Announcements of new federal regulations on the use of program-related investments (PRIs) and the launch of a groundbreaking fund in Chicago are the latest signals that impact investing, once a marginal philanthropic and policy tool, is moving into the mainstream. They are also illustrative of two important and complementary paths to institutional change: fast-moving, collaborative local leadership creating innovative new instruments to meet funding demands; federal regulators updating policy to pave the way for change at scale.

Impact investing, referring to “investment strategies that generate financial returns while intentionally improving social and environmental conditions,” provides an important tier of higher-risk capital to fund socially beneficial projects with revenue-generating potential: affordable housing, early childhood and workforce development programs, and social enterprises. It is estimated that there are over $60 billion of impact investments globally and interest is growing—an annual JP Morgan study of impact investors from 2015 reports that the number of impact investing deals increased 13 percent between 2013 and 2014 following a 20 percent increase in the previous year.

Traditionally, foundations have split their impact investments into two pots, one for mission-related investments, designed to generate market-rate returns and maintain and grow the value of the endowment, and the other for program-related investments. PRIs can include loans, guarantees, or equity investments that advance a charitable purpose without expectation of market returns. PRIs are an attractive use of a foundation’s endowment as they allow foundations to recycle their limited grant funds and they count towards a foundation’s charitable distribution requirement of 5 percent of assets. However they have been underutilized to date due to perceived hurdles around their use–in fact among the thousands of foundations in the United States, currently only a few hundred make PRIs.

But this is changing, spurred on by both entrepreneurial local action and federal leadership. On April 21, the White House announced that the U.S. Department of the Treasury and Internal Revenue Service had finalized regulations that are expected to make it easier for private foundations to put their assets to work in innovative ways. While there is still room for improvement, by clarifying rules and signaling mainstream acceptance of impact investing practices these changes should lower the barriers to entry for some institutional investors.

This federal leadership is welcome, but is not by itself enough to meet the growing demand for capital investment in the civic sector. Local innovation, spurred by new philanthropic collaborations, can be transformative. On April 25 in Chicago, the Chicago Community Trust, the Calvert Foundation, and the John D. and Catherine T. MacArthur Foundation launched Benefit Chicago, a $100 million impact investment fund that aims to catalyze a new market by making it easier for individuals and institutions to put their dollars to work locally and help meet the estimated $100-400 million capital needs of the civic sector over the next five years.

A Next Street report found that the potential supply of patient capital from foundations and investors in the Chicago region was more than enough to meet the demand – if there were ways to more easily connect the two. Benefit Chicago addresses this market gap by making it possible for individuals to invest directly through a brokerage or a donor-advised fund and for the many foundations without dedicated impact investing programs to put their endowments to work at scale. All of the transactional details of deal flow, underwriting, and evaluation of results are handled by the intermediary, which should lead to greater efficiency and a significant increase in the size of the impact investing market in Chicago.

In the last few years, a new form of impact investing has made measurement of social return to investments even more concrete. Social impact bonds (SIBs), also known as pay for success (PFS) financing, are a way for private investors (including foundations) to provide capital to support social services with the promise of a return on their investment from a government agency if some agreed-upon social outcomes are achieved. These PFS transactions range from funding to support high-quality early childhood education programs in Chicago to reduction in chronic individual homelessness in the state of Massachusetts. Both the IRS and the Chicago announcements are bound to contribute to the growth of the impact bond market which to date represents a small segment of the impact investing market.

These examples illustrate a rare and wonderful convergence of leadership at the federal and local levels around an idea that makes sense. Beyond simply broadening the number of ways that foundations can deploy funds, growing the pool of impact investments can have a powerful market-making effect. Impact investments unlock other tiers of capital, reducing risk for private investors and making possible new types of deals with longer time horizons and lower expected market return.

In the near future, these federal and local moves together might radically change the philanthropic landscape. If every major city had a fund like Benefit Chicago, and all local investors had a simple on-ramp to impact investing, the pool of capital to help local organizations meet local needs could grow exponentially. This in turn could considerably improve funding for programs—like access to quality social services and affordable housing—that show impact over the long term.

Impact investing can be a bright spot in an otherwise somber fiscal environment if localities keep innovating and higher levels of government evolve to support, incentivize, and smooth its growth. These announcements from Washington and Chicago are examples of the multilevel leadership and creative institutional change we need to ensure that we tap every source of philanthropic capital, to feel some abundance in an era where scarcity is the dominant narrative.

Editor's Note: Alaina Harkness is a fellow at Brookings while on leave from the John D. and Catherine T. MacArthur Foundation, which is a donor to the Brookings Institution. The findings, interpretations and conclusions posted in this piece are solely those of the authors and not determined by any donation.

Access to information and communication technology through cell phones, the internet, and electronic media has increased exponentially around the world. While a few decades ago cell phones were a luxury good in wealthy countries, our data show that today over half of respondents in Sub-Saharan Africa and about 80 percent of those in Latin America and Southeast Asia have access to cell phones. In addition to making phone calls and text messaging, cell phones are used for activities such as accessing the internet and social network sites. Meanwhile, the launch of mobile banking gives access to these technologies an entirely new dimension, providing access to financial services in addition to information and communication technology. It is estimated that in Kenya, where the mobile banking “revolution” originated, there are some 18 million mobile money users (roughly 75 percent of all adults). Given the expanding role of information technology in today’s global economy, in this paper we explore whether this new access also enhances well-being.

Neither of the authors is an expert on information technology. The real and potential effect of information technology on productivity, development, and other economic outcomes has been studied extensively by those who are. Building on past research on the economics of well-being and on the application of the well-being metrics to this particular question, we hope to contribute an understanding of how the changes brought about by information and communication technology affect well-being in general, including its non-income dimensions.

Our study has two related objectives. The first is to understand the effects of the worldwide increase in communications capacity and access to information technology on human well-being. The second is to contribute to our more general understanding of the relationship between well-being and capabilities and agency. Cell phones and information technology are giving people around the world – and particularly the poor – new capabilities for making financial transactions and accessing other services which were previously unavailable to them. We explore the extent to which the agency effect of having access to these capabilities manifests itself through both hedonic and evaluative aspects of well-being.

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2016: The turning point

Policymakers and development practitioners now face a new set of challenges in the aftermath of the global consensus triumvirate Addis Agenda—2030 Agenda—Paris Agreement: [1] implementation, follow-up, and review. Development policy professionals must tackle these while at the same time including the three pillars of sustainable development—social development, economic growth, and environmental protection—and the above three global consensus’ cross-sectoral natures—all while working in a context where policy planning is still performed in silos. They also must incorporate the universality of these new agreements in the light of different national circumstances—different national realities, capacities, needs, levels of development, and national policies and priorities. And then they have to significantly scale up resource allocation and means of implementation (including financing, capacity building, and technology transfer) to make a difference and enhance novel multi-stakeholder partnerships to contain the surge of global flows of all kinds (such as migration, terrorism, diseases, taxation, extreme weather, and digital revolution) in a resolutely interconnected world. Quite an ambitious task!

Given the above complexities, new national and global arrangements are being made to honor the commitments put forth to answer these unprecedented challenges. Several African governments have already started establishing inter-ministerial committees and task forces to ensure alignment between the global goals and existing national planning processes, aspirations, and priorities.

With the international community, Africa is preparing for the first High-Level Political Forum since the 2030 Agenda adoption in July 2016 on the theme “Ensuring that no one is left behind.” In order to inform the 2030 Agenda’s implementation leadership, guidance, and recommendations, six African countries [2] of 22 U.N. Member States, volunteered to present national reviews on their work to achieve the Sustainable Development Goals (SDGs), a unique opportunity to provide an uncompromising reality check and highlight levers to exploit and limits to overcome for impact.

Paralleling Africa’s groundwork, the United Nations’ efforts for coordination have been numerous. They include an inter-agency task force to prepare for the follow-up forum to Financing For Development timed with the Global Infrastructure Forum that will consult on infrastructure investment, a crucial point for the continent; an appointed 10-representative group to support the Technology Facilitation Mechanism that facilitates the development, transfer and dissemination of technologies for the SDGs, another very important item for Africa; and an independent team of advisors to counsel on the longer-term positioning of the U.N. development system in the context of the 2030 Agenda, commonly called “U.N. fit for purpose,” among many other endeavors.

These overwhelming bureaucratic duties alone will put a meaningful burden on Africa’s limited capacity. Thus, it is in the interest of the continent to pool its assets by taking advantage of its robust regional networks in order to mitigate this obstacle in a coherent and coordinated manner, and by building on the convergence between the newly adopted texts and Agenda 2063, the African Union’s 50-year transformation blueprint, with the help of pan-African institutions.

