Reopening the curtain on arts in New York City

Originally posted in New York Daily News

Thousands of theaters across the country were shut down in 2020 because of national and state quarantine policies. The arts, entertainment and recreation sectors experienced the greatest employment decline in the entire economy, plummeting by 50.7% between Feb. 15 and April 25, 2020.

While some sectors can go remote, the performing arts sector — home to many classical musicians, ranging from violinists to opera singers — bore the greatest burden of these restrictions. Arguably the most central hub for the arts in the entire United States, New York City was among the hardest hit.

And the performing arts are still suffering. Although Broadway is beginning to reopen, casting the characters in a show and stewarding an overall production takes time. The latest data from the Bureau of Labor Statistics, for example, shows that employment in the performing arts is 44% lower in May 2021, relative to February 2020, whereas total nonfarm employment is 5% lower.

While mass layoffs are always hard to cope with, the adverse effects on the fine arts have been especially damaging to society. The arts, when done right, have a wide array of benefits beyond bringing delight to the end-use consumer. By bringing people together who often hold wildly different political opinions, the arts can help diffuse political polarization. Moreover, by drawing people together and fostering social interaction, the arts foster greater creativity and innovation.

In a newly-released report through the American Enterprise Institute, I argue that arts are also important for education, and there is large public support for arts education too. The arts confer substantial benefits to children, ranging from improved cognitive and non-cognitive skills to heightened socialization to the cultivation of executive function skills. In other words, the arts do not just entertain and inspire adults, learning about the arts also induces childhood development.

Among the three policy recommendations from the report, one of the suggestions is the allocation of COVID-19 relief funding towards arts education in schools, together with an integration of skilled arts into the educational system. With so many artists out of work due to the closure of theaters, the decline in demand due to migration out of New York City, or a combination of them, these artists still have important skills that can be effectively utilized in the city. In particular, suppose that schools without an arts education curricula could receive funding that is specifically allocated towards hiring interim arts teachers and consultants to instruct children?

In our research, we discuss the scientific literature on arts education in early childhood and explain that the arts can also be highly therapeutic, particular for those who have experienced trauma. That is especially relevant for many children who were pulled out of in-person schooling and were unable to socialize regularly because of the national and state quarantines.

Moreover, other research of mine finds that the surge in child-care regulations, including declines in the child-to-staff ratio, adversely affected maternal labor force participation and employment. That means many families may have suffered financially because mothers had to drop out of the labor force to care for their children, limiting the amount of money that they have available to spend on typical expenditures, such as private tutoring or the arts.

However, that will require a change in the general attitudes between educators and practitioners. Currently, there is a rift between the two, but that need not exist. Educators need practitioners who are skilled and understand how the sector works, and practitioners need educators whose job it is to impart knowledge and assess it among new cohorts of learners. There is a win-win deal here, if only we reach for it.

Makridis is a research professor at Arizona State University and chief technology officer and head of research for Living Opera, an arts and education technology startup.

As the Specter of Inflation Looms, Consumers Consider Cryptocurrency

Originally published in National Review with Raghav Warrier

Since the introduction of fiat money into the global currency market, the U.S. dollar has been viewed as one of the safest forms of tender for international business and banking. As the world’s reserve currency, the dollar is used as the standard unit for commodities such as gold and oil. While the dollar is still used on a global scale for international transactions, domestic consumers have been shaken as fears of inflation continue to grow, particularly after two consecutive weak jobs reports. A major root cause of this distrust: volatility in the Federal Reserve’s policymaking.

Deutsche Bank has published a new report highlighting these concerns, titled “Inflation: The defining macro story of this decade.” They remark that “U.S. macro policy and, indeed, the very role of government in the economy, is undergoing its biggest shift in direction in 40 years. In turn we are concerned that it will bring about uncomfortable levels of inflation.”

For one, the bank has skirted around designating a concrete inflation policy. Vague language about “average inflation targeting” has been a source of ambiguity with consumers and investors having little to no knowledge of how the Federal Reserve plans to tackle inflation as the CPI is set to rise upwards of 3.5 percent. Because policymakers are in disagreement as to a proper balance of growth and inflation, the target value keeps increasing, furthering uncertainty and increasing the perception of the Fed as a volatile and unpredictable institution. This rising uncertainty, coupled with historical changes in inflation policy, particularly in the COVID-19 pandemic era, when the Federal Reserve has been no-holds-barred in terms of expansionary monetary policy since the onset of the pandemic, and contrary to other central banks, it shows no sign of stopping. This approach signals that the bank is tied down to policies from the pre-pandemic era, noting that overheating can be likely if the bank fails to slow down the rapidly growing economy.

The growing concern over the Fed’s inability to properly execute policy has two major implications. First, a decline in trust among consumers. A survey from Axios finds steadily decreasing consumer confidence in the U.S. central bank. In most demographic groups, including college graduates and senior citizens, less than 40 percent express confidence in the Fed, with only 34 percent stating that they have a moderate or high level of trust in the central bank.

Second, a decline in dollar confidence on the global stage. Some investors warn that the dollar could lose its status as the global reserve currency. The Fed’s decision to hold interest rates at zero, coupled with trillions in asset purchases, has coincided with a decrease in foreign holdings of U.S. debt by 2 percent, or $127 billion, in the past year alone. Moreover, the Fed has become involved in many other activities besides monetary policy, creating a “mission creep.” These actions have put the wind in the sails for a move toward cryptocurrency, ranging from Bitcoin to Ethereum, as a new medium for exchange. Simply put, consumers pay attention to central-bank policy and, at least some, will not take rising uncertainty forever.

