What Will the American Economy Look Like 26 Years From Today?

Jul 21, 2014Bo Cutter

Earlier this summer, the Next American Economy project brought together 30 experts from various disciplines to envision tomorrow's economic and political challenges and develop today's solutions. Find out what they had to say.

Participants in our recent convening speculated:

Earlier this summer, the Next American Economy project brought together 30 experts from various disciplines to envision tomorrow's economic and political challenges and develop today's solutions. Find out what they had to say.

Participants in our recent convening speculated:

“The post-WWII model of full-time, permanent employment proved itself the historical aberration we predicted: in 2040, only 12 percent of the American workforce is directly employed by corporate enterprises or government departments, and the average length of time spent on any one job is under six months.”

“New platforms and services will spring up to solve the problems of the micro-gig economy using distributed, peer-to-peer models of social insurance that will be hyper-local, but not based on geography. They will be based on the micro-niche identities that we build online -- accountants for bacon. Latinos who play Dungeons & Dragons. What have you.”  

“In the late '20s, the Know Everything Party assumed their final national political victories of mandating every American household be limited to three robots, one 3D printer, and own a minimum of three guns would be enough to secede and be left alone. After 15 years of explosive growth in income and wealth inequality, unimaginable to us in 2014, it all came to a head in our second Civil War, or what historians are calling the Bloodless War.”

Guided by the belief that we are on the precipice of fundamental and lasting economic change, the Next American Economy project gathered a group of 30 academics, business leaders, organizers, and technologists, and asked them to envision the long-term economic and political future of the United States. We gave our participants free rein to be bold in their speculations – to deviate from data, the conventional wisdom, or even their own expert opinions. The goal was not to predict the future, but to debate a series of critical questions: (a) Are we at an inflection point in the nature of innovation and technological change? (b) How will the rise of cities change the geography of economic activity? (c) How will economic trends alter the nature of work and employment? (d) Is the trend of widening income inequality likely to continue or stagnate?

What followed was a series of prescient, thoughtful, and often hilarious three- to four-minute speculations on topics ranging from the gig economy to the future of finance, from imminent civil war to the transformation of Google into a car company, and many more. Each speculation on its own could foster a day of debate and a sea of responses. For this reason, we will release one video speculation a day for the next three weeks, starting with David Autor’s description of economic polarization.

Our recent meeting was a first step toward our broader goal of identifying the trends likely to shape the future in order to identify the policy interventions needed to ensure the best possible outcome. The group identified key topics for further investigation and also found some areas of broad consensus.

  • 79 percent of participants believe “technological change will persist and will be big enough to disrupt business-as-usual."

  • 42 percent believe “a new paradigm of work is emerging and will change the nature of jobs for a large percentage of the population” and an additional 29 percent believe “a new paradigm has already emerged and you East Coast intellectuals are way behind the times.”

  • A total of 74 percent believe that even if an entrepreneurship booms leads to productivity growth it will not lead to job creation.

  • Nearly half (48 percent) believe that if inequality trends continue, the political backlash will be so extreme that our current system will change drastically in the next 25 years.

You can learn more about our project and find our forthcoming research on our website.

Roosevelt Institute Senior Fellow Bo Cutter is Director of the Next American Economy project. He was formerly a managing partner of Warburg Pincus, a major global private equity firm, and served as the leader of President Obama’s Office of Management and Budget (OMB) transition team. He has also served in senior roles in the White Houses of two Democratic Presidents.

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Daily Digest - July 18: BRICS Bank Shifts Balance of Power in the Global Economy

Jul 18, 2014Rachel Goldfarb

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Nobel Economist Joseph Stiglitz Hails New BRICS Bank Challenging U.S.-Dominated World Bank & IMF (Democracy Now)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Nobel Economist Joseph Stiglitz Hails New BRICS Bank Challenging U.S.-Dominated World Bank & IMF (Democracy Now)

Roosevelt Institute Chief Economist Joseph Stiglitz says this bank will support the developing world's needs, and reflects fundamental shifts in global economic power.

Port Trucking Industry Rips Off Drivers, Responsible Employers, and Taxpayers (The Hill)

Roosevelt Institute Senior Fellow Richard Kirsch looks at the port truck drivers' strike in California as evidence of the need for stronger policy on independent contractors.

Help a City, Write Its Budget (Bloomberg View)

Roosevelt Institute Fellow Susan Crawford endorses participatory budgeting as one of the best ways to build strong civic engagement, and says technology can help.

