Trade & Globalization: The Latest From New America

Japan Rethinks Reform

Next Social Contract — Tue, 25 Aug 2009 20:09:00 -0400

"The Koizumi reforms" was one of the portmanteau concepts most commonly bandied about in Japanese political debates in the summer of 2009 as the parties geared up for the August election. Japan had in fact embarked on its neo-liberal agenda of deregulation and privatization well before the charismatic Mr. Koizumi laconically offered his "no gain without pain" recipes, but it was pushed with most enthusiasm during his premiership from 2001 to 2006.

The American-German Divide

Economic Growth — Wed, 08 Jul 2009 10:01:00 -0400

German Chancellor Angela Merkel has just completed her first official visit to Washington since President Barack Obama took up office. At home Mrs. Merkel has only a few months left to go until an upcoming general election will determine her own political future. This was surely one more reason to send a message of harmony with President Obama back home, as the new U.S. president, much in contrast to his predecessor, enjoys great popularity among German voters. Elections aside, such harmonious gestures can hardly deflect

Workers of the World

Economic Growth — Mon, 15 Jun 2009 20:34:00 -0400

Davos Man, by all accounts, is worried. The severity of the global economic recession has alarmed many of the architects of the global economy. Fears of resurgent economic nationalism are rampant. At the same time, some world leaders - most prominently, French President Nikolas Sarkozy, as well as German Chancellor Angela Merkel - argue for instituting a new regime of regulation for the financial sector that will be global rather than merely national in scale.

Foreign Policy Implications of the Financial Crisis

Economic Growth — Wed, 11 Feb 2009 14:30:00 -0500

Thank you Mr. Chairman and members of this committee for the honor of addressing you today. Mr. Chairman, it is a tribute to your leadership that this roundtable is being convened in recognition of the centrality of economic and financial issues to American foreign policy.

Financing the Productive Economy: The Heartland Development Bank

Economic Growth — Thu, 18 Sep 2008 00:24:00 -0400

Infrastructure and Economic Opportunity
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An Economic Recovery Program for the Post-Bubble Economy

adminn — Tue, 29 Jul 2008 20:23:00 -0400

Sovereign Wealth Funds: Foreign Policy Consequences In an Era Of New Money

Ron Tang — Wed, 11 Jun 2008 03:44:00 -0400

Over the past several months, few issues in international finance have generated as much discussion and comment as have Sovereign Wealth Funds (“SWF”s). This Committee deserves enormous credit for recognizing the potentially significant foreign policy consequences of the rapid accumulation by foreign governments of enormous, growing pools of capital. These large concentrations of government controlled wealth raise complex issues that transcend traditional boundaries between foreign policy, financial markets, international economics and national security.

It is my belief, however, that too much focus on SWFs may, in fact, divert attention from the more fundamental foreign policy issue that these funds have come to represent -- that of the rise of “state capitalism” and the broader use of finance as a tool of foreign policy. These, I believe, are increasingly important 21st century phenomena.

SWFs are simply a particular type of global financial market investor. They should not automatically trigger foreign policy concerns. Too much focus on SWFs as potential tools of political influence fails to take into account that the world’s more than fifty SWFs are very different in terms of the origin of funds, size, structure, investment philosophy and motivation. Other than the commonality of government ownership, they are really not a definable class of either political or financial actors. But it is specifically foreign government ownership and the possibility that these increasingly wealthy foreign governments may use finance as a tool to advance their national interests abroad that makes them of interest as a matter of foreign policy.

I believe the criteria by which many suggest we judge the risks posed by SWFs has resulted in an overemphasis on transparency and disclosure, while ignoring the more subjective, but more valuable, assessment of the political risk that a particular government owner poses. This is dangerous. While increased transparency and disclosure should be encouraged, such an over-emphasis on transparency of SWFs alone may, in fact, lead to unnecessary conflict with allies, which, for a multitude of reasons may fail to meet the requisite level of transparency. Likewise, we may take false comfort from those SWFs that comply with transparency rules, but whose government owners use of a broad array of other financial tools to advance foreign policy interests and which should warrant closer attention...

For the full text of the testimony, please see the PDF attached below.

Smart Globalization Policy Agenda

Economic Growth — Mon, 09 Jun 2008 12:35:00 -0400

Public Comments on the Proposed Regulations On Foreign Investment Into the U.S.

