An American drone strike that killed leader of the Afghan Taliban Mullah Akhtar Mohammed Mansour may seem like a fillip for the United States’ ally, the embattled government of Afghanistan’s President Ashraf Ghani. But as Vanda Felbab-Brown writes in a new op-ed for The New York Times, it is unlikely to improve Kabul’s immediate national security problems—and may create more difficulties than it solves.

The White House has argued that because Mansour became opposed to peace talks with the Afghan government, removing him became necessary to facilitate new talks. Yet, as Vanda writes in the op-ed, “the notion that the United States can drone-strike its way through the leadership of the Afghan Taliban until it finds an acceptable interlocutor seems optimistic, at best.”

[T]he notion that the United States can drone-strike its way through the leadership of the Afghan Taliban until it finds an acceptable interlocutor seems optimistic, at best.

Mullah Mansour's death does not inevitably translate into substantial weakening of the Taliban's operational capacity or a reprieve from what is shaping up to be a bloody summer in Afghanistan. Any fragmentation of the Taliban to come does not ipso facto imply stronger Afghan security forces or a reduction of violent conflict. Even if Mansour's demise eventually turns out to be an inflection point in the conflict and the Taliban does seriously fragment, such an outcome may only add complexity to the conflict. A lot of other factors, including crucially Afghan politics, influence the capacity of the Afghan security forces and their battlefield performance.

Nor will Mansour’s death motivate the Taliban to start negotiating. That did not happen when it was revealed last July’s the group’s previous leader and founder, Mullah Mohammad Omar, had died in 2013. To the contrary, the Taliban’s subsequent military push has been its strongest in a decade—with its most violent faction, the Haqqani network, striking the heart of Kabul. Mansour had empowered the violent Haqqanis following Omar’s death as a means to reconsolidate the Taliban, and their continued presence portends future violence. Mansour's successor, Mawlawi Haibatullah Akhundzada, the Taliban’s former minister of justice who loved to issue execution orders, is unlikely to be in a position to negotiate (if he even wants to) for a considerable time as he seeks to gain control and create legitimacy within the movement.

The United States has sent a strong signal to Pakistan, which continues to deny the presence of the Afghan Taliban and the Haqqani network within its borders. Motivated by a fear of provoking the groups against itself, Pakistan continues to show no willingness to take them on, despite the conditions on U.S. aid.

Disrupting the group’s leadership by drone-strike decapitation is tempting militarily. But it can be too blunt an instrument, since negotiations and reconciliation ultimately depend on political processes. In decapitation targeting, the U.S. leadership must think critically about whether the likely successor will be better or worse for the counterinsurgency endgame.

      

       

       

       

       

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Global warming is changing environmental conditions in the Arctic and opening new opportunities for resource extraction. Greenland, long thought to have excellent potential for iron ore, copper, zinc, lead, gold, rubies, rare earth elements and oil, has looked to strengthen its economy through the development of these resources. For many in Greenland, including the current government, resource extraction is seen as a necessary step toward the ultimate goal of independence from Denmark.

On September 24, the Energy Security Initiative (ESI) and the John L. Thornton China Center at Brookings hosted Premier Aleqa Hammond of Greenland for an Alan and Jane Batkin International Leaders Forum address on the future of natural resource extraction in Greenland. Following her address, a panel discussion highlighted the findings of a new Brookings report, “The Greenland Gold Rush: Promise and Pitfalls of Greenland’s Energy and Mineral Resources.” Report co-author Kevin Foley, a doctoral candidate at Cornell University, was joined on the panel by ESI Director Charles Ebinger and University of Copenhagen Professor Minik Rosing, who served as a discussant. The panel was moderated by Jonathan Pollack, a senior fellow with the China Center and Center for East Asia Policy Studies at Brookings.

This event was part of the Alan and Jane Batkin International Leaders Forum Series, a new event series hosted by Foreign Policy at Brookings which brings global political, diplomatic and thought leaders to Washington, D.C. for major policy addresses.

 Join the conversation on Twitter using #Greenland

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• Natural Resource Development in Greenland: An Alan and Jane Batkin International Leaders Forum with Greenland's Premier Aleqa Hammond

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• Transcript (.pdf)

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One year after its conclusion, the Joint Comprehensive Plan of Action (JCPOA) remains controversial in Tehran and Washington, with opponents unreconciled to the deal and determined to derail it. Republican attacks against the deal will keep the controversy alive for most of this election year.

But opponents have had to scale back their criticism, in large part because the JCPOA, at least so far, has delivered on its principal goal—blocking Iran’s path to nuclear weapons for an extended period of time. No one can dispute that Tehran has sharply reduced its capacity to produce fissile materials for nuclear weapons and would need at least a year to rebuild enough capacity to produce a single bomb.

Iran’s positive compliance record has not given opponents much ammunition. The IAEA found Iran in compliance in its two quarterly reports issued in 2016. True, Iran temporarily exceeded the agreed ceiling on heavy water but quickly rectified the infraction, which most observers attributed to the practical difficulty of ensuring that production overages are exported in a timely way rather than to an intention to circumvent the limit. Critics have also pounced on a German report that Iran’s illicit attempts to procure nuclear and missile items continued in 2015. But Tehran’s requirement to import all nuclear items for its permitted civil nuclear program through the JCPOA’s procurement channel—and stop procuring items outside the channel—did not kick in until January 2016, and neither Washington nor Berlin has information that illicit efforts continued after that time.

Murky missile issue

Iran’s ballistic missile tests present a more complicated compliance issue. Due to a compromise reached in the negotiations, missile activities are not covered in the JCPOA and Security Council resolution 2231 simply ”calls upon” but does not legally require Iran to cease those activities (as did the U.N. Security Council resolutions replaced by 2231). As a result, Iranians argue they are not legally bound to cease missile testing, and Russia and China essentially support their argument. 

The administration and Congress are right to oppose Iran’s provocative and destabilizing missile activities. But they are not on strong legal or political grounds to treat the issue as a compliance violation. Rather than invoking the Iran nuclear deal, Washington and its partners will need to counter Iran’s missile programs with other policy tools, including interdictions of procurement attempts, Missile Technology Control Regime restrictions, U.S. diplomatic efforts with suppliers, missile defenses, and sanctions.

An uncertain path ahead

So, from the standpoint of Iran implementing and complying with its nuclear commitments, the JCPOA has operated well for its first year. But challenges to the smooth operation and even the longevity of the deal are already apparent.

A real threat to the JCPOA is that Iran will blame the slow recovery of its economy on U.S. failure to conscientiously fulfill its sanctions relief commitments and, using that as a pretext, will curtail or even end its own implementation of the deal. Iranians are understandably frustrated that the benefits of sanctions relief have not materialized as quickly as expected. But international banks and businesses have been reluctant to engage Iran not because they have been discouraged by the United States but because they have their own business-related reasons to be cautious, including the inadequate regulatory standards of Iran’s financial system, low oil prices in an oil-dependent economy, and fear of running afoul of remaining U.S. sanctions. In an effort to ensure that Iran will reap the economic rewards it deserves, the Obama administration has bent over backwards to inform foreign governments, banks, and businesses of what sanctions relief measures entitle them to do, but Iranian officials continue to complain that it is not doing enough.

[W]e can say the nuclear deal is off to a promising start...[s]till, it is already clear that the path ahead will not always be smooth.

Legislation proposed in Congress could also threaten the nuclear deal. Many proponents of new sanctions legislation genuinely seek to reinforce the deal—for example, by renewing the Iran Sanctions Act without attaching poison pills. But for some other members of Congress, the bills are designed to undercut the JCPOA. In a July 11 statement of policy, the administration threatened to veto three House bills, stating that they “would undermine the ability of the United States to meet our JCPOA commitments by reimposing certain secondary economic and financial sanctions lifted on ‘Implementation Day’ of the JCPOA.” For now, the administration is in a position to block new legislation that it believes would scuttle the nuclear deal.

But developments outside the JCPOA, especially Iran’s regional behavior and its crackdown on dissent at home, could weaken support for the JCPOA within the United States and give proponents of deal-killing legislation a boost. So far, however, there are no clear indications that the JCPOA has contributed either to more moderate or more provocative behavior. Indeed, consistent with statements by Supreme Leader Ali Khamenei, there have been few changes in Iran’s behavior toward its neighbors in the last year.