Deutsche Bank has published a new report highlighting these concerns, titled “Inflation: The defining macro story of this decade.” They remark that “U.S. macro policy and, indeed, the very role of government in the economy, is undergoing its biggest shift in direction in 40 years. In turn we are concerned that it will bring about uncomfortable levels of inflation.”

For one, the bank has skirted around designating a concrete inflation policy. Vague language about “average inflation targeting” has been a source of ambiguity with consumers and investors having little to no knowledge of how the Federal Reserve plans to tackle inflation as the CPI is set to rise upwards of 3.5 percent. Because policymakers are in disagreement as to a proper balance of growth and inflation, the target value keeps increasing, furthering uncertainty and increasing the perception of the Fed as a volatile and unpredictable institution. This rising uncertainty, coupled with historical changes in inflation policy, particularly in the COVID-19 pandemic era, when the Federal Reserve has been no-holds-barred in terms of expansionary monetary policy since the onset of the pandemic, and contrary to other central banks, it shows no sign of stopping. This approach signals that the bank is tied down to policies from the pre-pandemic era, noting that overheating can be likely if the bank fails to slow down the rapidly growing economy.

The growing concern over the Fed’s inability to properly execute policy has two major implications. First, a decline in trust among consumers. A survey from Axios finds steadily decreasing consumer confidence in the U.S. central bank. In most demographic groups, including college graduates and senior citizens, less than 40 percent express confidence in the Fed, with only 34 percent stating that they have a moderate or high level of trust in the central bank.

Second, a decline in dollar confidence on the global stage. Some investors warn that the dollar could lose its status as the global reserve currency. The Fed’s decision to hold interest rates at zero, coupled with trillions in asset purchases, has coincided with a decrease in foreign holdings of U.S. debt by 2 percent, or $127 billion, in the past year alone. Moreover, the Fed has become involved in many other activities besides monetary policy, creating a “mission creep.” These actions have put the wind in the sails for a move toward cryptocurrency, ranging from Bitcoin to Ethereum, as a new medium for exchange. Simply put, consumers pay attention to central-bank policy and, at least some, will not take rising uncertainty forever.

The Omnishambles

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MONETARY POLICY

As the Specter of Inflation Looms, Consumers Consider Cryptocurrency

By CHRISTOS A. MAKRIDIS

& RAGHAV WARRIER

June 18, 2021 6:30 AM

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Cryptocurrency ATM at a shop in Union City, N.J., May 19, 2021. (Mike Segar/Reuters)

How Fed policy is pushing some investors into cryptocurrencies

Since the introduction of fiat money into the global currency market, the U.S. dollar has been viewed as one of the safest forms of tender for international business and banking. As the world’s reserve currency, the dollar is used as the standard unit for commodities such as gold and oil. While the dollar is still used on a global scale for international transactions, domestic consumers have been shaken as fears of inflation continue to grow, particularly after two consecutive weak jobs reports. A major root cause of this distrust: volatility in the Federal Reserve’s policymaking.

Deutsche Bank has published a new report highlighting these concerns, titled “Inflation: The defining macro story of this decade.” They remark that “U.S. macro policy and, indeed, the very role of government in the economy, is undergoing its biggest shift in direction in 40 years. In turn we are concerned that it will bring about uncomfortable levels of inflation.”

For one, the bank has skirted around designating a concrete inflation policy. Vague language about “average inflation targeting” has been a source of ambiguity with consumers and investors having little to no knowledge of how the Federal Reserve plans to tackle inflation as the CPI is set to rise upwards of 3.5 percent. Because policymakers are in disagreement as to a proper balance of growth and inflation, the target value keeps increasing, furthering uncertainty and increasing the perception of the Fed as a volatile and unpredictable institution. This rising uncertainty, coupled with historical changes in inflation policy, particularly in the COVID-19 pandemic era, when the Federal Reserve has been no-holds-barred in terms of expansionary monetary policy since the onset of the pandemic, and contrary to other central banks, it shows no sign of stopping. This approach signals that the bank is tied down to policies from the pre-pandemic era, noting that overheating can be likely if the bank fails to slow down the rapidly growing economy.

The growing concern over the Fed’s inability to properly execute policy has two major implications. First, a decline in trust among consumers. A survey from Axios finds steadily decreasing consumer confidence in the U.S. central bank. In most demographic groups, including college graduates and senior citizens, less than 40 percent express confidence in the Fed, with only 34 percent stating that they have a moderate or high level of trust in the central bank.

Second, a decline in dollar confidence on the global stage. Some investors warn that the dollar could lose its status as the global reserve currency. The Fed’s decision to hold interest rates at zero, coupled with trillions in asset purchases, has coincided with a decrease in foreign holdings of U.S. debt by 2 percent, or $127 billion, in the past year alone. Moreover, the Fed has become involved in many other activities besides monetary policy, creating a “mission creep.” These actions have put the wind in the sails for a move toward cryptocurrency, ranging from Bitcoin to Ethereum, as a new medium for exchange. Simply put, consumers pay attention to central-bank policy and, at least some, will not take rising uncertainty forever.

MORE IN INFLATION

• On the Economy, Joe Biden Isn’t Even Trying

• The Omnishambles

• U.S. GDP Growth Slows Dramatically in Third Quarter

Examining investor incentives yields a common theme in that nations and individuals alike want to be free from interest rates controlled by a volatile central bank, or unpredictable policies from an unstable U.S. federal government. Enter Bitcoin, a safe haven for investors transitioning away from fiat currency into a competitive currency market, where the ability to exchange money digitally without regulation looks increasingly attractive. While there is great volatility surrounding cryptocurrency, stemming from seemingly random price spikes and drops, this volatility can excite investors. Believe it or not, the high-risk, high-reward nature is thrilling to investors — if they are choosing to invest in increasingly risky U.S. treasuries because of Federal Reserve blunders, or high-risk cryptocurrencies, the choice is ultimately clear. Results such as these have already been noted empirically in Venezuela, where rampant inflation combined with poor governance by the country’s central bank is pushing citizens of all socioeconomic statuses to Bitcoin and other cryptocurrencies.