Ron Tang — Mon, 09 Jun 2008 03:38:00 -0400

The Honorable Nova Daly
Deputy Assistant Secretary
U.S. Department of the Treasury

Dear Mr. Daly:

We are pleased to submit these comments with respect to the recently proposed regulations regarding the implementation of the Foreign Investment and National Security Act of 2007 (“FINSA”) amendments to Section 721 of the Defense Production Act of 1950 (“Exon-Florio”).

Background

As a general matter, we believe that U.S. and global economic health are strengthened by the free flow of investment capital and by the increased liquidity that open markets provide. As significant providers of capital, foreign investors have thus far been a positive influence on U.S. markets and for the economy as a whole.

We recognize, however that economic interests and the free flow of capital, while important, must be balanced against national security interests. Following extensive analysis, we believe that the U.S. Congress, Administration and the American people should be comforted that, as regards foreign investment, this country’s national security interests and financial market integrity are well protected and well regulated. We believe that, in determining the potential impact of proposed FINSA regulations, it is important that they are understood in the context of the entirety of the existing laws and regulations that confront a foreign entity or person seeking to invest in the United States. These proposed FINSA regulations represent just one of multiple areas of restriction, oversight and regulation that confront a foreign investor and that attempt to address this balance.

Comment

Under the express language of Section 721, the President is authorized to review “mergers, acquisitions and takeovers... which could result in foreign control”. These regulations must obviously be consistent with this legislative language. The Treasury Department deserves credit for reminding us of the legislative history to Exon-Florio, highlighting that “the Conferees in no way intend to impose barriers to foreign investment”. This is an important point to remember when reviewing the proposed regulations.

It is because of the limitations of the scope and intent of the relevant legislation that we express our concern that some of the proposed regulatory language may result in a deterrent, if not an outright barrier, to legitimate foreign investment -- even if that is not the intention of either the legislation or regulation.

We recognize the advantages to maintaining flexibility on the part of the Committee on Foreign Investment in the United States (“CFIUS “). We nevertheless believe that the corollary of increased flexibility for the U.S. Government is increased uncertainty on the part of the potential foreign investor. This is likely to discourage consideration of potential investment opportunities and may well have a negative effect on foreign investment into the country.

Our concern emanates from a belief that domestic and foreign investors alike generally reward predictability and certainty, while shying away from uncertainty and the unquantifiable risk it presents. This is likely to negatively impact valuations or even the decision to pursue a given investment at all.

The proposed regulations retain significant flexibility (and therefore uncertainty) and avoid providing a specific “roadmap” or comprehensive “safe harbor” guidance to investors. As a result, there is likely to be a good deal of uncertainty as to whether any individual transaction might, inter alia., fall within the definition of a “covered transaction” (Section 800.206) or whether it is structured to afford the investor the necessary level of “control” (Section 800.203) to warrant review by CFIUS.

We believe that uncertainty for potential investors about whether an individual transaction will require CFIUS review is likely to add both cost and risk to a transaction, which may well result in a negative impact on potential investment into the U.S. Investors will be presented with a choice of erring on the side of caution by incurring costs, delays and transaction risks in subjecting their potential investment to CFIUS review and scrutiny, or to assume the risk that a non-reviewed transaction is later determined to have required such approval, and is subject to scrutiny, sanction and disruption after the fact. The alternative is to simply decline to pursue the investment.

Conclusion

It is clear that there is a need for the U.S. Government, including CFIUS, to retain flexibility in all instances where national security interests are at stake. But it is imperative that we recognize that it is not in our national interest to unnecessarily discourage legitimate foreign investment into the United States. We believe that the proposed regulations would be improved if they created less uncertainty, more predictability and included more explicit “safe harbor” provisions to provide guidance to those international investors who seek to invest their capital in this country. The risk is that they may desire to invest, but will decline to do so for fear of how their investment may be treated under these regulations. Any unnecessary deterrent to foreign investment is neither appropriate under Exon-Florio, nor would it increase our national security. On the contrary, it could endanger our economic security, instead.

A PDF version of the letter is available below.

Financing America’s Infrastructure

Ron Tang — Sun, 08 Jun 2008 23:41:00 -0400

America’s basic infrastructure is outdated, worn, and in some cases, failing. Most experts agree that it is inadequate for meeting the demands of the 21st-century global economy. If we are to remain competitive, we must invest in capital assets like roads, ports, bridges, mass transit, water systems, and broadband infrastructure. Many other countries -- both rich and poor -- see investing in infrastructure as imperative for economic survival and success in an increasingly competitive economic environment. But the United States has lagged in infrastructure investment, in both relative and absolute terms. We are spending less than 2 percent of GDP on infrastructure, while China and India are spending 9 percent and 5 percent of GDP, respectively.