A potential wildcard for the future of the JCPOA is upcoming governing transitions in both Washington and Tehran. There will be more continuity in policy toward Iran and the JCPOA if Hillary Clinton becomes president, although she is likely to take a harder line than her predecessor. Donald Trump now says he will re-negotiate rather than scrap the deal, but in practice that could produce the same result because a better deal will not prove negotiable. With President Hassan Rouhani up for re-election next year and the health of the Supreme Leader questionable, Iran’s future policy toward the JCPOA cannot be confidently predicted.

A final verdict on the JCPOA is many years away, not just because of the challenges mentioned above but also because of the crucial uncertainly regarding what Iran will do when key restrictions on its ability to produce weapons-grade nuclear materials expire after 15 years. However, we can say the nuclear deal is off to a promising start, as even some of its early critics now concede. Still, it is already clear that the path ahead will not always be smooth, the longevity of the deal cannot be taken for granted, and keeping it on track will require constant focus in Washington and other interested capitals. 

       

       

       

       

Seattle Mayor Ed Murray recently announced a plan to raise the minimum wage in his city to $15/hour over the next few years. The plan emerged from a special business/labor advisory committee, approved by 21 out of 24 its members, after four months of hearings, academic studies, and debate . The measure awaits approval by the City Council, but the move to $15/hour in Seattle seems well underway.

Seattle may be the first, but it won’t be the last, city to take this bold step. Granted, there were some peculiarities in Seattle’s case, including a $15/hour minimum wage ballot initiative that succeeded in the nearby city of SeaTac in November, and the election of a new Socialist Party Seattle City Council member who campaigned on the issue. But with inequality taking center stage as a political issue in big cities around the country, mayors, businesses, and labor advocates are watching Seattle closely.

However, the focus on big cities shouldn’t obscure the fact that wages are a function of regional economics. Seattle is indeed a big city, with 635,000 residents and (by our count) nearly 500,000 jobs. But it’s only part of King County, Washington, which has roughly 2 million residents and more than 1 million jobs. And King County is just one of three counties that make up the wider Seattle metropolitan area, with a population of 3.5 million and 1.8 million jobs.

While low-wage jobs are prevalent in Seattle, they’re even more prevalent in its nearby suburbs. Using data from the American Community Survey, my colleague Sid Kulkarni and I calculated that between 2009 and 2011, there were on average 149,000 jobs (full-time and part-time) in the city of Seattle that paid less than $15/hour. Over the same period, the remainder of King County had an average of 216,000 jobs that paid hourly wages below that threshold. These low-wage jobs represented 30 percent of all jobs in Seattle, and 34 percent of all jobs in the rest of King County.

It stands to reason that low-wage jobs are more suburban than high-wage jobs. Typically, the highest-value jobs in a region are located in central cities. High-paying sectors like finance, advanced health care, information technology (Redmond notwithstanding), and higher education tend to be more urban than suburban. Yes, cities also have lots of low-paying jobs in hospitality and retail, but so do suburbs. Those jobs tend to follow people, and most people in major metro areas live in suburbs. As my colleague Elizabeth Kneebone has found, as population sprawls, so does low-wage work.

To be sure, many people who live in the King County suburbs of Seattle will benefit from a $15/hour Seattle minimum wage, because they work in the city. According to a University of Washington study conducted for Mayor Murray’s Income Inequality Advisory Committee, fully four in 10 people who earn less than $15/hour working in Seattle jobs—and who would thus presumably benefit from the minimum wage increase—live outside of the city. That’s particularly important in a region like Greater Seattle, where suburbs are home to most of the poor. At the same time, the UW study finds that nearly as many Seattle residents in sub-$15/hour jobs work outside the city limits.

None of this amounts to an argument against Seattle taking the first step toward increasing its minimum wage. Residential and commercial demand is so strong in the city these days that Seattle may have more latitude than its suburbs to boost its minimum wage significantly without encountering negative employment effects. And maybe the city needs to move first in order to convince its neighbors (and itself) that a $15/hour minimum wage won’t make the sky fall.

But these statistics offer an important reminder that the problems of low wages, inequality, and social mobility do not stop at city borders. Ultimately, more cities might try acting in coordination with their surrounding jurisdictions, as the District of Columbia did with two Maryland counties, to boost their minimum wages and ameliorate any “border effects.” And as Seattle contemplates other key policy initiatives, like universal preschool and backfilling state cuts to transit funding (a King County ballot initiative failed last month), it should keep open the lines of communication with its neighbors, and act as one county—or region—where it can.

       

The Seattle city council voted to push up the city’s minimum wage to $15 an hour. If the wage hike is fully implemented, it will guarantee Seattle’s workers the nation’s highest minimum wage. The increase in the minimum wage will be phased in over a number of years. Big employers that do not provide their employees a health plan are the first that will face the $15 per hour minimum, a requirement that will be fully phased in around 2017. Large employers who offer health benefits will have to pay the $15 minimum starting in 2018. Small businesses with employees who receive tip income will have to pay the $15 per hour minimum a couple of years later, but the countable wage will include employees’ tips. By 2021 all employers in the city must offer a minimum wage of $15 an hour, regardless of the employer’s size.

The federal minimum wage is currently just $7.25 an hour, unchanged since 2009. If Congress does not raise the national minimum wage, Seattle’s minimum will be more than twice the federal minimum wage. Many states currently have a higher minimum wage than the federal one. As it happens, Washington has the nation’s highest state-level minimum wage, $9.32 per hour. Unlike the federal minimum wage law, Washington’s state law increases the state minimum wage every year in line with changes in the consumer price index. By the time Seattle’s $15 per hour minimum becomes effective for large employers in 2017, the Washington state minimum wage will be about $10 per hour, assuming consumer prices continue to rise 2% a year. Thus, large employers in Seattle will have to pay their minimum-wage employees 50% more than minimum-wage employees receive outside the Seattle city limits.

I strongly favor the Administration’s proposal to boost the U.S. minimum wage to $10.10 an hour. It will boost the spendable incomes of millions of poorly paid workers and their families, and I expect it will have only a small adverse effect, if any, on low-wage workers’ job opportunities and work hours. However, I am more cautious about the wisdom of raising a single city’s minimum wage to $15 an hour when nearby jurisdictions leave their minimum wages unchanged.

One reason for my caution is that a big minimum-wage hike can place Seattle’s low-wage employers at a competitive disadvantage compared with employers engaged in the same line of business but located in a nearby suburb. If compensation costs for low-wage workers represent a big percentage of a Seattle employer’s costs, and if the employer faces competition from businesses on the other side of the city limits, companies located in Seattle can lose customers to competitors outside the city.

Consider a business that mainly sells low-cost, fast-food meals. If it must pay $15 an hour to its low-wage employees, while its competitors less than a mile away are only required to pay $10 an hour, the companies outside Seattle can charge lower prices to their customers for shakes, burgers, and fries, and yet still make a profit. The lower cost establishments can capture a larger percentage of the local fast-food trade, reducing fast-food sales inside Seattle’s city limits. The same is true of the goods and services sold by laundry and dry cleaning establishments, inexpensive motels, and other businesses that depend on low-wage workers to stay competitive. The labor cost disadvantage caused by a higher minimum wage can hurt low-wage employment in Seattle and possibly reduce the value of some of the city’s commercial real estate.

To the extent that consumers have the option of buying goods or services from companies that are not required to pay a higher minimum wage, some of the hoped-for gains from a higher minimum wage will be lost. When customers can conveniently buy products or services from firms that face lower labor costs, the new businesses that they patronize will grow and the old, high-cost businesses they abandon will shrink. Low-wage workers may earn higher wages inside the Seattle city limits, but their employment opportunities in Seattle may shrink.

