfare. The findings are intuitive. Income matters to well-being, and not having enough income is bad for both dimensions. But income matters more to evaluative well-being, as it gives people more ability to choose how to live their lives. More income cannot make them experience each point in the day better. Other things, such as good health and relationships, matter as much if not more to well-being than income. The approach provides useful complements to the income-based metrics that are already in our statistics and in the GDP. Other countries, such as Britain, have already begun to include well-being metrics in their national statistics. There is even a nascent discussion of doing so here.

Perhaps what is most promising about well-being metrics is that they seem to be more compelling for the average man (or woman) on the street than are complex income measures, and they often tell different stories. There are, for example, endless messages about the importance of exercising for health, the drawbacks of smoking, and the expenses related to long commutes. Yet it is likely that they are most often heard by people who already exercise, don’t smoke, and bicycle to work. And exercise does not really enter into the GNP, while cigarette purchases and the gasoline and other expenses related to commuting enter in positively. If you told people that exercising made them happier and that smoking and commuting time made them unhappy (and yes, these are real findings from nationwide surveys), then perhaps they might listen?

Read other responses to this question at zocalopublicsquare.org »

*Zócalo Public Square is a not-for-profit daily ideas exchange that blends digital humanities journalism and live events. 

Authors

Publication: Zócalo Public Square
Image Source: © Ho New / Reuters
     
 
 




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Targeting an Achievement Gap in One of the Country's Most Educated Metropolitan Areas

Over the past two decades, the Puget Sound area’s innovation-driven economy has become a magnet for highly educated people from across the country and around the world. Drawn to the region by some of the nation’s most innovative companies—Microsoft, Boeing, Nintendo, Amazon, Genentech and the Fred Hutchinson Cancer Research Center, to name a few—the Puget Sound region ranks well on measures of educational attainment. Of the nation’s largest 100 metro areas, the Seattle-Tacoma-Bellevue area is 11th in bachelor’s degree holders and 17th in graduate degree attainment.

But for all its brainpower, the region has fallen behind in terms of cultivating homegrown talent, particularly in less affluent school districts located in South Seattle and South King County. Starting from an early age, low-income students and children of color in these communities tend to lag behind on important indicators of educational success. The effects of this achievement gap worsen with time, putting these students at a serious disadvantage that often affects their ability to find jobs and their earning potential. 

In an effort to address this achievement gap, the Community Center for Education Results has teamed up with the city of Seattle, the University of Washington, the Seattle Community Colleges District, the Puget Sound Educational Service District, the Bill & Melinda Gates Foundation and others to form the Road Map Project, a coalition working to double the number of South Seattle and South King County students pursuing a college diploma or career credential by 2020.

What’s innovative about the Road Map Project is its focus on collective action and community engagement. By bringing together key stakeholders to collaborate on shared goals, the project is creating a new model for efforts to reduce inequality in educational attainment. Its cradle-to-college-and-career approach aims to improve student outcomes beginning with access to prenatal care and kindergarten readiness all the way through to elementary and secondary schooling and beyond. Through a combination of community outreach and partnership building, data-driven goal-setting and performance management, the project supports area organizations working to boost student success and close the achievement gap in South Seattle and South King County.

In December, the Project released its baseline report, which provides a detailed snapshot of student achievement in the Road Map region during the 2009-2010 school year. With this initial data in hand, the project will be able to work with area organizations to encourage and track progress on a wide variety of indicators, ranging from birth weight and full-day kindergarten enrollment to proficiency in reading, math, and science, parent engagement to graduation rates and postsecondary enrollment. “Demographics should not determine the destiny of children in this region,” says Mary Jean Ryan, executive director of the Community Center for Education Results. “The children who grow up here deserve as good of an education as the people who show up here.”

Authors

Publication: The Atlantic Cities
     
 
 




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Medicaid job requirements would hurt America’s most vulnerable

Henry Aaron, senior fellow in Economic Studies, discusses the Trump administration’s announcement to authorize states to enact job requirements for Medicaid eligibility. Aaron explains that these requirements could be detrimental to low-income citizens who need medication to work or are unable to work because of their medical conditions. He also predicts that this authorization will…

       




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Venezuela refugee crisis to become the largest and most underfunded in modern history

The Venezuelan refugee crisis is just about to surpass the scale of the Syrian crisis. As 2019 comes to a close, four years since the start of the Venezuelan humanitarian crisis, 4.6 million Venezuelans have fled the country, about 16 percent of the population. The figure is strikingly similar to the 4.8 million people that…

       




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The world economy in 2020—the IMF gets it mostly right

The International Monetary Fund (IMF) just published its World Economic Outlook for 2020 and 2021. To nobody’s surprise, it says that “the global economy is projected to contract sharply by –3 percent in 2020, much worse than during the 2008–09 financial crisis.” The U.S. economy is projected to shrink this year by 5.9 percent and the…