The Economy’s Big Mystery: Why Workers are Disappearing From the Job Market (WaPo)

Zachary Goldfarb looks at two theories from the White House Council of Economic Advisors that attempt to explain the drop in labor force participation since the recession began.

Stop the Tax Inversions of Free-Riding Corporations (AJAM)

By failing to pass laws that prevent companies from reincorporating aboard to avoid taxes, David Cay Johnston says Congress is supporting their shirking of responsibility.

What Happens When Detroit Shuts Off the Water of 100,000 People (The Atlantic)

Rose Hackman writes that Detroit residents have been forced to pay bills beyond their means or turn to illegal means to access water. The UN has declared this a human rights violation.

States with Better 'Business Climates' Also Have Higher Inequality (CityLab)

A new study finds an unfortunate connection between policies that encourage business and economic growth and rising inequality, writes Richard Florida.

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Port Drivers Take on Low Wages in an Industry Built on a Lie

Jul 14, 2014Richard Kirsch

Port truck drivers aren't indepedent contractors: they're employees of companies that pay them too little for long hours, with no benefits or worker protections.

It’s a David and Goliath story, only in this case there are 120 Davids taking on a hidden Goliath of an industry that every day touches everyone who is reading this in hundreds of ways. The port trucking industry is built on an illegal fiction, designed to rip off the 120 drivers who went on strike at the ports of Los Angeles and Long Beach this week.

Port truck drivers aren't indepedent contractors: they're employees of companies that pay them too little for long hours, with no benefits or worker protections.

It’s a David and Goliath story, only in this case there are 120 Davids taking on a hidden Goliath of an industry that every day touches everyone who is reading this in hundreds of ways. The port trucking industry is built on an illegal fiction, designed to rip off the 120 drivers who went on strike at the ports of Los Angeles and Long Beach this week.

They are not alone; 49,000 port truck drivers around the country work long hours at low pay with no benefits or basic worker protections like unemployment insurance or workers compensation, because the industry misclassifies them as independent contractors. The drivers’ courageous action is one more facet of a surging labor and community movement, which is starting to take on the captains of America’s low-wage economy.

Virtually everything you are wearing now that was made overseas came through our nation’s ports. So did every imported item in your office or home. Port truck drivers transported those goods from ship terminals to rail yards and warehouse centers, for distribution to stores around the country. Starting more than 30 years ago, when the trucking industry was deregulated during the Carter administration, the industry was taken over by firms with a business model based on driving down drivers’ incomes by treating them as independent contractors instead of employees.

The new model was based on a lie. The drivers weren’t really independent truck drivers, with their own rigs. They still worked for one distribution company, which totally controlled everything about their work – their hours, their shipments, the rates they were paid. The company supplied the trucks they drove. But by insisting the drivers accept the new arrangement if they wanted to work, the companies avoided paying payroll taxes, workers compensation, and unemployment benefits, let alone health or retirement benefits. The drivers were forced to pay to lease, fuel and maintain the trucks out of their own paychecks.

The result of this scam has been high profits for the companies, lower wages and no workplace protections for the drivers, plus big losses to the social insurance funds. This arrangement put employers who complied with the law by continuing to treat their workers as employees at a competitive disadvantage.

The port drivers' story is emblematic of the forces that crushed America’s middle class. Good paying, often union jobs were replaced by low wage, no-benefit jobs. "Manufactured in the U.S." was displaced by foreign goods, sold to consumers through the Wal-Marts and Home Depots and other giant retailers that perch at the end of global supply chains. Government, stripped of resources and will by corporate lobbyists and their wholly-owned elected officials, sat by while the law was violated and social insurance programs were weakened. And corporate profits soared.

But times are beginning to change. The strike in Southern California carries with it all the elements and power of the new movement of low-wage workers and their allies to create a good jobs economy. The foundation of the strategy is the willingness of low-wages workers to risk their jobs to fight back. The strategy is driven by strategic, legal, and financial assistance supplied by labor unions, partnerships with community groups, and public campaigns against big brand names.

The strikers, like many other port drivers, are mostly immigrants who often don’t speak English. Only recently did they become aware that their rights were being violated, after a free legal clinic was set up by two community groups at the port. Since then, drivers have filed more than 400 claims against companies under California’s wage and hour laws. The first 19 rulings resulted in an average award of $66,240, largely for wage and hour violations and illegal paycheck deductions for items like truck leases.