Seattle is a prosperous city, and its mayor was elected in part because of a promise to boost the pay of its most poorly paid residents. If a $15 an hour minimum wage has a chance of working and enjoying broad political support, Seattle is a good place to test the idea. I will be interested to see whether low-wage Seattle businesses continue to prosper even after they are required to pay a minimum wage that is 50% higher than the one faced by competitors in nearby suburbs. The risk of a big minimum-wage hike at the city level is that the city’s low-wage employers will be harmed in their competition with out-of-town businesses that sell the same products or services. The risk of this kind of harm is vastly smaller when the minimum wage is increased at the state or national level. If the Administration can persuade Congress to boost the national minimum wage, all employers—inside and outside a city’s limits—will be required to raise the pay they offer to their most poorly paid workers.

Note: An edited version of this post appears on Fortune.com

       

Seattle Mayor Ed Murray recently announced a plan to raise the minimum wage in his city to $15/hour over the next few years. The plan emerged from a special business/labor advisory committee, approved by 21 out of 24 its members, after four months of hearings, academic studies, and debate . The measure awaits approval by the City Council, but the move to $15/hour in Seattle seems well underway.

Seattle may be the first, but it won’t be the last, city to take this bold step. Granted, there were some peculiarities in Seattle’s case, including a $15/hour minimum wage ballot initiative that succeeded in the nearby city of SeaTac in November, and the election of a new Socialist Party Seattle City Council member who campaigned on the issue. But with inequality taking center stage as a political issue in big cities around the country, mayors, businesses, and labor advocates are watching Seattle closely.

However, the focus on big cities shouldn’t obscure the fact that wages are a function of regional economics. Seattle is indeed a big city, with 635,000 residents and (by our count) nearly 500,000 jobs. But it’s only part of King County, Washington, which has roughly 2 million residents and more than 1 million jobs. And King County is just one of three counties that make up the wider Seattle metropolitan area, with a population of 3.5 million and 1.8 million jobs.

While low-wage jobs are prevalent in Seattle, they’re even more prevalent in its nearby suburbs. Using data from the American Community Survey, my colleague Sid Kulkarni and I calculated that between 2009 and 2011, there were on average 149,000 jobs (full-time and part-time) in the city of Seattle that paid less than $15/hour. Over the same period, the remainder of King County had an average of 216,000 jobs that paid hourly wages below that threshold. These low-wage jobs represented 30 percent of all jobs in Seattle, and 34 percent of all jobs in the rest of King County.

It stands to reason that low-wage jobs are more suburban than high-wage jobs. Typically, the highest-value jobs in a region are located in central cities. High-paying sectors like finance, advanced health care, information technology (Redmond notwithstanding), and higher education tend to be more urban than suburban. Yes, cities also have lots of low-paying jobs in hospitality and retail, but so do suburbs. Those jobs tend to follow people, and most people in major metro areas live in suburbs. As my colleague Elizabeth Kneebone has found, as population sprawls, so does low-wage work.

To be sure, many people who live in the King County suburbs of Seattle will benefit from a $15/hour Seattle minimum wage, because they work in the city. According to a University of Washington study conducted for Mayor Murray’s Income Inequality Advisory Committee, fully four in 10 people who earn less than $15/hour working in Seattle jobs—and who would thus presumably benefit from the minimum wage increase—live outside of the city. That’s particularly important in a region like Greater Seattle, where suburbs are home to most of the poor. At the same time, the UW study finds that nearly as many Seattle residents in sub-$15/hour jobs work outside the city limits.

None of this amounts to an argument against Seattle taking the first step toward increasing its minimum wage. Residential and commercial demand is so strong in the city these days that Seattle may have more latitude than its suburbs to boost its minimum wage significantly without encountering negative employment effects. And maybe the city needs to move first in order to convince its neighbors (and itself) that a $15/hour minimum wage won’t make the sky fall.

But these statistics offer an important reminder that the problems of low wages, inequality, and social mobility do not stop at city borders. Ultimately, more cities might try acting in coordination with their surrounding jurisdictions, as the District of Columbia did with two Maryland counties, to boost their minimum wages and ameliorate any “border effects.” And as Seattle contemplates other key policy initiatives, like universal preschool and backfilling state cuts to transit funding (a King County ballot initiative failed last month), it should keep open the lines of communication with its neighbors, and act as one county—or region—where it can.

       

       

       

       

       

       

       

       

       

       

Editor’s Note: In the report “Think Tank 20: Growth, Convergence and Income Distribution: The Road from the Brisbane G-20 Summit” experts from Brookings and around the world address interrelated debates about growth, convergence and income distribution, three key elements that are likely to shape policy debates beyond the ninth G-20 summit that was held on November 15-16 in Brisbane, Australia. The content of this blog is based on the chapter on Latin America. Read the full brief on Latin America's growth trends here.

A figure says a thousand words. And, looking at Figure 1, which shows the population-weighted average income per capita in emerging economies relative to the U.S., there could be no doubt in anybody’s mind that since the late 1990s something rather extraordinary happened—a phenomenon with no antecedents in the post-WWII period—that propelled emerging economies into an exponential process of convergence.

Needless to say, this phenomenon had enormous consequences for the welfare of millions of citizens in emerging economies. It lifted more than 500 million people out from poverty and extreme poverty, and gave rise to the so-called emerging middle class that grew at a rate of 150 million per year.

So, it seems that something rather extraordinary happened in emerging economies. Or did it? Let’s look again. When China and India are removed from the emerging markets sample, Figure 1 becomes Figure 2a.

In Figure 2a, one can still discern a period of convergence starting in the late 1990s. But convergence here was not nearly as strong—relative income is still far below its previous heights—and it occurred after a period of divergence that started in the mid-1970s after the first oil shock, in the early 1980s with the debt crisis, and in the late 1980s with post-Berlin Wall meltdown in Eastern European economies.

This pattern is actually characteristic of every emerging region including Latin America (see Figure 2b). Only Asia differs markedly from this pattern—with China and India displaying exponential convergence since the late 1990s, while the rest of emerging Asia experienced a sustained but much slower convergence since the mid-1960s. 

From a Latin American perspective, the relevant question we need to ask is whether the recent bout of convergence that started in 2004 after a quarter of a century of relative income decline is a break with the past or just a short-lived phenomenon?

In order to address this question from a Latin American perspective, we study the arithmetic of convergence (i.e., whether mechanical projections are consistent with the convergence hypothesis) and the economics of convergence (i.e., whether income convergence was associated with a comparable convergence in the drivers of growth).

According to our definition of convergence,[1] since 1950, growth-convergence-development miracles represent a tiny fraction of emerging countries. Only five countries managed to achieve this: Japan, South Korea, Taiwan, Hong Kong and Singapore. In other words, convergence towards income per capita levels of rich countries is an extremely rare event.

But where does Latin America stand? Based on growth projections for the period 2014-2018, not a single Latin American country will converge to two-thirds of U.S. income per capita in two generations. Unfortunately, the arithmetic does not seem to be on the side of the region.

What about the economics? To answer this question, we analyze whether Latin America’s process of income convergence in the last decade was also associated with a similar convergence in the key drivers of growth: trade integration, physical and technological infrastructure, human capital, innovation, and the quality of public services. Figure 3 illustrates the results.

In contrast to relative income, during the last decade, LAC-7 [2] countries failed to converge towards advanced country levels in every growth driver. The overall index of growth drivers—the simple average of the five sub-indexes—remained unchanged in the last decade relative to the equivalent index for advanced economies. By and large, the latter holds true for every LAC-7 country with exceptions like Colombia (the only country that improved in every single growth driver in the last decade) and Chile (the country in the region where the levels of growth drivers are closer to those of advanced economies). 

Latin America had a decade of uninterrupted high growth rates—with the sole exception of 2009 in the aftermath of the Lehman crisis—that put an end to a quarter of a century of relative decline in income per capita levels vis-à-vis advanced economies. However, high growth and income convergence were largely the result of an unusually favorable external environment, rather than the result of convergence to advanced-country levels in the key drivers of growth. Fundamentally, the last was a decade of “development-less growth” in Latin America.

With the extremely favorable external conditions already behind us, the region is expected to grow at mediocre rates of around 2 percent in per capita terms for the foreseeable future. With this level of growth, the dream of convergence and development is unlikely to be realized any time soon.

