Trumponomics is failing on growth – Simon Johnson

MIT Sloan Professor Simon Johnson

From Project Syndicate

WASHINGTON, DC – US President Donald Trump and his Secretary of the Treasury, Steven Mnuchin, have promised an economic miracle. They argue that when the United States adopts their policies, it will consistently achieve annual economic growth above 3%, or even above 4%. After a year of being in charge, pushing hard on deregulation, and getting what it wanted in terms of tax cuts, how is the Trump team doing?

We are still in the early days, but the results so far have been disappointing. And the US’s medium-term prospects for sustained growth could be endangered if Trump pursues the policies he claims to want.

Trump has repeatedly argued that America’s overall economic performance in 2017 should be seen as the direct result of his policies, and he has made a big deal out of the third-quarter growth rate, which was initially reported as 3.3%, then revised down to 3.2%. Yet, in the fourth quarter, growth was down to 2.6%, and initial estimates suggest that overall growth for the year will not surpass 2.3%. That is lower than what was achieved under former President Barack Obama in 2014 (2.6%) and 2015 (2.9%).

In fact, under Obama, the quarterly growth rate surpassed 3% seven times, and even reached 4.6% on two occasions. From the third quarter of 2009, growth was positive in every quarter, save two. But not only was headline growth sturdy under Obama; his administration also presided over considerable job growth – the economy added more than two million jobs annually in seven out of his eight years in office – as well as falling unemployment and higher labor-force participation. Read More »

America should respond to China with a ‘second Sputnik moment – Yasheng Huang

MIT Sloan Professor Yasheng Huang

MIT Sloan Professor Yasheng Huang

From MarketWatch

The burgeoning trade war between the United States and China has as much to do with technology as with the balance of trade. Reports have surfaced that the Treasury Department is drafting rules to block Chinese firms from investing in American companies doing business in so-called industrially significant technology, while the Commerce Department is planning new export controls to keep such technologies out of Chinese hands.

These moves follow President Donald Trump’s proposal to impose tariffs on $50 billion worth of Chinese products, many of which are on the priority list for “Made in China 2025,” President Xi Jinping’s blueprint to transform China into a global leader in high-tech industries like aerospace, robotics, pharmaceuticals, and machinery. Although the Chinese government has refused to modify its initiative, the U.S. is demanding that China end all government subsidies and grants under the program. Trade talks have stumbled on this point.

America’s concern with Made in China 2025 is understandable; China’s approach to technology development has been controversial, to say the least.But there are better ways to respond to China’s policies. Two ways, to be precise. Read More »

Here’s how workers would spend the corporate tax cut – if they had a voice – Thomas Kochan

MIT Sloan Prof. Thomas Kochan

From The Conversation

Over 200 CEOs have said they will raise wages or give bonuses as a result of the large corporate income tax cut passed late last year by Congress.

Some view their plans as simply a public relations move, others as a response to tighter labor markets or worker pressures. Pretty much everyone hopes that it might signal a new era in which corporate leaders share earnings with workers in ways they have not done in the past.

I’m among those who hold such a hope. Only if such profit sharing becomes the norm will the long-term trends in widening income inequality and wage stagnation be reversed.

But why should this decision be left to CEOs? Don’t workers have a legitimate claim and stake in what is done with the profits they help produce? New research I’ve been leading at MIT finally gives workers a voice on these issues and many others. Read More »

Watch Now: “The Truth About Fake News” with Sinan Aral and Tim O’Reilly

Sinan Aral, MIT Sloan David Austin Professor of Management

Our latest installment of the MIT Sloan Experts Series includes a conversation about fake news with Sinan Aral, David Austin Professor of Management and author of the forthcoming book, The Hype Machine. We’ll discuss insights from the latest research from Aral and his co-researchers Soroush Vosoughi and Deb Roy of the MIT Media Lab which overturns conventional wisdom about how misinformation spreads, what causes it to spread so fast, and who—or what—is spreading it.

It is the largest study of its kind about fake news and is featured in the latest issue of Science, “The Spread of True and False News Online”,  March 9, 2018.

Tim O’Reilly, the founder, CEO, and Chairman of O’Reilly Media, and the author of many books including, WTF: What’s the Future and Why It’s Up to Us, also appears on the program to discuss possible technological and algorithmic solutions.

Watch the show here:

 

 

The Case for Evidence in Government – Doug Criscitello

Doug Criscitello, Executive Director of MIT’s Center for Finance and Policy

Doug Criscitello, Executive Director of MIT’s Center for Finance and Policy

From Government Executive

Although the U.S. government presides over what collectively must be one of the world’s largest data repositories, its capacity to use that data to build citizen trust and make informed, evidence-based decisions is severely constrained. As explained in an enlightening report recently issued by the bipartisan Commission on Evidence-Based Policymaking (CEP), the mere existence of data is a necessary but not sufficient condition for creating empirical evidence to inform decisions throughout the full lifecycle of public programs—enactment, funding, operation, reform, termination.

The digitization of many facets of various activities the government funds through its $4 trillion annual budget has resulted in a data explosion at federal agencies. But that data needs to be synthesized into actionable information to satisfy taxpayers’ demands for better results and greater transparency. The CEP report makes clear that much remains to be done to achieve that goal and provides a comprehensive plan to improve access to federal data, strengthen privacy protections and expand the public, private and academic research communities’ capacity to analyze data.

CEP provides an insightful list of recommendations such as establishing a National Secure Data Service to enable and leverage capabilities across government, addressing statutory impediments that obstruct smart data use, and streamlining processes used to grant researchers access to data. The report appropriately emphasizes strong privacy protections and advocates for comprehensive risk assessments for publicly released data and for the use of better technology and greater coordination across government. To prioritize efficient evidence building, CEP points out the need to coordinate statistical activities, evaluation and policy research within and between departments and across levels of government.

Read More »