The claims are part of an aggressive legal strategy, which includes filings under California’s wage and hour laws, class action suits, and claims that the companies are violating federal labor laws. The goal is for the firms to face such an onslaught of fines and court orders that they will begin to realize it would be better to abide by the law, rather than continue to defend their practices in court. California Attorney General Kamala Harris could be hugely helpful here if she used the growing number of cases to insist on an industry wide compliance settlement.

The companies are fighting back. “It’s all out war,” an attorney for two workers who were fired for both supporting a union and pressing wage claims, told me. Green Fleet, the company that fired the workers and one of the companies being picketed, is using the full arsenal of union-busting tactics, including firing workers who are leading union efforts and hiring union busters who threaten workers. The company’s goal is to terrify other workers, so that they won’t support forming a union or file wage claims.

The NLRB ruled in the workers' favor, establishing that they are employees, not independent contractors, but Green Fleet is appealing in order to delay any relief. The fired workers’ attorneys are asking a federal judge to immediately order the companies to rehire the workers who were fired and to inform all the workers of their right to form a union and protest unfair labor practices.

In the face of this illegal harassment, the 120 drivers at Green Fleet and other firms walked off the job. They want to join the Teamsters union, which is providing key strategic support to their efforts through their Justice for Port Drivers campaign. Many drivers recently saw the benefits of unionization when drivers won union representation at Toll Global Holdings, an Australian based company, which is unionized in their home country. The unionized drivers actually get paid for the hours they spend waiting to pick up merchandise, and receive better wages and benefits.

Los Angeles’ well-organized community-labor coalition, led by LAANE, has turned out hundreds of picketers to join the drivers. The picketers block company trucks driven by drivers who have not joined the strike. The pickets create even longer lines of trucks at the marine terminals, where ships arrive with containers full of goods. This is one way that the strikers can exercise the economic power to get the companies to settle. The Teamsters report that already some terminals have told the companies being struck to stop picking up goods in order to clear the blockade.

Another weapon in the campaign is public pressure on the big brands that are the ultimate beneficiaries of the low-wages paid to the port drivers. All of Skechers shoes are delivered by Green Fleet. Protestors attended Skechers’ annual shareholder meetings, have leafleted stores, and this week had a plane fly over the company’s flagship L.A. store with a banner that read, “Skechers – laced with misery”. As LAANE’s Danny Feingold points out, unlike some other retailers, such as Nike, Skechers has refused to sign a code of conduct with labor standards for its contractors.

Another element in the port drivers' campaign, as in low-wage workers' campaigns nationally, is a push to change public policy. There are some 75,000 port drivers around the country, of whom 49,000 are misclassified as independent contractors. The New York and New Jersey legislatures both passed bills in the last year toughening standards and enforcement for misclassification of port truck drivers. While New Jersey’s Governor Chris Christie vetoed that state’s bill, the New York legislation signed by Governor Andrew Cuomo includes strict standards and most importantly, civil and criminal penalties.

There is a new movement growing in America, comprised of courageous low-wage workers and backed by unions, community groups, and activists to take on the huge companies that drive the low-wage economy. From fast food, to Wal-Mart, to workers who make car seats and immigrants who wash cars, the movement is learning a new strategy, based on mobilizing workers and the public. The twin goals of this movement are to enable workers to organize unions and to enact new public policy to rebuild the middle class. You can support the movement now, and lend a hand to port drivers who are on strike, by making with a contribution to the Justice for Drivers Hardship Fund. Remember, the device on which you are reading this now was delivered by a port driver.  

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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Negotiating With Iran Should be the United States’ Foreign Policy Priority

May 12, 2014Jacqueline Van de Velde

If the United States wants to maintain influence in the conflicted Middle East and legitimacy in the international arena, it's time to open up to diplomatic relationships with Iran.

If the United States wants to maintain influence in the conflicted Middle East and legitimacy in the international arena, it's time to open up to diplomatic relationships with Iran.

With many states in the Middle East still politically torn, economically disadvantaged, and serving as hotbeds of extremism in the wake of the Arab Spring, Iran has come to play the surprising role of a stable power player in an extremely unstable region. Iran’s influence in regional politics is undeniable: it is a power player in the Syrian crisis, maintains a close relationship with Russia, and serves as the ideological opposite to Saudi Arabia in the Middle East peace process. Despite sharing a vested interest in the same crises and regional developments, the United States and Iran have myriad differences. Iran has yet to recognize Israel’s statehood, has provided sponsorship to terrorist organizations such as Hamas and Hezbollah, and, of most concern, has uranium mines and enrichment capabilities that place Iran near “breakout capability” (having enough highly enriched uranium to fuel a nuclear weapon).