To avoid such a fate the region must make a renewed effort of economic transformation. Although the challenges ahead appear to be huge, there is plenty of room for optimism. First, Latin America has built a sound platform to launch a process of development. Democracy has by-and-large consolidated across the region, and an entire generation has now grown up to see an election as the only legitimate way to select national leaders. Moreover, it is for the most part a relatively stable region with no armed conflicts and few insurgency movements threatening the authority of the state. Second, a sizeable group of major countries in Latin America have a long track record of sound macroeconomic performance by now. Third, the region could be just steps away from major economic integration. Most Latin American countries in the Pacific Coast have bilateral free trade agreements with their North American neighbors (11 countries with the U.S. and seven countries with Canada). Were these countries to harmonize current bilateral trade agreements among themselves—in the way Pacific Alliance members have been doing—a huge economic space would be born: a Trans-American Partnership that would comprise 620 million consumers, and have a combined GDP of more than $22 trillion (larger than the EU’s, and more than double that of China). Were such a partnership on the Pacific side of the Americas to gain traction, it could eventually be extended to Atlantic partners, in particular Brazil and other Mercosur countries.

In the last quarter of a century democracy, sound macroeconomic management and an outward-looking development strategy made substantial strides in the region. If these conquests are consolidated and the same kind of progress is achieved in key development drivers in the next 25 years, many countries in the region could be on the road to convergence.

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[1] We define convergence as a process whereby a country’s income per capita starts at or below one-third of U.S. income per capita at any point in time since 1950, and rises to or above two-thirds of U.S. income per capita.

[2] LAC-7 is the simple average of Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela, which account for 93 percent of Latin America’s GDP.

       

       

One of the foundational notions of digital financial services has been the distinction between payment rails and services running on the rails. This is a logical distinction to make, one easily understood by engineers who tend to think in terms of hierarchies (or stacks) of functionalities, capabilities, and protocols that need to be brought together. But this distinction makes less sense when it is taken to represent a logical temporal sequencing of those layers.

It is not too much of a caricature to portray the argument —and, alas, much common practice— like this: I’ll first build a state-of-the art digital payments platform, and then I’ll secure a great agent network to acquire customers and offer them cash services. Once I have mastered all that, then I’ll focus on bringing new services to delight more of my customers. The result is that research on customer preferences gets postponed, and product design projects are outsourced to external consultants who run innovation projects in a way that is disconnected from the rest of the business.

This mindset is understandable given limited organizational, financial and human resource capabilities. But the problem with such narrow sequencing is that all these elements reinforce each other. Without adequate services (a.k.a. customer proposition), the rails will not bed down (a.k.a. no business case for the provider or the agents). In businesses such as digital payments that exhibit strong network effects, it’s a race to reach a critical mass of users. You need to drive the entire stack to get there, as quickly as possible. Unless, you develop a killer app early on, as M-PESA seems to have done with the send money home use case in the Kenyan environment.

It is tough for any organization to advance on all these fronts simultaneously. Only superhero organizations can get this complex job done. I have argued in a previous post that the piece that needs to be parceled off is not the service creation but rather cash management: that can be handled by independently licensed organizations working at arms length from the digital rails-and-products providers.

What are payment rails?

Payment rails are a collection of capabilities that allow value to be passed around digitally. This could include sending money home, paying for a good or a bill, pushing money into my or someone else’s savings account, funding a withdrawal at an agent, or repaying a loan. The first set of capabilities relates to identity: being able to establish you are the rightful owner of the funds in your account, and to designate the intended recipient in a money transfer. The second set of capabilities relates to the accounting or ledger system: keeping track of balances held and owed, and authorizing transactions when there are sufficient funds per the account rules. The third set of capabilities relates to messaging: collecting the necessary transaction details from the payment initiator, conveying that information securely to the authorizing entity, and providing confirmations.

Only the third piece has been transformed by the rise of mobile phones: we now have an increasingly inclusive and ubiquitous real-time messaging fabric. Impressive as that is, this messaging capability is still linked to legacy approaches on identity and accounting. Which is why mobile money is still more an evolution than a revolution in the quest for financial inclusion.

The keepers of the accounts —traditionally, the banks— are, of course, the guardians of the system’s choke points. There is now recognition in financial inclusion circles that to expand access to finance it is not enough to proliferate the world with mobile phones and agents: you need to increase the number and type of account keepers, under the guise of mobile money operators, e-money issuers or payment banks. But that doesn’t change the fundamental dynamics, which is that there still are choke point guardians who need to be convinced that there is a business case in order to invest in marketing to poor people, that there are opportunities to innovate to meet their needs, and that perhaps all players can be better off if only they interoperated. A true transformation would be to open up these ledgers, so anyone can check the validity of any transaction and write them into the ledger.

That’s what crypto-currencies are after: decentralizing the accounting and transaction authorization piece, much in the same way as mobile phones have decentralized the transaction origination piece. Banks seek to protect the integrity of their accounting and authorizations systems —and hence their role as arbiters of financial transactions— by hiding them behind huge IT walls; crypto-currencies such as Bitcoin and Ripple do the opposite: they use sophisticated protocols to create a shared consensus for all to see and use.

The other set of capabilities in the digital rails, identity, is also still in the dark ages. Let me convince you of that through a personal experience. My wallet was stolen recently, and it contained my credit card. I can understand the bank wanting to know my name, but why is the bank announcing my name to the thief by printing it on the credit card, thereby making it easier for him to impersonate me? The reason is, of course, that the bank wants merchants to be able to cross check the name on the card with a piece of customer ID. But as you can imagine, my national ID got stolen along with my credit card, and because of that the thief knows not only my name but also my address. That was an issue because I also kept a key to my house in the wallet. None of this makes sense: why are these “trusted” institutions subverting my sense of personal security, not to mention privacy?

The problem is that the current financial regulatory framework is premised on a direct binding of every transaction to my full legal identity. As David Porteous and I argue in a recent paper, what we need is a more nuanced digital identity system that allows me to present different personas to different identity-requesting entities and choose precisely which attributes of myself get revealed in each case, while still allowing the authorities to trace the identity unequivocally back to me in case I break the law.

The much-celebrated success of mobile money has so far really only transformed one third (messaging) of one half (payment rails) of the financial inclusion agenda. We ain’t seen nothin’ yet.

      

       

       

       

       

Totaling more than $111,000,000.00, the 2014 North Carolina Senate contest between Kay Hagan and Thom Tillis is the most expensive Senate election in the nation’s history (not adjusted for inflation). As we investigated earlier this week, outside money has been flowing into American politics in the wake of the Supreme Court’s Citizens United decision in 2010.

When candidate and independent spending are combined, 2014 ranks among the most expensive, if not the most expensive, in history. However, understanding campaign spending takes more than a simple examination of total dollars. Spending differences across states can occur for a variety of reasons, including geographic size, population size, and the expense of media markets.

As a result, a more useful metric for understanding the magnitude of campaign activity is spending per voter, and 2014 offers an interesting case: Alaska. This year, Alaska saw a highly competitive Senate race in which both outside groups and candidates spend substantial amounts of money. Alaska ranks 47th in population with just over 700,000 residents and an estimated 503,000 eligible voters. After adjusting spending (both candidate and independent expenditures) for each state's estimated voting eligible population, Alaska's 2014 Senate race, unsurprisingly, ranks as the most expensive in US history.

Alaska originally ranked 6^th most expensive in 2014, with about $60 million spent total. But it jumps to first place in dollars spent per voter. Candidates and outside groups spent roughly $120 per voter in Alaska this year, about double the next most-expensive race, Montana 2012, where candidates and outside groups spent $66.5 per voter. By comparison, the $111 million Senate race in North Carolina—with a voting-eligible population of about 6,826,610—equaled only $16.25 per voter. That’s still far above the median spending per race for all three cycles ($7.3 per voter) but certainly serves to put the spending in context.

Relative to 2012 and 2014, in terms of both combined and per-voter spending, 2010 could be considered one of the cheaper cycles for Senate races thus far.

These data lend some support to the observation that, since Citizens (and more recently McCutcheon v. FEC) independent expenditures are quickly outpacing contributions to candidates. But given changes in reporting requirements and limited data, there is still a lot about outside spending we still don’t know.

All in all, candidate and outside group spending totaled just over a billion dollars in Senate races in 2014. The fact that North Carolina alone accounted for more than ten percent of that spending is astonishing, but no less remarkable is the intensity of spending per voter in Alaska. But if spending continues to grow as it has the last three election cycles, both of those records will likely be shattered in 2016.