While there are risks, to be sure, cryptocurrencies are inherently decentralized and confer various benefits over fiat currency, which explains why investors turn to it as an alternative — the lack of ties to world economies, low online payment fees as opposed to credit cards and money-transfer services, and security due to the nearly impenetrable nature of blockchain technology all make it an extremely attractive competitor to the dollar. Certain cryptocurrencies have seen immense growth in 2021 and are trending high; besides the major players Bitcoin and Ethereum, Cosmos and Dogecoin have seen 139.17 percent and 7,709.67 percent growth in the past year respectively.

Players in these markets are not just restricted to the ultrawealthy either, with the demographics of cryptocurrency investors being centered mainly among Millennials (ages 18 to 34) who mainly focus on Bitcoin, Ethereum, and Litecoin. These investors are looking not only to the short-term profits but also to long-term trends that make cryptocurrency much more lucrative than many centralized currencies. That’s one of the long-term bets that crypto investors are making: Despite short-run growing pains, decentralization will be more stable and prices will be more informative about value in the long run.

Another reason investors might flock to crypto is its finite supply. Unlike fiat currencies that are often influenced by central banks that can expand the money supply, a fixed supply can create more discipline in the market. Admittedly, there is a lot of debate in the popular press, but fundamentally many of these debates are philosophical, coming down to whether someone believes that a central bank that effectively prints more money actually brings more value into the economy.

As concern about inflation and “mission creep” begin to mount, investors will increasingly flock to cryptocurrencies. Time will tell how much of the surge in cryptocurrency activity is genuine versus just buzz and sentiment-driven, but already it is proving to be an oasis that is free from government intervention and manipulation by centralized authorities.

Christos A. Makridis is a research professor at Arizona State University and a digital fellow at Stanford’s Digital Economy Lab. He holds doctorates in economics and management science & engineering from Stanford University. Raghav Warrier is a rising sophomore at the Barrett Honors College at Arizona State University, studying computer science, economics, and mathematics. His interests include digital economic trends and quantitative economic analysis.

New Study Finds Educational Technology Can Have A Democratizing Effect In Higher Education

Originally posted in Zenger News and Newsweek

A laptop screen is increasingly taking the place of the university lecture hall — fueling a $200 billion EdTech industry and touching off a debate that pits union leaders and professors against software entrepreneurs and budget-conscious lawmakers.

EdTech, or educational technology platforms, teach lessons at a much lower cost than in-person instruction, amounting to a roughly 80 percent decline in per-student cost, according to a study published in Science Advances. It also offers new learning opportunities to adult students, U.S. soldiers, foreign students and ordinary students stranded by the pandemic.

The Insight Partners research firm estimates the EdTech industry is projected to reach $234.41 billion by 2027 — a 15.3 percent increase compared to 2020.

Yet as the market grows, so does the controversy.

A key criticism — from teacher’s unions to higher education analysts — is that EdTech platforms have historically granted greater benefits to affluent or high-performing students. Now, new research calls into question that long-held belief.

Online learning only worsens inequality among students, critics say, adding they prefer social and political changes to technological solutions. “Flexibility from online learning is good, but it hasn’t been nearly up to the task of addressing the terrible upheaval in our society,” said Professor Justin Reich at the Massachusetts Institute of Technology’s Teaching Systems Lab.

“Greater equality in education will come from social movements, from politics, from organizing that provides greater public support for building human capacity, especially among marginalized students,” Reich said.

But new research published in the Proceedings of the National Academy of Sciences challenges some expert assumptions about the relative value of political versus technological changes in the education field.

College enrollments for fall 2020 sank by 16 percent and community-college enrollments fell by 9.5 percent, according to data from the National Student Clearinghouse. Enrollments from new international students declined even more steeply — by 43 percent, according to data from the Institute of International Education.

Conversely, EdTech learning services are skyrocketing, according to data gathered by Class Central, a search engine and review site for massive open online courses, commonly known as “MOOCs.”

Coursera, the nation’s largest online learning platform, founded by two Stanford University computer science professors in 2012, added 9.2 million new registered users in 2019. Then came the pandemic. In 2020, Coursera added 30.6 million more users — a 59 percent increase year-over-year. Similarly, edX, another one of the larger EdTech platforms, saw a 161 percent year-over-year growth in registered users to 35 million.

Some of the most effective EdTech platforms focus on teaching technical skills that are in high demand.

Demand for artificial intelligence and machine-learning skills is expected to grow by 71 percent per year through 2025, according to a recent study by business analytics firm Burning Glass Technologies.

The new research published in the Proceedings of National Academy of Sciences uses data from DataCamp, an EdTech company focused on data science and programming skills, and found the expansion of online learning during the pandemic led to greater registration and engagement overall, as well as a proportional increase across low- and high-income ZIP codes.

Full disclosure: The reporter is a nonresident research scientist at DataCamp.

While the national surge in EdTech might not be surprising, given all the confounding factors of the pandemic, the study leverages the introduction of nonessential business closure orders at different points in time across states, thereby allowing the researchers to compare students in the same state before and after the adoption of these orders. This statistical strategy controls for shifts in national income and demand for education.

Business closures, driven by pandemic-relief policies in various states, drove a 38 percent increase in new DataCamp users and a 6 percent increase in engagement among existing users, according to the authors. With more time on their hands, due to state and national quarantines, many people signed up for new learning opportunities.

Completion rates for weekly online lessons are also growing.

The average number of weekly exercises completed was 37.8 in May 2020, compared with 28.8 in May 2019 and 28.7 in May 2018.