The election of Iranian President Hassan Rouhani, who campaigned on and was elected on a platform of attempting to warm diplomatic relations with the United States, opened the first avenue since 1980 for Iran and the United States to attempt direct diplomatic negotiations.

Such interaction, centering on resolving the Iranian Nuclear Deal, ending the conflict in Syria, and lessening violent extremism in the Middle East, has placed both states in an unstable situation. Negotiations have forced Iran to work with the country that supported Saddam Hussein in the Iran-Iraq war, and forced the United States to work with the country that held their diplomats hostage in 1979. The United States has been forced to recognize and treat Iran as a significant, sovereign state with its own legitimate interests, rather than as a violent and extremist rogue nation. At the same time, Iran has been forced to seek out negotiations with the United States to kickstart their sputtering economy. Negotiations over the Iranian nuclear program, attended by Iran, the United States, Britain, France, China, Germany, and Russia, have been remarkably successful. The group, which reached an interim agreement in November, meets again on May 13 to draft the text of a permanent resolution.

Despite the progress, the United States has failed to treat Iran as an equal negotiator in all aspects of the international diplomatic arena. For example, on January 20, the United Nations, under pressure from the United States, withdrew Iran’s invitation to the Geneva II peace talks, designed to craft a sustainable solution to the Syrian conflict. The pattern of withheld diplomacy was repeated on April 11, when the United States announced that it would block Iran’s selection of Hamid Aboutalebi as its representative to the United Nations. President Obama then signed a law passed by Congress that blocks any individual found to have engaged in espionage or terrorist activity from entering the United States. Aboutalebi, who reportedly served as a translator during the 1979 Iranian hostage crisis, would thus be barred from receiving a visa to take up his position at United Nations headquarters in New York under U.S. law. Frustrations over this affront to Aboutalebi, who is seen as a moderate and highly experienced diplomat within Iran, have led Iranian lawmakers to accuse the United States of “bullying.” While the United States has maintained calm decorum within discussions of nuclear disarmament, it has continually undercut Iran’s authority and displaced it from the table within international negotiations. In spite of concerted efforts, public interviews, and measured responses to the insults, the two countries’ negotiations and interactions seem to be stretched thin.

History and differences aside, reestablishing relations with Iran is one of the greatest foreign policy challenges of President Obama’s final term as president. Retaining peace through the nuclear discussions with Iran is crucial to ensuring that Iran does not progress to breakout capability, which has the potential to spark a regional arms race, cause oil prices to rise, or provoke an Israeli attack.  With the United States withdrawing from Afghanistan and absent from Iraq – two states which border Iran – it is critical to engage Iran so that the stability of the region is maintained. Finally, as Saudi Arabia and the United States drift apart ideologically, as Russia and the United States engage in diplomatic struggles over the future of Ukraine, as Europe tries to free itself from energy dependence on Russia, and as the international community struggles over the future of Syria, Iran becomes a critical “balancing power.”

The United States stands to lose a foothold in the Syrian conflict, influence in the Middle East, and perceived legitimacy in international politics if it does not actively work with Iran. This is not the moment for reflecting on the past; rather, our foreign policy makers need to be looking to the future. The consequences of not engaging with Iran are severe, and the risk of failure isn’t worth the attention we receive from flexing our muscles on the international stage. 

Jacqueline Van de Velde is the Roosevelt Institute | Campus Network's Senior Fellow for Defense and Diplomacy and a senior at the University of Georgia.

Photo via ThinkStock.

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Daily Digest - May 6: Will the Robin Hood Tax Hit the Mark?

May 6, 2014Rachel Goldfarb

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The Most Popular Tax in History Has Real Momentum (The Nation)

Katrina vanden Heuvel, a member of the Roosevelt Institute's Board of Directors, says that if Europe's "Robin Hood" tax is successfully implemented, it could boost efforts to implement a financial transactions tax in the U.S.

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The Most Popular Tax in History Has Real Momentum (The Nation)

Katrina vanden Heuvel, a member of the Roosevelt Institute's Board of Directors, says that if Europe's "Robin Hood" tax is successfully implemented, it could boost efforts to implement a financial transactions tax in the U.S.