If the nation’s infrastructure needs are apparent, so too are the limits on available funds in federal, state, and local government coffers. In this presidential election year, we can see these limits clearly, as the nation’s spending priorities are magnified by electoral politics. Although significant government funding will likely continue to play a key role in the development of public infrastructure, the scale of our funding needs increasingly compels us to look beyond government to close the financing gap. It is for this reason that public support for private sector infrastructure investment is essential.

The good news is that while the federal government struggles to find funds to address its spending needs there is abundant private capital for infrastructure investment. An estimated $400 billion in global funds are available for equity investment in infrastructure, and the funds available to support the debt component amount to several trillion dollars if we include global central bank reserves, global pension funds, and sovereign wealth funds. Rather than focus on these large pools of global capital as a threat, we should view them as an opportunity. So, while we have enormous infrastructure financing needs, there are also enormous pools of capital available for investment. The trick is to bring the two together in a commercial, sustainable, and politically acceptable way.

The U.S. municipal bond markets have functioned well for many years, channeling private capital into financing certain elements of U.S. infrastructure. But current budgetary constraints and other market conditions mean that municipal finance is no longer adequate to meet the challenge of financing the scale of investment needed. And our current financing structures are unable to take advantage of the large pools of capital that are available for infrastructure financing.

We recommend two initiatives to help finance U.S. infrastructure needs beyond direct government grants. First, we suggest the enactment of legislation and the development of regulations to facilitate the origination and issuance of public sector covered bonds in the United States, which will provide a market-based, efficient, and secure mechanism to attract capital for infrastructure investment. Second, along the lines of a proposal by Congresswoman Rosa DeLauro (D-CT) last year, we recommend that the federal government consider the creation of a new, government-owned and -capitalized infrastructure financing entity -- a National Infrastructure Finance Enterprise -- that would pool, package, and sell existing and future public infrastructure securities in the capital markets. The proposed entity would also seek to develop an in-house capability to originate infrastructure loans and would be able to fund itself through the international capital markets. We believe that the entity should be capitalized at a far higher level than proposed in the DeLauro bill. Further, its scope should extend beyond that of the National Infrastructure Bank as currently proposed by Senators Christopher Dodd (D-CT) and Chuck Hagel (R-NE).

Despite the current climate of suspicion and distrust regarding capital markets and financial engineering techniques, we believe that this should not preclude their responsible use in the future to help address infrastructure problems that require the investment and deployment of large amounts of capital.

For the full text of the policy brief, please see the PDF attached below.

Do Sovereign Wealth Funds Make the U.S. Economy Stronger or Pose National Security Risks?

Economic Growth — Wed, 13 Feb 2008 18:00:00 -0500

By way of introduction, I spent most of the last seventeen years working as an investment banker and private equity investor based primarily in London, England. This experience, I believe, gives me a somewhat different perspective on Sovereign Wealth Funds and the role that they play in today’s international capital markets. Currently, I co-direct the Global Strategic Finance Initiative at the New America Foundation. The New America Foundation is a non-profit, post-partisan public policy institute in Washington D.C.

Over the past several months, few issues in international finance have generated as much discussion and comment as have Sovereign Wealth Funds. I commend you and your colleagues for the informed and balanced views that you have expressed and the questions that you have posed on this important subject.

As a general matter, I believe that both the U.S. and global economies are strengthened through open markets. Overall, economic health is bolstered and fortified by the free flow of investment capital and increased liquidity that open markets provide. As significant providers of capital to these markets, Sovereign Wealth Funds have thus far been a positive influence in U.S. and global markets. Most recently, significant capital injections by Sovereign Wealth Funds in several major financial institutions have been a stabilizing force, potentially averting a significant market downturn at a time of high market uncertainty and volatility...

For the full text of Rediker's prepared testimony, please see the PDF attached below.

Back to Basics: A Pro-Growth Public Investment Strategy

Economic Growth — Thu, 29 Nov 2007 16:32:00 -0500

For more than a decade, rising asset prices have driven the economy, benefiting the wealthy but doing relatively little to improve either the economic status of the majority of Americans or the country’s overall competitiveness. Rising stock and housing prices created staggering short-term increases in wealth for some, but did little to bolster the nation’s preeminence in technology, industry, or agriculture.