       




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2014 Brookings Blum Roundtable: Jump-Starting Inclusive Growth in the Most Difficult Environments


Event Information

August 7-9, 2014

Aspen, Colorado

The start of the 21st century has been an auspicious period for global economic development. In the 1990s, a mere 13 emerging economies succeeded in growing at a speed at least twice that of the OECD countries, enabling rapid convergence on Western living standards. By the first decade of the 2000s, this number had mushroomed to 83. Accelerated rates of economic growth lay behind many of the recent success stories in global development, not least the fulfilment of the first Millennium Development Goal to halve the global poverty rate, five years ahead of the 2015 deadline. Yet in a number of places, growth has failed to take off, has undergone periodic reversals, or has benefited a few while leaving the majority short-changed.

On August 7-9, 2014, Brookings Global Economy and Development is hosting the eleventh annual Brookings Blum Roundtable on Global Poverty in Aspen, Colorado. This year’s roundtable theme, “Jump-Starting Inclusive Growth in the Most Difficult Environment,” brings together global leaders, entrepreneurs, practitioners, and public intellectuals to discuss what strategies exist for promoting inclusive economic growth in settings where standard prescriptions are not feasible or sufficient as well as what the comparative advantages are of different actors seeking to improve the prospects for inclusive growth and how can they most effectively collaborate with each other to increase their impact. 

This event is closed, but you can follow along on Twitter using #Blum2014.



Roundtable Agenda


Thursday, August 7, 2014

Welcome - 3:30-4:00 p.m.:

  • Strobe Talbott, Brookings Institution

Opening Remarks:

Session I - 4:00-5:00 p.m.: How Can Multinationals Engage With Governments to Support Economic Development?

Multinational corporations are increasingly recognized as key partners for governments in development planning. Corporations are brought into discussions at various levels: around individual projects and their impact on affected localities; on sector performance, regulation and competition; and on country-level issues such as the business environment, infrastructure, jobs, and skills.

What motivations do multinationals have to participate in government engagement? Do discussions work better under formalized and multilateral structures, such as business councils, or on an ad-hoc bilateral basis? How does engagement differ in poor and weakly governed countries?    

Moderator:

Introductory Remarks:

  • Jane Nelson, Harvard University
  • Tara Nathan, MasterCard Worldwide
  • The Honorable Amara Konneh, Government of Liberia

Aspen Institute Madeleine K. Albright Global Development Dinner & Lecture - 7:00-9:30 p.m.:

The Aspen Institute Madeleine K. Albright Global Development Lecture recognizes an exceptional individual whose vision has provided breakthrough thinking to tackle the challenges of global development.

Featuring: 


Friday, August 8, 2014

Session II - 9:00 - 10:30 a.m.: Managing Risks in Conflict Settings

Ending extreme poverty over the next generation will require inclusive and sustained growth across the developing world. This is a particularly onerous challenge in fragile and conflict-affected states, which account for a growing share of the world’s poor. There is growing recognition that fast economic recovery, and the jobs that go with it, can serve to shore up peace agreements and help countries successfully transition beyond the immediate post-conflict phase.

What can be done to support investors and entrepreneurs weighing up the risks and opportunities of starting or expanding business in these settings? What risk-mitigating instruments and strategies work? How can corporations identify, foster and partner with local businesses to support job creation and private sector development?

Moderator:

Introductory Remarks:


Session III - 10:50-12:00 p.m.: Leap-Frogging Technologies

Weak legal and regulatory frameworks, crime and corruption, deficient infrastructure, and lack of access to finance are common constraints to many developing economies. New leap-frogging technologies offer poor countries the potential to overcome some of these challenges without the cost, capacity or good governance required from traditional solutions. Mobile technology, powered by nearly five billion mobile subscriptions worldwide, provides a platform through which to do business and expand financial services. Off-grid power and the internet offer other examples of how weak infrastructure and missing public goods can be circumvented. Special economic zones and charter cities offer the possibility of forging oases where economic conditions are favorable.

On what conditions, if any, does successful leap-frogging depend? What type of financing instruments do innovators look for when designing and marketing such technologies? What are the sources of growth in low-income countries and what can they tell us about new growth strategies?

Moderator:

Introductory Remarks:


Session IV - 2:00-3:30 p.m.: Delivering Government Partnerships

With President Obama’s June 2013 announcement of Power Africa, the U.S. government is demonstrating its new vision for development built on public-private partnerships. Historically, such partnerships have a mixed tracked record.

How can we make sure that Power Africa, Feed the Future, and similar partnerships deliver to their full potential? What have we learned about structuring effective government-business-donor cooperation?

