Thoughts on the Senate Finance Committee hearing


Like many trade junkies, I am listening to the Senate Finance Committee hearing.  Unfortunately, it is a dance around the key questions.
Here’s some things USTR should do.

  1. USTR needs to address how it (or the USG) can use trade agreements to help the middle class.  USTR must provide clarity on whether trade agreements really create or destroy jobs.. the current mercantalist language is not helpful.   Our tax system favors investment in technology, not people. We never link US trade policy to the larger context of tax, education and social welfare policies.  We have to explain these links in order to explain why individuals can’t and shouldn’t hold trade policy responsible.
  2. USTR must clearly explain that trade agreements can’t directly include actionable provisions to address income inequality but that trade agreements may indirectly affect income inequality within and among nations.   Everyone now understands that globalization has made it easier for businesses to rely on workers from other countries who are willing to work for lower pay, while technologies such as robots and computers have rendered many jobs obsolete. But policymakers also made some decisions that perhaps without intent facilitated economic inequality and economic insecurity.  In recent years, some countries (and US states) have made it harder or less attractive for workers to organize and bargain collectively.  At the same time, some workers have turned against unions an organization working in their interest.  In the wake of these developments, unions have declined and worker bargaining power has decreased. At the same time, corporate officials have focused on quarterly results rather than investing in the skills and long term productivity of their employees.  Some people blame trade policies and agreements for these problems and do not believe that trade creates jobs or raises wages.   Scholars have determined that while trade plays a role, the most important factor contributing to rising income inequality is not trade, but rapid technological growth in exportable sectors.  However, technological change, while scary and threatening to jobs, is essential to productivity and economic growth.  The US must find ways to encourage technological change while making sure that trade agreements are not written in ways that could foster further income inequality by favoring certain interests at the expense of the broad interest.  So as example, agricultural subsidies or export subsidies, while politically necessary, do not help us use trade agreements to ensure that we do not foster income inequality.
  3. What is USTR doing to involve the American public (not Wash representatives of civil society, business and labor) in developing and understanding trade?
  4. What changes can USTR make to trade policymaking to involve more Americans more directly?  Why not experiment? Why not ask Americans to suggest language related to the free flow of information?  Perhaps this brainstorming could yield new ideas?
  5. USTR must rethink its template for trade agreements. If these agreements are to promote “middle class” jobs, employment and labor issues must be embedded throughout the agreement.  The agreement also addresses labor issues in the services chapter; in the chapter on regulatory coherence; and indirectly through language related to investor state dispute settlement. The services chapter could be helpful to individuals who want to move to other countries to sell services over borders, although most such chapters generally address skilled labor such as architects.  However, critics of TTIP raise concerns about proposed language in the investment and regulatory coherence chapters; they fear it might lead to a labor rights “race to the bottom.”  They argue that these chapters are designed to reduce regulatory burdens by eliminating alleged unnecessary or costly regulations.  But one man’s costly regulation is another man’s much needed job protection. Since the US and EU have relatively similar labor costs and productivity, firms may choose to produce and invest in the venues with less or less expensive regulations.  Since the US has not ratified the same ILO conventions related to health and safety as has the EU, generally US workers have fewer protections and employers have relatively lower costs (despite an appreciating dollar). Moreover, the US and the EU have not clarified how they will achieve regulatory coherence given different approaches and levels of regulations, nor have they explained how higher standards can be maintained in the venues that have such higher standards. Activists are concerned that in the interest of achieving regulatory convergence and reducing administrative costs, policymakers could undermine domestically determined regulations. But we do not know how much convergence policymakers want to achieve or if the main threats to higher labor standards are within EU member countries and between US states, rather than between the two trade giants as a whole
  6. USTR needs to be more transparent about how trade agreements affect Internet openness and freedom and how USTR might use trade agreements to challenge filtering and censorship.  But the exceptions here are key: when can nations limit the free flow of information to protect privacy and national security?

The Future of US Labor Markets: 5 Questions with Tara Sinclair


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One of the overarching goals of economic forecasting is accurately predicting when a recession will occur and what can be done to fix it, though no one has yet been very successful at it. IIEP affiliate researcher Tara Sinclair thinks that private data might hold the keys to improving forecasting methods. As Chief Economist to the largest job site in the world, Tara uses data for a unique and unprecedented insight into the behaviors of job seekers.