In order to retool the economy and generate balanced, robust job growth, the government should focus on rebuilding and enhancing the nation’s energy, transportation, and communications infrastructure. Judicious investment in renewing and creating critical public goods will provide opportunities to all income classes and help ensure that employment keeps pace with population growth. We refer to this approach as “back to basics,” are turn to the sort of sensible public agenda that strengthened the economy and promoted societal well-being in the past.

In contrast, over the past 20 years, while returns to capital and the incomes of those in certain elite occupations grew rapidly, wages for lower-income and middle-class workers stagnated. To be sure, most families spend much less on food than they did in 1960, and the number of people earning over $100,000 a year has risen by over 13 percent since 1979. Yet, it has become increasingly difficult for families with two incomes to maintain a “middle-class lifestyle,” and single-earner households find it hard to keep pace with the rising costs of education, housing, and health insurance.

Almost all of the recent gains in wealth have been achieved by the relatively small number of Americans with incomes more than seven times the poverty level. In the meantime, middle-tier educated and skilled workers have been losing ground. This striking disparity is evident in income and wealth data, which show that the top 1 percent of U.S. house holds now accounts for as much of the nation’s total wealth as it did in 1913, when monopolistic business practices were the order of the day. The net worth of the top 1 percent is now greater than that of the bottom 90 percent of the nation’s households combined.6 Nearly three-quarters of all income gains from 1979 to 2000 were realized by the top 20 percent of taxpayers.

In view of these trends, it is not surprising that Americans are increasingly pessimistic about the prospects for upward mobility. For the first time in our nation’s history, two thirds of all Americans think life will not be better for their children.

A large measure of this national unease is related to our failure to invest in and maintain critical infrastructure. In the past, the belief that it was possible to better one’s economic condition by working hard was reinforced by the public and private investment in transportation systems, scientific research, and technological development that fueled economic advancement. At present, however, Americans see government as being incapable of providing up-to-date transportation systems, reliable water supplies, or even basic education. The Katrina disaster, which led to the near-destruction of New Orleans and was largely caused by local, state, and federal failures to build and repair infrastructure, crystallized these concerns.

For the full report, please see the attached PDF file below.

Foreign Investment and Sovereign Wealth Funds

Economic Growth — Wed, 03 Oct 2007 11:02:00 -0400

The amount of money now held by governments around the world both in reserves and through sovereign wealth funds (“SWFs”) represents the largest concentration of investment capital the world has ever known. Their sheer size and expected rate of growth raise important issues regarding both the origin of this wealth and how it is to be invested. The origin of these funds rests on two main factors: the global imbalances between debtor nations (like the U.S.) and surplus nations (like China), and the rise of state-owned commodity (oil) funds. As for their uses, these countries have built up sums that dwarf those held by all the hedge funds in the world combined and are set to grow at an unprecedented pace. It is incumbent upon policymakers to not wait, but rather to address this issue now, and to determine what opportunities and threats they present. We should be assessing how best to influence how these funds are utilized and invested. The issues raised involve political, economic, and security considerations.

Background

Global Central Bank reserves today total approximately $5.5 trillion. In addition to these reserves, SWFs are today estimated to have between $2.5 - 3 trillion under management.

In the past several months, the Governments of China, Japan, and Russia, among others, have announced the creation of new SWFs with significant re-allocation of present and future reserves to these funds. Independent of reserves, SWFs are conservatively expected to grow to $12 trillion by 2015 -- a figure that will roughly equal the entire U.S. GDP.

It is the scale, as well as the nature of the funds’ government ownership, that compels analysis of these enormous pools of capital and whether SWFs require new and different standards than those in place today. Existing investments by SWFs, while large by any other standard, have not fundamentally changed the character of the overall market -- but the ownership and size of these new funds requires a fresh look.

For the full paper, please see the attached PDF below.

No Worker Left Behind

Workforce and Family — Fri, 15 Jun 2007 07:00:00 -0400

Why aren’t Republican presidential candidates talking more about job training?

Wherever they go on the campaign trail, candidates are asked about off-shoring, layoffs, and wages. Despite the strong U.S. economy and near full employment, middle class anxiety is real.