The results confound some of EdTech’s critics and bring a new perspective: The DataCamp study shows these effects were proportional across higher- and lower-income ZIP codes, suggesting the expansion of EdTech services had a democratizing effect — at least in the market for programming and data-science skills.

This marks a decisive shift toward more people accessing educational content and greater learning among those who are accessing the content. That is important since one of the biggest challenges associated with the rise of massive open online courses has been the lack of engagement.

Online education tends to work better for four-year college students than for trade school, community college or for-profit school students, according to a report co-authored by Di Xu, a professor at University of California Irvine.

“The relative effectiveness of online learning varies substantially by college setting and by subgroups of students,” Xu said. Xu has also published related work pointing out the online performance gap is larger for some subgroups, such as younger students and minorities.

However, the achievement gaps that Xu has identified in online education are a product of several related risk factors coming together, including that part-time students are much less likely to complete a college degree program than full-time students, according to Department of Education data.

Technology alone is never a panacea, Reich emphasized in his 2020 book “Failure to Disrupt: Why Technology Alone Can’t Transform Education.”

Still, the sharp climb in online learning shows the technology is increasingly attractive to nontraditional, younger and minority students. The latest evidence is starting to suggest that EdTech can improve access to learning solutions by reducing barriers.

Christos A. Makridis is a research professor at Arizona State University and a nonresident research scientist at DataCamp. Christos holds dual doctorates in economics and management science & engineering from Stanford University. His academic research is concentrated at the intersection of labor economics, human capital and the digital economy.

Guest Post by Artur Meyster: Covid-19 & Higher Ed

Colleges and universities are struggling to handle the current pandemic. They have yet to find the balance of in-person classes and online accessibility. The rapid transition from in-person to online learning forced institutions to rethink the learning process and resources that have gone decades without change. Longstanding educational institutions that don't invest in change face being left in the dust to agile schools adapting to the pandemic and promoting online learning.

Education continues to move forward despite the pandemic. High school graduates and career changers looking to learn new skills aren't going to let much get in their way. Students and teachers will find a way to keep students on track to getting into colleges and earning their degrees.  

The Admissions Process Looks Different

High school students looking to continue their educational careers will face a process unlike anyone else has beforehand. Student applications will look vastly different than their peers' applications from just one year ago. The pandemic made it impossible for students to complete the normal requirements of applying to college. A majority of the requirements outside of classroom learning were canceled, alongside standardized tests, entire sports seasons, theater, and even after-school jobs. The lack of extracurriculars will give students fewer ways to stick out on their applications.

At the same time, college admissions counselors are going to look for new metrics to determine an applicant's merits. They know the hardships COVID-19 caused for students and know that the college experience will be different than what students expected. College admissions counselors are looking for students who practice self-care, watch out for those around them, and increase their families' responsibilities.  

More Students Opt for Online Degrees

Many schools are opting for online learning in the upcoming semesters and won't offer any on-campus classes. Schools aren't lowering their tuition either. Traditionally, online schools cost less than their on-campus counterparts, largely due to lack of room and board. Now that students have more exposure with online learning, they might look for more online learning opportunities. 

Online colleges were increasing in popularity before the pandemic. Prior to the pandemic, most large universities didn't offer a wide variety of online courses. The reluctance to adopt online learning opened the doors for forward-thinking educators. The few schools that saw the potential of online learning are known across the country despite their actual campuses being in smaller areas of the country. 

Schools Will Adapt to Changes

The education industry will be hard-pressed to move away from in-person learning. Some students need personal interactions to get the best results. Colleges will entice students with new features to attract them to campus life. 

After temporarily moving classes online, students and faculty are comfortable with the new learning method. The familiarity with online learning makes students more likely to enroll in future online courses and colleges more likely to offer them. 

The increased number of online college courses will open more doors for non-traditional students as well. Students who are earning their degrees at later ages or after leaving the military will have more options than before the pandemic. Instead of nationally run for-profit online colleges, non-traditional students will have the option to attend top-tier schools without quitting their jobs or moving across the country. 

Self-paced Courses

A unique aspect of online courses is the ability to pre-record lectures. Online courses don't have to be instructor led. The rise of Coursera and Udemy during the pandemic is evidence of this. The self-paced option for students gives them the ability to learn at their own pace. Learning at your own pace gives students the time to dive deep into their studies. Self-paced courses are one of the cornerstones to the fastest online degrees. Students don't have to waste time waiting for the class to move to the next topic if they already understand the lesson. Self-paced courses are available to students with disabilities who need extra time to understand concepts or need to get their resources through different methods.  

One shortcoming of self-paced learning is collaboration and other perspectives. In a typical class, the entire class can hear questions from their peers. Some questions bring to light new angles of thinking or fill in gaps that the professor failed to include. 

Peer collaboration isn't ideal for self-paced learning either. Collaboration and group work are vital components of the education industry's goal of getting students ready for the workforce. While individual skills are important, collaboration and teamwork are major sticking points for hiring managers. After all, most people pursue education to increase their career opportunities.

Artur Meyster is the Chief Technology Officer of CareerKarma.

Delisting Sudan From Terrorism List Will Drive Democratic And Economic Reforms

This article was originally posted on National Interest.

Ever since the first terrorist attack against the World Trade Center in 1993, the United States has designated Sudan as a state sponsor of terrorism. However, since then, particularly over the past year and a half, Sudan has undergone significant democratic reforms, including a recent victory and step towards internal peace and stability in Juba, South Sudan.

Even former Obama Administration officials agree with the move. Cameron Hudson remarked that “[Sudan] needs to have this label removed… Sudan’s designation as a state sponsor of terrorism is a ‘vestige’ of its past.” And, the 9/11 Commission, an independent and bipartisan body, concluded that Sudan was not responsible, expropriating all of Osama bin Ladin’s assets when he left in 1996.