      

      

Policy Brief #174

A nation’s education system is a pillar of its economic strength and international competitiveness. The National Bureau of Economic Research analyzed data from 146 countries, collected between 1950 and 2010, and found that each year of additional average schooling attained by a population translates into at least a two percent increase in economic output. A 2007 World Bank policy research working paper reported similar results. Based on these findings, if the United States increased the average years of schooling completed by its adult population from the current 12 years to 13 years—that is, added one year of postsecondary education—our gross domestic product would rise by more than $280 billion.

The story also can be told by focusing on the returns to education for individuals. The difference in income between Americans who complete high school and those who drop out after 10th grade exceeds 50 percent. Large income differentials extend throughout the continuum of education attainment, with a particularly huge gap occurring between an advanced degree and a four-year college degree.

Although education clearly pays, the education attainment of the nation’s youth has largely stagnated, falling substantially behind that of countries with which we compete. In 1960, the United States led the world in the number of students who graduated from high school. Today young adults in many countries, including Estonia and Korea, exceed their U.S. counterparts in education attainment.

	RECOMMENDATIONS
	America’s economic productivity and competitiveness are grounded in education. Our public schools and our higher education institutions alike are falling behind those of other nations. Four policy proposals offer substantial promise for improving American education, are achievable and have low costs: Choose K–12 curriculum based on evidence of effectiveness. Evaluate teachers in ways that meaningfully differentiate levels of performance. Accredit online education providers so they can compete with traditional schools across district and state lines. Provide the public with information that will allow comparison of the labor market outcomes and price of individual postsecondary degree and certificate programs.

The problem of low education attainment is particularly salient among students from low-income and minority backgrounds. The graduation rate for minorities has been declining for 40 years, and majority/minority graduation rate differentials have not converged. Hispanic and black students earn four-year or higher degrees at less than half the rate of white students.

The economic future of the nation and the prospects of many of our citizens depend on returning the United States to the forefront of education attainment. Simply put, many more of our students need to finish high school and graduate from college.

At the same time, graduation standards for high school and college must be raised. Forty percent of college students take at least one remedial course to make up for deficiencies in their high school preparation, and a test of adult literacy recently given to a random sample of graduating seniors from four-year U.S. institutions found less than 40 percent to be proficient on prose and quantitative tasks.

Barriers to Innovation and Reform

Our present education system is structured in a way that discourages the innovation necessary for the United States to regain education leadership. K-12 education is delivered largely through a highly regulated public monopoly. Outputs such as high school graduation rates and student performance on standardized assessments are carefully measured and publicly available, but mechanisms that would allow these outputs to drive innovation and reform are missing or blocked. For example, many large urban districts and some states are now able to measure the effectiveness of individual teachers by assessing the annual academic growth of students in their classes. Huge differences in teacher effectiveness are evident, but collective bargaining agreements or state laws prevent most school district administrators from using that information in tenure or salary decisions.

Further complicating K-12 reform is the fact that authority for education policy is broadly dispersed. Unlike countries with strong national ministries that can institute top-down reforms within the public sector, education policy and practice in the United States are set through a chaotic network of laws, relationships and funding streams connecting 16,000 independent school districts to school boards, mayors, and state and federal officials. The lack of central authority allows the worst characteristics of public monopolies to prevail—inefficiency, stasis and catering to interests of employees—without top-down systems’ offsetting advantage of being capable of quick and coordinated action.

The challenges to reforming higher education are different. The 6,000-plus U.S. postsecondary institutions have greater flexibility to innovate than do the public school districts—and a motive to do so, because many compete among themselves for students, faculty and resources. However, while output is carefully measured and publicly reported for public K-12 schools and districts, we have only the grossest measures of output for post secondary institutions.

Even for something as straightforward as graduation rates, the best data we have at the institutional level are the proportion of full-time, first-time degree-seeking students who graduate within 150 percent of the normal time to degree completion. Data on critical outputs, including labor market returns and student learning, are missing entirely. In the absence of information on issues that really matter, postsecondary institutions compete and innovate on dimensions that are peripheral to their productivity, such as the winning records of their sports teams, the attractiveness of their grounds and buildings, and their ratio of acceptances to applications. Far more information is available to consumers in the market for a used car than for a college education. This information vacuum undermines productive innovation.

Examining Two Popular Reforms

Many education reformers across the political spectrum agree on two structural and governance reforms: expanding the public charter school sector at the expense of traditional public schools and setting national standards for what students should know. Ironically, the evidence supporting each of these reforms is weak at best.

Charter schools are publicly funded schools outside the traditional public school system that operate with considerable autonomy in staffing, curriculum and practices. The Obama administration has pushed to expand charter schools by eliminating states that don’t permit charters, or capping them, from competition for $4.35 billion in Race to the Top funding. Both President Obama and Education Secretary Arne Duncan have proposed shuttering poorly performing traditional public schools and replacing them with charters.

What does research say about charter schools’ effects on academic outcomes? Large studies that control for student background generally find very small differences in student achievement between the two types of public schools.

For example, on the 2005 National Assessment of Educational Progress (the “Nation’s Report Card”), white, black and Hispanic fourth graders in charter schools performed equivalently to fourth-graders with similar racial and ethnic backgrounds in traditional public schools. Positive findings do emerge from recent studies of oversubscribed New York and Boston area charter schools, which use lotteries to determine admission. But these results are obtained from children whose parents push to get them into the most popular charter schools in two urban areas with dynamic and innovative charter entrepreneurs.

What about common standards? Based on the belief that high content standards for what students should know and be able to do are essential elements of reform and that national standards are superior to individual state standards, the Common Core State Standards Initiative has signed up 48 states and 3 territories to develop a common core of state standards in English-language arts and mathematics for grades K-12. The administration has praised this joint effort by the National Governors Association and Council of Chief State School Officers, made participation in it a prerequisite for Race to the Top funding, and set aside $350 million in American Recovery and Reinvestment Act funding to develop ways to assess schools’ performance in meeting common core standards.

Does research support this approach? The Brown Center on Education Policy at Brookings examined the relationship between student achievement outcomes in mathematics at the state level and ratings of the quality of state content standards in math. There was no association. Some states with strong standards produce high-achieving students, such as Massachusetts, while other states with strong standards languish near the bottom in terms of achievement, such as California. Some states with weak standards boast high levels of achievement, such as New Jersey, while others with weak standards experience low levels of achievement, such as Tennessee.

Four Ideas

For every complex problem there is one solution which is simple, neat, and wrong. — H. L. Mencken

I will avoid Mencken’s approbation by proposing four solutions rather than one. Although education has far too many moving parts to be dramatically reformed by any short list of simple actions, we can start with changes that are straightforward, ripe for action and most promising, based on research and past experience.

Link K-12 Curricula to Comparative Effectiveness

Little attention has been paid to choice of curriculum as a driver of student achievement. Yet the evidence for large curriculum effects is persuasive. Consider a recent study of first-grade math curricula, reported by the National Center for Education Evaluation and Regional Assistance in February 2009. The researchers randomly matched schools with one of four widely used curricula. Two curricula were clear winners, generating three months’ more learning over a nine-month school year than the other two. This is a big effect on achievement, and it is essentially free because the more effective curricula cost no more than the others.

The federal government should fund many more comparative effectiveness trials of curricula, and schools using federal funds to support the education of disadvantaged students should be required to use evidence of effectiveness in the choice of curriculum materials. The Obama administration supports comparative effectiveness research in health care. It is no less important in education.

Evaluate Teachers Meaningfully

Good education outcomes for students depend on good teachers. If we have no valid and reliable system in place to identify who is good, we cannot hope to create substantial improvements in the quality of the teacher workforce.

A substantial body of high-quality research demonstrates that teachers vary substantially in effectiveness, with dramatic consequences for student learning. To increase academic achievement overall and address racial, ethnic and socioeconomic achievement gaps, we must enhance the quality of the teacher workforce and provide children from poor and minority backgrounds with equitable access to the best teachers.