Hardly a day goes by that some Democratic candidate doesn’t speak about the struggles of the middle class family in the age of globalization.
Democrats campaigned last November on responding to working family angst through a minimum wage increase. Republicans often respond that they would help at-risk workers through job skills, yet they lack specifics.

If they believe skills are the answer, it’s time for Republican candidates to offer bold new job skill plans.

Democrats smell blood on the issue of middle class economic anxiety. Senator Charles Schumer (D-NY), head of the Democratic Senatorial Campaign Committee, writes in his new book, “(Americans) are unsure of their footing in the economy.... They feel they are alone to navigate the contours of change and that government isn’t really helping them where they need it.”

For the complete issue brief, please see the attached PDF version below.

Realizing America's Economic Potential

adminn — Mon, 30 Oct 2006 21:37:00 -0500

Over the past decade and half, two pivotal developments have come together to create the conditions for what could be a new golden era of faster economic growth and rising prosperity. One development involves the technological advancements and other changes associated with the new economy, which have substantially increased U.S. and world productivity growth. The bursting of the tech bubble in 2000 may have put an end to the hype surrounding the new economy. But it did not undo the three productivity-enhancing revolutions of the new economy -- the information technology revolution, the revolution in business and finance, and the efficiency revolution in materials and energy -- that continue to deliver productivity growth well above that of the 1973-95 period. Indeed, the greatest productivity gains from these revolutions may yet lie ahead, as workers and firms fully gain competence in the use of these new technologies, and as more efficient business practices become more widely spread.

The other pivotal development relates to the integration of China, India, and the former Soviet Union into the world economy. The inclusion of these three populous regions into the global economy has created what economists call positive supply- side shocks, resulting in surpluses in labor, capital, and productive capacity. The most obvious impact of China, India, and the former Soviet Union has been on the world’s labor market. Their entry into the world economy has in effect doubled the global labor force in the course of a decade, raising the return on capital and dampening wages and inflation. Capital has also become plentiful because of the high-savings propensities of China and other Asian economies. In fact, these high-saving societies of Asia are producing more savings than the world can absorb. This glut of world savings, together with the increasing globalization of financial markets, has predictably driven down the cost of capital and has helped keep interest rates low worldwide. Together, the productivity-enhancing revolutions associated with the new economy and the positive supply-side shocks brought about by the integration of China, India, and the former Soviet Union into the world economy have created what is called here the new abundant economy. The new abundant economy contrasts sharply with the supply-side constrained economy of the 1973-95 period, which diminished our economic growth expectations and radically altered the prevailing policy framework, ushering in an era of supply-side policy measures aimed at taming inflation, cutting taxes, curbing government spending, and deregulating markets. By contrast, the new abundant economy has created the conditions for more rapid economic growth and rising living standards without greater price and wage inflation, making possible once again a full-employment economy that delivers great prosperity to the overwhelming majority of Americans.

But as we have seen with the tech bubble of the late 1990s and with widening income and wealth inequality, the new abundant economy can bring with it a new set of challenges, for which many of the supply-side policies of the 1980s and 1990s are inappropriate. In a world of rapidly rising productivity growth and excess labor and capital, asset bubbles and deflation become greater worries than inflation; maintaining demand and wage income becomes a more serious concern than stimulating supply; funding public investment becomes more important than lowering the cost of capital for private investment; and ensuring the future strength of one’s productive economy becomes a greater priority than breaking down more trade barriers. If not properly managed, these problems can be as serious as those from which the U.S. and world economies suffered from the mid-1970s to the mid-1990s. In fact, the U.S. and world economies have significantly underperformed their potential over the past decade in part because governments have pursued the wrong policies and have had the wrong growth agenda. In spite of rapid productivity growth and abundant labor and capital, U.S. and world economic growth over the past ten years is less than it was in the 1950s and 1960s and is only on par with the economically troubled 1970s. Moreover, a more possible serious challenge lies ahead because the current pattern of economic growth -- growth that is overly dependent upon personal consumption in the United States fueled by a housing boom and debt creation -- is not sustainable.

This report shows how our economic thinking must change to meet the challenges associated with the otherwise favorable economic conditions of this new era. U.S. policymakers face both a macroeconomic challenge related to putting the U.S. and world economies on a more optimal growth path and a microeconomic challenge of strengthening America’s productive economy. With regard to the first challenge, the report argues that the biggest near-term constraints on economic growth are not America’s budget and current account deficits, as conventional wisdom holds. Rather, the constraints involve the lingering hangover from the tech and housing bubbles, which threatens both investment and consumption, and inadequate world demand, caused by suppressed consumption abroad and depressed wage growth at home.

