Thursday, January 15, 2009

“Green Jobs” Stimulus Package Summary, Text, and Industry Views

“Green Jobs” Stimulus Package Summary and Text. By Institute for Energy Research
Today Congressional Democrats unveiled $825 billion in spending and tax cuts intended to stimulate the economy.
January 15, 2009

Rep. Obey’s Summary of the Bill
Text of the “Green Jobs” Stimulus Bill
Discussion Draft of the Bill Report

The bill is partially based on studies which purport to show large numbers of jobs created by government spending on “green technology” such as energy efficiency and renewable energy projects. IER recently released a study demonstrating that the campaign to sell government ‘green jobs’ as a cure for our economic ills relies on misguided assumptions, unsound data, and false hope.

Among the key findings of IER’s Green Jobs: Fact or Fiction?:

  • “[Obama’s green jobs plan] would likely increase consumer energy costs and the costs of a wide array of energy-intensive goods, slow GDP growth and ironically may yield no net job gains. More likely, [it] would result in net job losses.”
  • “Although each report [in defense of ‘green jobs’] is unique, a common characteristic is that they all rest on incomplete economic analysis, and consequently greatly overstate the net benefits of their policy recommendations.”
  • “[The Center for American Progress] estimates that this “fiscal stimulus” will result in the creation of two million jobs. Yet the CAP methodology treats the $100 billion as manna from heaven; it does not consider the direct and indirect adverse effects (including job destruction) of imposing higher costs on a wide array of energy-intensive industries and thereby raising prices for consumers.”
  • “The government doesn’t create wealth simply by taking $100 billion from one group of firms and handing it over to a different group …”
  • “After broadly defining the renewable industry, the Council of Mayors study goes on to paint a picture of expanding markets that can only grow further. In reality, with the single exception of wind, U.S. power production from renewables has stagnated for the past fifteen years.”

Progressive Policy Institute: Memos to the New President

Memos to the New President, by Progressive Policy Institute
January 15, 2009

Mr. President, your election was a testament to our country's amazing capacities for self-correction and reinvention. Those national qualities have manifested themselves not a moment too soon. With our country mired in war and a worsening economic crisis, Americans across the political spectrum sense that hyperpartisan grandstanding is a luxury they can no longer afford. They seek a new era of competence and comity, in which our people reach across old divides to find new solutions to the urgent challenges of our time.

The purpose of this book is to offer you and our fellow citizens some constructive ideas on how we can meet those challenges. It is a collection of short policy pieces the Progressive Policy Institute (PPI) published as Memos to the Next President starting last September, before we could be sure who our next president would be. Our work continued through the transition, and this book -- with the updated title of Memos to the New President -- collects all 25 memos in a volume that we respectfully commend to your attention.

Taken together, these ideas constitute a new progressive agenda, one that we believe is entirely consistent with your vision for transcending outdated boundaries, forging new coalitions, and governing in a spirit of radical pragmatism.

This is a "big ideas" book in the tradition of PPI's Mandate for Change (1992) and Building the Bridge (1996). Those earlier volumes spelled out the policy innovations that defined President Clinton's modernizing agenda during the 1990s. This new collection features the creative contributions of a wide array of analysts and policy experts. It reflects PPI's belief in the power of ideas to overcome the forces of inertia, stasis, and partisan orthodoxy that hold our country back.

We do not seek merely to advance ideas for the sake of novelty. This book rests on the same core tenets that have always undergirded PPI's work: equal opportunity for all -- and special privilege for none; a social compact based on mutual responsibility and civic reciprocity; and the vigorous defense of individual liberty at home and abroad.

We see the progressive tradition in American politics as the continual struggle to apply and modify such classically liberal ideals in the light of changing economic and social conditions. At a time when uncertainty haunts our financial markets, our Main Streets, and the international landscape, the need for modernized approaches to policy and governance is as great as it has ever been. You have called for transformative change, and this book is intended as a source of ideas for making it happen.

Memos to the New President is organized into six main parts, each of which pertains to a broad challenge facing your administration and our country. We start where any serious project for fundamental change must start -- a candid assessment of our broken political system. Americans' confidence in Washington has reached low ebb. Restoring trust in the basic integrity and problem-solving capacity of our federal government is the indispensible prerequisite for sweeping reform. In his memo, Ed Kilgore offers creative proposals for reducing the power of special interests in Washington and restoring genuine political competition in congressional elections.