Despite strong empirical evidence for differences in teacher performance—as well as intuitive appeal, demonstrated when we remember our own best and worst teachers—the vast majority of public school teachers in America face no meaningful evaluation of on-the-job performance. A recent survey of thousands of teachers and administrators, spanning 12 districts in four states, revealed that none of the districts’ formal evaluation processes differentiated meaningfully among levels of teaching effectiveness, according to a 2009 report published by The New Teacher Project. In districts using binary ratings, more than 99 percent of teachers were rated satisfactory. In districts using a broader range of ratings, 94 percent of teachers received one of the top two ratings, and less than one percent were rated unsatisfactory. In most school districts, virtually all probationary teachers receive tenure—98 percent in Los Angeles, for example—and very small numbers of tenured teachers are ever dismissed for poor performance.

Conditions of employment should be restructured to recruit and select more promising teachers, provide opportunities for them to realize their potential, keep the very best teachers in the profession, and motivate them to serve in locations where students have the highest needs. The precondition for these changes is a valid system of evaluating teachers.

The federal government should require school districts to evaluate teachers meaningfully, as a condition of federal aid. Washington also should provide extra support to districts that pay substantially higher salaries to teachers demonstrating persistently high effectiveness and serving in high-needs schools. But, because many technical issues in the evaluation of on-the-job performance of teachers are unresolved, the federal government should refrain, at least for now, from mandating specific evaluation components or designs. The essential element is meaningful differentiation—that is, a substantial spread of performance outcomes.

Accredit Online Education Providers

Traditional forms of schooling are labor-intensive and offer few economies of scale. To the extent that financial resources are critical to education outcomes, the only way to improve the U.S. education system in its current configuration is to spend more. Yet we currently spend more per student on education than any other country in the world, and the appetite for ever-increasing levels of expenditure has been dampened by changing demographics and ballooning government deficits. The monies that can be reasonably anticipated in the next decade or two will hardly be enough to forestall erosion in the quality of the system, as currently designed. The game changer for education productivity will have to be technology, which can both cut labor costs and introduce competitive pressures.

Already, at the college level, online education (also termed “virtual education” or “distance learning”) is proving competitive with the classroom experience. Nearly 3.5 million students in 2006—about 20 percent of all students in postsecondary schools and twice the number five years previously—were taking at least one course online, according to a 2007 report published by the Sloan Consortium.

In K-12, online education is developing much more slowly. But, the case for online K–12 education is strong—and linked to cost control. A survey reported on page one of Education Week (March 18, 2009) found the average per-pupil cost of 20 virtual schools in 14 states to be about half the national average for a traditional public school.

Local and state control of access to virtual schooling impedes the growth of high-quality online education and the competitive pressure it contributes to traditional schooling. Development costs are very high for virtual courseware that takes full advantage of the newest technologies and advances in cognitive science and instruction—much higher than the costs for traditional textbooks and instructional materials. These development costs can only be rationalized if the potential market for the resulting product is large. But, states and local school districts now are able to determine whether an online program is acceptable. The bureaucracy that may be most disrupted by the introduction of virtual education acts as gatekeeper.

To overcome this challenge, K-12 virtual public education would benefit from the model of accreditation used in higher education. Colleges and universities are accredited by regional or national bodies recognized by the federal government. Such accrediting bodies as the New England Association of Schools and Colleges and the Accrediting Council for Independent Colleges and Schools are membership organizations that determine their own standards within broad federal guidelines. Once an institution is accredited, students residing anywhere can take its courses, often with the benefit of federal and state student aid.

Federal legislation to apply this accreditation model to online K-12 education could transform public education, especially if the legislation also required school districts to cover the reasonable costs of online courses for students in persistently low-performing schools. This approach would exploit—and enhance—U.S. advantages in information technology. We are unlikely to regain the international lead in education by investing more in business as usual; but we could leapfrog over other countries by building new, technology-intensive education systems.

Link Postsecondary Programs to Labor Market Outcomes

On a per-student basis, the United States spends two and one-half times the developed countries’ average on postsecondary education. Although our elite research universities remain remarkable engines of innovation and are the envy of the world, our postsecondary education system in general is faltering. The United States used to lead the world in higher education attainment, but, according to 2009 OECD data, is now ranked 12th among developed countries. We have become a high-cost provider of mediocre outcomes.

Critical to addressing this problem is better information on the performance of our postsecondary institutions. As the U.S. Secretary of Education’s Commission on the Future of Higher Education concluded in 2006:

Our complex, decentralized postsecondary education system has no comprehensive strategy, particularly for undergraduate programs, to provide either adequate internal accountability systems or effective public information. Too many decisions about higher education—from those made by policymakers to those made by students and families—rely heavily on reputation and rankings derived to a large extent from inputs such as financial resources rather than outcomes. Better data about real performance and lifelong working and learning ability is absolutely essential if we are to meet national needs and improve institutional performance.

Ideally, this information would be available in comparable forms for all institutions through a national system of data collection. However, achieving consensus on the desirability of a national database of student records has proved politically contentious. One of the issues is privacy of information. More powerful is the opposition of some postsecondary institutions that apparently seek to avoid accountability for their performance.

The way forward is for Congress to authorize, and fund at the state level, data systems that follow individual students through their postsecondary careers into the labor market. The standards for such state systems could be recommended at the federal level or by national organizations, to maximize comparability and eventual interoperability.

The public face of such a system at the state level would be a website allowing prospective students and parents to compare degree and certificate programs within and across institutions on diverse outcomes, with corresponding information on price. At a minimum, the outcomes would include graduation rates, employment rates and average annual earnings five years after graduation. Outcomes would be reported at the individual program level, such as the B.S. program in chemical engineering at the University of Houston. Price could be reported in three ways: advertised tuition,average tuition for new students for the previous two years, and average tuition for new students for the previous two years net of institutional and state grants for students eligible for federally subsidized student loans. These different forms of price information are necessary because institutions frequently discount their advertised price, particularly for low-income students. Students and families need information about discounts in order to shop on the basis of price.

Many states, such as Washington, already have data that would allow the creation of such college search sites, at least for their public institutions. The primary impediment to progress is the federal Family Educational Rights and Privacy Act (FERPA), which makes it very difficult for postsecondary institutions to share data on individual students with state agencies, such as the tax division or unemployment insurance office, in order to match students with information on post-graduation employment and wages. Congress should amend FERPA to allow such data exchanges among state agencies while maintaining restrictions on release of personally identifiable information. To address privacy concerns, Congress also should impose substantial penalties for the public release of personally identifiable information; FERPA currently is toothless.

Creating a higher education marketplace that is vibrant with transparent and valid information on performance and price would be a powerful driver of reform and innovation. Easily addressed concerns about the privacy of student records and political opposition from institutions that do not want their performance exposed to the public have stood in the way of this critical reform for too long. America’s economic future depends on returning the United States to the forefront of education attainment. Simply put, many more of our students need to finish high school and graduate from college. Investments in improved data, along with structural reforms and innovation, can help restore our leadership in educational attainment and increase economic growth.

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Situated in the heartland, Missouri reflects the full range of American reality.

The state is highly urban yet deeply rural. It contains two bustling metropolises, numerous fastgrowing suburbs, and dozens of typically American small towns. Elsewhere lie tranquil swaths of open country where farmers still rise before dawn and the view consists mainly of rich cropland, trees, and sky.

Missouri sums up the best of the nation, in short.

And yet, Missouri also mirrors the country’s experience in more problematic ways.

The spread of the national economic downturn to Missouri, most immediately, has depressed tax collections and increased the demand for social services, resulting in a troublesome state and local fiscal moment. This has highlighted pocketbook concerns and underscored that the state must make the most of limited resources.

At the same time, Missourians, like many Americans, have many opinions about how their local communities are changing. They are divided—and sometimes ambivalent—in their views of whether their towns and neighborhoods are developing in ways that maintain the quality of life and character they cherish.

All of which explains the double focus of the following report by the Brookings Institution Center on Urban and Metropolitan Policy. Intended to speak to the simultaneous concern of Missourians for fiscal efficiency and communities of quality, "Growth in the Heartland: Challenges and Opportunities for Missouri" brings together for the first time a large body of new information about both the nature and costs of development patterns in the Show-Me State.