The report therefore calls for a public-investment-led transition strategy in the United States to stimulate both investment and demand, and a global Keynesian program abroad to increase consumption in newly industrialized countries like China, as the best way to avert the next recession and put the U.S. economy on a more sustainable path to realizing its full growth potential. The report also lays out an agenda for strengthening America’s productive economy and ensuring future prosperity. The U.S. economy has many inherent strengths, but it also has some potentially debilitating weaknesses that could compromise future economic growth. The report recommends a five-part program entailing:

increased investment in both America’s knowledge capital and its physical infrastructure;
a program to accelerate new energy development and greater energy efficiency;
a strategy for on-shoring more jobs and investment in America’s tradable goods sector;
policies to promote an efficiency revolution in health care and education; and
a wage and asset-based incomes policy to ensure that more Americans share the fruits of the new abundant economy.

The full report is available below in PDF format.

America's Promise in A New Century

adminn — Fri, 06 Aug 2004 00:00:00 -0400

FROM: Karen Kornbluh
SUBJECT: America's Promise in A New Century
DATE: August 6, 2004

Americans are concerned as they have not been since 1992 about the future of their way of life in a global economy. They sense that their kids may be part of the first generation that does worse than its parents and they don't understand how this can be so when they are "working hard and playing by the rules."

President Bush has embraced the framework popularized by New America to explain changes in both the economy and the family. The diagnosis is right but, unfortunately, the prescription -- the Ownership Society agenda -- would make the patient worse. It would help only the dwindling number of those thriving in a global economy and increase economic insecurity for most families:

These are exciting times for our country. It's a time of amazing change. The economy is changing. The world is changing. In our parents' generation, moms usually stayed home while fathers worked for one company until retirement. The company provided health care, and training, and a pension. Many of the government programs and most basic systems, from health care to Social Security to the tax code were based, and still are based on those old assumptions.

This is a different world. Workers change jobs and careers frequently. Most of these jobs are created by small businesses. They can't afford to provide health care or pensions or training. Parents are working; they're not at home. We need to make sure government changes with the times, and to work for America's working families. You see, American workers need to own their own health care accounts. They need to own and manage their own pensions and retirement systems. They need more ownership so they can take the benefits from job to job. They need flex-time so they can work out of the home.

The right response to the changing family and economy is not to undermine the social contract further by asking families to "own" more of the risk inherent in the global economy, as the Ownership agenda proposes to do. Nor is it to appear to be patching the outdated social contract. It is to reform the social contract so it works to make families economically secure in the 21st Century economy.

The Narrative: Renewing America's Promise in A New Century

Over the last three decades, American workers became "global free agents," competing with workers around the world for wages and benefits, changing jobs every five years on average and, in one out of four cases, working in nonstandard (temp, part-time, free lance) jobs. So, earnings stagnated and health insurance and pension benefits shrank. At the same time, the costs of middle class life rose.

The result has been parents working more and more hours to pay the bills. The new "juggler parents" are stretched for time to care for kids and participate in community activities. A forthcoming Economic Policy Institute-New America paper reports that middle-class family income would have virtually held steady over the last 25 years if these families had not increased the number of hours they worked dramatically, in a radical departure from post-war trends. Families in the bottom two income quintiles would actually have fallen.

Stephen Roach of Morgan Stanley explained in a recent NY Times op ed that global "wage arbitrage" is finally upon us and we must act. He is only half right. We face global wage and safety net arbitrage. Alan Greenspan sees clouds on the horizon. He testified in June that the jobs problem "can be and must be addressed, because I think that it's creating an increasing concentration of incomes in this country and, for a democratic society, that is not a very desirable thing to allow to happen."

A poll conducted by pollsters Bill McInturff and Anna Greenberg for the New America Foundation found likely voters feel kids aren't being properly cared because parents are working harder to make ends meet.

Americans are eager to embrace the many advantages -- flexibility, autonomy and potential for upside -- of the new century. However, antiquated policies undermine their ability to succeed. The goals of our education, social insurance and workplace policies, created to give our grandparents the tools to build economic security and opportunity, are as critical as ever. The policies should not be abandoned. They must be reformed for the new era.