Besides national and global, there is a third level of consideration: the regional one. Indeed, the three major agreements in 2015 emphasized support to projects and cooperation frameworks that foster regional and subregional integration, particularly in Africa. [3] Indeed, common and coherent industrial policies for regional value chains developed by strengthened regional institutions and sustained by a strong-willed transformational leadership are gaining traction towards Africa’s insertion into the global economy.

Africa has long made regional economic integration within its main “building blocs,” the eight Regional Economic Communities (RECs), a core strategy for development. The continent is definitely engaged in this path: Last summer, three RECs, the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern African Development Community (SADC), launched the Tripartite Free Trade Area (TFTA) that covers 26 countries, over 600 million people, and $1 trillion GDP. The tripartite arrangement paves the way towards Africa’s own mega-regional one, the Continental Free Trade Area (CFTA), and the realization of one broad African Economic Community. If regionalization allows free movement of people, capital, goods, and services, the resulting increased intra-African connectivity will boost trade within Africa, promote growth, create jobs, and attract investments. Ultimately, it should ignite industrialization, innovation, and competitiveness. To that end, pan-African institutions, capitalizing on the recent positive continental performances, are redoubling their efforts to build an enabling environment for policy and regulation harmonization and economies of scale.

Importantly, infrastructure, without which no connectivity is possible, is undeniably the enabling bedrock to all future regionalization plans. Together with market integration and industrial development, infrastructure development is one of the three pillars of the TFTA strategy. Similarly, the New Partnership for Africa’s Development (NEPAD) Agency, the technical body of the African Union (AU) mandated with planning and coordinating the implementation of continental priorities and regional programs, adopted regional integration as a strategic approach to infrastructure. In fact, in June 2014, the NEPAD Agency organized the Dakar Financing Summit for Infrastructure, culminating with the adoption of the Dakar Agenda for Action that lays down options for investment mobilization towards infrastructure development projects, starting with 16 key bankable projects stemming from the Programme for Infrastructure Development in Africa (PIDA). These “NEPAD mega-projects to transform Africa” are, notably, all regional in scope.

See the full map of NEPAD’s 16 mega-projects to transform Africa here »

Supplementing NEPAD and TFTA, the Continental Business Network was formed to promote public-private dialogue with regard to regional infrastructure investment. The Africa50 Infrastructure Fund was constituted as a new delivery platform commercially managed to narrow the massive infrastructure finance gap in Africa evaluated at $50 billion per annum.

The development of homegrown proposals and institutional advances observed lately demonstrate Africa’s assertive engagement towards accelerating infrastructure development, thereby regionalization. At the last AU Summit, the NEPAD Heads of State and Government Orientation Committee approved the institutionalization of an annual PIDA Week hosted at the African Development Bank (AfDB) to follow up on the progresses made.

The energy partnerships listed below illustrate the possible gain from adopting trans-boundary approaches for implementation and follow-up: the Africa Power Vision (APV) undertaken with Power Africa; the ECOWAS Centre for Renewable Energy and Energy Efficiency (ECREEE) model accompanying the Sustainable Energy for All (SE4ALL) Africa Hub efforts; and the Africa GreenCo solution that is to bank on PIDA.

• Africa Power Vision: African ministers of power and finance gathered at the World Economic Forum (WEF) in Davos in 2014 decided to create the APV. The vision provides a strategic template harnessing resources to fast-track access to modern energy for African households, businesses, and industries. It draws up a shortlist of African-driven regional priority energy projects mostly extracted from the PIDA Priority Action Program, which is the PIDA short-term pipeline to be completed by 2020. The game changer Inga III hydropower project, the iconic DESERTEC Sahara solar project, and the gigantic North-South Interconnection Transmission Line covering almost the entire TFTA are among the 13 selected projects. The APV concept note and implementation plan entitled “From vision to action” developed by the NEPAD Agency, in collaboration with U.S. government-led Power Africa initiative, was endorsed at the January 2015 AU Summit. The package elaborates on responses to counter bottlenecks to achieve quantifiable targets, the “acceleration methodology” based on NEPAD Project Prioritization Considerations Tool (PPCT), risk mitigation, and power projects’ financing. Innovative design was thought to avoid duplication, save resources, improve coordination and foster transformative action with the setting up of dual-hatted Power Africa – APV Transaction Advisors, who supervise investment schemes up to financial closure where and when there is an overlap of energy projects or common interest. Overall, the APV partnership permits a mutualization of expertise while at the same time, since it is based on PIDA, promoting regional economic integration for electrification.

• ECOWAS Centre for Renewable Energy and Energy Efficiency: U.N. Secretary-General Ban Ki-moon launched the Sustainable Energy for All initiative worldwide as early as 2011 with the triple objective of ensuring universal access to modern energy services, doubling the rate of improvement of energy efficiency, and doubling the share of renewable energy in the global energy mix by 2030. Since its inception, SE4ALL prompted a lot of enthusiasm on the continent, and is now counting 44 opt-in African countries. As a result, the SE4ALL Africa Hub was the first regional hub to be launched in 2013. Hosted at the AfDB in partnership with the AU Commission, NEPAD Agency, and the U.N. Development Program (UNDP), its role is to facilitate the implementation of SE4ALL on the continent. The SE4ALL Africa Hub 3rd Annual Workshop held in Abidjan last February showed the potential of this “creative coalition” (Yumkella, 2014) to deliver on areas spanning from national plans of action, regionally concerted approaches in line with the continental vision, to SDG7 on energy, to climate Intended Nationally Determined Contributions (INDCs) made for the Paris Agreement. Above all, the workshop displayed the hub’s ability to efficiently kick-start the harmonization of processes for impact among countries. Forasmuch as all ECOWAS Member States opted-in to SE4ALL, the West African ministers mandated their regional energy center, ECREEE, to coordinate the implementation of the SE4ALL Action Agendas (AAs), which are documents outlining country actions required to achieve sustainable energy objectives, and from then Investment Prospectuses (IPs), the documents presenting the AAs investment requirements. As a result, the ECOWAS Renewable Energy Policy (EREP) and the Energy Efficiency Policy (EEEP) were formulated and adopted; and a regional monitoring framework to feed into a Global Tracking Framework, the SE4ALL measuring and reporting system, is now being conceived. The successful ECREEE model, bridging national inventory and global players, is about to be duplicated in two other African regions, EAC and SADC, with the support of the U.N. Industrial Development Organization (UNIDO).

• Africa GreenCo: Lastly, initiatives like Africa GreenCo are incubating. This promising vehicle, currently funded by a grant from the Rockefeller Foundation, envisions itself as an independently managed power trader and broker to move energy where needed. Indeed, Africa GreenCo aims to capitalize on PIDA power projects: In its capacity as intermediary creditworthy off taker, it plans to eventually utilize their regional character as a value addition to risk guarantee. To date, Africa GreenCo is refining the legal, regulatory, technical, and financial aspects of its future structure and forging links with key stakeholders in the sector (member states, multilateral development banks, African regional utilities for generation and interconnection called Power Pools) ahead of the completion of its feasibility study in June 2016.

The above-mentioned partnerships are encouraging trends towards more symbiotic multi-stakeholders cooperation. As they relate to home-crafted initiatives, it is imperative that we do not drift away from a continental vision. Not only do Africa-grown plans have higher chance of success than the one-size-fits-all imported solutions, but consistent and combined efforts in the same direction reinforce confidence, emulation, and attract supportive attention. It implies that the fulfillment of intergovernmental agreements requires first and foremost their adaptation to local realities in a domestication process that is respectful of the policy space. Mainstreaming adjustments can be later conducted according to evidence-based and data-driven experiments. Between these global engagements and national procedures, the regional dimension is the indispensable link: Enabling countries to bypass the artificiality of borders inherited from colonial times and offering concrete options to eradicate poverty in a united-we-stand fashion. Regional integration is therefore a prelude to sustainable development operationalization within Africa and a key step towards its active partaking in the global arena. Regionalization can also trigger international relations shift provided that it encompasses fair multilateralism and sustainable management of global knowledge. Indeed, the resulting openness and the complexity encountered are useful parameters to enrich the conception of relevant local answers.

These success stories show the great potential for new experiments and synergies. To me, they inspire the promise of a better world. The one I like to imagine is characterized by mutually beneficial ecosystems for the people and the planet. It encourages win-win reverse linkages, or in other words, more positive spillovers of developing economies on industrial countries. It is a place where, for example, an African region could draw lessons from the Greek crisis and the other way around: China could learn from Africa’s Maputo Development Corridor for its Silk Road Economic Belt. Twin institutes performing joint research among regional knowledge hubs would flourish. Innovative Fab Labs would be entitled to strive after spatial adventure with e-waste material recycled into 3D printers. In that world, innovative collaborations in science, technology, engineering, and math (STEM) would be favored and involve not only women but also the diaspora in order to develop environmentally sound technical progress. Commensurate efforts, persistent willingness, indigenous ingenuity, and unbridled creativity place this brighter future within our reach.