In a historic move, President Donald Trump announced on Monday that the State Department would remove Sudan from the list of state sponsors of terrorism, in addition to unleashing new, sweeping economic and humanitarian assistance to continue their economic development plans. In response, Sudan is also formalizing plans to normalize their relations with Israel.

The move comes at an especially important time. Although Sudan has undergone major democratic reforms and worked hard to expel terrorist links, the sanctions that had been in place since 1993 were crippling its economic and investment activities. According to Prime Minister, Abdalla Hamdok, “there was no guarantee the transition to democracy would stay on course until elections scheduled for 2022.” Hamdok’s detractors have been attacking him at every turn—even manifesting in an attempted assassination this past March.

Fortunately, President Trump’s decision, after many hours of negotiations and foundation-building through the Department of State and the National Security Council, comes after Senators Chuck Schumer and Bob Menendez blocked a Congressional measure to take Sudan off the list since they wanted to keep their options open for potential payouts from the Sudanese government to 9/11 victims, arguing that they were responsible for al-Qaeda’s build-up.

Absent the announcement, all the reforms that were made over the past year and a half would have slipped away. As some have rightly pointed out, the blacklisting means that legitimate Sudanese businesses, and the economy more generally, are unable to receive foreign direct investment and both the World Bank and the International Monetary Fund are unable to adjust their debt relief packages. Now, Sudan will ride on the wings of the Middle East peace deals that were negotiated last month, setting an example to its neighbors about the benefits of peace and democratic reform.

A democratic and economically robust Sudan is an incredible asset for Western democracies in Northern Africa. First, while China has traditionally had a strong hold on Sudan, particularly with former Sudanese President Omar al-Bashir, Beijing has distanced itself recently. Sudan can continue its reforms without relying on manipulative deals from the Chinese Communist Party (CCP).

Through the Belt and Road Initiative, the CCP has been angling for control over more land and resources. For example, Sudan has been put in the middle of a vicious grab for power between Egypt and Ethiopia, specifically over the Grand Ethiopian Renaissance Dam. In this sense, Sudan is positioned in a strategic location, especially when put in perspective of the surrounding failed states. Stability in Sudan will serve as an oasis of peace in a region marked by so much volatility and terrorist activity.

Second, given Sudan’s historical violations of religious freedom, it can become a beacon and textbook example for not only economic but also social and political reform that encourages similar efforts among neighbors. Already, they’ve made incredible progress, but continuing these efforts takes work. My research shows that improvements in religious liberty are incredibly important for human flourishing, leading to greater women empowerment, access to justice, civil liberties, and freedom of expression, which are all prerequisites for economic activity.

That’s exactly what’s been happening in Sudan over the past year: they’ve dropped the death penalty for apostasy, they’ve empowered women in the political process, and undertaken significant political reforms to root out corruption. These are all ingredients for economic development and flourishing.

While there has been bipartisan support for removing Sudan from the state sponsors of terrorism list, politics has gotten in the way for far too long. The road ahead is not easy, but now the stage is set for Sudan to continue its historical economic, social, and political reforms to become another light to the world. The tide is turning with the advent of the Middle East peace deals—and the good news from Sudan is yet another illustration of the possibilities that reside when we come together.

Christos A. Makridis is an assistant research professor at Arizona State University, a non-resident fellow at Baylor University, a visiting fellow at the Foundation for Defense of Democracies, and a senior adviser at Gallup. Christos previously served on the White House Council of Economic Advisers. Follow him on Twitter and Instagram @camakridis.

Azerbaijan's assault against Armenia threatens Democracy everywhere

This article was originally posted on The Hill.

On September 27, Azerbaijan began a coordinated full-scale aerial and missile attack on Artsakh, Armenia. Turkey has played an especially active role by not only supporting, but also driving much of Azerbaijan’s aggression. It has provided its proxy with foreign mercenaries and the full extent of its military arsenal, including its F-16s . In fact, shortly after the assault on Artsakh began, Turkish President Recep Erdogan announced his full support for Azerbaijan and called for the overthrow of the Armenian government. These tactics are not new: Erdogan has employed them countless times, from its intervention in Libya to its dispute with Greece in the Mediterranean.

Unfortunately, some actors in the international community have dismissed Azerbaijan's role as the aggressor, calling both sides to “prepare populations for peace.” But if Armenia was never in search for war in the first place, what more do they have to prepare for?

In contrast, Azerbaijan has been preparing its population for war over the past two decades — institutionalizing anti-Armenian sentiment, stockpiling military assets purchased from Turkey and Israel, and steadily sidelining efforts for a negotiated solution to the conflict. In fact, Azerbaijan recently disavowed the Organization for Security and Cooperation in Europe (OSCE) Minsk Group peace process when President Ilham Aliyev called the Nagorno Karabakh (Artsakh) mediation efforts “pointless” and threatened to resolve the issue militarily. What’s happening now shouldn’t come as a surprise to the international community — Azerbaijan telegraphed it all along.

Azerbaijan and Turkey have been working strategically to influence international public opinion, especially in the United States, Israel and Europe. Azerbaijan’s nefarious foreign dealings were recently exposed by an Organized Crime and Corruption Reporting Project (OCCRP) investigation into the “Azerbaijani laundromat,” an extensive money laundering operation that saw Azerbaijan funnel over $2.9 billion dollars between 2012 and 2014 into foreign shell corporations to buy favor among international institutions, politicians, lobbyists and journalists. UNESCO and the European Parliament were extensively targeted, and recent reports have surfaced from Israel of the transfer of a significant amount of funds from the state-owned Israeli Aerospace Industries to a laundromat-linked account after a $5 billion contract was signed between the two.