With such large quantities of data to analyze and work with, Tara is excited for the future of economic forecasting. She has also learned that job seekers are “really quite savvy,” and that requirements in the job market are changing – with a major impact on millennials.

  1. How exactly does your position with aid you in uncovering labor trends?

 As Indeed’s Chief Economist, I have access to data on over 140 million unique visitors to the site each month along with job postings in over 50 countries.  We launched the Indeed Hiring Lab earlier this year with the goal of using the new “big data” we have to produce insights about labor market behavior and trends.  From our research I have learned that job seekers are really quite savvy in the labor market – they know where the jobs are both in terms of occupations and locations. 

  1. In what direction do you see unemployment trends heading and why?

I’m actually hoping we see a small uptick in the US unemployment rate in the near future.  This might be good news for the economy if it is due to people who had stepped out of the labor force deciding to start looking for a job again.  Right now our labor force participation rate is quite low, so a small unemployment rate does not mean a high employment rate.  In fact, the US’s employment to population ratio over the past 4 years has been hovering at a 25 year low.

  1. What sectors are experiencing the most job growth in the short term, and what does that mean for the economy? What about the long term?

Healthcare has really been the key growth area in terms of employment and the BLS projects it will continue to be near the top in terms of growth out to 2022 (as far as their projections go).  This in part reflects the key demographic trend our labor market is facing at the moment – the aging of our population.  This has the potential to have serious impacts on our economy in all sorts of areas from the performance of the stock market to the types of jobs that our economy will create. 

  1. Do you think job opportunities for recent graduates are as scarce as many are saying?

The labor market has improved substantially from a few years ago, so I think new and recent graduates should see more options now – and hopefully even more so in the coming months as another graduation season comes around.  One piece of particularly good news: the unemployment rate for people with college degrees fell to 2.9% in December.  Thus there is a substantial benefit to having a college degree in this respect since the overall unemployment rate is 5.6%. 

  1. How do you think technology and the Internet are shaping job sectors? Are new fields emerging?

There are so many job titles involving technology that didn’t exist just a few years ago.  One field I find particularly interesting is “social media,” but there are so many others.  Lots of other jobs are changing because they now require more technical skills than in the past.  A little bit of training in computer programming can now help someone in almost any field. 

While millennials have grown to know that the most lucrative fields are in engineering and computer science technology, Tara says that this is not a complete picture. Instead, these skills can be incorporated into any number of different career paths. Sinclair said that a wide variety of fields now require training in engineering or computer science-oriented skills. Instead of being limited to a small number of career paths, STEM skills are now used in every sector. These can encompass major programming software and a variety of computer coding languages.

Aside from technical fields, Tara sees the largest growth happening in healthcare industries – although she finds it disconcerting that millennials are not headed in this direction. The baby boomer generation is aging, and education levels from associates to doctorates are needed to fill this gap in care.

College degrees are more important now than in any other time period, and unemployment rates for graduates are almost three points below national averages. Unemployment rates, however, do not represent the full spectrum of employment. More telling, instead, are employment to population ratios – which paint a picture in which college graduates are not seeking employment.

Tara explained that we can see this mystery population in every corner of life. College graduates who actively seek employment can find it, but there are large numbers of these individuals who drop off the radar. Additionally, many adults lost their jobs after the 2008 recession and never returned to the job market – or the search.

Who are they? What do they look like? Economists will be spending the coming years trying to find the answers.

Written by IIEP Staff Member, Alexa Smith-Rommel

Why a UN Climate Agreement Will Not Be Reached

This week the UN will convene a climate summit where Secretary General Ban Ki Moon will ask leaders to bring “bold announcements and actions that will reduce emissions, strengthen climate resilience, and mobilize political will for a meaningful legal agreement in 2015.”