The candidate who convinces them he understands their plight and is best able to lead them into a brighter future has a great advantage. In 1992, Bill Clinton put forward a comprehensive agenda to create high paying jobs in a global economy. Married women voted for Clinton in 1992. In 1996 he won the support of married women and men. Arnold Schwartzenegger used the struggles of working families to introduce himself to the voters of California. He proposed an after-school initiative to address the problem of latch-key kids.

The New Agenda for America's Families

Reforms are needed to restore America's promise and address the global wage and safety net arbitrage. The New Agenda would include a number of signature New America Foundation proposals as well as new ideas for redesigning the safety net for the 21st Century.

Redesigning the Safety Net

Citizen-based Health Insurance, subsidized so that no one pays more than a fixed percentage of income.
Progressive Retirement (USA) Accounts.
International forum on safeguarding the middle class in developed countries and growing the middle class in developing countries.
Parent Accounts. Tax-preferred, refundable accounts for parents to save for the costs of raising children OR adopt the Clark tax reform proposal to combine the various child tax credits.
Work-Life. Expand FMLA, work with business to create more flexible workplaces by creating a new award and work with small businesses on adopting best practices.

Growing Wages

Learning Society. Put new science and math teachers in our schools. Devise a blueprint for a New Learning Network of the highest quality learning, appropriate to the needs of local employment opportunities, in every community.
National Economic Opportunity Council (combining NEC and OSTP) focused on creating quality jobs in a global economy through innovation, investment and infrastructure.
Entrepreneurial Capitalism Bank. Replace SBA with a new bank to spur small business creation and innovation out of the disparate small business funding programs.

Sustainable Enterprise

Economic Growth — Fri, 28 Feb 2003 00:00:00 -0500

The fundamental challenge for human institutions in the 21st century is to create and maintain a sustainable combination of economic, social, and natural environmental conditions in an increasingly global and commercial civilization.

This challenge is not now being met. The world economy so far is failing to meet even the basic needs of a large fraction of the human population, or to protect its natural resources and the ecosystems that produce them, even as it creates unprecedented wealth and amenities for a few. The reasons for these failures lie in both economic and political institutions.

An emerging literature in strategic business management proposes that the most promising solutions to these problems lie in entrepreneurial business innovation. The Sustainable Enterprise Model (SEM) asserts that businesses can create greater value, even for themselves, by a more balanced optimization of social, environmental and financial considerations than by a narrowly economic emphasis alone. This model raises important questions, challenges, and potentially opportunities for the international finance and investment community. If the world is to become more sustainable, financial and investment institutions must themselves become "sustainable enterprises."

This paper summarizes the Sustainable Enterprise Model and its implications, highlights unresolved issues and questions about it, and poses a series of recommendations for further discussion and action by the finance and investment community.

For the complete document, please see the attached PDF version.

The Role of Regulation in Mitigating the Impact of International Capital Flows on the Environment

adminn — Wed, 23 Oct 2002 00:00:00 -0400

The large scale movement of capital in the form of financial flows and foreign direct investment is a relatively recent phenomenon despite the fact that international trade has been an important part of commerce throughout the industrial era. Such flows have constituted a major and perhaps defining part of the process of globalization over the past two decades. At the same time, the environmental problems created by industrialization have also grown to have global range, particularly as they are replicated around the world, largely as a result of international capital and technology flows. What were once local problems of resource depletion, air pollution, etc. have grown to include truly global problems such as biodiversity loss and global warming. The impact of international trade on the environment has received significant attention, but the impact of international financial flows has received less. This paper seeks to provide a framework for thinking about the relationship between international investment and the environment, and for identifying areas which may require new types of regulation. This framework is based on a dynamic modeling perspective, where the global economy is seen as a series of nested and interacting systems, governed by dynamic feedback loops.

For the complete document, please see the atttached PDF version.

International Financial Institutions, Environmental Standards and Foreign Direct Investment

Economic Growth — Tue, 15 Oct 2002 00:00:00 -0400

The ongoing debate over the environmental impacts of private foreign direct investment (FDI) has focused primarily on the role of multinational corporations (MNCs) in implementing diverse standards in countries at varying levels of social, economic and political development. Since the international debt crisis of the late 1980s foreign investment flows have become increasingly important, financing current account deficits as well as sustaining economic development. The flow of FDI to developing countries and emerging markets now exceeds official development assistance (ODA) by a factor of five, (Jeucken p. 50) peaking at $220 billion in 1999. Therefore, the environmental impacts of FDI deserve at least as much attention as has been devoted to the impacts associated with structural and project lending by the International Monetary Fund, the World Bank and other, mutilateral and bilateral forms of ODA.