Beyond the recognition of the African voice throughout the intergovernmental processes, Africa should now consolidate its gains by firmly maintaining its position and safeguarding its winnings throughout the preliminary phase. The continent should urgently set singular tactics with the greatest potential in terms of inclusiveness and creation of productive capacity. While doing so, African development actors should initiate a “learning by doing” virtuous cycle to create an endogenous development narrative cognizant of adaptable best practices as well as failures. Yet the only approach capable of generating both structural transformation and informative change that are in line with continentally own and led long-term strategies is … regional integration.

The U.S. military will carry out a major modernization of its strategic nuclear forces in the 2020s.

It will cover all three legs of the strategic triad.

Much of the planned program makes sense. The long-range standoff (LRSO) — a new nuclear-armed cruise missile to outfit strategic bombers — does not.

The primary reason for the modernization program is that many US strategic weapons systems are aging out, and American policy is that, as long as there are nuclear weapons, the United States will maintain a safe, secure and robust nuclear deterrent.

The Ohio-class ballistic missile submarines will begin to hit the end of their service life in the late 2020s, and the Navy will need new submarines. Submarines and submarine-launched ballistic missiles (SLBMs) make up the most survivable leg of the triad, and they carry the bulk of deployed US strategic warheads.

The service life of the Minuteman III intercontinental ballistic missile (ICBM) runs out in 2030. The Air Force seeks a replacement ICBM. At a minimum, keeping an ICBM leg of the triad would require another life extension program for existing Minuteman III missiles.

As for the air-breathing leg of the triad, the Air Force wants to procure 80 to 100 B-21 bombers. Plans are shrouded in secrecy but reportedly will incorporate stealth features and advanced electronic warfare capabilities to allow the aircraft to penetrate contested air space. The Air Force is also modernizing the B61 nuclear gravity bomb for use on strategic bombers.

It is not clear why the United States will need to replace 400 deployed ICBMs on a one-for-one basis, particularly as the Air Force several years ago was prepared to go down to 300. A force of 200-300 ICBMs would suffice and result in significant cost savings. Likewise, one can challenge the requirement for 12 new ballistic missile submarines, as opposed to nine or 10.

The biggest question, however, arises over the LRSO, with a projected cost of $20 billion to $30 billion. The Air Force originally developed nuclear-armed air-launched cruise missiles (ALCMs) in the 1970s because the B-52 — then the mainstay of the strategic bomber fleet — presented a big target for adversary radars. That would make it hard for the aircraft to penetrate air defenses. A B-52 armed with ALCMs could remain outside of radar range and release its cruise missiles.

The B-2, with its stealth features, was designed to restore a penetrating capability. The Air Force plans to use stealth and electronic warfare capabilities to give the B-21 a penetrating capability as well. If these bombers can defeat and penetrate air defenses, that makes the LRSO redundant. (Moreover, unlike in the 1970s, the Air Force today has very capable long-range conventionally armed cruise missiles that provide a standoff capability for bombers.)

If, on the other hand, the stealth of the B-21 will be compromised in the not-too-distant future, then one has to question the wisdom of spending $60 billion to $80 billion — and perhaps more — to procure the B-21. If we believe the B-21 would soon encounter problems penetrating air defenses, scrap that program. Buy instead modified Boeing 767s, a variant of which will serve as the Air Force’s new aerial tanker, and arm them with the LRSO.

The Air Force’s evident attachment to the B-21 suggests, however, that it believes that the aircraft will be able to defeat adversary air defenses for some time to come. That means that the LRSO would add little capability to the US strategic force mix.

If one were to argue for the redundant capability provided by the LRSO, the number of new ALCMs that the Pentagon proposes to purchase — 1,000 to 1,100 — is difficult to understand. Even allowing for extra cruise missiles for test purposes, the number seems excessively high.

In its 2010 annual report to Congress on implementation of the Strategic Offensive Arms Reduction Treaty (SORT), the State Department advised that, as of Dec. 31, 2009, the United States had 1,968 operationally deployed strategic nuclear warheads. That figure captured the actual number of nuclear warheads atop SLBMs and ICBMs plus the number of nuclear bombs and ALCMs at air bases for use by bombers.

On June 1, 2011, a State Department fact sheet showed the number of deployed US strategic warheads as 1,800 as of Feb. 5, 2011, when the New Strategic Arms Reduction Treaty (New START) went into force. A Dec. 1, 2011, fact sheet provided a more detailed breakdown of US strategic forces. It stated that, as of Sept. 1, 2011, the United States had 1,790 deployed strategic warheads and 125 deployed strategic bombers. Like SORT, New START counts each warhead on a deployed ballistic missile as a deployed warhead. But New START counts bomber weapons differently from SORT. New START attributes each deployed bomber as one warhead, regardless of the number that it can carry or the number of weapons that may be at bomber bases.

The 125 deployed bombers on Sept. 1, 2011, would have counted as 125 under New START’s deployed strategic warhead total. Reducing 1,790 by 125 yields 1,665 — the number of deployed warheads then on US SLBMs and ICBMs.

Comparing the SORT and New START numbers is a bit of an apples-and-oranges comparison, but it gives some idea of the number of bomber weapons at US strategic bomber bases. Unless there was a dramatic increase in the number of warheads on ICBMs and SLBMs between the end of 2009 and September 2011 — and there is no reason to think that there was — comparing SORT’s 1,968 figure (end of 2009) to the 1,665 deployed warheads on ICBMs and SLBMs (under New START counting rules in September 2011) suggests some 300 nuclear bombs and ALCMs were at bomber bases. The B-2s would have been armed with bombs, which indicates a maximum of 200-250 ALCMs. The Federation of American Scientists (FAS) also estimates that there are about 300 nuclear weapons at strategic bomber bases, of which 200 are nuclear-armed ALCMs. FAS believes an additional 375 ALCM airframes are held in reserve.

This comparison raises the question: Why would 1,000-1,100 ALCM airframes be needed to support a couple of hundred deployed ALCMs?

The United States should sensibly modernize its strategic deterrent, particularly in a time of tight defense budgets. The case for the LRSO is demonstrably weak, especially for the planned size of the program. The LRSO should be shelved.

This piece was originally published in Defense News.

There are lots of good reasons to go to college, but the vast majority of prospective students in this country report[i] that they’ll go to college because they believe that it will improve their employment opportunities and financial wellbeing. And for the most part, they’re right. Despite many suggestions to the contrary, it’s very well documented[ii] that investments in higher education pay large dividends in the form of future earnings. This makes higher education one of the most important tools we have for generating social mobility. Regardless of an individual’s starting point in life, higher education offers access to greater financial well-being. Unfortunately, it’s not a fail proof system.

Investments in education, like investments in the stock market, do not come without risk. In financial markets, access to information is one way investors mitigate risk. Mutual funds, for example, disclose average returns over various time periods for certain categories of investments (e.g. large-cap funds, emerging market funds, technology funds, etc.), in addition to other information. These data, moreover, are widely and freely available through consumer-oriented websites like Yahoo Finance, Vanguard, and E-Trade. Yet, for higher education, students have had access to no analogous information until quite recently.

For decades, economists discussed the average benefits of a college education compared to a high school education with no regard to either field of study or institution. Finally, in 2009, the Census Bureau started collecting data that could be used to assess which majors pay the most,[iii] and then just a few months ago, the Department of Education released data on the earnings of alumni by institution, for all students who receive federal grants or loans. These data can be further analyzed, as we have done, to estimate the economic contribution of schools (or value-added) as distinct from the outcomes attributable to student characteristics (like test scores).[iv] Still, even with these data advances, students cannot compare earnings by major across institutions, except in a handful of cases using state data systems.

Here, we illustrate how data by major and institution can inform the decision of what to study and where using data from Texas. Suppose first that this student is a Texas resident and has decided she would like to pursue a bachelor’s degree at a public institution in her state.

Our data on alumni earnings by major comes from the Texas Higher Education Board, and we combine it with information on the net cost of tuition from the Department of Education’s IPEDS database as reported in the College Scorecard.[v] We use these data to estimate the ten-year return on investment for each institution in the state of Texas by major.   

We calculate an estimate of ten-year return by summing the average earnings faced by graduates over the first ten years following graduation[vi] and subtracting off the wage they would have received as a high school graduate without a degree (taking into account additional years of earnings when they would have been enrolled in college). To estimate this benchmark, we used data on Texas residents from the Annual Social and Economic Supplement to the Current Population Survey, obtained via IPUMS CPS.[vii] We then subtract the institution specific costs[viii] to get the ten-year financial return. Since education pays off over a lifetime, this isn’t the ideal exercise, but it’s still informative. We’ve estimated these returns based on the population of individuals who both complete their degree and do not go on to complete graduate study. Ideally, these estimated expected returns would be adjusted to account for how earnings and costs are affected by non-completion. Indeed, the average rate of completion across these schools is only 48 percent. This is a quick and dirty method for estimating returns that fails to take into account a number of selection issues,[ix] but we believe that it still provides an effective illustration of risk in higher education. 