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Missouri's population is spreading out, adding to the costs of providing services and infrastructure across the state, according to a new study released today by the Brookings Institution Center on Urban and Metropolitan Policy.

The 84-page study, Growth in the Heartland: Challenges and Opportunities for Missouri, reports that Missouri's population is quickly dispersing, with smaller metropolitan areas experiencing some of the state's fastest growth and residency in unincorporated areas on the rise. Though new residents and jobs fueled prosperity in the 1990s, the report finds that growth has slowed in the past year, and suggests that the state's highly decentralized development patterns could become troublesome as Missouri contends with a slowing economy and serious budget deficits.

Sponsored by the Ewing Marion Kauffman Foundation, Growth in the Heartland provides the most comprehensive and up-to-date body of research and statistics yet assembled analyzing the direction, scope, and implications of development in Missouri. In addition to assessing the consequences of those trends for the state's fiscal health, economic competitiveness, and quality of life, the report addresses the potential role of state and local policy in shaping those trends in the future. Specific findings of the report conclude that:

• Growth in the Columbia, Springfield, Joplin, and St. Joseph metropolitan areas strongly outpaced that of the Kansas City and St. Louis metropolitan areas in the 1990s. Altogether the four smaller areas captured fully one-quarter of the state's growth and doubled the growth rate of the Kansas City and St. Louis areas.
  
  
• Population and job growth also moved beyond the smaller metro areas and towns into the state's vast unincorporated areas. Overall, residency in these often-outlying areas grew by 12.3 percent in the 1990s—a rate 50 percent faster than the 8.1 percent growth of towns and cities.
  
  
• Most rural counties reversed decades of decline in the 1990s, with eight in ten rural counties experiencing population growth and nine in ten adding new jobs. By 2000, more rural citizens lived outside of cities and towns than in them, as more than 70 percent of new growth occurred in unincorporated areas.

"Missouri experienced tremendous gains during the last decade, but the decentralized nature of growth across the state poses significant fiscal challenges for the future," said Bruce Katz, vice president of Brookings and director of the policy center. "The challenge for Missouri is to give communities the tools, incentives, and opportunities to grow in more efficient and fiscally responsible ways."

The Brookings Institution Center on Urban and Metropolitan Policy is committed to shaping a new generation of policies that will help build strong neighborhoods, cities, and metropolitan regions. By informing the deliberations of state and federal policymakers with expert knowledge and practical experience, the center promotes integrated approaches and practical solutions to the challenges confronting metropolitan communities. Learn more at www.brookings.edu/urban.

      

*A slightly modified version of this commentary appeared in the St. Louis Post-Dispatch on October 19, 2004.

So it looks like Missouri's gubernatorial race will turn on "character" issues.

GOP consultant Paul Zemitzsch predicts Secretary of State Matt Blunt will portray Claire McCaskill, the Democratic state auditor, as "an extra-liberal female candidate" and "waffler" when things get ugly. McCaskill, for her part, has already countered one attack on her "hypocrisy" with her own attack on Blunt's veracity.

Look for more talk about character as Election Day approaches.

Yet that would be too bad.

Missouri needs to talk about some other things this fall.

In a recent statewide report, "Growth in the Heartland: Challenges and Opportunities for Missouri," for example, we argued that Missouri faces a land-use and competitive crisis that demands serious attention.

The crisis is not new—we described it two years ago—but the fact remains that Missouri's chaotic style of low-density development is defacing the state's rural heritage, gutting towns and cities, and exacting a heavy toll on Missourians' pocketbooks and quality of life just when the state needs to compete at a higher level on those factors.

Just look around:

Strip malls and home sites chewed across nearly 350 square miles of Missouri prairie and fields in the 1990s as sprawl engulfed rural Missouri and the state continued to develop land almost four times as fast as it's been adding population.

Cities are struggling, as fast exurban growth either outstrips city and town growth or, in the case of St. Louis, drains the center-city of vibrancy.

And recently decline has spread beyond the state's big urban centers into numerous older suburbs, so that inner-ring municipalities like Wellston and Rock Hill in the St. Louis area, or Raytown and Grandview near Kansas City, now suffer from population losses.

Why do these trends matter? For some the concern is cultural. They fear the state is losing its rural ambiance. For others the threat is environmental. They know scattershot development is tainting the Ozark lakes and degrading Missouri's natural areas.

However, for us the concern is mostly economic: By remaining virtually laissez faire on growth and development issues, we fear the Show Me State is undercutting its ability to parlay its very real assets in the life sciences and other high-value industries into a broader prosperity.

On the one hand, Missouri's dispersed development adds to the size of the state's enormous—and crumbling—highway system. Already Missouri taxpayers struggle with a maintenance backlog that will require half a billion dollars a year over the next 10 years—$200 million more than current finding will provide.

On the other, we suspect that the state's spread-out, low-quality development diminishes Missouri's appeal to the educated workers necessary to prosper in biotech, medical instruments, and infomatics. Educated workers gravitate to vibrant urban centers with plenty of amenities. Missouri's sprawl, by contrast, drives them away by draining the state's downtowns and Main Streets of life and variety.

And so we say it again: Missouri and the gubernatorial candidates need to face up to some tough realities this fall:

• Missouri can't afford to keep sprawling, even with tax revenues stronger this year. Blunt and McCaskill need to tell Missourians how they will foster more efficient, less chaotic growth that doesn't break the bank

 

Ditto the highway issue: Notwithstanding rural pleas, Missouri can't afford to keep building new roads until it contends with the maintenance hole it's paved itself into. The candidates absolutely must explain how they will modernize the state's deteriorating transportation system while aligning it with the principles of sound land-use and fiscal sanity

 

And what about the whole connection of economic vitality to strong cities and higher education? Growth now depends on brainpower and quality of life. Therefore, the candidates owe it to Missourians to detail how they will bolster the quality and affordability of Missouri's colleges and universities. They also must explain how they plan to bolster the state's flagging town and city centers to attract and retain the best and the brightest

In sum, the Show Me State stands at a crossroads.

With huge issues about their state's future livability and prosperity in the balance, Missourians shouldn't buy into a campaign focused on character issues and divisive wedge issues.

Instead, they should insist candidates Blunt and McCaskill address the state's problems head on and get to work.

 

      

*A slightly modified version of this commentary appeared in The Springfield News-Leader on October 24, 2004.

The Missouri gubernatorial race is going down to the wire, and guess what? Contentious social and moral issues are predominating.

Last week Republican Matt Blunt questioned McCaskill's values, saying his stand against gay marriage matched the values of mainstream Missourians.

For her part, McCaskill, the Democratic state auditor, has parried Blunt on gays, guns, and abortion by insisting that Republicans don't have a lock on values just because Democrats like her don't wear religion on their sleeves.

Look for more sniping on gays, guns, and abortion as the campaigns careen toward election day.

Which would be too bad.

Missouri—and particularly the Springfield region—needs to talk about some other things this fall.

In a major statewide report, "Growth in the Heartland: Challenges and Opportunities for Missouri," after all, we argued that Missouri today faces an outright land-use, environmental, and competitive crisis that has little to do with gay marriage or concealed-carry gun rules.

The crisis is not new—we described it two years ago—but the fact remains that Missouri's chaotic style of low-density development is gobbling up the state's rural heritage, gutting towns and cities, and exacting a heavy toll on Missourians' pocketbooks and quality of life just when the state needs to compete at a higher level on exactly those factors.

Just look around the Springfield area:

Forty-five percent of the region's growth in the 1990s took place in the unincorporated "open country," the exurban places often least equipped to manage it.

Strip malls and home sites are chewing up the region's beautiful Ozarks scenery.

And all the while newcomers are flocking to small outlying towns like Willard, Republic, Clever, Niza, and Ozark—all of which hit "hypergrowth" in the 1990s and struggle to keep up.

As to the results, they have been predictably mixed: New jobs and vitality have been accompanied by the water-quality problems that have fouled Lake Taneycomo and Table Rock Lake. Taxes are increasing as local governments strain to provide the necessary roads, services, or sewer hook-ups. And with more sprawl coming, more traffic and mini-malls could soon undercut the region's reputation as the quaint heartland of rural America.