Which States Are Givers and Which Are Takers? (The Atlantic)

Maps depicting states' reliance on federal funding lead John Tierney to ask whether the framework of givers and takers is useful, or whether we should instead focus on how the government creates an American community.

Blackstone Unit Invitation Homes Sued Over Rental House's Condition (LA Times)

Amid concerns about investment firms' ability to properly maintain the thousands of rental homes they've acquired, Andrew Khouri reports on one family's lawsuit over a slum-like house.

Gallup: Uninsured Rate Is Lowest We've Ever Recorded (TNR)

Jonathan Cohn reports on a new poll from Gallup, which has been asking whether people have health insurance since 2008. He warns that this isn't proof that more are getting health care, but it's a good start.

Millennials Have Stopped Trusting the Government (Vox)

Andrew Prokop breaks down a new survey by Harvard's Institute of Politics, which shows Millennials' decreasing trust in government over the past few years. Their biggest concern is unsurprising: the economy.

  • Roosevelt Take: Roosevelt Institute Vice President of Networks Taylor Jo Isenberg introduces the Campus Network's 2014 10 Ideas series, featuring top policy proposals from students across the country who still see ways for government to create a better world.

Nutter to Sign Minimum Wage Executive Order (Philadelphia Inquirer)

The Philadelphia mayor is following President Obama's lead, reports Claudia Vargas, by requiring a higher minimum wage in city contracts and subcontracts.

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Daily Digest - March 17: The Pacific Standard for Bad Deals

Mar 17, 2014Rachel Goldfarb

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On the Wrong Side of Globalization (NYT)

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On the Wrong Side of Globalization (NYT)

Roosevelt Institute Senior Fellow and Chief Economist Joseph Stiglitz argues that trade deals like the proposed Trans-Pacific Partnership create a race to the bottom for regulations, and exacerbate inequality.

The Great Corporate Cash-Hoarding Crisis (AJAM)

David Cay Johnston says that multinationals keeping their cash abroad instead of investing in their businesses or paying income taxes on it is what is keeping the U.S. from a real economic recovery.

10 Things Elizabeth Warren's Consumer Protection Agency Has Done for You (MoJo)

Erika Eichelberger lists the changes the Consumer Financial Protection Bureau has already pushed through since its creation in 2011, which affect homeowners, student loan holders, and anyone with a credit card.

Capping Public Service Loan Forgiveness at $57.5K Defeats Its Purpose (HuffPo)

People who use the PSLF program are trying to do good for the country, and according to Tim Lowden, this proposed cap would create a disincentive to entering these absolutely vital careers.

Income Gap, Meet the Longevity Gap (NYT)

Two U.S. counties, separated by only 350 miles, have life expectancies that differ as much as Sweden and Iraq. Annie Lowrey reports on how inequality is affecting the length of people's lives.

Paul Ryan’s Worst Nightmare: Here’s the Real Way to Cut Poverty in America (Salon)

Michael Lind thinks planning to avert future poverty is great, but we could reduce poverty today with a simple solution: increased government spending in the form of generous welfare and social insurance programs.

The Cost of Kale: How Foodie Trends Can Hurt Low-Income Families (Bitch Magazine)

Flat wages and rising food costs are only exasperated by food gentrification and trends, says Soleil Ho. From 2007 to 2012, wages remained stagnant, while the cost of feeding a family increased 18 percent.

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Rethinking Diplomacy: Why Iran Should Have a Seat at the Table on Syria

Jan 21, 2014Jacqueline Van de Velde

As the Geneva II talks on Syria begin, Iran's absence at the negotiating table reveals the problems in attempting to reach an agreement if the actors involved in this crisis aren’t invited to help end it.

As the Geneva II talks on Syria begin, Iran's absence at the negotiating table reveals the problems in attempting to reach an agreement if the actors involved in this crisis aren’t invited to help end it.

The situation in Syria has grown increasingly desperate, though the decrease in news coverage might lead you to believe otherwise. Over the past few months, the Islamic State of Iraq and Greater Syria (ISIS) an al-Qaeda linked group of violent extremists, has gained control of much of the north and the borders between Turkey and Syria. ISIS has begun kidnapping journalists and holding them hostage for ransom. Dozens are still in captivity, leaving reporters to scrounge for news along Syria’s borders or risk imprisonment, torture, or worse.