Part II of the book grapples with what may be the most urgent substantive challenge you face: saving America's free-enterprise system from the greed and myopia lately exhibited by far too many financiers and corporate leaders. You will find here sage advice from Gene Ludwig, former Comptroller of the Currency, for building a new regulatory framework to stabilize U.S. financial markets. Other memos offer novel ideas for stimulating our ailing economy; rebuilding the nation's aging transportation infrastructure; overhauling our regressive tax code; and rebalancing the intergenerational compact embedded in Social Security. All of these prescriptions share an emphasis on reviving a dynamic, entrepreneurial economy that can once again deliver broad-based national prosperity.

While addressing the concerns of the middle class must be central to our economic policy, we must also redouble our efforts to help low-income Americans enter the middle class in the first place. Part III focuses on reviving our nation's promise of upward social mobility for all. This section of the book offers a set of highly specific prescriptions for closing persistent gaps in educational attainment. It also explores ideas for bringing low-income men into the workforce, and for ending the scourge of childhood hunger in the wealthiest nation on Earth.

Part IV presents strategies for building a clean-energy economy and restoring America's leadership in green technology innovation. By now, there is a broad consensus on the need for energy policies that can heal our natural environment, rebuild our job base, and wean us from dependence on foreign oil. These memos offer specific plans for accelerating development of clean cars; unleashing the economic benefits of energy efficiency; contending with the problem of nuclear waste; and creating a new international body to foster cooperation on climate change and other threats to the global commons.

Part V addresses a longstanding challenge for progressives: spelling out clear, credible principles on national security and foreign policy. Sen. Evan Bayh proposes a Nuclear Fuel Bank to curb the spread of nuclear materials and technology. Other memos call for spurring economic growth and opportunity in the Greater Middle East; modernizing the concept of collective security; reforming the military acquisitions process; striking a better balance between military and civilian power; and establishing a legitimate legal framework for trying terrorist suspects.

Finally, in Part VI, we delve into one of our most vexing domestic challenges: a health-care system that absorbs about one-seventh of our national wealth; imposes onerous financial burdens on the public and private sectors; and leaves more than 45 million of us uninsured. These memos elaborate a broad argument for reducing costs by raising quality. They affirm PPI's longstanding support for covering all Americans, while suggesting ways that reform can pay for itself. The book ends with an in-depth analysis by David Osborne of how the nation's governors can join forces with you and the federal government to break the back of medical inflation -- an essential step toward creating a distinctly American approach to universal health care.

We would like to conclude by thanking our PPI colleagues, particularly Debbie Boylan, Beth Kennedy, Tyler Stone, Maria Bello, Alice McKeon, and Moira Vahey. We also thank the writers who contributed to this collection. These memos are offered in the hope that they may reinforce the call for transformative change at a time when our country faces daunting challenges. The last election was an expression of this nation's keen desire to meet those challenges in a new spirit -- a constructive spirit that transcends the tired ideological distinctions of the past, and seeks to renew the finest elements of our national character.

The book is downloadable here

U.S.-UAE Agreement for Peaceful Nuclear Cooperation (123 Agreement)

U.S.-UAE Agreement for Peaceful Nuclear Cooperation (123 Agreement)
Media Note
US State Dept, Office of the Spokesman
Washington, DC, January 15, 2009

Secretary of State Condoleezza Rice and United Arab Emirates (UAE) Foreign Minister Abdullah bin Zayed today signed an Agreement for Cooperation Between the Government of the United States of America and the Government of the United Arab Emirates Concerning Peaceful Uses of Nuclear Energy. Once it enters into force, the Agreement (also called a 123 Agreement after the relevant section of the U.S. Atomic Energy Act) will establish the legal framework for the United States to engage in civil nuclear cooperation with the UAE under agreed nonproliferation conditions and controls.