Figure 1 illustrates the potential average outcome facing our Texas student, who is deciding between bachelor’s degree programs from the set of public institutions in her home state. We’ve plotted the distribution of financial returns for the set of potential expected outcomes, which are defined as all combinations of institution and major. To be clear, the distribution of potential outcomes would be far wider if we were using individual specific variation (i.e. the fact that some students will ultimately earn more than others, even with the same degree from the same institution) and the real possibility of non-completion.

We know that, on average, this student will face a positive return on her investment, wherever she chooses to go. The average rate of return across all possible choices facing this student is quite a sizeable 11.3 percent (or $216,000 in undiscounted 2014 dollars). At a systemic level that’s important.  Still, the standard deviation is 6.7, with a low return of a -6.6 percent (Animal Science at Sul Ross State) and a high return of 79.8 percent (Registered Nursing at UT Brownsville). Out of 1065 combinations of majors and schools, 19 yielded average negative returns. This was true even for two programs at the selective UT Austin campus (Visual and Performing Arts and Classics). 1.1 percent of students who graduated in 2004 were in a major-institution combination that yielded a net return below 4 percent. In such cases, they would have been better off putting their dollars into treasury bills.

Figure 1. Mean return on bachelor’s degree investment by institution and major, for Texas residents who graduated in 2004 from a Texas public college

Students who know what they want to major in could benefit greatly from knowing which school is likely to generate the largest pay off (it would be nice to know this in terms of learning as well as money, but that is another more complicated matter).

We’ve illustrated the distribution of potential outcomes for two different popular majors, Liberal Arts and Sciences and Electrical Engineering.[x] Both majors clearly offer a significant average rate of return across all institutions (12 for Liberal Arts and 20 for Electrical Engineering), but depending on which major they choose the student will face a different level of risk in their future earnings. The variation (standard deviation) in the expected rate of return across institutions is much larger for Liberal Arts majors (5.7) than for Electrical Engineering majors (3.7). Yet, while these facts may discourage people from pursuing a Liberal Arts major in the abstract, the plot below does show that some Liberal Arts majors out-earn their peers in electrical engineering. For example, Liberal Arts majors from UT Austin earned a higher return than electrical engineering majors at UT Dallas, the University of Houston, and three other UT campuses. Thus, these more detailed facts can actually encourage students to pursue majors that look economically bad for the average student but quite attractive at a particular school with a strong program.

Figure 2. Distribution of earnings 10 years after graduation for bachelor’s degree holders with an Electrical Engineering or Liberal Arts degree, for Texas residents and 2004 graduates from Texas public colleges 

The point is that college degrees, like other investments, are risky, but information goes a long way to clarify the nature of that risk and improve the quality of investment decisions. In addition to providing students and the public greater access to data on market performance of alumni, there are a number of innovations both in the policy arena and in the private market that could help make college investments less risky. First of all, innovative financing systems that allow students to pay for their investment over a longer period of time and tie repayment to earnings would greatly limit downside risk for students.  Second, institutions have the capacity to shoulder some of this risk, and a proposal known as risk-sharing[xi] is gaining some traction and would require schools to pay the federal government some portion of loan default losses. On a voluntary basis, some colleges have offered on-time graduation guarantees[xii] and wage guarantees.[xiii] And last, new business models in higher education could help mitigate risk. Part of the problem in the current system comes from the all-or-nothing regime in which students have to invest in a bundle of coursework (i.e. a degree) in order to reap significant returns. The growing prominence of new models, like micro-credentials[xiv] and coding boot camps,[xv] can offer alternatives that don’t require students to put all of their eggs in one basket.

May’s jobs gains, released this morning, show that only 38,000 new jobs were added this May, down from an average of 178,000 over the first four months of the year, and the least new jobs added since September 2010.

This year’s monthly job gains and losses can indicate how the economy is doing once they are corrected to account for the pattern we already expect in a process called seasonal adjustment. The approach for this seasonal adjustment that is presently used by the Bureau of Labor Statistics (BLS) puts very heavy weight on the current and last two years of data in assessing what are the typical patterns for each month.

In my paper “Unseasonal Seasonals?” I argue that a longer window should be used to estimate seasonal effects. I found that using a different seasonal filter, known as the 3x9 filter, produces better results and more accurate forecasts by emphasizing more years of data. The 3x9 filter spreads weight over the most recent six years in estimating seasonal patterns, which makes them more stable over time than in the current BLS seasonal adjustment method.

I calculate the month-over-month change in total nonfarm payrolls, seasonally adjusted by the 3x9 filter, for the most recent month. The corresponding data as published by the BLS are shown for comparison purposes. According to the alternative seasonal adjustment, the economy actually lost about 4,000 jobs in May (column Wright SA), compared to the official BLS total of 38,000 gained (column BLS Official).

In addition to seasonal effects, abnormal weather can also affect month-to-month fluctuations in job growth. In my paper “Weather-Adjusting Economic Data” I and my coauthor Michael Boldin implement a statistical methodology for adjusting employment data for the effects of deviations in weather from seasonal norms. This is distinct from seasonal adjustment, which only controls for the normal variation in weather across the year. We use several indicators of weather, including temperature and snowfall.

We calculate that weather in May had a negligible effect on employment, bringing up the total by only 4,000 jobs (column Weather Effect). Our weather-adjusted total, therefore, is 34,000 jobs added for May (column Boldin-Wright SWA). This is not surprising, given that weather in May was in line with seasonal norms.

Unfortunately, neither the alternative seasonal adjustment, nor the weather adjustment, makes todays jobs report any more hopeful. They make little difference and, if anything, make the picture more gloomy.

a. Applies a longer window estimate of seasonal effects (see Wright 2013).
b. Includes seasonal and weather adjustments, where seasonal adjustments are estimated using the BLS window specifications (see Boldin & Wright 2015). The incremental weather effect in the last column is the BLS official number less the SWA number.

What if I told you I’d found a surefire way to decrease community involvement in our local schools while at the same time increasing the costs of providing education for taxpayers? Probably not a political winner, eh? And yet, for well over 100 years we’ve adopted such an approach to governing America’s public schools.

I’m talking of course, about the widespread and increasingly questionable practice of local school district governments holding their school board elections “off-cycle” so that they are contested apart from regular national elections.

Just how significant and widespread are “off-cycle” school board elections? And what are the consequences of using off-cycle elections for the tone and direction of education policy? UC Berkeley Political Scientist Sarah Anzia recently penned a terrific book examining the causes and consequences of off-cycle elections in American politics in which she finds that 90 percent of states hold at least some municipal races apart from major national elections and three quarters of states do so for school board elections. Data from the National School Boards Association seem to confirm Anzia’s descriptive account on the prevalence of these elections.

By exploiting the occasional episode in which a change in state law forced localities to move their elections “on cycle,” Anzia is able to provide some pretty rigorous causal evidence that off-cycle elections decrease voter turnout and equip organized interests (e.g. teachers unions) to obtain more favorable policy outcomes. Anzia’s findings mesh nicely with other work done by University of Pennsylvania Political Scientist, Marc Meredith, who found that when school boards are given the authority to choose election dates for raising revenue (e.g. bond elections) boards will “manipulate” the timing of elections in predictable ways to ensure an electorate that is most favorable to increased school spending.

"While most citizens are tuned into the presidential primary contests this year, the important reality is that thousands of school board members will be 'elected' by tiny and unrepresentative electorates prior to next November’s general election."

While most citizens are tuned into the presidential primary contests this year, the important reality is that thousands of school board members will be “elected” by tiny and unrepresentative electorates prior to next November’s general election. This isn’t an accident or an oversight. The helpless position of today’s “education voter” is a predictable consequence of Progressive era reforms that sought to “take politics out of education.” As Columbia Professor, Jeffrey Henig, explains in his insightful and wide-ranging book, The End of Exceptionalism in American Education, the widespread use of single-purpose governments that are insulated from the electorate has been a hallmark of American school governance that is only recently beginning to come undone.