Moderator:

  • Dana Hyde, Millennium Challenge Corporation

Introductory Remarks:


Saturday, August 9, 2014

Session V - 9:00-10:30 a.m.: Unlocking Big Deals

Massive infrastructure gaps in the energy, transport, information and communications technology, water, and urban sectors threaten the long-term competitiveness and prospects for sustainable development across many countries. This realization has spurred interest from countries, donors, regional groups and development finance institutions to devise new ways of overcoming constraints to mega-investment deals, particularly agreements that are cross-border in scope. Identified constraints include a shortage of early-stage project development finance; skilled legal, technology and financial experts; and instruments to attract additional capital from external players like institutional investors and international investment banks.

How can constraints to big deals be overcome, and what are the ingredients that allow for enduring partnerships to deliver on these projects? Are dedicated pools of financing needed to unlock these deals?

Moderator:

Introductory Remarks:

Session VI - 10:50-12:20 p.m.: Where Can Enclave Projects Take Us?

Recent discoveries of natural resource wealth in East Africa offer the promise of supercharged growth in one of the world’s poorest regions. A critical challenge is to leverage the capital, skills and knowledge generated from enclave growth to support nascent other industries.

How can corporations, government, and NGOs support structural transformation away from enclave activities? What sorts of industries present the most feasible small steps away from extractive sector activities?

Moderator:

  • Smita Singh, Independent 
Introductory Remarks:

Closing Remarks:

Event Materials

      
 
 




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The problem with militias in Somalia: Almost everyone wants them despite their dangers

Introduction Militia groups have historically been a defining feature of Somalia’s conflict landscape, especially since the ongoing civil war began three decades ago. Communities create or join such groups as a primary response to conditions of insecurity, vulnerability and contestation. Somali powerbrokers, subfederal authorities, the national Government and external interveners have all turned to armed…

       




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MEDTalk: Pediatric Asthma and Transforming Care for the Most Vulnerable


Event Information

September 24, 2014
10:30 AM - 12:00 PM EDT

Falk Auditorium
Brookings Falk Auditorium
1775 Massachusetts Ave., NW
Washington, DC 20036

Register for the Event

Many clinicians have terrific ideas for improving the quality and cost of health care, but often don’t know how to navigate the frequently baffling landscape of payment and delivery reform options. To address this need in clear, practical terms, we are pleased to announce the third MEDTalk event in the “Merkin Series on Innovations in Care Delivery.” The series is designed to support clinicians and policymakers who’ve always wondered how delivery reform occurs, but didn’t know where to begin.

Our third case drew on the experiences of the Community Asthma Initiative, an enhanced pediatric asthma intervention, and their efforts in sustainability. The event featured seven brief “TED-style” talks that consider the challenges of delivering pediatric care, while tackling non-medical factors that drive suboptimal care, improving patient and family quality of life, and reducing costs. The agenda included firsthand experiences from patients, payers, policymakers, and clinical leadership from Massachusetts and Arkansas. Sustainable improvement strategies and the financial mechanisms available to encourage innovations in asthma were explored.

Video

       




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The President’s 2013 Budget Would Enable Almost All Americans to Save for Retirement


The new 2013 budget unveiled by President Obama on Monday again contains the Automatic IRA, which was developed by Brookings' Retirement Security Project in conjunction with The Heritage Foundation. This year's version again includes an important change that will also encourage more employers to offer a 401(k) account to their workers. However, important changes to the Saver's Credit, which had been in previous budgets failed to make it this year.

Nearly half of American workers - an estimated 78 million- currently have no employer-sponsored retirement savings plan. The Automatic IRA is a simple, easy to administer and understand system that is designed to meet the needs of small businesses and their employees. Employers facilitate employee savings without having to sponsor a 401(k)-type plan, make matching contributions or meet complex eligibility rules. Employees are enrolled automatically into an IRA with a simplified system of investment choices and a set automatic savings level. However, they retain complete control over all aspects of the account including how much to save, which investment choice to use, or even to opt out completely. Automatic IRAs also offer savings options for the self-employed, for independent contractors, as well as providing those who are changing jobs the ability to continue their retirement savings.

The new 2013 budget would also double the size of the tax credit that employers receive in return for starting a new 401(k) plan from $500 annually for three years to $1,000 annually for the same period. This increase will ensure that the credit covers more of an employer's costs, and should encourage more employers to offer such a plan. This is a very good move, but the credit could be still further expanded to $1,500 for three years as will be proposed by a new House bill coming from Rep. Richard Neal. As Congress examines the proposal, it will have the opportunity to also expand the smaller credit that would be offered to employers that start an Automatic IRA to ensure that they are fully reimbursed for all expenses connected with starting and operating such an account for their workers.