The news is grim: the Syrian crisis has now raged on for nearly three years. It has killed over 130,000 people, created an estimated 2.4 million refugees and 6.5 million internally displaced peoples (IDPs), and made over half of the Syrian population dependent on aid. Many IDPs in rebel-controlled areas are unable to receive aid. Schools are closed, leaving a generation without its education. ISIS has recently imposed sweeping restrictions on individuals, killing children for heresy, banning music, and forbidding images of people. Prospects are bleak.

As I wrote about three months ago, the international community is still hoping for a diplomatic solution to the Syrian crisis. On Wednesday, January 22, the international community will gather together at the Geneva II talks to discuss achieving peace in Syria. The talks are the brainchild of the United States and Russia, as an attempt to map out a transition plan to end the Syrian crisis. They are also invitation-only.

The talks are the follow-up to the Geneva I talks, held on June 30, 2012, at which participants agreed on the Geneva Communique and an Action Plan which calls for a “Syrian-led political process leading to a transition that meets the legitimate aspirations of the Syrian people;” requests multi-party elections free of sectarian, ethnic, or religious discrimination; and mandates the creation of a neutral transitioning body that can “include members of the present government and the opposition and other groups and shall be formed on the basis of mutual consent.” All parties present at Geneva I agreed to and signed on to this plan.

However, the negotiation attendees threaten to undermine the previous talks. One of the main actors at the talks is the Syrian National Coalition (SNC), an umbrella organization of dozens of rebel groups that oppose Bashar al-Assad’s regime. The SNC is in disarray. Since many representatives in the SNC are now forced to live in exile in Europe, some Syrians have claimed that the group is out of touch and does not accurately represent their viewpoint. Even persuading the SNC to attend was complicated; many of its member groups have refused to take part in the negotiations.

If the Syrian people do not view the SNC as a valid actor, there is no guarantee that the people will accept or agree to implement any treaties that are agreed upon at the conference.  The United States needs to begin negotiations and discussions with groups who are actually, actively involved in the Syrian conflict and are viewed by the Syrian people as legitimate representatives.

Surprisingly, the country that has been pushing for inclusivity has been Russia. During the lead-up to the Geneva II talks, Russia began to stress that the absence of Iran from the negotiating table was a failure. And it is. Iran is a country critically involved in the Syrian crisis: a firm backer of the Assad regime and an active agent in sending aid and troops to the conflict. Negotiating without Iran at the table is ignoring one of the largest players  in the conflict. It’s also a regional snub, as Iran’s rival, Saudi Arabia, is invited to participate in the negotiations.

On Sunday, January 19, UN Secretary-General Ban Ki-moon invited Iran and 9 other states to participate in the Geneva II talks. Iran followed by announcing on Monday, January 20, that it would not accept “any preconditions” for attending the talks, such as accepting the Action Plan crafted at the Geneva I talks. The Secretary-General withdrew the invitation on the same day.

Alienating such a critical regional power will not benefit the Syrian people and may harm recent U.S. moves towards peace. The Syrian conflict was created precisely because large regional powers meddled in Syria; it needs to have these same powers’ support to fully be resolved. Snubbing Iran may also serve to undermine the critically important nuclear agreement that is just now going into effect in the international community.

Diplomacy is not gathering like-minded individuals at a table to reaffirm their beliefs; it is gathering states from various regions and with differing opinions and working together to find a solution. Until the international community can gather all – or at least more – of the actors who are involved in Syria, any agreement, road map, or action plan that is reached at Geneva II will be seen as illegitimate in the eyes of the Syrians and will lack the consent of several major actors who will continue to pursue their own strategies.

The Syrian people deserve better. 

Jacqueline Van de Velde is the Roosevelt Institute | Campus Network's Senior Fellow for Defense and Diplomacy and a senior at the University of Georgia.

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Daily Digest - January 9: Celebrating the War on Poverty's Successes

Jan 8, 2014Rachel Goldfarb

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Materially Richer Today Than 50 Years Ago (The Kudlow Report)

Roosevelt Institute Fellow Mike Konczal discusses the War on Poverty on CNBC, where he focuses on some of its successes. Mike says that War on Poverty programs have drastically reduced poverty among children and the elderly, which should be celebrated.

Click here to receive the Daily Digest via email.