Advocates of off-cycle elections sometimes contend that holding school elections apart from major federal elections helps foster a more informed electorate. But shouldn’t the onus be on those who defend off-cycle elections to demonstrate better outcomes in districts that cling to a policy that often results in higher costs to taxpayers and diminishes small-d democracy. Of course it’s fair and important to ask, “How much democracy is good for our schools?” However, there are at least three reasons to be skeptical that the benefits of using “off-cycle” elections outweigh the costs:

First, I’m unaware of any scholarly evidence that the voters who participate in off-cycle elections are significantly more informed than the electorates participating in on-cycle elections. More importantly, I am not aware of any scholarly research that demonstrates a linkage between off-cycle elections and better student achievement outcomes. To the contrary, my friend and collaborator Arnie Shober (Lawrence University) and I found a strong association between a district’s relative academic performance and the use of on-cycle elections in a 2014 analysis that we undertook for the Fordham Institute. Although that report could not establish any causal relationship between on-cycle elections and better student achievement (clearly we could not randomly assign on-cycle elections), the fact that we found a positive correlation between on-cycle school board elections and a district’s academic performance arguably puts the ball back in the court of those who would prefer diminished citizen participation and higher fiscal costs.

Second, on the subject of higher costs, consider the takeaway from a recent piece in Governing Magazine that quotes Rice University Political Scientist and local elections expert, Melissa Marschall.  It paraphrases Marschall, saying “There's no doubt about it. Holding concurrent elections is bound to increase turnout…Holding elections less frequently should save them [local governments] money.” In short, even if some benefits (a marginally more informed electorate?) could in theory be demonstrated, one would also need to account for known costs: lower citizen participation and more frequent elections that school districts cannot piggyback onto national or statewide elections.

Third and finally, as Eitan Hersh explains in a hard-hitting recent post on FiveThirtyEight, there’s more than a tinge of hypocrisy when it comes to those who defend off-cycle elections. Ironically, while the Democratic Party and organized labor often advocate for policies that enhance workplace democracy and reduce barriers to voter participation (i.e., opposing voter ID laws, supporting same day registration and vote by mail), these two groups have, according to Hersh, led the charge to retain off-cycle school board elections that all but assure lower and more unrepresentative turnout.  

Admittedly, there’s no perfect approach to governing American K-12 education. And, governance “reform” is hardly a panacea for improving our schools. Nonetheless, as Noel Epstein wisely observed in her 2004 volume, Who’s in Charge Here?, when education governance is fragmented ordinary citizens are challenged to hold policy-makers accountable because it is difficult for the public to mobilize and readily identify which political authority or authorities are responsible. The bottom line: we don’t do the electorate any additional favors by purposefully staggering school board races across multiple off-year election cycles. Consolidating the school election calendar is a small, but nonetheless sensible step in the right direction.  

In her February 25 Brookings report, Dr. Dale Farran questions the scientific case for endorsing widespread policy in preschool education. Indeed, she argues that enthusiasm for public preschool and its promise is “premature.” Her argument is founded on three points—that the data on impact is mixed, that we do not have scientific direction with respect to the key quality constructs, and that our measurement of these constructs lack empirical validity. There is a grain of truth in each of these statements. Yet, a closer look reveals that when the data are focused on high quality preschools, the weight of the evidence for effectiveness is compelling. The early childhood science is at least evidence informed on the skill sets that will promote later school and life success and valid measures exist for many of the important outcomes. While there is always more to be learned, the bulk of the scientific community contends that high quality preschool programs will play a role in preparing young children for success in school and beyond.

There is no doubt that the literature looking for relationships between preschool access and school readiness outcomes in literacy, mathematics, and other domains are mixed.  Both the Head Start Impact Study and recent findings from Farran’s own Tennessee pre-k study (Lipsey et al., 2015) indicate that preschool of less than high quality produce only modest short-term gains. 

The data do not look bleak, however, when we look across preschool outcomes in the aggregate. And when high quality programs are investigated, whether in well-controlled studies of intensive models (e.g., Perry and Abecedarian) or in studies of strong public programs in Boston (Weiland & Yoshikawa, 2013), Cincinnati (Karoly & Auger, 2016), New Jersey (Barnett et al., 2013), North Carolina (Peisner-Feinberg et al., 2015), and Tulsa (Hill et al., 2015), the results are downright promising  (Yoshikawa et al., 2013; Minervino. 2014). Society reaps benefits from fostering early skill development, as children participating in high quality preschool programs had lower rates of grade retention, less need for special education, decreased antisocial behavior, and greater productivity as adults (Reynolds & Temple, 2015; Cunha & Heckman, 2006). In 2014, over 1,200 scientists who work in the area of early education signed the ECE Consensus Letter for Researchers, attesting to the mountains of data in support of the role of preschool education in improving child outcomes in social development, language, pre-literacy, and mathematics.

Though Farran’s brief reviews only data from the United States, a growing literature suggests that preschool education has long and lasting and causal effects on outcomes around the globe (Atinc & Gustafsson-Wright, 2013). For example, an impact evaluation of a preschool program in Mozambique found that the program increased on-time enrollment into primary school among beneficiaries by 22 percent relative to the children in the control group. Enrolled children also experienced a 6 percent increase in fine motor development, and an 87 percent increase in cognitive development. More importantly, this is not just a story of “everything is bleak in the developing world so the program is bound to have an impact.”

With compelling data in the United States and across the globe, one might ask why there is such a great divide between Farran’s interpretation and that of the wider academic community? One reason appears to be that Farran discounts any data that did not emerge from random assignment longitudinal studies. While correlational studies are not the gold standard, they are informative. Surely practitioners and policymakers would not dismiss data on parenting practices because children were not randomly assigned to parents. Further, in the area of preschool education, there is no difference in findings between randomized trials and other methodologies with respect to targeted cognitive, achievement-related outcomes when other study and program features are taken into account (Duncan & Magnuson, 2013; Camilli et al., 2010). 

Farran also discounts many of the randomized trials because she says they do not tell us enough about cause and effect. She writes of the famous Abecedarian and Perry Preschool studies:

The primary difficulty with this approach as a basis for designing interventions is that there is no way to identify what specifically changed about children’s abilities that enabled them to perform better in school or to link those changes to any particular set of active ingredients in the treatment. Neither Perry nor Abecedarian explicitly describes beyond the broadest level the “treatment” that brought about their positive effects.

But the children did improve, and at some level—while it would be wonderful to isolate the exact recipe for preschool success—we need not deny children the benefits of preschool while scientists probe for the precise combinations of active ingredients that yield the best results. Consider an analogy: the impact of storybook reading on children. While numerous studies document that reading storybooks with children in a joint way improves vocabulary and early literacy, we have yet to isolate the exact causal factors that matter in book reading. Perhaps it is the cuddling that occurs between child and parent; perhaps this crucial unstudied variable is the key that has not yet been turned. But no one would argue that we should stop book reading as a way to foster young children’s interest in reading. So it is with preschool. A quality preschool can heighten young children’s desire to attend school and prepare them for learning—even if all the ingredients in the magic sauce have not yet been identified.

In short, the evidence does provide models of high quality preschool that effectively prepare children for entrée into school and that change a child’s trajectory toward success. Not knowing the exact mechanisms by which preschool exerts its impact is secondary to the fact that poor children need good preschools now and we know how to provide them.

Farran raises the very important point that a narrow focus on only reading and math outcomes would be misplaced in our quest to build high quality preschool curricula. We could not agree more. She goes on to write, however, that “premature as well is the presumption that solid research exists to guide the content and structure of pre-K programs.”

Here we beg to differ. There are thousands of studies that speak to the skill sets children need to achieve success in the changing world. Reading and math are among these skills—collectively bundled under what Golinkoff and Hirsh-Pasek (2016) call “content skills.” But there is overwhelming evidence that children need to master skills that move beyond just reading and math. Content knowledge has, at its base, language and executive function skills. Language is the medium of instruction and executive function skills empower children with the ability to control their impulses and attend. Flexibility and working memory (Galinsky, 2010; Blair, 2016), also part of executive function, enable children to shift gears and remember what they have been told. But even language and executive function are not enough. Children must be prepared to participate alongside others (collaboration), to question when they are unclear (critical thinking) (Kuhn, 1999), and to have the persistence needed to stick with difficult problems—grit (Duckworth et al., 2007). These skills have been tested, are predictive of later achievement, have been shown to be malleable and to relate to academic, social, and learning outcomes in school.

Farran argues that we cannot provide high quality preschool because we lack strong measures of quality. Again, there is some truth in her assertion, but it seems to us somewhat confused. Farran mixes together policy benchmarks, measures of classroom practice, and child outcome measures. All are useful, but for different purposes. The first is meant to set a floor across many domains including health and safety. The second is designed for providing feedback on classroom practice. The last allows us to assess children’s wellbeing and progress. Well-designed continuous improvement systems for pre-K have detailed standards for learning and teaching that align with assessments of classroom practice and systems operation as well as with child assessments. Together with program standards these can provide a clear vision of high quality. They set high expectations for children’s learning and development and for pedagogy. Our ability to specify all of this exceeds our ability to measure it with reasonable investments of time and money. Nevertheless, classroom observation measures and child assessments as elements of a continuous improvement system help inform teachers and administrators about where they are and what steps they need to take next (Hall et al., 2012; Sylva et al., 2006; Williford et al., 2013). None of us would argue that this is easy, or that any single measure of classroom quality or child development is sufficient. Providing guidance for the improvement of learning and teaching is hard work and domain specific, but it is not futile.