A disappointing development is the failure to again include proposals to expand and improve the Saver's Credit by making it fully refundable. The Saver's Credit is an incentive for middle-and lower-income taxpayers to save in 401(k)-type accounts or IRAs. Retirement Security Project research found that more than 69 million taxpayers had income that was low enough for them to be eligible for the Saver's Credit in 2007. However, nearly 45 million of these filers actually failed to qualify for the credit because they had no federal tax liability. If the Saver's Credit was made refundable as RSP has proposed and deposited directly into the account as a match for savings, those 45 million taxpayers could have taken advantage of the program and had significantly higher retirement savings.

Image Source: © Hugh Gentry / Reuters
     
 
 




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Double tipping points in 2019: When the world became mostly rich and largely old

When it comes to economic development, positive change is typically gradual and only noticeable over long periods of time; by contrast negative developments—economic crises—are often rapid and spectacular. This creates a biased narrative that focuses on negative news, while positive trends go unnoticed because they are less dramatic. In this blog, amid an atmosphere of…

       




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Are the aged most deserving of more federal spending?


Social Security is the most popular legacy of Franklin Roosevelt's New Deal. Last year almost 60 million Americans received benefits from the program. Payments amounted to over $875 billion, nearly a quarter of all federal spending.  For more than two decades, most discussion of Social Security, at least in Washington, has centered on its funding shortfall. Contributions to the program are not high enough to pay for all benefits scheduled under current law. The Social Security Trust Fund is expected to be depleted around 2030. If Congress does not address the funding problem before reserves are exhausted, monthly payments will have to be cut about one-fifth.

Despite the projected shortfall, Democrats in Congress have begun to argue that Social Security benefits should be expanded rather than cut.  Senators Bernie Sanders and Brian Schatz have offered proposals to boost monthly pensions while at the same time shoring up Social Security finances through tax hikes on high-income Americans. 

That Democratic voters and lawmakers embrace these ideas is not surprising. But opinion polling suggests such reforms also enjoy broad support among self-identified independents and Republicans. For example, 57 percent of Republicans (versus 71 percent of Democrats) favor increasing cost-of-living adjustments in the benefit formula. Forty-eight percent of Republicans (versus 67 percent of Democrats) favor boosting the minimum benefit available to low-wage workers who have contributed for many years to the program.  Seventy-four percent of Republicans (versus 88 percent of Democrats) favor raising taxes in order to protect benefits. These polling numbers were obtained in 2013, but more recent polls show similar opinions. Even if debates among Washington insiders and GOP lawmakers focus on how to trim benefits in order to keep Social Security solvent, poll results suggest Senator Sanders holds views closer to those of the typical voter.

One question for both voters and policymakers is whether the aged population is really the most deserving target for additional government spending.  Much of the discussion of voter disaffection in the current election cycle has focused on the stagnation of middle class incomes and the rise in inequality.  While these represent major problems for families headed by a working-age person, they have not been notably troublesome for the nation’s elderly.  The incomes of the elderly, unlike those of the nonelderly, have increased steadily over the past three or four decades.  For low- and middle-income retirees, incomes have clearly improved. The same cannot be said for the incomes of low- and middle-income working-age families. Income inequality among the elderly has increased, to be sure, but much more slowly than among working-age families.

In new research with my colleagues Barry Bosworth and Kan Zhang, I have examined trends in real incomes and inequality among the nation’s elderly and compared them with the same trends in working-age families. We show that inequality has increased among both the elderly and nonelderly, but it has increased much faster among families headed by prime-age and younger adults than among families headed by someone past age 62.  More to the point, real money incomes have increased much faster among middle- and low-income aged families compared with middle- and low-income working-age families. 

Our estimates of the annual rate of change in real money income are displayed in the chart below. The changes are estimated over the period from 1979 to 2012 based on data reported in the Census Bureau’s annual income survey. The top panel shows changes in families with a head who is less than 62. The bottom panel shows changes in families with a head older than 62.  Each bar shows the annual rate of change in real income at the indicated position of the income distribution, either for nonaged families (in the top panel) or for aged families (in the bottom panel).  At the top of the two income distributions—that is, at the 98th income percentile—real income gains are virtually the same in the two groups.  Further down the income ladder, the income gains differ noticeably, with bigger differences the further down we go.  Middle- and low-income working-age families have clearly fared much worse than families with an equivalent position in the old-age income distribution.

Estimates of income growth based solely on pre-tax cash incomes, such as the ones in the chart, almost certainly understate the improvement families have seen in their living standards, as I have argued elsewhere (here and here).  However, the understatement is bigger in the case of elderly and low-income Americans than it is for the nonelderly and affluent.  If we adjust family incomes to reflect the taxes families owe and the monetary value of their noncash benefits, the relative improvement in the standard of living of older Americans is even greater than is shown in the chart. Under almost any plausible income definition, the elderly have fared better than the nonelderly, especially at the bottom of the income distribution.