For those who have marched in cities around the world this weekend demanding change, the Summit offers a new opportunity to finally set the world on a corrective path that will avert an imminent global disaster.   This summit follows on the heels of previous UN conferences in Copenhagen, Cancun, Durban, and Doha, each of which had ambitious goals but which failed to prompt world leaders towards substantive action.   Frustration and disappointment has become the norm. As Felipe Calderon, chairman of the Global Commission on the Economy and Climate said, “If the evidence is so clear, why have we not acted?”

This summit has little chance for success. Even if it did result in some agreement by leaders, the eventual successful implementation would be extremely unlikely. The simple reason is that the world is severely addicted to fossil fuels and because of that, even the recognition and acceptance of the problem is simply not sufficient to inspire coordinated action.

A convincing argument can be made using an analogy between an individual’s addiction to cigarettes and fossil fuel usage by society.[1]  Smoking is commonly recognized as an addiction and it is important to note that smoking exhibits a similar pattern of costs and benefits over time as fossil fuel usage. Both cigarette and fossil fuel consumption generates immediate benefits to users; smoking causes the seductive effect of nicotine in the brain and social camaraderie among peers; fossil fuels provide affordable energy for transportation, heating and electrical needs – it is a part of everyone’s daily life. Both smoking and fossil fuels have the potential to cause long term damage in the future: with smoking comes the higher incidence of cancer, heart disease, and emphysema; with fossil fuels comes the potentially deleterious effects of super storms, droughts, and rising sea levels caused by climate change.   Finally, both smoking and fossil fuel usage are difficult and costly to discontinue: smoking cessation causes sometimes severe withdrawal costs and continual urges for resumption; fossil fuel substitution requires costly replacements of energy systems and higher energy costs.   In addition, the future effects of both smoking and fossil fuel usage are uncertain. Smoking does raise the probability of contracting a disease, but, as many as 50% of smokers never experience these negative effects. Fossil fuel consumption may certainly be raising global temperatures, but knowledge of who will be affected, to what degree, and when, remains speculative at best.

It is the presence of withdrawal costs that makes smoking addictive. Because it is painful for smokers to quit, even those with full understanding of the potentially detrimental future effects, can become trapped in their current habits and smoke until it kills them. Similarly, high relative costs of energy substitutes will also make it difficult to kick the fossil fuel habit as well.

Consider the campaign aimed at breaking the addiction to smoking, which began in earnest after the 1964 US Surgeon Generals report.   Since then, anti smoking groups have initiated educational campaigns, advertising bans, higher taxes, and successful litigation against cigarette companies. The efforts were a success with a substantial reduction in adult smoking rates in the US from over 40% in the 1960s to around 20% today.

In the early stages though, resistance to change was strong and many people simply denied that smoking was harmful. Today the vast majority of people, including smokers themselves, accept the dangers posed by smoking. Still, despite that knowledge, it may seem somewhat surprising that fully one-fifth of the US adult population continues to smoke. If we consider smoking around the world, noting that many similar regulatory programs and high taxes have been imposed in Europe and elsewhere, it is surprising that as much as 30% of the adult male population continues to smoke. Thus, despite many successes over more than a 50-year campaign, it has been grudgingly difficult to break peoples’ addiction to cigarettes.

Now consider fossil fuel usage. As described above, fossil fuel usage displays a similar pattern of costs and benefits over time as cigarettes and thus can be thought of as an addictive process.   However, fossil fuel usage is different from smoking in an important respect that will make breaking this addiction many times more difficult.

To curtail smoking one has to convince an individual to change his or her behavior in order to have a long term positive effect directly upon him or herself.   In contrast, with fossil fuels one must convince billions of people to change their behaviors in order to have a positive impact on future generations of people. Individual action on fossil fuel usage will have no meaningful impact on the future outcome for oneself, or the world. In fact, even if hundreds of millions of individuals in several large countries change their fossil fuel usage it will still have little effect on climate change if the rest of earth’s population maintains its current habits. This means that climate change mitigation is a collective action problem, on top of being an addictive process, and this is the reason the UN is convening regular summits to reach a collective agreement.