The Agreement will not only establish a firm foundation for mutually beneficial cooperation in civil nuclear energy, but also has the potential to usher in an era of responsible nuclear energy development throughout the Middle East. The UAE’s approach to development of civil nuclear energy stands in direct contrast to Iran’s pursuit of nuclear capabilities incompatible with IAEA and UN Security Council resolutions. The United States is pleased that this Agreement reflects the UAE’s renunciation of any intention to develop domestic enrichment and reprocessing capabilities in favor of long-term commitments to obtain supply of nuclear fuel from reliable and responsible international suppliers. In light of the importance to the United States of the UAE’s commitment not to engage in enrichment or reprocessing within its borders, activities contrary to that commitment will be grounds for the United States to terminate the Agreement. This Agreement can serve as a model for other countries in the region in pursuing responsible civil nuclear energy development undertaken in full conformity with nonproliferation commitments and obligations.

The UAE is an active partner in a range of nonproliferation initiatives, including the Proliferation Security Initiative, the Global Initiative to Combat Nuclear Terrorism and DOE’s Megaports Initiative. The United States also welcomes the support the UAE has provided to establishing an International Atomic Energy Agency international fuel bank through its contribution of $10 million and urges other States to make similar commitments. By signing this Agreement today, the United States and the UAE have taken an important step in building a long and fruitful partnership to enhance nonproliferation and energy security in the region. For more information on the U.S.-UAE 123 Agreement, please visit the State Department’s website:


Does the Doctor Need a Boss?

Does the Doctor Need a Boss?, by Arnold Kling and Michael F. Cannon
Cato, January 13, 2009

Briefing Paper no. 111

The traditional model of medical delivery, in which the doctor is trained, respected, and compensated as an independent craftsman, is anachronistic. When a patient has multiple ailments, there is no longer a simple doctor-patient or doctor-patient-specialist relationship. Instead, there are multiple specialists who have an impact on the patient, each with a set of interdependencies and difficult coordination issues that increase exponentially with the number of ailments involved.

Patients with multiple diagnoses require someone who can organize the efforts of multiple medical professionals. It is not unreasonable to imagine that delivering health care effectively, particularly for complex patients, could require a corporate model of organization.

At least two forces stand in the way of robust competition from corporate health care providers. First is the regime of third-party fee-for-service payment, which is heavily entrenched by Medicare, Medicaid, and the regulatory and tax distortions that tilt private health insurance in the same direction. Consumers should control the money that purchases their health insurance, and should be free to choose their insurer and health care providers.

Second, state licensing regulations make it difficult for corporations to design optimal work flows for health care delivery. Under institutional licensing, regulators would instead evaluate how well a corporation treats its patients, not the credentials of the corporation's employees. Alternatively, states could recognize clinician licenses issued by other states. That would let corporations operate in multiple states under a single set of rules and put pressure on states to eliminate unnecessarily restrictive regulations.

[Download full paper here]

"Reversing the Decline: An Agenda for U.S.-Russian Relations in 2009"

Reversing the Decline: An Agenda for U.S.-Russian Relations in 2009. By Steven Pifer
The Brookings Institution, Jan 2009

As the Bush administration comes to a close, U.S.-Russian relations have fallen to their lowest level since the Soviet Union collapsed in 1991. Unresolved and problematic issues dominate the agenda, little confidence exists between Washington and Moscow, and the shrill tone of official rhetoric approaches that of the Cold War.

This state of affairs is a far cry from what Presidents George Bush and Vladimir Putin envisaged in 2002, when they defined a framework for a qualitatively different U.S.-Russian relationship. Both sides bear responsibility for the failure to realize that vision.

As President Barack Obama takes charge of the Oval Office, he confronts a wary and assertive Russia among the many foreign policy challenges in his inbox. Moscow desires to reclaim “great power” status, an ambition fueled over the past five years by hundreds of billions of dollars in energy revenues. Its desires are colored by a bitter perception that the West took advantage of Russian weakness in the 1990s and that Washington has failed to take serious account of Moscow’s interests. Building a more sustainable relationship with Russia will not prove easy.

Securing Russian help in controlling nuclear materials, pressuring Iran not to acquire nuclear arms, and countering international terrorism is very much in the U.S. interest. Getting Russia right, however, will require a carefully considered, focused and sustained Russia policy, not just treating Russia as a function of the U.S. approach to other issues. Washington should seek to put U.S.-Russian relations on a more solid footing.