The income statistics do not prove the policy reforms urged by Congressional Democrats are unneeded or undesirable. Their proposals spring from an accurate reading of a long-term trend toward less pension coverage — ironically, a trend that has mainly affected working-age adults.  Whereas workers in the 1950s through the 1970s enjoyed continuous improvement in their access to employer-provided retirement benefits, the improvement ceased after 1980. Since that time, private-sector workers have seen reductions in the coverage and generosity of their employer-sponsored pensions. If the private sector voluntarily provides less retirement protection, it does not seem unreasonable to expect the government to provide more.

A crucial reason the nation’s elderly population fared better compared with the nonelderly after 1980 is that Social Security and Medicare provided them government protection that was far more generous (and more costly to taxpayers) than the protection available to working-age adults and their youngsters. The gap was especially glaring in the case of families headed by low-wage breadwinners, who have suffered sizeable reductions in pay and employment opportunities. In the years since 1980, their losses have been only modestly compensated through changes in the tax code and expansions of public health insurance.

Changes in the labor market make it important to protect future retirement benefits provided through Social Security. The same labor market developments make it even more urgent to expand the employment opportunities and improve the protections and work supports offered to working-age breadwinners.  In 2016, the weakening of future income protection for the aged is mostly theoretical. In contrast, the sinking fortunes of less skilled working-age adults are anything but theoretical. They are plain to anyone who can read Census and Bureau of Labor Statistics reports. If taxpayers can identify additional resources to pay for major new initiatives, my vote is for programs that improve the prospects of struggling wage earners. The equity arguments for such an initiative seem to me more persuasive than the case for an across-the-board benefit hike targeted on retirees.


Editor's note: This piece originally appeared in Real Clear Markets

Authors

Publication: Real Clear Markets
Image Source: Joshua Lott / Reuters
     
 
 




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Why the Turkish election results are not all bad news (just mostly)


This weekend’s election results in Turkey were a surprise to the vast majority of Turkish pollsters and pundits, myself included. The ruling Justice and Development Party (AKP) won nearly 50 percent of the popular vote. The party can now form a single-party government, even if it doesn’t have the supermajority necessary to remake the Turkish constitution. What happened?

Now I see clearly

As with much in life, the result does make sense in hindsight. Prior to the June 7 election, President Recep Tayyip Erdoğan and the AKP leadership had supported a Kurdish peace process, in part in the hope of gaining Kurdish votes. In that election, however, not only did the AKP fail to win new Kurdish votes, but support for the Nationalist Action Party (MHP)—a far-right Turkish nationalist party—swelled, apparently out of frustration among nationalist Turks with the AKP-led peace process with the Kurds. In other words, the AKP had the worst of both worlds.

Erdoğan and the AKP leadership, recognizing the political problem this posed for them, allowed the peace process to collapse amid mounting instability driven by the Syrian civil war. This, combined with disillusionment with the MHP leadership due to their perceived unwillingness to form a coalition government, drove about two million MHP voters to the AKP this weekend. The exodus shows, in a sense, what close substitutes the two parties can be among a more nationalist voting bloc.

The controlled chaos that resulted from the collapse of the peace process—combined with the escalating refugee crisis, the fear of ISIS attacks, and the struggling economy—helped the government politically. Voters evidently recalled that it had been the AKP that brought the country out of the very tough times of the 1990s.  

In contrast, the opposition parties seem to lack leadership and appear to promise only internal squabbles and indecisiveness. Craving security and stability, voters have now turned to the one party that appears to have the strength to provide it. In that sense, Erdoğan’s nationalist gambit—which was actually a well-conceived series of political maneuvers—worked. Even some one million conservative Kurdish voters returned to the AKP.

These voters perhaps did not notice the irony that the government had also engineered the instability they feared. In part, this success derives from government’s control over the media. These elections may have been free, in the sense that Turkish voters can cast a ballot for the candidates they want. But they were not fair. The state maintained tight control over traditional and social media alike. Freedom House and the Committee to Protect Journalists, among others, have cast doubt on Turkey’s press freedom credentials. Real opposition voices are difficult for media publish or voters to see on television. Thus, for example, Selahattin Demirtaş, the leader of the pro-Kurdish Peoples' Democratic Party (HDP) and the most charismatic opposition politician in Turkey, had essentially no air time during the campaign.

Not all bad news

There are some important upsides to the election results. For one, HDP again passed the 10 percent threshold to remain in parliament. That will help mitigate—though hardly erase—the polarization that grips the country, and will hopefully make government reconsider its abandonment of the Kurdish peace process.

More significantly, the AKP does not have what it needs to convert Turkey’s government structure into a presidential system, which would be a bad move for the country. The election results will undoubtedly revitalize Erdoğan’s push for a presidential regime in Turkey. But that requires changing the constitution, and the AKP did not achieve the supermajority that it would need to do that on its own.