But while collective action can work when the benefits of the actions will have immediate positive impacts, it is unlikely to work when the benefits are highly uncertain and in the distant future. Also, although world leaders may pay lip service to climate change mitigation and even implement policies to prompt modest reductions in fossil fuel use, significant reductions in carbon emissions in democratic countries will ultimately require the support by a majority of the national electorates. With respect to smoking abatement policies, such as higher taxes and strict regulations, the majority of the population are non-smokers who are perfectly willing to support such restrictive policies. In addition, the cigarette industry is a very small sector relative to the size of the entire economy so legal attacks against it provoked little resistance. In contrast, policies to restrict fossil fuel usage and carbon emissions will affect 100% of the world’s population and impact industries that are the largest companies in the world employing tens of millions of people. The supply chains for fossil fuels and the profits that flow from them are well understood and both directly and indirectly benefit everyone on the planet. Attempts to break these fossil fuel “habits” will be met with an indefatigable resistance that will include continuing propagation of climate change denials and intense lobbying against any policy change that threatens these well-established patterns.  For these reasons, UN summits have virtually no chance for success. It won’t matter how many meetings are held or how many marches take place.

All hope need not be lost though. There are several viable alternatives to collective action. However, one of these alternatives faces high uncertainty regarding its potential effectiveness. And although the second option has high potential to be effective, it faces substantial resistance even from those most concerned about climate change.

The first option is a concentrated effort to reduce the cost of switching to low carbon alternative energy sources such as solar, wind and nuclear. If alternatives can satisfy consumer energy demands at a lower cost, then consumers will surely demand them. However, one additional requirement for this to work is that energy companies must be able to make greater profit supplying these alternatives than they can supplying fossil fuels.   Only in this way will there be a rapid changeover sufficient to crowd out fossil fuel usage. Whether low cost and highly profitable alternatives can be found quickly enough is highly uncertain.

The second possible solution is to use geo-engineering efforts to directly offset the greenhouse gas effect caused by rising carbon dioxide levels.  Several potentially viable options have been proposed including carbon capture methods and use of atmospheric reflective materials, which could be implemented at a relatively modest cost. However, despite the fact that it was scientific discoveries that have motivated the demand for fossil fuels during the past two centuries in the first place, people nevertheless resist the application of science to mitigate the negative effects that are resulting from its use.   Even if one accepts that there is a scientific consensus of the anthropogenic effects on climate change, that consensus does not imply that the only way to solve the problem is by forcing the reduction in fossil fuel use.

For these reasons the world would do well to abandon its efforts to reach climate change agreements. These efforts will be fruitless and are likely to result in rising hostilities as climate policy advocates increasingly chastise world leaders for their inaction while demonizing the oil, coal and gas companies who are simply delivering the world’s energy needs in the most habitually, efficient way.  The more effective approach is to use science to solve the problem caused by science. Better to pour collective efforts into the development of viable and profitable non-carbon energy sources and in the event that does not succeed, to be ready to act with effective science-based interventions that can help regulate and control the earth’s climate.

[1] For a more complete analysis see Suranovic, Steven (2013), “Fossil Fuel Addiction and the Implications for Climate Change Policy,” Global Environmental Change, 23(3) 598-608.

Why the U.S. and EU are Failing to Set Information Free


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Tim Berners-Lee, the architect of the World Wide Web, taught us that the Internet we have is a function of the choices we (users, companies, policymakers etc…) make about information flows. As an example, in 1995, Berners Lee chose not to patent his work on the World Wide Web because he feared patenting could limit the universality and openness of the web. He continues to advocate. In March 2014, he called for an online bill of rights and created a new organization to ensure that the web would remain the “web we want”—open, free and neutral. With his actions, Tim Berners-Lee has shown us that it is not easy to set information free.[1]

Policymakers also must make tough choices about information flows. On one hand, they want to encourage the free flow of information in the interest of educational, technological and scientific progress. On the other hand, they need to control and at times limit the free flow of information, in order to achieve important policy objectives including maintaining Internet resiliency; preventing spam, piracy, and hacking; protecting national security and privacy; and protecting intellectual property. They struggle to balance, let alone achieve these goals.[2]

In my research I examine how the U.S. and the EU tried to use trade policies to advance the free flow of information while simultaneously taking other steps to control or block the free flow of information. Policymakers turned to trade rules because information often flows across borders; moreover trade agreements are binding and enforceable.