Azerbaijan's public relations efforts have sought to obscure the international community’s awareness of the virulent state-sponsored anti-Armenian racism throughout Azerbaijani society that has resulted in the incitement of hate crimes, such as the destruction of cultural monuments and the granting of impunity to the perpetrators of hate crimes. Moreover, Azerbaijan and Turkey have repeatedly dismissed and denied the Armenian genocide, not only refusing to take accountability for the actions of their predecessors in perpetrating this crime against humanity, but going to the lengths of openly espousing the very ideologies that informed the genocide 105 years ago.

These actions have had international reverberations. For example, following Azerbaijan's aggression against the Republic of Armenia in July, tens of thousands of Azerbaijani demonstrators chanted “death to Armenians” in the streets of Baku. That has spread to diaspora even in the United States, where in recent weeks, most notably in San Francisco, a series of attacks were waged against an Armenian church and elementary schools.

Ironically, Azerbaijan has often touted itself as a leader in human rights and religious liberty. But according to measures of religious liberty from the Varieties of Democracy, Azerbaijan ranks within the 10th percentile of countries across the world as of 2018 — far below the median. In contrast, Armenia ranks at roughly the unweighted mean across all countries in the data.

While religious liberty might seem like a luxury to some students of international relations, it is an important determinant of human flourishing. Using a sample of over 150 countries surveyed between 2006 and 2018, new research from one of the authors shows that religious liberty has a causal effect on human flourishing, particularly among religious minorities. Importantly, these results are present even after controlling for measures of economic freedom (e.g., property rights) from the Heritage Foundation’s Index of Economic Freedom and measures of economic activity (e.g., GDP).

The research suggests that religious liberty is a prerequisite for democratic governance, aiding the process for civic engagement and women's empowerment and reducing the potential for public and political corruption. Not surprisingly, limiting the freedom to choose and arrive at even the most basic judgments about their identity stifles creativity and increases the potential for corruption by overly zealous and powerful bureaucrats. In this sense, until Azerbaijan recognizes the legitimate right to self-determination of the Armenian people free of threat of persecution for their religion, culture and ethnic identity, peace is going to be impossible.

Through the years, the chief failure of the OSCE Minsk Group – the entity mandated with finding a settlement to this conflict – and its three co-chairs – the United States, Russia and France – has been the refusal to directly attribute blame to Azerbaijan for its constant aggression. Despite efforts by the U.S to curtail Azerbaijan’s aggression during the 1991-94 war, and in recent years its advocacy for the implementation of the Royce-Engel peace protocols, successive administrations have continued to appease Azerbaijan, including the recent earmarking of $100 million in military assistance to the Caspian dictatorship earlier this year.

While Azerbaijan has positioned itself as a key strategic partner to the U.S. in the region, often cynically deploying its relationship with Israel as an example of its good-faith partnership, its close ties to an increasingly dictatorial and expansionist Turkey, as well as its oft-overlooked relationship with Iran and Russia, demonstrates that Azerbaijan is only out to serve its own interests, even if that means transferring millions of dollars into Russian and Iranian state-linked companies, or selling Iran a 10 percent stake in one of its major oil pipelines despite international sanctions regimes.

While Azerbaijan has attempted to shield itself from international scrutiny by riding on the presence of tense domestic politics in the United States and a global pandemic, we cannot ignore it any longer. The international community must recognize that failure to stand up for religious minorities anywhere is a threat to them everywhere. Inaction creates precedent and emboldens dictators.

Christos A. Makridis is an assistant research professor at Arizona State University, a non-resident fellow at Baylor University, and a senior adviser at Gallup. Follow him on Twitter and Instagram @camakridis. Alex Galitsky is communications director of the Armenian National Committee of America - Western Region, the largest Armenian grassroots advocacy organization in the United States. Follow him on Twitter @algalitsky.

How Regulation Kills Middle-Class Jobs

This article was originally posted on National Review.

It’s no secret that we’ve observed a rise in wage inequality over the past two decades. Although blue-collar wages and employment in manufacturing experienced a substantial bump over the past three years, the middle class has been hollowed out: Workers in the middle of the skill distribution have seen the weakest growth in wages and jobs.

Understanding the source of these changes in the labor market is a prerequisite for producing effective public-policy prescriptions. Otherwise, any “solutions” may end up being counterproductive.

In a recent working paper released through the Mercatus Center at George Mason University, Georgetown professor Alberto Rossi and I investigate changes in the labor market for financial services, focusing on the rise of science, technology, engineering, and mathematics (STEM) workers. STEM employment grew by 22 percent between 2011 and 2017, exceeding growth in any other sector besides professional services. STEM jobs are associated with large wage advantages and poised for further growth over the next decade — almost three times as much as non-STEM jobs.

These figures represent a substantial shift in the demand for skills within the financial-services sector. Employment for bank tellers, on the other hand, declined by 10 percent during that time — from 533,650 to 481,490 workers.

These patterns raise a question: Were changes in financial-services jobs the natural result of technological development and competition, or something else? Although we investigate three potential theories in the paper, we find that the rise in STEM employment is linked with a rise in regulation. Financial services, more than any other industry, experienced a surge in regulatory restrictions between 2011 and 2017, driven largely by the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010.

Using data spanning every occupation over time, we show that a 10 percent rise in regulatory restrictions is associated with a 5.3 percent rise in STEM employment. Increases in regulatory restrictions are also associated with declines in lower- and middle-skilled jobs. That’s important, given that non-STEM jobs have historically served an important role for the middle class, creating opportunities for upward mobility and family stability. This marks one of the important unintended consequences of greater regulation.