Critically, changing to a presidential system will require some support from the opposition and even more importantly popular support via a referendum. As political strategists around the world have learned, people tend not to vote on the actual referendum item, per se, but based on more general opinions of their leadership. So to win a referendum on the presidential system, Erdoğan and his AKP colleagues would need to show improvements in the economy, in the security situation, on the Kurdish issue, on Syrian refugees, and on national stability more generally. Instability in Turkey, particularly the renewal of violence in the Kurdish region, will deter investment and deepen the economic slump throughout the country.

With its new majority, AKP leaders are now in a position of strength to negotiate with the HDP over Kurdish issues. The refugee crisis also means the government also has more leverage with the EU. If it chooses to use its strength to reach positive agreements on those fronts, the outcomes could be very good for the Turkish people.

To actually win a referendum on the presidential system, Erdoğan would have to work to depolarize his country. While the presidential system itself would not be good for Turkey, the process of getting there might be.

      
 
 




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Most business incentives don’t work. Here’s how to fix them.

In 2017, the state of Wisconsin agreed to provide $4 billion in state and local tax incentives to the electronics manufacturing giant Foxconn. In return, the Taiwan-based company promised to build a new manufacturing plant in the state for flat-screen television displays and the subsequent creation of 13,000 new jobs. It didn’t happen. Those 13,000…

       




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2016: The most important election since 1932


The 2016 presidential election confronts the U.S. electorate with political choices more fundamental than any since 1964 and possibly since 1932. That statement may strike some as hyperbolic, but the policy differences between the two major parties and the positions of candidates vying for their presidential nominations support this claim.

A victorious Republican candidate would take office backed by a Republican-controlled Congress, possibly with heightened majorities and with the means to deliver on campaign promises. On the other hand, the coattails of a successful Democratic candidate might bring more Democrats to Congress, but that president would almost certainly have to work with a Republican House and, quite possibly, a still Republican Senate. The political wars would continue, but even a president engaged in continuous political trench warfare has the power to get a lot done.

Candidates always promise more than they can deliver and often deliver different policies from those they have promised. Every recent president has been buffeted by external events unanticipated when he took office. But this year, more than in half a century or more, the two parties offer a choice, not an echo. Here is a partial and selective list of key issues to illustrate what is at stake.

Health care 

The Affordable Care Act, known as Obamacare or the ACA, passed both houses of Congress with not a single Republican vote. The five years since enactment of the ACA have not dampened Republican opposition.

The persistence and strength of opposition to the ACA is quite unlike post-enactment reactions to the Social Security Act of 1935 or the 1965 amendments that created Medicare. Both earlier programs were hotly debated and controversial. But a majority of both parties voted for the Social Security Act. A majority of House Republicans and a sizeable minority of Senate Republicans supported Medicare. In both cases, opponents not only became reconciled to the new laws but eventually participated in improving and extending them. Republican members of Congress overwhelmingly supported, and a Republican president endorsed, adding Disability Insurance to the Social Security Act.  In 2003, a Republican president proposed and fought for the addition of a drug benefit to Medicare.

The current situation bears no resemblance to those two situations. Five years after enactment of Obamacare, in contrast, every major candidate for the Republican presidential nomination has called for its repeal and replacement. So have the Republican Speaker of the House of Representatives and Majority Leader in the Senate.  

Just what 'repeal and replace' might look like under a GOP president remains unclear as ACA critics have not agreed on an alternative. Some plans would do away with some of the elements of Obamacare and scale back others. Some proposals would repeal the mandate that people carry insurance, the bar on 'medical underwriting' (a once-routine practice under which insurers vary premiums based on expected use of medical care), or the requirement that insurers sell plans to all potential customers. Other proposals would retain tax credits to help make insurance affordable but reduce their size, or would end rules specifying what 'adequate' insurance plans must cover.

Repeal is hard to imagine if a Democrat wins the presidency in 2016. Even if repeal legislation could overcome a Senate filibuster, a Democratic president would likely veto it and an override would be improbable. 

But a compromise with horse-trading, once routine, might once again become possible. A Democratic president might agree to Republican-sponsored changes to the ACA, such as dropping the requirement that employers of 50 or more workers offer insurance to their employees, if Republicans agreed to changes in the ACA that supporters seek, such as the extension of tax credits to families now barred from them because one member has access to very costly employer-sponsored insurance.

In sum, the 2016 election will determine the future of the most far-reaching social insurance legislation in half a century.

Social Security

Social Security faces a projected long-term gap between what it takes in and what it is scheduled to pay out. Every major Republican candidate has called for cutting benefits below those promised under current law. None has suggested any increase in payroll tax rates. Each Democratic candidate has proposed raising both revenues and benefits. Within those broad outlines, the specific proposals differ.