Building areas of cooperation not only can advance specific U.S. goals, it can reduce frictions on other issues. Further, the more there is to the bilateral relationship, the greater the interest it will hold for Russia, and the greater the leverage Washington will have with Moscow. The thin state of U.S.-Russian relations in August gave the Kremlin little reason for pause before answering the Georgian military incursion into South Ossetia with a large and disproportionate response. Washington should strive to build a relationship so that, should a similar crisis arise in the future, Russian concern about damaging relations with the United States would exercise a restraining influence.

The Obama administration should aim for a balance in its approach toward Russia, making clear the unacceptability of Russian actions that violate international norms while encouraging cooperation and integration that will make Russia a stakeholder in existing international institutions. The new administration can offer initiatives in several areas to test Moscow’s readiness for cooperation on issues of interest to Washington:
  • A revived nuclear arms control dialogue could lower the number of nuclear weapons capable of striking the United States while exerting a positive influence on the broader relationship. The Obama administration should propose reducing each side to no more than 1,000 strategic nuclear warheads, with ancillary limits on strategic nuclear delivery vehicles (missiles and bombers).
  • Different timelines for Iran’s missile development and for U.S. missile defense deployment in Central Europe offer a possibility to defuse the missle defense issue. The Obama administration should impose a two- or three-year moratorium on the construction of missile defense facilities in Central Europe and in form the Russians that the moratorium could be extended if the Iranian missile program slows or stops.
  • Expanding commercial links would add economic ballast that could cushion the overall relationship against differences on other issues. Specific steps include bringing Russia into the World Trade Organization, moving forward with the agreement on civil nuclear cooperation, and conferring permanent normal trade relations status on Russia by graduating it from the Jackson-Vanik Amendment.
  • Greater creativity in the NATO-Russia channel could, over the longer term, reshape how Moscow views the Alliance and European security. This should include new areas for NATO-Russia cooperation, such as counter piracy operations, and greater transparency about NATO plans.

Transnational challenges may offer other areas for U.S.-Russian cooperation. Proposing new ideas to develop better relations with Moscow does not mean overlooking unacceptable Russian behavior or areas of difference, and differences will remain, even in an improved relationship. For example, the United States will continue to have concerns about the course of democracy within Russia. These questions should be addressed candidly and clearly. But the Obama administration should seek a different way to conduct the dialogue from that of the past five years, which has not worked.

This paper reviews how U.S.-Russian relations went off course. It looks at what Moscow wants. It offers policy recommendations for the Obama administration and concludes with suggestions on tactics and a notional calendar for engaging Russia in 2009.

[Get the paper here]

Encouraging a Resilient Public

Encouraging a Resilient Public, by Bernard Finel
Cato Unbound, January 14th, 2009


On most issues, I think the gap between my perspective and Dr. Burns’ is quite small. I don’t think that policy success directly translates into changes in public perceptions. And I agree with his conclusion, “Take-away lesson: To be effective, reducing risk must be accompanied by identifying gaps in public understanding.” Where I am more skeptical is about the role of an explicit communication strategy in bringing about the changes we seek.

Aside from the problem of cutting through the noise that I mentioned earlier, I just don’t think there is any good evidence that nuanced discourse affects perceptions. Indeed, virtually every public policy debate in the United States tends to resolve itself down a set of unsophisticated sound-bites that gain traction through their appeal to broader, inchoate beliefs and norms. We don’t debate the actual merits of policy options. What we debate is whether a proposal looks vaguely like something we like or hate. The public tends to lodge policy debates into quite broad boxes… much to the frustration of policy wonks. But it is what it is.

And frankly, there is nothing really wrong with that. Communication with the public always has theatrical elements. It is often about images and symbols more than about details. Which is why, ultimately, I think that any public reassurance strategy will inevitably gravitate away from the sophisticated discourse envisaged by Dr. Burns and toward the blunt “security theater” approaches that we’ve already seen.


[Full text in the link above]

Conservative Views: Why state R&D flops

Why state R&D flops, by Peter Foster
Financial Post, Wednesday, January 07, 2009

Whatever one's views of a bi-national bailout of the Big Three, most pundits seem to agree that a significant part of any funding must be devoted to developing "fuel-efficient cars of the future." Apart from its multi-billion dollar share of the bailout, the Conservative government of Stephen Harper has launched a $250-million "Automotive Innovation Fund." Meanwhile a key part of president-elect Barack Obama's plans to "stimulate" the U. S. economy involve funnelling US$150-billion over 10 years to the development of "green" technologies.