Farran closes her report by suggesting that “[the] proposition that expanding pre-K will improve later achievement for children from low-income families is premature.” Perhaps instead it is Farran’s prognosis that is overly pessimistic. Research to date indicates that sustained access to high quality preschool does alter the trajectory of low-income children who are otherwise not exposed to early math and to age-appropriate books. In several now classic studies, the effects of a quality preschool education has far reaching consequences linked to not only reading and math, but to fewer incarcerations, teen pregnancies, and higher employment well into adulthood. As economists have shown, high quality early learning programs save money for society—a finding that has been replicated in different programs across the globe—in the United States, Canada, the U.K., and Mozambique.

Do we need to know more about what constitutes high quality and how to harness this reliably? Absolutely. But science offers evidence-based and evidence-informed advice on what has worked and what should work when brought to scale. We have an obligation to use the best science to serve our struggling children. Recent surveys indicate that a majority of the American public—Republican and Democrat—agrees that all children deserve a chance to reach their fullest potential. Let the science progress and let us use what we know at this point in time to meet the promise that all children should have a fighting chance to succeed. Better to light a candle than curse the darkness.

Announcements of new federal regulations on the use of program-related investments (PRIs) and the launch of a groundbreaking fund in Chicago are the latest signals that impact investing, once a marginal philanthropic and policy tool, is moving into the mainstream. They are also illustrative of two important and complementary paths to institutional change: fast-moving, collaborative local leadership creating innovative new instruments to meet funding demands; federal regulators updating policy to pave the way for change at scale.

Impact investing, referring to “investment strategies that generate financial returns while intentionally improving social and environmental conditions,” provides an important tier of higher-risk capital to fund socially beneficial projects with revenue-generating potential: affordable housing, early childhood and workforce development programs, and social enterprises. It is estimated that there are over $60 billion of impact investments globally and interest is growing—an annual JP Morgan study of impact investors from 2015 reports that the number of impact investing deals increased 13 percent between 2013 and 2014 following a 20 percent increase in the previous year.

Traditionally, foundations have split their impact investments into two pots, one for mission-related investments, designed to generate market-rate returns and maintain and grow the value of the endowment, and the other for program-related investments. PRIs can include loans, guarantees, or equity investments that advance a charitable purpose without expectation of market returns. PRIs are an attractive use of a foundation’s endowment as they allow foundations to recycle their limited grant funds and they count towards a foundation’s charitable distribution requirement of 5 percent of assets. However they have been underutilized to date due to perceived hurdles around their use–in fact among the thousands of foundations in the United States, currently only a few hundred make PRIs.

But this is changing, spurred on by both entrepreneurial local action and federal leadership. On April 21, the White House announced that the U.S. Department of the Treasury and Internal Revenue Service had finalized regulations that are expected to make it easier for private foundations to put their assets to work in innovative ways. While there is still room for improvement, by clarifying rules and signaling mainstream acceptance of impact investing practices these changes should lower the barriers to entry for some institutional investors.

This federal leadership is welcome, but is not by itself enough to meet the growing demand for capital investment in the civic sector. Local innovation, spurred by new philanthropic collaborations, can be transformative. On April 25 in Chicago, the Chicago Community Trust, the Calvert Foundation, and the John D. and Catherine T. MacArthur Foundation launched Benefit Chicago, a $100 million impact investment fund that aims to catalyze a new market by making it easier for individuals and institutions to put their dollars to work locally and help meet the estimated $100-400 million capital needs of the civic sector over the next five years.

A Next Street report found that the potential supply of patient capital from foundations and investors in the Chicago region was more than enough to meet the demand – if there were ways to more easily connect the two. Benefit Chicago addresses this market gap by making it possible for individuals to invest directly through a brokerage or a donor-advised fund and for the many foundations without dedicated impact investing programs to put their endowments to work at scale. All of the transactional details of deal flow, underwriting, and evaluation of results are handled by the intermediary, which should lead to greater efficiency and a significant increase in the size of the impact investing market in Chicago.

In the last few years, a new form of impact investing has made measurement of social return to investments even more concrete. Social impact bonds (SIBs), also known as pay for success (PFS) financing, are a way for private investors (including foundations) to provide capital to support social services with the promise of a return on their investment from a government agency if some agreed-upon social outcomes are achieved. These PFS transactions range from funding to support high-quality early childhood education programs in Chicago to reduction in chronic individual homelessness in the state of Massachusetts. Both the IRS and the Chicago announcements are bound to contribute to the growth of the impact bond market which to date represents a small segment of the impact investing market.

These examples illustrate a rare and wonderful convergence of leadership at the federal and local levels around an idea that makes sense. Beyond simply broadening the number of ways that foundations can deploy funds, growing the pool of impact investments can have a powerful market-making effect. Impact investments unlock other tiers of capital, reducing risk for private investors and making possible new types of deals with longer time horizons and lower expected market return.

In the near future, these federal and local moves together might radically change the philanthropic landscape. If every major city had a fund like Benefit Chicago, and all local investors had a simple on-ramp to impact investing, the pool of capital to help local organizations meet local needs could grow exponentially. This in turn could considerably improve funding for programs—like access to quality social services and affordable housing—that show impact over the long term.

Impact investing can be a bright spot in an otherwise somber fiscal environment if localities keep innovating and higher levels of government evolve to support, incentivize, and smooth its growth. These announcements from Washington and Chicago are examples of the multilevel leadership and creative institutional change we need to ensure that we tap every source of philanthropic capital, to feel some abundance in an era where scarcity is the dominant narrative.

Editor's Note: Alaina Harkness is a fellow at Brookings while on leave from the John D. and Catherine T. MacArthur Foundation, which is a donor to the Brookings Institution. The findings, interpretations and conclusions posted in this piece are solely those of the authors and not determined by any donation.

If you live in a city or suburb, chances are your regional government has tried to get your attention. Did you notice? Many of the issues your regional government is grappling with are actually important to you: the quality of the air you breathe, the quality of public transportation, the availability of green open space, and more.

As important as these issues are, I can almost guarantee that planners from your region have had to work extra hard to convince the press -- not to mention the citizens that live and work there -- to pay attention. The problem is, regional planning is about as exciting to the public as televised bowling and the press don’t seem to find the topic as newsworthy as it should be.

And then there is Paris. In one year, approximately a hundred articles and editorials on Grand Paris, a new regional effort, were printed in the city’s main paper, Le Monde. Grand Paris has also been covered by UK newspapers, such as the Telegraph and The Guardian, and by US newspapers, such as The New York Times and The Christian Science Monitor. In my interviews with Parisian architects, economists, and sociologists, they tell me that it’s not only the press that is paying attention. Ordinary citizens on the streets and cafes are talking about Grand Paris and Paris as a region.

So what happened?

Turns out, President Sarkozy created a political and media frenzy this past year when he announced his intention to design a new Paris that incorporates the suburbs. Looking at his effort from a socio-economic perspective, Sarkozy should be lauded for his effort to reconnect the isolated suburbs to the economic heart of Paris. The 2005 riots by African immigrants in some of these suburbs gave the world a real peek into some of the inequities found here.

His push has been to look past local political boundaries and acknowledge the new Paris that is emerging -- one that is both larger in geography and socio-economically more diverse. In 2007, the metropolitan area produced more than a quarter of France’s GDP, with a Gross Metropolitan Product of $731.3 billion.

Yet, his national government cites that Paris is underdeveloped in important sectors, and that the region’s economic growth has been slowing over the past two decades. Sarkozy also saw this as an opportunity to redefine the region in a post-Kyoto era, where sustainable development is no longer an afterthought.

Sarkozy retained 10 architectural teams with heavy hitters, such as Richard Rodgers, and asked them to “think big” on how to physically redefine the Paris region. In response, they offered lofty ideas for new economic centers, new high density housing hubs, and even a Paris covered with green roofs. For a moment, one could even argue that these teams breathed a new life of possibility for Paris. 

But politics is local—even when the French President is involved. 

As it turns out, Paris already has a plan for their region; one that was formally approved by the local jurisdictions and leaders and is now simply waiting for sign off by Sarkozy’s government. This plan addresses many of the issues Sarkozy argues that the region lacks, such as the need to address the 20 years of underinvestment in public infrastructure.

It also turns out that Grand Paris flies directly in the face of the regional coalition building effort under way. An important number of leaders that comprise the region’s 1,231 jurisdictions are already forging a common agenda on cross cutting issues such as transportation and economic development. These are just two of the several missteps that have made the idea turn sour.