Most Republican candidates would cut benefits across the board or selectively for high earners. For example, Senator Ted Cruz proposes to link benefits to prices rather than wages, a switch that would reduce Social Security benefits relative to current law by steadily larger amounts: an estimated 29 percent by 2065 and 46 percent by 2090. He would allow younger workers to shift payroll taxes to private accounts. Donald Trump has proposed no cuts in Social Security because, he says, proposing cuts is inconsistent with winning elections and because meeting current statutory commitments is 'honoring a deal.' Trump also favors letting people invest part of their payroll taxes in private securities. He has not explained how he would make up the funding gap that would result if current benefits are honored but revenues to support them are reduced. Senator Marco Rubio has endorsed general benefit cuts, but he has also proposed to increase the minimum benefit. Three Republican candidates have proposed ending payroll taxes for older workers, a step that would add to the projected funding gap.

Democratic candidates, in contrast, would raise benefits, across-the-board or for selected groups—care givers or survivors. They would switch the price index used to adjust benefits for inflation to one that is tailored to consumption of the elderly and that analysts believe would raise benefits more rapidly than the index now in use. All would raise the ceiling on earnings subject to the payroll tax. Two would broaden the payroll tax base.

As these examples indicate, the two parties have quite different visions for Social Security. Major changes, such as those envisioned by some Republican candidates, are not easily realized, however. Before he became president, Ronald Reagan in numerous speeches called for restructuring Social Security. Those statements did not stop him from signing a 1983 law that restored financial balance to the very program against which he had inveighed but with few structural changes. George W. Bush sought to partially privatize Social Security, to no avail. Now, however, Social Security faces a funding gap that must eventually be filled. The discipline of Trust Fund financing means that tax increases, benefit cuts, or some combination of the two are inescapable. Action may be delayed beyond the next presidency, as current projections indicate that the Social Security Trust Fund and current revenues can sustain scheduled benefits until the mid 2030s. But that is not what the candidates propose. Voters face a choice, clear and stark, between a Democratic president who would try to maintain or raise benefits and would increase payroll taxes to pay for it, and a Republican president who would seek to cut benefits, oppose tax increases, and might well try to partially privatize Social Security.

The Environment

On no other issue is the split between the two parties wider or the stakes in their disagreement higher than on measures to deal with global warming. Leading Republican candidates have denied that global warming is occurring (Trump), scorned evidence supporting the existence of global warming as bogus (Cruz), acknowledged that global warming is occurring but not because of human actions (Rubio, Carson), or admitted that it is occurring but dismissed it as not a pressing issue (Fiorina, Christie). Congressional Republicans oppose current Administration initiatives under the Clean Air Act to curb emission of greenhouse gases.

Democratic candidates uniformly agree that global warming is occurring and that it results from human activities. They support measures to lower those emissions by amounts similar to those embraced in the Paris accords of December 2015 as essential to curb the speed and ultimate extent of global warming.

Climate scientists and economists are nearly unanimous that unabated emissions of greenhouse gases pose serious risks of devastating and destabilizing outcomes—that climbing average temperatures could render some parts of the world uninhabitable, that increases in sea levels that will inundate coastal regions inhabited by tens of millions of people, and that storms, droughts, and other climatic events will be more frequent and more destructive. Immediate actions to curb emission of greenhouse gases can reduce these effects. But no actions can entirely avoid them, and delay is costly.  Environmental economists also agree, with little partisan division, that the way to proceed is to harness market forces to reduce greenhouse gas emissions.” 

The division between the parties on global warming is not new. In 2009, the House of Representatives narrowly passed the American Clean Energy and Security Act. That law would have capped and gradually lowered greenhouse gas emissions. Two hundred eleven Democrats but only 8 Republicans voted for the bill. The Senate took no action, and the proposal died.

Now Republicans are opposing the Obama administration’s Clean Power Plan, a set of regulations under the Clean Air Act to lower emissions by power plants, which account for 40 percent of the carbon dioxide released into the atmosphere. The Clean Power Plan is a stop-gap measure. It applies only to power plants, not to other sources of emissions, and it is not nationally uniform. These shortcomings reflect the legislative authority on which the plan is based, the Clean Air Act. That law was designed to curb the local problem of air pollution, not the global damage from greenhouse gases. Environmental economists of both parties recognize that a tax or a cap on greenhouse gas emissions would be more effective and less costly than the current regulations, but superior alternatives are now politically unreachable.

Based on their statements, any of the current leading Republican candidates would back away from the recently negotiated Paris climate agreement, scuttle the Clean Power Plan, and resist any tax on greenhouse gas emissions. Any of the Democratic candidates would adhere to the Clean Power Plan and support the Paris climate agreement. One Democratic candidate has embraced a carbon tax. None has called for the extension of the Clean Power Plan to other emission sources, but such policies are consistent with their current statements.