Those inclined to give credence to such grandiose plans would be well advised to read a recent book titled -- somewhat misleadingly -- Sex, Science & Profits, by British academic Terence Kealey. The book deals with the nature of science, the history of technology and the role of governments in promoting economic growth. It provides a devastating critique of states' failure to fund economically useful knowledge, and suggests that all spending on "technologies of the future" is likely to wind up down the drain.

Professor Kealey is not promoting some off-the-wall, right-wing economic theory. A comprehensive 2003 study by the Organization for Economic Co-operation and Development titled "The Sources of Economic Growth in OECD Countries," found that the only useful R&D came from private sources and that public R&D funding tended to have negative consequences.

Professor Kealey provides the history and psychology behind this inconvenient truth, and sets out to explode the pervasive notion -- first propounded by the prototypical 17th-century English policy wonk, Sir Francis Bacon -- that science is a "public good" that needs to be promoted by governments.

In a sweeping analysis, Professor Kealey notes that advances in both science and technology have -- from the steam engine to radio astronomy -- come overwhelmingly from the private sector. "Powerful" states, from Egypt through China to modern Russia, have held up technological advance rather than promoted it. The vast U. S. expenditure on research in the wake of the Sputnik scare in the 1950s managed to put a man on the moon, but has (strategic considerations to one side) done little or nothing for the well-being of the average American.

Professor Kealey supports the wisdom of Adam Smith, the 18th-century Scottish economist, who suggested that technological advance was a natural consequence of market specialization which could not be improved by governments.

The Industrial Revolution in Britain was promoted by the political freedom's emerging from the "Glorious Revolution" of 1688. Its agents were eminently practical private tinkerers who had little or nothing to do with government or the educational institutions of the day. France, by contrast, was dripping with state-funded organizations to promote agriculture and science, but lagged Britain severely.

Professor Kealey explodes the notion of private "underinvestment" in R&D, which is based on flawed economic theory rather than industrial fact. He also highlights the counterproductive-ness of government technological promotion, using two prominent British examples. Before he became Prime Minister, Harold Wilson, in the early 1960s, promoted the "White Heat" of technological revolution, using the Soviet Union as a model. His Labour government greatly increased public R&D spending, which yielded the first commercial nuclear reactor, the first jet passenger aircraft, the first commercial computer and (half of) the first supersonic commercial aircraft. But what all these "achievements" had in common was that they were financial disasters, and accompanied a precipitous decline in the British economy.

Margaret Thatcher, by contrast, was castigated for cutting government R&D, but her cuts were more than compensated for by private spending, suggesting that government R&D merely "crowds out" the private version. Government R&D also tends to be counterproductive because it emphasizes political priorities and corrals companies into failing consortia.

One of Professor Kealey's most fascinating revelations is the astonishing success of promoters of publicly-funded science and technology in bending history to suit their prejudices. The advance of privately-funded British science has for two hundred years gone hand in hand with constant predictions of decline. The experience of post-war Japan was comprehensively falsified. In fact, Japanese government support for R&D has almost everywhere proved counterproductive. State agencies opposed the development of cars, electronics and cameras, while government promotion of "fifth generation" computers, and the space and nuclear industries have been a bust. To the extent that Japan was successful, it was due to private R&D.

Again, Germany's post-war success was not due to government but to the state's abandonment of so-called "Rhenish capitalism," with its cartels, tariffs and subsidies, and the adoption of the "Ordoliberalism" of Ludwig Erhard, who established an independent central bank, reduced government controls and liberalized trade.

Professor Kealey notes that government funding tends to corrupt science, but unfortunately does not go into the currently most dangerous example: that of state-funded "climate science" -- although he does refer to the establishment pogrom against the environmental skepticism of Bjorn Lomborg.

Bold presidential technological commitments such as those of Mr. Obama have-- with the exception of the moonshot, which could not have been less commercial -- a depressing history. If Mr. Obama is channelling any former president right now, it is the hapless Jimmy Carter, who, in the 1970s, invoked the "moral equivalent of war" to promote energy alternatives. Professor Kealey's book explains why he--inevitably --failed.