The “race to the bottom” hypothesis, played out in discussions about the appropriate relationship between trade and environmental protection has its counterpart in the literature on FDI. While the relationship between trade and environment is heavily focused on by official actors, nation-states, regional trading blocs and global regulatory institutions such as the WTO, the environment-FDI debate focuses primarily on non-state actors, including MNCs, NGOs and the international financial institutions (IFIs) that facilitate flows of FDI to developing and emerging markets.

The paper proposes to explore the role of IFIs in FDI and the implications their role has for the relationship between investment and the environment. For the complete document, please see the attached PDF version.

Untangling the Knots of Protectionism

Economic Growth — Sun, 01 Sep 2002 00:00:00 -0400

In the months leading up to the votes on Trade Promotion Authority (TPA), President Bush had to buy off powerful domestic constituencies with tariffs on steel and, more recently, increased subsidies for agriculture. Now that he has TPA, the President has wisely reversed course and proposed a far-reaching plan to use the Doha round of trade talks to eliminate the majority of world-government support for agricultural products by 2010. The agricultural proposal, in conjunction with TPA, will hopefully enable the administration to undo years of European Union and U.S. protectionist policy. This will provide benefits to taxpayers, consumers, and developing countries trying to build credible agricultural export markets.

The Doha agricultural proposal, which includes the scrapping of agricultural export subsidies over the next five years and cutting global farm tariffs to fifteen percent by 2010, is the administration's answer to the European Union's mid-term review of the Common Agricultural Policy (CAP) that recommended a shift away from protectionist policies in Europe.

The TPA (or "fast-track" as it is more commonly known) will allow President Bush to aggressively negotiate the deal with greater credibility than previously anticipated, in the knowledge that he will not have to fear drastic changes from Congress on any agreement.

The agriculture proposal was a surprising turn-around from the farm bill the president signed two months ago. That bill -- reminiscent of the more lavish indulgences of European socialism -- increases agricultural spending by more than $80 billion in the next ten years.

President Bush cannot continue to be swayed by agricultural interest groups. Comprehensive agricultural trade liberalization, such as that being proposed, is essential for four reasons.

One, agricultural policy in the developed world has, for the most part, been anti-trade and anti-development. The worst culprits are the European Union and the United States, who for more than half a century have increased spending for their farmers under the guise of income stability for small farmers and the preservation of the rural way of life. This has not only caused a loss of credibility of the industrialized world in the eyes of developing countries -- countries that want to enable their own development through the creation of sustainable agricultural export markets -- but also undermines the developing world's belief in the free trade system in general.

Two, the notion of protectionism is distinctly anti-consumer. Consumers ultimately pay for protectionism twice: through increases in taxation to pay for protectionist measures such as subsidies and through inflated prices of goods made from the protected products. For instance, it is estimated that the average American taxpayer will pay more than $600 for the increases in the farm bill alone.

Three, agricultural subsidies constitute wasteful and indulgent government spending, especially when there are more pressing spending needs, such as education, healthcare, and more recently homeland defense. The EU can also ill-afford its agricultural spending excesses as it attempts to expand. Extravagant, protectionist spending will be almost impossible to justify. European taxpayers will already be paying heavily in the short run for the poorer newcomers and will thus expect Eurocrats to tighten their purse strings in other places.

Four, protectionist agricultural policies in the United States do not contribute to a positive rural redevelopment policy and preserve a dying way of life. As of 2001, seven percent of farmers were producing eighty percent of farm goods. Farming assistance is going, in the most part, to wealthy corporate farmers and not to the more than two million small farms in the United States. Over the past five years, it is estimated that the wealthiest ten percent of farmers received an average of almost $300,000, whereas the other ninety percent only received an average of $1,100 each.

In light of its recent poor performance in trade matters, particularly the pork-laden farm bill and steel tariffs, the administration must not use the Doha agricultural proposal as mere rhetoric. Bush must lead the world community, by example, toward freer and fairer agricultural trade policy. Congress was right to give the president TPA, and he must not disappoint the American people with imprudent trade policy.

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