Unlike prior studies that have sought to quantify the effects of regulation, our analysis uniquely isolates the responsiveness of STEM employment, relative to its non-STEM counterparts, to changes in regulation within the same sub-sector over time. This helps avoid concerns about spurious factors like overall changes in technology or a growing demand for the digital workforce.

What explains the link between regulation and STEM employment? Not surprisingly, we show that increases in regulation are associated with greater compliance costs. In this sense, the data suggest that firms, especially in financial services, hire STEM workers at least in part to automate more of their organizational activities, which reduces the scope for human error and raises the overall value of the business. In fact, according to some estimates, the market for regulatory technology (or “RegTech”) is expected to grow from $4.3 billion in 2018 to $12.3 billion by 2023.

In sum, the surge in regulation accelerated the shift toward STEM employment in financial services, adversely impacting many lower- and middle-skilled workers who traditionally relied on these jobs.

These results highlight the importance of thinking through the unintended consequences of regulations before enacting them. Indeed, even if your priority is to mitigate inequality, these results show that the rise in regulation adversely affected the very individuals that it aimed to help. On the other hand, regulatory reform that focuses on removing unnecessary costs works in the other direction: It leads to increases in economic growth and wages across the distribution.

If the financial-services sector is going to reap all the benefits of emerging technological change, such as the application of artificial intelligence, it needs to be agile enough to draw upon the right mix of skills. Regulatory policy marks one of the important differences between the Trump administration and a potential Biden administration. Whereas regulatory restrictions grew rapidly under Biden during the Obama administration, they have declined for the first time ever under Trump.

As this election season moves along, we need to think more deeply about how public policies ultimately affect workers. Policymakers can sometimes dress legislation up to look very nice on the outside, but we only find out about the negative effects in the years that follow. Let’s try to avoid the latter.

Christos A. Makridis is a research assistant professor with Arizona State University’s W. P. Carey School of Business, a senior adviser at Gallup, and a non-resident fellow at Baylor University.

New Research Shows Religious Liberty Drives Human Flourishing – And Why This Matters Now More Than Ever

This article was originally posted on Real Clear Religion.

The Trump Administration has prioritized the advancement of religious liberty for all faiths arguably more than any president in United States history. For example, at the United Nations General Assembly, President Donald Trump remarked, “These evil attacks are a wound on all humanity ... We must all work together to protect communities of every faith,” committing an additional $25 million to protect religious freedom and religious sites and relics.

Tragically, roughly 80% of the world lives in a religiously restricted environment. Even with all the billions of dollars invested in development by the World Bank and other multilateral institutions, many countries around the world maintain repressive regimes that persecute religious minorities.

My recently-published research in PLOS ONE investigated the importance of religious liberty quantitatively. First, contrary to public opinion, the median country experienced a 13% decline in religious liberty between 2006 and 2018. Moreover, these declines were concentrated among countries with stronger property rights – for example, Western Democracies. This is important to take note of, especially for the United States, because it underscores that religious liberty can deteriorate anywhere. In fact, it has declined by 35% in America between 1980 and 2018.

Second, drawing on a sample of over 150 countries surveyed between 2006 and 2018, I found that increases in religious liberty lead to improvements in human flourishing – an effect concentrated among religious minorities. The ability to compare the same country over time is important for identifying the causal effect of religious liberty over other potentially spurious factors. Moreover, controlling for measures of economic freedom (e.g., property rights) from the Heritage Foundation’s Index of Economic Freedom and other measures of economic activity strengthens the results.

To understand why religious liberty matters so much – even more than economic freedom – for predicting human flourishing, I gathered more characteristics about every country over time and included them in the statistical model. I found that religious liberty is an integral prerequisite for democratic governance, aiding the process for civic engagement and women’s empowerment and reducing the potential for public and political corruption. This shouldn’t come as a surprise: limiting the freedom to choose and arrive at even the most basic judgments about one’s identity stifles creativity and increases the potential for corruption by overly zealous and powerful bureaucrats.

Although the United States still ranks at the top in terms of religious liberty, we’ve seen a decline over the past two decades. If it weren’t for the Trump Administration, that decline would have arguably been accelerated. Particularly with the ongoing pandemic, many states and local governments have enacted restrictions that have either outright stopped faith-based institutions from gathering or penalizing them after the fact, despite some exemptions. And yet, other entities, including violent protests, have been allowed and in many cases promoted by local officials.

We’re also seeing a renewed viciousness and series of personal attacks against Amy Comey Barrett, Trump’s new nominee for the Supreme Court, and her Christian faith. If we care about religious liberty as a nation, then we need to be consistent in how we treat one another. Let these results be a reminder that religious liberty isn’t just fluff – there’s strong quantitative evidence supporting the view that it has a causal effect on human flourishing.

Christos A. Makridis is an assistant research professor at Arizona State University, a non-resident fellow at Baylor University, and a senior adviser at Gallup. Follow him on Twitter and Instagram @camakridis.

How A Pro-Life President Saves Tens Of Thousands Of Lives

This article was originally published in The Federalist.

The battle for America’s most powerful office just inherited a whole new layer of intensity. On Sept. 18, Justice Ruth Bader Ginsberg passed away, creating a new vacancy on the Supreme Court. Ginsberg had been a stalwart advocate and defender of abortion throughout her 27 years on the court.

The vacant seat represents a once-in-a-generation opportunity for the pro-life movement to achieve the highly sought-after reversal of Roe v Wade. While only time will tell whether this vacancy will be filled before 2021, the contrast between President Donald Trump and former Vice President Joe Biden has never been clearer than it is today on issues of life and liberty.

Some of President Trump’s critics have sought to dilute the importance of the presidency to the pro-life cause, arguing that Trump does not deserve praise for his pro-life accomplishments. While such critics are right that abortion rates have declined over the past decade, these numbers reflect a wide array of confounding factors, ranging from a decline in fertility to an increased standard of living.