So what seems to have started as a visionary act to physically remake the region has turned into a story on jurisdictional entanglements and hurt egos -- and the press ate it up. Interestingly, this controversy and all the press it generated has actually been an important win for regionalism in the end.

Terrorist attacks with high casualties usually create a sense of national solidarity and patriotic reaction in societies that fall victim to such heinous acts. Not in Turkey, however. Despite a growing number of terrorist attacks by the so-called Islamic State on Turkish soil in the last 12 months, the country remains as polarized as ever under strongman President Recep Tayyip Erdogan.

In fact, for two reasons, jihadist terrorism is exacerbating the division. First, Turkey's domestic polarization already has an Islamist-versus-secularist dimension. Most secularists hold Erdogan responsible for having created domestic political conditions that turn a blind eye to jihadist activities within Turkey.

It must also be said that polarization between secularists and Islamists in Turkey often fails to capture the complexity of Turkish politics, where not all secularists are democrats and not all Islamists are autocrats. In fact, there was a time when Erdogan was hailed as the great democratic reformer against the old secularist establishment under the guardianship of the military.

Yet, in the last five years, the religiosity and conservatism of the ruling Justice and Development Party, also known by its Turkish acronym AKP, on issues ranging from gender equality to public education has fueled the perception of rapid Islamization. Erdogan's anti-Western foreign policy discourse -- and the fact that Ankara has been strongly supportive of the Muslim Brotherhood in the wake of the Arab Spring -- exacerbates the secular-versus-Islamist divide in Turkish society.

Erdogan doesn't fully support the eradication of jihadist groups in Syria.

The days Erdogan represented the great hope of a Turkish model where Islam, secularism, democracy and pro-Western orientation came together are long gone. Despite all this, it is sociologically more accurate to analyze the polarization in Turkey as one between democracy and autocracy rather than one of Islam versus secularism.

The second reason why ISIS terrorism is exacerbating Turkey's polarization is related to foreign policy. A significant segment of Turkish society believes Erdogan's Syria policy has ended up strengthening ISIS. In an attempt to facilitate Syrian President Bashar Assad's overthrow, the AKP turned a blind eye to the flow of foreign volunteers transiting Turkey to join extremist groups in Syria. Until last year, Ankara often allowed Islamists to openly organize and procure equipment and supplies on the Turkish side of the Syria border.

Making things worse is the widely held belief that Turkey's National Intelligence Organization, or MİT, facilitated the supply of weapons to extremist Islamist elements amongst the Syrian rebels. Most of the links were with organizations such as Jabhat al-Nusra, Ahrar al-Sham and Islamist extremists from Syria's Turkish-speaking Turkmen minority.

He is trying to present the PKK as enemy number one.

Turkey's support for Islamist groups in Syria had another rationale in addition to facilitating the downfall of the Assad regime: the emerging Kurdish threat in the north of the country. Syria's Kurds are closely linked with Turkey's Kurdish nemesis, the Kurdistan Workers' Party, or PKK, which has been conducting an insurgency for greater rights for Turkey's Kurds since 1984.

On the one hand, Ankara has hardened its stance against ISIS by opening the airbase at Incirlik in southern Turkey for use by the U.S-led coalition targeting the organization with air strikes. However, Erdogan doesn't fully support the eradication of jihadist groups in Syria. The reason is simple: the Arab and Turkmen Islamist groups are the main bulwark against the expansion of the de facto autonomous Kurdish enclave in northern Syria. The AKP is concerned that the expansion and consolidation of a Kurdish state in Syria would both strengthen the PKK and further fuel similar aspirations amongst Turkey's own Kurds.

Will the most recent ISIS terrorist attack in Istanbul change anything in Turkey's main threat perception? When will the Turkish government finally realize that the jihadist threat in the country needs to be prioritized? If you listen to Erdogan's remarks, you will quickly realize that the real enemy he wants to fight is still the PKK. He tries hard after each ISIS attack to create a "generic" threat of terrorism in which all groups are bundled up together without any clear references to ISIS. He is trying to present the PKK as enemy number one.

Only after a peace process with Kurds will Turkey be able to understand that ISIS is an existential threat to national security.

Under such circumstances, Turkish society will remain deeply polarized between Islamists, secularists, Turkish nationalists and Kurdish rebels. Terrorist attacks, such as the one in Istanbul this week and the one in Ankara in July that killed more than 100 people, will only exacerbate these divisions.

Finally, it is important to note that the Turkish obsession with the Kurdish threat has also created a major impasse in Turkish-American relations in Syria. Unlike Ankara, Washington's top priority in Syria is to defeat ISIS. The fact that U.S. strategy consists of using proxy forces such as Syrian Kurds against ISIS further complicates the situation.

There will be no real progress in Turkey's fight against ISIS unless there is a much more serious strategy to get Ankara to focus on peace with the PKK. Only after a peace process with Kurds will Turkey be able to understand that ISIS is an existential threat to national security.

This piece was originally posted by The Huffington Post.

Technical change is advancing at a breakneck speed while the institutions that govern innovative activity slog forward trying to keep pace. The lag has created a need for reform in the governance of innovation. Reformers who focus primarily on the social benefits of innovation propose to unmoor the innovative forces of the market. Conversely, those who deal mostly with innovation’s social costs wish to constrain it by introducing regulations in advance of technological developments. In this paper, Walter Valdivia and David Guston argue for a different approach to reform the governance of innovation that they call "Responsible Innovation" because it seeks to imbue in the actors of the innovation system a more robust sense of individual and collective responsibility.

Responsible innovation appreciates the power of free markets in organizing innovation and realizing social expectations but is self-conscious about the social costs that markets do not internalize. At the same time, the actions it recommends do not seek to slow down innovation because they do not constrain the set of options for researchers and businesses, they expand it. Responsible innovation is not a doctrine of regulation and much less an instantiation of the precautionary principle. Innovation and society can evolve down several paths and the path forward is to some extent open to collective choice. The aim of a responsible governance of innovation is to make that choice more consonant with democratic principles.

Valdivia and Guston illustrate how responsible innovation can be implemented with three practical initiatives: 

1. Industry: Incorporating values and motivations to innovation decisions that go beyond the profit motive could help industry take on a long-view of those decisions and better manage its own costs associated with liability and regulation, while reducing the social cost of negative externalities. Consequently, responsible innovation should be an integral part of corporate social responsibility, considering that the latter has already become part of the language of business, from the classroom to the board room, and that is effectively shaping, in some quarters, corporate policies and decisions.
2. Universities and National Laboratories: Centers for Responsible Innovation, fashioned after the institutional reform of Internal Review Boards to protect human subjects in research and the Offices of Technology Transfer created to commercialize academic research, could organize existing responsible innovation efforts at university and laboratory campuses. These Centers would formalize the consideration of impacts of research proposals on legal and regulatory frameworks, economic opportunity and inequality, sustainable development and the environment, as well as ethical questions beyond the integrity of research subjects.
3. Federal Government: Federal policy should improve its protections and support of scientific research while providing mechanisms of public accountability for research funding agencies and their contractors. Demanding a return on investment for every research grant is a misguided approach that devalues research and undermines trust between Congress and the scientific community. At the same time, scientific institutions and their advocates should improve public engagement and demonstrate their willingness and ability to be responsive to societal concerns and expectations about the public research agenda. Second, if scientific research is a public good, by definition, markets are not effective commercializing it. New mechanisms to develop practical applications from federal research with little market appeal should be introduced to counterbalance the emphasis the current technology transfer system places on research ready for the market. Third, federal innovation policy needs to be better coordinated with other federal policy, including tax, industrial, and trade policy as well as regulatory regimes. It should also improve coordination with initiatives at the local and state level to improve the outcomes of innovation for each region, state, and metro area.

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Tuesday night, President Obama presented four critical questions about the future of America and I should like to comment on the first two:

1. How to produce equal opportunity, emphasizing economic security for all.
2. In his words, “how do we make technology work for us, and not against us,” particularly to meet the “urgent challenges” of our days.

The challenges the president wishes to meet by means of technological development are climate change and cancer. Let’s consider cancer first. There are plenty of reasons to be skeptical: this is not the first presidential war against cancer, President Nixon tried that once and, alas cancer still has the upper hand. It is ironic that Mr. Obama chose this particular ”moonshot”, because not only are the technical aspects of cancer more uncertain than those of space travel, political support for the project is vastly different and we cannot be sure that even another Democrat in the White House would see this project to fruition. In effect, neither Mr. Obama nor his appointed “mission control”, Vice President Biden, have time in office to see fruits from their efforts on this front.