However, the free flow of information affects many other policies beyond trade, including human rights. In 1946, the UN General Assembly adopted Resolution 59 (I); members stated that “freedom of information is a fundamental human right and…the touchstone of all the freedoms to which the United Nations is consecrated.” Under international human rights law, states are obligated to take practical steps to give effect to the right of freedom of information, but may also restrict freedom of information in order to respect the rights or reputations of others, protect national security and public order, and protect public health or morals.[3] Hence, the free flow of information is also a security,[4] trust, foreign policy, and governance issue.

Information is also a global public good that governments should provide and regulate effectively. Because the benefits of a public good are available to everyone (no one can be excluded), private companies and individuals often need incentives to provide new information. Moreover, everyone is hurt when individuals, companies or governments horde or hide information (Maskus and Reichman: 2004, 284-285; Kahn: 2009). The Internet has made it cheaper and easier to trade information (such as digital news, data, and entertainment); to collaborate and work across borders; and to fund and sell goods and services across borders (McKinsey: 2014). If governments and their citizens could devise shared rules to encourage the free flow of information, more people would have greater access to information, and more information would be created and exchanged (McKinsey: 2014, Tietje: 2011).

Since the first years of the 21st century, business leaders, policymakers and activists have tried to create shared principles to encourage information flows. They began by developing principles to guide their behavior at the OECD, APEC and other venues. But these principles are voluntary and not universal. Meanwhile, some academics and companies began pushing for very specific language in trade agreements; they wanted to promote the free flow of information and limit trade barriers to the free flow of information (Kommerskollegium: 2014).

Today, data flow issues are key components of 3 ongoing negotiations: The U.S. and the 27 nations of the EU have been negotiating T-TIP (the Transatlantic Trade and Investment Partnership; the U.S. and 10 other nations bordering the Pacific have been negotiating the Trans-Pacific Partnership (TPP); and some fifty members of the WTO (including the 27 EU) are negotiating the Trade in Services Agreement of the WTO (TISA). However, many governments have not responded positively to U.S. and EU efforts to set information free. Officials and citizens from these governments worry about their ability to control or limit information flows as well as their dependence on U.S. companies to provide web services (which often must comply with U.S. rules on privacy and national security.) Some scholars note that the U.S./EU approach appeared hypocritical and inconsistent. The U.S. controls the free flow of information to protect intellectual property and national security but labels it protectionist when others do so. The EU controls the free flow of information to protect intellectual property, to protect privacy, and to prevent holocaust denial and hate speech (Aaronson and Townes: 2012, Aaronson and Maxim: 2013). Moreover, neither the U.S. nor the EU link policies to promote the free flow of information with policies to advance Internet freedom; both seemed to develop policies in bureaucratic silos, without weighing how such policies might affect the Internet as a whole. In June 2013, after important media outlets publicized the revelations of former NSA analyst Edward Snowden (Davies: 2014), internet activists began to point out the contradictions in U.S. and EU policies.

As of this writing, June 2014, the EU, the U.S. and their negotiating partners have been unable to find common ground regarding how to promote the free flow of information; limit information flows in the name of national security; and protect privacy. The U.S. and the EU are also divided over when to restrict (or censor) information; whether localization of servers is protectionism; and whether U.S. and EU firms should export Internet related technologies (from servers to malware) that could be used to undermine the human rights of information online, while allowing exceptions to protect national security; public information, while allowing some exceptions to the free flow in the interest of protecting national security, public morals; or public health.[5] But in 2013, we learned that the U.S. National Security Administration (and those of several other countries) had taken steps that limited, hijacked or transformed information flows. Some states including several EU countries found in the Snowden revelations an opportunity to wrest greater market share from U.S. internet dominance. Hence, although these states generally support free flow, they also adopted policies that some labelled data protectionist or data nationalism. Consequently, I argue that trade agreements have yet to set information free and may in fact be making it less free.[6]

Nonetheless, U.S. and EU trade policies are a work in progress; you and I can still have significant influence over their direction. We can encourage trade officials to think more holistically about the balance between the free flow of information and the need to control information flows in the name of privacy and national security. Policymakers should begin by developing shared principles for maintaining the One Global Internet and to delineate steps to take when countries do not live up to these principles. Secondly, governments should include language in trade agreements that relate to the regulatory context in which the Internet functions including free expression, fair use, the rule of law, net neutrality, and due process. Finally, when they negotiate trade agreements, policymakers should use language to encourage interoperability.