The importance of global policy to curb greenhouse gas emissions is difficult to exaggerate. While the United States acting alone cannot entirely solve the problem, resolute action by the world’s largest economy and second largest greenhouse gas emitter is essential, in concert with other nations, to forestall climate catastrophe.

The Courts

If the next president serves two terms, as six of the last nine presidents have done, four currently sitting justices will be over age 86 and one over age 90 by the time that presidency ends—provided that they have not died or resigned.

The political views of the president have always shaped presidential choices regarding judicial appointments. As all carry life-time tenure, these appointments influence events long after the president has left office. The political importance of these appointments has always been enormous, but it is even greater now than in the past. One reason is that the jurisprudence of sitting Supreme Court justices now lines up more closely than in the past with that of the party of the president who appointed them. Republican presidents appointed all sitting justices identified as conservative; Democratic presidents appointed all sitting justices identified as liberal. The influence of the president’s politics extends to other judicial appointments as well.

A second reason is that recent judicial decisions have re-opened decisions once regarded as settled. The decision in the first case dealing with the Affordable Care Act (ACA), NFIB v. Sibelius is illustrative.

When the ACA was enacted, few observers doubted the power of the federal government to require people to carry health insurance. That power was based on a long line of decisions, dating back to the 1930s, under the Constitutional clause authorizing the federal government to regulate interstate commerce. In the 1930s, the Supreme Court rejected an older doctrine that had barred such regulations. The earlier doctrine dated from 1905 when the Court overturned a New York law that prohibited bakers from working more than 10 hours a day or 60 hours a week. The Court found in the 14th Amendment, which prohibits any state from ‘depriving any person of life, liberty or property, without due process of law,’ a right to contract previously invisible to jurists which it said the New York law violated. In the early- and mid-1930s, the Court used this doctrine to invalidate some New Deal legislation. Then the Court changed course and authorized a vast range of regulations under the Constitution’s Commerce Clause.  It was on this line of cases that supporters of the ACA relied.

Nor did many observers doubt the power of Congress to require states to broaden Medicaid coverage as a condition for remaining in the Medicaid program and receiving federal matching grants to help them pay for required medical services.

To the surprise of most legal scholars, a 5-4 Supreme Court majority ruled in NFIB v. Sibelius that the Commerce Clause did not authorize the individual health insurance mandate. But it decided, also 5 to 4, that tax penalties could be imposed on those who fail to carry insurance. The tax saved the mandate. But the decision also raised questions about federal powers under the Commerce Clause. The Court also ruled that the Constitution barred the federal government from requiring states to expand Medicaid coverage as a condition for remaining in the program. This decision was odd, in that Congress certainly could constitutionally have achieved the same objective by repealing the old Medicaid program and enacting a new Medicaid program with the same rules as those contained in the ACA that states would have been free to join or not.

NFIB v. Sibelius and other cases the Court has recently heard or soon will hear raise questions about what additional attempts to regulate interstate commerce might be ruled unconstitutional and about what limits the Court might impose on Congress’s power to require states to implement legislated rules as a condition of receiving federal financial aid. The Court has also heard, or soon will hear, a series of cases of fundamental importance regarding campaign financing, same-sex marriage, affirmative action, abortion rights, the death penalty, the delegation of powers to federal regulatory agencies, voting rights, and rules under which people can seek redress in the courts for violation of their rights.

Throughout U.S. history, the American people have granted nine appointed judges the power to decide whether the actions taken by elected legislators are or are not consistent with a constitution written more than two centuries ago. As a practical matter, the Court could not maintain this sway if it deviated too far from public opinion. But the boundaries within which the Court has substantially unfettered discretion are wide, and within those limits the Supreme Court can profoundly limit or redirect the scope of legislative authority. The Supreme Court’s switch in the 1930s from doctrines under which much of the New Deal was found to be unconstitutional to other doctrines under which it was constitutional illustrates the Court’s sensitivity to public opinion and the profound influence of its decisions.

The bottom line is that the next president will likely appoint enough Supreme Court justices and other judges to shape the character of the Supreme Court and of lower courts with ramifications both broad and enduring on important aspects of every person’s life.

***

The next president will preside over critical decisions relating to health care policy, Social Security, and environmental policy, and will shape the character of the Supreme Court for the next generation. Profound differences distinguish the two major parties on these and many other issues. A recent survey of members of the House of Representatives found that on a scale of ‘liberal to conservative’ the most conservative Democrat was more liberal than the least conservative Republican. Whatever their source, these divisions are real.  The examples cited here are sufficient to show that the 2016 election richly merits the overworked term 'watershed'—it will be the most consequential presidential election in a very long time.

Authors

      
 
 




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