The second challenge the president wishes to address with technology is problematic beyond technical and economic feasibility (producing renewable energy at competitive prices); curbing carbon emissions has become politically intractable. The president correctly suggested that being leaders in the renewable energy markets of the future makes perfect business sense, even for global warming skeptics. Nevertheless, markets have a political economy, and current energy giants have a material interest in not allowing any changes to the rules that so favor them (including significant federal subsidies). Only when the costs of exploration, extraction, and distribution of fossil fuels rise above those of renewable sources, we can expect policy changes enabling an energy transition to become feasible. When renewables are competitive on a large scale, it is not very likely that their production will be controlled by new industrial players. Such is the political economy of free markets. What’s more, progressives should be wary of standard solutions that would raise the cost of energy (such as a tax on carbon emissions), because low income families are quite sensitive to energy prices; the cost of electricity, gas, and transportation is a far larger proportion of their income than that of their wealthier neighbors.

It’s odd that the president proposes technological solutions to challenges that call for a political solution. Again, in saying this, I’m allowing for the assumption that the technical side is manageable, which is not necessarily a sound assumption to make. The technical and economic complexity of these problems should only compound political hurdles. If I’m skeptical that technological fixes would curb carbon emissions or cure cancer, I am simply vexed by the president’s answer to the question on economic opportunity and security: expand the safety net. It is not that it wouldn’t work; it worked wonders creating prosperity and enlarging the middle-class in the post-World War II period. The problem is that enacting welfare state policies promises to be a hard political battle that, even if won, could result in pyrrhic victories. The greatest achievement of Mr. Obama expanding the safety net was, of course, the Affordable Care Act. But his policy success came at a very high cost: a majority of the voters have questions about the legitimacy of that policy. Even its eponymous name, Obamacare, was coined as a term of derision. It is bizarre that opposition to this reform is often found amidst people who benefit from it. We can blame the systematic campaign against it in every electoral contest, the legal subterfuges brought up to dismantle it (that ACA survived severely bruised), and the AM radio vitriol, but even controlling for the dirty war on healthcare reform, passing such as monumental legislation strictly across party lines has made it the lighting rod of distrust in government.

Progressives are free to try to increase economic opportunity following the welfare state textbook. They will meet the same opposition that Mr. Obama encountered. However, where progressives and conservatives could agree is about increasing opportunities for entrepreneurs, and nothing gives an edge to free enterprise more than innovation. Market competition is the selection mechanism by which an elite of enterprises rises from a legion created any given year; this elite, equipped with a new productive platform, can arm-wrestle markets from the old guard of incumbents. This is not the only way innovation takes place: monopolies and cartels can produce innovation, but with different outcomes. In competitive markets, innovation is the instrument of product differentiation; therefore, it improves quality and cuts consumer prices. In monopolistic markets, innovation also takes place, but generally as a monopolist’s effort to raise barriers to entry and secure high profits. Innovation can take place preserving social protections to the employees of the new industries, or it can undermine job security of its labor force (a concern with the sharing economy). These different modes of innovation are a function of the institutions that govern innovation, including industrial organization, labor and consumer protections.

What the President did not mention is that question two can answer question one: technological development can improve economic opportunity and security, and that is likely to be more politically feasible than addressing the challenges of climate change and cancer. Shaping the institutions that govern innovative activity to favor modes of innovation that benefit a broad base of society is an achievable goal, and could indeed be a standard by which his and future administrations are measured. This is so because these are not the province of the welfare state. They are policy domains that have historically enjoyed bipartisan consensus (such as federal R&D funding, private R&D tax credits) or low contestation (support for small business, tech transfer, loan guarantees).

As Mr. Obama himself suggested, technology can be indeed be made to work for us, all of us.

Editors' Note: How can the U.S. government better counter ISIS propaganda? As the State Department overhauls its counter messaging program, Will McCants and Clint Watts examine what makes ISIS’s online magazine, Dabiq, so successful, and the obstacles to the U.S. government producing a publication that effective. This piece originally appeared on The Daily Beast.

The Obama administration attributes much of ISIS’s success at communicating to its technological savvy, which has elevated the group to a global media and terrorist phenomenon. The president has gone so far as to say that the Paris attackers were a “bunch of killers with good social media.”

Despite the praise heaped on the so-called Islamic State for its cutting-edge propaganda online, one of its most effective products is decidedly low tech. Dabiq, ISIS’s online news magazine, has a small but devoted readership that spans the globe. News of advances on the battlefield excite them—more evidence that God’s kingdom on earth has returned and grows. Stories of fighters inspire them—more models to emulate as they contemplate what role they can play in the divine drama unfolding.

Journalists and analysts read it with almost the same intensity as ISIS fans; the contents of each volume fill newspapers and think-tank reports soon after it’s released. And no wonder: the magazine clearly states the organization’s goals; provides news of its activities that advance those goals; showcases personal stories of the people engaged in the activities; and announces major developments in the organization’s fight against its enemies. It’s a wealth of information presented between two covers every few months.

Can you name a single U.S. government publication or online platform devoted to the anti-ISIS fight that is as informative or as widely-read as Dabiq? Is there anything that tells us what all these air sorties are for? Who’s fighting this fight on the ground? What advances the coalition has made and why we should we care? We couldn’t come up with one either.

That got us to thinking: why can’t the U.S. government publish something like Dabiq online? Lack of imagination isn’t the reason. A news magazine isn’t a very creative idea—Americans perfected the form, which ISIS copied. And if anything, folks inside the government have too many overly-imaginative ideas, most of them involving whiz-bang technology. If you’ve thought it, they’ve thought it. A social media campaign for youth to come up with ways to counter violent extremism? Check. Sock-puppetry? Check.

The only real obstacle impeding the U.S. government is itself. The executive branch’s complicated bureaucracy, legal strictures, and sensitivity to criticism from media and Congress make it tough to publish a Dabiq-style magazine. To see what we mean, let’s look at two of Dabiq’s regular features and see what would happen if the U.S. government tried to mimic them:

Attack Reports: Each issue of Dabiq details its attacks on its enemies. One entry in issue 12 chronicled ISIS’s efforts to capture an airbase in Dayr al-Zawr, Syria. Another described four suicide attacks on the Saudi-led coalition fighting southern Yemen. Pictures accompany most entries, some quite gruesome.

The U.S. government routinely writes these types of reports for internal consumption. But when they’re public—and thus under the scrutiny of Congress that holds the pursestrings and the media that holds the careerstrings—routine gives way to caution and quarreling.

If the president asks his government to write attack reports for the public, the U.S. Department of State and the Department of Defense will quarrel about who will take the lead in writing and publishing them. Then they and the intelligence agencies will quarrel over which reports should be included. Will this report counter the president’s insistence that we have no boots on the ground? Will that report make it look like our Iraqi partners aren’t carrying their weight? Does this one tell the enemy too much about our game plan? Does that picture make U.S. soldiers look too menacing? Will this report later be discredited by the media? Will these battlefield successes be reversed in the future? Does anyone know if another agency has said this or its opposite? Will anyone trust what we’re saying? Shouldn’t someone else be saying this?

When something finally slides off the serpentine conveyor belt months later, it will be a bland blob devoid of detail and relevance. Meanwhile, ISIS will have added twelve more volumes to its shelves.

Biographies of Fighters: Dabiq sometimes profiles its fighters, including the young men on the front lines dying for ISIS’s cause. The fighters tell their stories and explain their reasons for fighting. In issue 8, for example, there is a Q&A with the man who murdered a prominent politician in Tunisia. He explains why he did it and how it advances the greater goals of the Islamic State.

The United States military used to feature these sorts of stories, too—back when the American war in Iraq was a massive, overt affair. Now, that’s not the case. The identities of the Americans fighting in Syria and Iraq are a well-guarded secret because the government does not want them or their families to become targets. The government would also frown on them for nonchalantly talking about killing lest the American public get upset. And then there’s that boots on the ground thing.

Without personal stories, we’re left with drones buzzing in the sky, and buzz-cut officers droning through stale Pentagon briefings. The human cost on both sides is reduced to numbers on slides, which means Americans can’t appreciate the true costs of war and foreigners can’t appreciate the sacrifices Americans are making on their behalf.

Some readers might feel that the U.S. government should be constrained in these ways. They want the government to be sensitive to public opinion and exceedingly cautious when talking about war and violence. If so, they shouldn’t complain when the U.S. government explains its anti-ISIS fight in the vaguest possible terms—that’s the outcome of extreme caution compounded by bureaucratic bargaining on a mind-boggling scale. Others might feel we need to reform the way government does messaging. If so, don’t propose to change the system first. Rather, ask the system to perform a simple task like the one we’ve described and see where it breaks down. Then you’ll know what to fix.

Making a news magazine probably isn’t the high tech solution the government is looking for, at least judging by Friday’s pilgrimage of senior security officials to Silicon Valley and the revamping of State Department’s online counter messaging campaign. But if our byzantine, poll-sensitive government can’t do something so basic, it won’t perform better when it’s tasked with something more complicated no matter how much technology it uses.