For more information about trade and information flows, view the Prezi at

Susan Ariel Aaronson is Research Professor of International Affairs at GWU, where she directs the Trade and Internet Governance Project. She also directs a fellowship program-the eBay Policy Scholars. Her current research looks at government creation, purchase, and use of malware and its implications for economic growth, trust, and human rights.

[1] Joe Mullin, “Tim Berners-Lee Takes the Stand to Keep the Web Free,” Wired, 2/08/12,, last searched 6/15/2014; on Lee in 2011, see Tim Berners-Lee: Spies’ cracking of encryption undermines the web,”

and Jemima Kiss, “An online Magna Carta: Berners-Lee calls for bill of rights for web,” The Guardian,,

Last searched 6/18/2014.

[2] Tietje notes that this challenge is not new; nations had to collaborate to deal with Morse code, the telegraph and the first transatlantic cable from 1858-1866 (Tietje:2011).

[3] Toby Mendel, “freedom of Information as an Internationally Protected Human Right, ND, The limitations on freedom of expression are spelled out in Article 19 (3) of the International Covenant on Civil and Political Rights of the Universal Declaration of Human Rights. See Article 19, “Limitations,”, last searched 6/24/2014.

[4] Tim Berners Lee, an engineer widely credited with creating the concept and protocols of the Internet has outlined the security risks to the Internet.

[5] NA, “US Tables New TISA Proposal to Ensure Free Flow of Data,” 5/15/2014, On TTIP, see On TISa negotiations, pl. see Department of Foreign Affairs and Trade, Australia, “Trade in Services Agreement (TiSA),”; and on TPP, see, all last searched 6/18/2014.

[6] Much of the initial research in this article was based on a study funded by the Ford and MacArthur Foundations, as well as the Minerva Initiative, “Can Trade Policy Set Information Free? Trade Agreements Internet Governance and Internet Freedom: 2012).

The Internet That Connects Us–that brings us news, culture, ideas, goods and services–Is Also Increasingly Dividing Us


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GWU’s Institute for International Economic Policy has long been involved on Internet foreign and economic policy issues where officials must work with other governments and multiple stakeholders to achieve policy balance.  ( )

We work at the intersection of the Internet, economic growth and trade, and human rights.  We are currently researching government use of malware across borders; and the evolution of U.S. and EU trade and digital rights. Please visit the site and review our publications and conferences.

This summer we are proud to host IGF-USA 2014 at GWU on July 16th, 2014. In the wake of the Snowden revelations digital rights are key concerns for IGF-USA attendees. One panel at IGF-USA will focus on these human rights concerns.

The panel will include:

Scott Busby, Deputy Assistant Secretary of State for Democracy, Human Rights and Labor;
Avri Doria, an expert on human rights, ethics and technological change;
Deborah Brown, from the Association for Progressive Communications; a long time internet rights activist;
Alberto Cerda, Professor of Law at the University of Chile and also a Fulbright Commission scholar pursuing a doctoral degree in law at Georgetown University;
Ben Blink of Google’s Free Expression team;
Carolina Rossini of Public Knowledge will moderate

Panelists will address the following and other topics:

-How can U.S. stakeholders help reinforce the continued preeminence of human rights concerns in global Internet governance conversations and meetings?

-How does the U.S. government understand its obligations to protect the human rights of non-Americans in the digital realm?

– Given the dominance of the U.S. government in the realm of global communications surveillance, how can the U.S. role model best practices with respect to protecting human rights in the digital realm?

-Should activists work towards an enforceable system of human rights online?

Dr. Susan Aaronson ( is pleased to answer any questions about IGF-USA 2014 and/or specifically this panel. Follow IIEP on Twitter (@IIEPGW). Follow IGF-USA on Twitter (@IGFUSA2014) and Facebook.