Materially Richer Today Than 50 Years Ago (The Kudlow Report)

Roosevelt Institute Fellow Mike Konczal discusses the War on Poverty on CNBC, where he focuses on some of its successes. Mike says that War on Poverty programs have drastically reduced poverty among children and the elderly, which should be celebrated.

A Dismal New Year for the Global Economy (The Guardian)

Roosevelt Institute Senior Fellow Joseph Stiglitz says that despite a few signs of economic improvement around the world, we should still be concerned about the ways that market economies across the globe are failing to create opportunity for most citizens.

Obama to Name 5 'Promise Zones' for Assistance (USA Today)

David Jackson reports on the creation of "Promise Zones," troubled neighborhoods that will receive targeted assistance to improve education, housing, and public safety. The plan involves working with government and businesses to attack poverty on a local level.

Connecticut Sick-Leave Law Has Little Impact on Employers: Study (WSJ)

Joseph de Avila looks at a study from the Center for Economic and Policy Research examining the effects of the CT law, which was the first paid-sick leave measure in the U.S. Preliminary findings show that only 10% of employers had payroll costs increase by 3% or more.

Rauner Wants to Roll Back Minimum Wage (NBC Chicago)

Mark W. Anderson writes that Bruce Rauner, the Republican candidate for Governor in Illinois, thinks that the state's $9.25 per hour minimum wage isn't "competitive." While many politicians are discussing raising minimum wages, he wants to return Illinois's to $7.25.

Investors Are Chastened. That’s A Good Thing. (ProPublica)

Jesse Eisinger says that the lack of enthusiasm for the stock market's record highs are a sign that the public has learned not to trust the stock market as a measure of the economy's success. Instead, it's a reminder that the recovery hasn't reached most Americans.

Warren, Coburn Push for Increased Transparency on Settlements (The Nation)

George Zornick reports on a new bill from Senators Warren and Coburn that would require federal agencies to provide full disclosures of how much corporations are actually paying in fines. Corporations write off large amounts in their taxes, and the Senators think the public should know how much.

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Stanley Fischer Will Please Centrists, But He's the Wrong Choice for the Fed

Dec 12, 2013Jeff Madrick

Fischer's track record shows that he'll base his decisions on market ideology instead of empirical evidence about the economy. 

Fischer's track record shows that he'll base his decisions on market ideology instead of empirical evidence about the economy. 

Oh, no, not Stan Fischer. Just when you thought President Obama had come to terms with Janet Yellen, his nominee for the Federal Reserve chairmanship, he sends a counter-message. Yellen, almost sure to be approved by Congress, will be not only the first woman to serve as Fed chair, but the first head of the Fed in a long time who is as concerned with unemployment as she is with inflation. Now the press reports that Obama will appoint Fischer as vice chairman. Wall Street will be soothed. Fischer is a centrist (I’d actually call him center-right) economist, a fully doctrinaire mainstreamer, who is in Obama’s mind probably the next best thing to Larry Summers.

According to press accounts, Summers was Obama’s frontrunner for Fed chair, a man Wall Street would perceive as tough enough to fight inflation, Wall Street’s main bugaboo. The backlash against Summers was too great to be withstood, so Yellen was nominated instead. But Fischer is surely not the person we need as her number two. His resume suggests that in his bones he is an austerian. Although he cut rates sharply during the crisis as head of the Israeli central bank, this is not proof he can manage an economy that is struggling to recover. 

Here is one good reason for concern: one of the comical claims in the admiring and ill-informed press accounts announcing Fischer’s likely nomination is that he was “on the front line” of the 1997 Asian financial crisis, as the Financial Times put it. He sure was. All that financial expertise the press raves about, citing bankers as their sources, and Fischer had no clue that the Asian economies were teetering on the brink in 1996, when he wrote this in a Brookings piece: “none of the East Asian countries has pursued an excessively easy macroeconomic policy, none has tolerated even double-digit inflation, and most have small governments and small budget deficits. So the risk of a prolonged slowdown caused by a need for major macro-economic adjustments is small.”

This is reminiscent of Milton Friedman’s telling Charlie Rose in 2005 that people should stop worrying about the U.S. economy because it was very stable. In 1997, Asia crashed, led by Thailand, which had a property bubble fueled by foreign capital flows. Its “miracle” had been temporary, not driven by good macroeconomic policies based on IMF and World Bank advice, but mostly by exports due to pegging its currency to a dollar adjusted downward by the Plaza Accord. Thailand’s manufacturing exports boomed as Japan, for example, moved production to the cheap currency country.