Why do these trends matter? For some the concern is cultural. They fear the state is losing its rural heritage. For others the threat is environmental. They are disturbed by the degradation of the Ozark lakes and other nearby natural areas.

However, for us the concern is mostly economic: By remaining virtually laissez faire on growth and development issues, we fear the Show Me State is undercutting its ability to parlay its very real assets into a broader prosperity.

Spread-out development patterns, for example, raise costs in the state for businesses and individual taxpayers. That's because highly dispersed development often increases the capital and operations costs of roads, sewer lines, schools, and police or fire services.

Similarly, Missouri's dispersed development adds to the size of the state's enormous—and crumbling—highway system. Missouri taxpayers consequently struggle with a maintenance backlog that will require half a billion dollars a year over the next 10 years—some $200 million more than current finding will provide.

And likewise, we suspect that the state's spread-out, low-quality development diminishes Missouri's appeal to highly educated workers—that critical factor if the state is going to appeal to entrepreneurs, well-educated retirees, and leading-edge techies and scientists.

This is especially important in the Springfield region, where the recent boom has clearly been built on the appeal of the region's improving downtown and cultural facilities, high quality of life, and stunning natural beauty.

And so we say it again—Missouri and the gubernatorial candidates need to face up to some tough realities this fall:

• Missouri can't afford to keep sprawling, even with tax revenues stronger this year. So Blunt and McCaskill need to tell Missourians how they will foster more efficient, less chaotic growth that doesn't break the bank

Or take the highway issue: Notwithstanding rural pleas for new blacktop, Missouri can't afford to keep building new roadways as it tries to dig itself out of the maintenance hole it's paved itself into. Blunt and McCaskill should also say how they will modernize the state's flagging transportation system while aligning it with the principles of sound land-use and fiscal sanity

And what about the whole connection of economic energy to strong cities and higher education? Growth now depends on brainpower and quality of life. For that reason, the candidates owe it to Missourians to detail how they will bolster the quality and accessibility of Missouri's colleges and universities, given the state's inadequate state fiscal system. And they should likewise explain how they plan to revive the state's flagging town and city centers both for the benefit of residents and to attract and retain the best and the brightest for the future

Missouri, in sum, stands at a crossroads.

Other heartland states, like Michigan and Pennsylvania, now recognize the links between educated workers, strong urban and rural centers, and economic competitiveness—and are taking action. Missouri needs to face up to the challenge.

Similarly, other states are moving to reap the fiscal benefits of nudging development into more sensible patterns, so Missouri should think about that too.

As to the agitations of wedge issues like abortion and concealed weapons or gay marriage, Missourians should take them in stride. "Values" are important, sure, but at the same time, there's a land-use and competitive crisis underway in Missouri that both the candidates and voters ignore at their peril this election.

       

This is the third in a series of reports on the demographic and political dynamics under way in key “battleground” states, deemed to be crucial in deciding the 2008 election. As part of the Metropolitan Policy Program’s Blueprint for American Prosperity, this series will provide an electoral component to the initiative’s analysis of and prescriptions for bolstering the health and vitality of America’s metropolitan areas, the engines of the U.S. economy. This report focuses on three major battleground states in the Midwest—Ohio, Michigan, and Missouri—and finds that:

Ohio, Michigan and Missouri all feature eligible voter populations dominated by white working class voters. However, this profile is changing, albeit more slowly than in faster-growing states like Colorado or Arizona, as the white working class declines and white college graduates and minorities, especially Hispanics, increase. The largest effects are in these states’ major metropolitan areas— Cleveland, Columbus, and Cincinnati in Ohio: Detroit in Michigan; and St. Louis and Kansas City in Missouri— especially in their suburbs.

In Ohio, these trends could have their strongest impact in the fast-growing and Democratic-trending Columbus metro, where Democrats will seek to tip the entire metro in their favor by expanding their margin in Franklin County and reducing their deficit in the suburbs. The trends could also have big impacts in the Cleveland metro (especially its suburbs), in the Cincinnati metro (especially Hamilton County) and in the mediumsized metros of the Northeast (Akron, Canton, and Youngstown). Overall, the GOP will be looking to maintain their support among the declining white working class, especially among whites with some college, who have been trending Democratic. Also critical to their prospects is whether the growing white college-educated group will continue its movement toward the Democrats.

In Michigan, these trends will likely determine whether the fast-growing and populous Detroit suburbs continue shifting toward the Democrats, a development which would tip the Detroit metro (44 percent of the statewide vote) even farther in the direction of the Democrats. The trends will also have a big impact on whether the GOP can continue their hold on the conservative and growing Southwest region of the state that includes the Grand Rapids metro. The GOP will seek to increase its support among white college graduates, who gave the GOP relatively strong support in 2004, but have been trending toward the Democrats long term.

In Missouri, these trends will have their strongest impact on the two big metros of Democratic-trending St. Louis (38 percent of the vote)—especially its suburbs— and GOP-trending Kansas City (20 percent of the statewide vote). The Democrats need a large increase in their margins out of these two metros to have a chance of taking the state, while the GOP simply needs to hold the line. The trends will also have a significant impact on the conservative and growing Southwest region, the bulwark of GOP support in the state, where the Republicans will look to generate even higher support levels. The GOP will try to maintain its support from the strongly pro-GOP white college graduate group, which has been increasing its share of voters as it has trended Republican.

These large, modestly growing states in the heartland of the United States will play a pivotal roll in November’s election. Though experiencing smaller demographic shifts than many other states, they are each changing in ways that underscore the contested status of their combined 48 Electoral College votes in this year’s presidential contest.



Table Of Contents:
Executive Summary » 
Introduction and Data Sources and Definitions » 
Ohio » 
Michigan » 
Missouri » 
Endnotes »

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Earlier this month, Missouri voters overwhelmingly rejected a 10-year, 3/4 cent sales tax increase to boost statewide transportation investment. With local referendums an increasingly popular method to raise transportation funding in an era of federal uncertainty, the result has lessons for Missouri’s transportation interests and the country as a whole.

Like many states, Missouri has a clear infrastructure deficit. A legislatively-mandated citizens committee found the state needs an additional $600 million to $1 billion in investment per year. The problem is finding the money. Outside of federal funds, the state primarily relies on a 17.3 cent gasoline tax and local property taxes to fund transportation projects, plus location-specific revenue streams like a half-cent sales tax in St. Louis city and county. Yet with Missouri residents driving less in recent years—down 5 percent per capita between 2000 and 2012-—there is less money available to fund critical projects.

This vote offered one remedy. The statewide bump in sales tax would’ve generated upwards of $5 billion over the ten-year period. The new monies would go to 800 projects across Missouri, primarily for roadways. The governance was a similarly unequal split, with the state department of transportation directly controlling all but 10 percent of the new revenue.

And this is where the referendum’s problems become clear. While each of the state’s seven transportation districts managed their own project list, there was no guarantee local sales taxes would be spent on local projects. There were also legitimate questions whether a heightened focus on roadways made sense in the face of falling statewide driving. This was at the heart of the opposition argument, led by Missourians for Better Transportation Solutions.

In many ways, the Missouri results reflect what happened in a failed 2012 Atlanta referendum. That transportation package contained a hodgepodge of road and rail projects, barely increased connectivity across the sprawling metro region and couldn’t align local interest groups. Much like Missouri, Atlanta has clear transportation needs—but voters sensed the current plan wouldn’t do enough to adequately improve their commutes and livability.

As Missouri’s transportation leaders regroup, they’d be wise to follow the “economy-first” lesson of successful referendums in places like Los Angeles, Denver and Oklahoma City. The common thread in all three was a great job proving the need for greater infrastructure investment. But as my colleagues outlined in a recent report, they also captured how transportation could support industrial growth and metro-wide economic health. Americans have proven time and again they’ll pay for transportation projects, but they want to know what they’re getting and how it will benefit their communities.

In this sense, I’m heartened by a recent Kansas City Star editorial related to their failed streetcar vote the same day. Even with a failed vote, the metro area still needs a better infrastructure network. The key is for public, private and civic leaders to continue working with the public to determine which transportation investments will best support regional economic growth for decades to come.

Ballot measures may fail, but they’ll always provide lessons to improve the plans that will pass.