But Fischer was a pure Washington consensus man, imposing balanced budgets, privatization, and market liberalization everywhere and anywhere he could. Most telling, as number two at the International Monetary Fund in the 1990s, he insisted the developing nations eliminate controls on capital flows. Was this based on any empirical evidence? As far as I know, there was none. It was based on market ideology. 

But worse was to come. To right the ship, the IMF told these nations in the midst of crisis to raise interest rates to keep their currencies from falling. Plummeting currencies encouraged capital flight that brought the countries down. The IMF also demanded budget cuts, assuring very deep recessions and a lot of suffering across Asia. Unemployment and bankruptcies soared.

But you don’t cut budgets in recessions; you stimulate. The IMF imposed austerity and pain on these countries, just as Germany is doing in the eurozone today—and as the U.S. is doing to a lesser extent with sequestration. To heck with Keynes, say the policymakers.

Fischer was a leader in making these enormous policy errors. Should capital flow freely around the world? Yes. But only when nations are ready. The U.S. and Europe waited to end their capital controls. Try gradualism.

What’s sad about this is that Obama may set up another obstacle for Janet Yellen to deal with—another male, no less. The best it says about Obama is that he doesn’t know much about Fischer. The former MIT professor is admired in centrist circles in Cambridge, Massachusetts. But more likely, Obama also wants to placate the inflation and deficit hawks. In truth, he’s leaned that way his entire administration. He’s just a centrist at heart—and maybe somewhat right of that. 

Jeff Madrick is a Roosevelt Institute Senior Fellow and Director of the Bernard L. Schwartz Rediscovering Government Initiative.

 

Federal Reserve banner image via Shutterstock.com

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Daily Digest - December 5: Pensions and Wages and Unions, Oh My!

Dec 5, 2013Rachel Goldfarb

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An Agenda to Save the Euro (Project Syndicate)

Click here to receive the Daily Digest via email.

An Agenda to Save the Euro (Project Syndicate)

Roosevelt Institute Chief Economist Joseph Stiglitz lays out a plan to reform the political structure of the eurozone. Eliminating austerity policies, among other changes, could save the Euro and the European project of unity.

Life in a Mobile Nation (NYT)

The New York Times draws on former Roosevelt Institute | Pipeline Fellow Nona Willis Aronowitz's recent series on where Millennials are building their lives for a Room for Debate discussion. The responses consider whether a city can be ideal for all stages of a life.

A Government Ban on 23andMe's Genetic Testing Ignores Reality (The Guardian)

Roosevelt Institute | Campus Network alumnus Rahul Rekhi says the FDA is trying to regulate 21st century technology with 20th century policy. Direct-to-consumer genetic testing could have plenty of potential, but an outright ban closes that option for research.

Study: States that Reject Medicaid Expansion Lose Money (USA Today)

Kelly Kennedy reports on a new study from the Commonwealth Fund laying out the state-by-state financial losses from refusing Medicaid expansion under the Affordable Care Act. That money would have gone to local health care providers, growing the states' economies.

  • Roosevelt Take: Roosevelt Institute Fellow Andrea Flynn's white paper, "The Title X Factor," says that states refusing Medicaid expansion is one of the reasons Title X family planning funds remain so important.

Pension Theft: Class War Goes to the Next Stage (Truthout)

Dean Baker decries the new sport of pension theft, a game that has just opened in Detroit and Illinois which he fears will spread further. Pensions are written into contracts, but apparently those contracts don't matter when they affect average workers.

Fast Food Strikes Hit 100 Cities Thursday (The Nation)

Allison Kilkenny speaks to fast food workers who plan to join strikes today as the call for higher wages spreads. The first fast food strikes were just over a year ago in New York City, and they have spread across the country; today's actions are expected to be the largest yet.

It’s Not Just Fast-Food Workers Who are Underpaid (Reuters)

Helaine Olen points out that while so-called "fast casual" dining might look nicer, with higher food quality and prices to match, that doesn't mean workers are paid any more than in fast food. It's important to keep that in mind with today's fast food strikes.

Don't Blame Robots For Declining Wages -- Blame Dissolving Unions (TPM)

Tali Kristal says that technology has only done so much to bring down wages. Her research shows the largest declines in share of income going to workers occurring in sectors where unions are disappearing, which does give us a possible path for wages to go back up.

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