A Biden-Harris Presidency Would Fuel Abortion

But even if the abortion rate were genuinely trending in the right direction, that still would not justify supporting the most radical pro-abortion ticket in American history—that of Biden and running mate Kamala Harris.

While former Vice President Biden once supported certain restrictions on abortion, he has adopted a radical position alongside Harris. Their stance goes against even the most basic legislation, like the Born-Alive Abortion Survivors Protection Act, which would mandate providing care to an infant who has survived a gruesome abortion procedure and is born alive. The Biden/Harris ticket also supports abortion through all nine months of pregnancy and repealing the decades-long, bipartisan Hyde Amendment, which keeps federal tax dollars from funding abortions.

A Biden/Harris victory would lead to billions of dollars in abortion funding internationally, the nomination of pro-abortion justices throughout the federal court system including on the Supreme Court, the repeal of the Hyde amendment, leading to millions of dollars of federal funding directly for abortions, which combined would lead to millions of increased abortions over the foreseeable future. It would also squash the pro-life movement’s momentum and advance pro-abortion forces like Planned Parenthood, a major Harris supporter.

Yes, Presidents Matter to Pro-Life Victories

ritics of President Trump, most notably David French, have made several arguments against the importance of the presidential election for pro-life policy. Let’s investigate these one-by-one.

French claims presidents are irrelevant to the abortion rate. This is wrong at face value. For starters, President Trump signed an executive order in April 2017 that allows states to defund Planned Parenthood from federal Title X (family planning) funding, reversing an attempt by the Obama administration to exert federal authority over state policymakers.

President Trump also signed the Protect Life Rule, which ensures compliance with the statutory prohibition on funding programs that use abortion as a method of family planning and no longer permits Title X-funded family planning services at the same location abortion is provided. Among many other examples, French and his ilk also overlook the fundamental role that the executive office, especially the president, plays in creating a platform on important issues.

Consider, for instance, how President Trump completely shifted the dialogue about China over the past three years. The Obama administration focused on accommodation, hoping the Chinese Communist Party (CCP) would choose a more democratic path.

But the Trump administration pointed out how China was taking advantage of the United States through unequal terms of trade, stealing intellectual property, and opening the country to systemic supply chain risk. President Trump has followed up with concrete policies, yet he also used the power of the presidency to create a platform for an argument that many pundits dismissed or overlooked.

Why would pro-life issues be any different? If anything, the fact that life is in part a cultural issue makes the power of the presidency even more important for gaining a platform. For example, earlier this year, President Trump became the first American president to speak at the annual March for Life, bringing a surge in media attention to the chronically underreported event and expanding the pro-life issue to a broader base of Americans.

Judges Absolutely Influence Changes in Law

Second, while French concedes that President Trump has appointed many pro-life judges, he argues judges are a force for stability, not change, in abortion law. This is a patently false claim.

While judges uphold the law of the land, unless they are activist judges that subtly try to change the law, court rulings constantly create precedent that leads to changes in policy. In other words, policy does not emerge out of thin air—it is based in part on court rulings.

Biden-appointed judges would be far more likely to strike down the most basic pro-life legislation and uphold the most aggressive pro-abortion legislation. Moreover, as we can see with Ginsberg’s passing, Trump has the opportunity to appoint yet another Supreme Court justice, which could lead to a substantial realignment in constitutional respect on the court.

Planned Parenthood Doesn’t Support Biden for Nothing

Conversely, pro-life state legislation would be more often reversed under Biden-appointed judges. Even Planned Parenthood is worried about four more years of a Trump presidency, specifically due to his appointment of federal judges. During the 2019 state legislative sessions, more than 290 bills restricting abortion have been filed in 45 states. Why would Planned Parenthood be worried if judges played such an insignificant role?

Third, some including French say state legislatures have more influence on abortion outcomes than Congress does. While state legislatures are clearly important, this again overlooks the interconnected nature of federal and state policymaking. Indeed, President Trump’s removal of the Obama administration policy that forced states to fund abortion is perhaps the most obvious illustrative example of federal policy affecting state policy.

That doesn’t even include the fact that a president can campaign for state policymakers running for Congress or for governor, thereby giving an extra spotlight to politicians with similar values. And, if President Trump does not win, Biden is on record saying he would abolish the filibuster, which under a Democrat Congress would lead to additional federal actions that direct billions of dollars of federal funding through states to radical leftist policies, including on abortion.

Repealing Roe Would Absolutely Reduce Abortions

Fourth, it’s often argued that overturning Roe v. Wade would not substantially affect the number of abortions. This is a speculative claim that contradicts much empirical evidence that shows law has the potential to influence culture towards what is good, beautiful, and true—and vice versa.

For example, prior to Roe v. Wade, only a couple of states had abortion laws. States stood on the pro-life side of the pendulum. Although we are in a different country today, it is much easier to make the argument scientifically about the personhood of the unborn child than ever before.

Furthermore, if most of pro-lifers’ recent success is in the states, then repealing Roe would allow states to move bills they haven’t passed due to the Supreme Court’s defense of abortion. Just look at former Ohio Gov. John Kasich’s vetoes of heartbeat bills. He justified them by stating that the Supreme Court would overrule him.

State legislatures generally won’t act if there is federal protection for a given policy matter. That means overturning Roe v. Wade would lead to significant state action, which could come to at least a 12.8 percent reduction in abortions. While French argues this number is insignificant, over time it represents millions of lives.

Law Influences Culture

Fifth is the argument most people don’t want an abortion. While it would be great if no one actually wanted to have an abortion, the Pew Center reports that 61 percent of adults report that abortion should be legal in all or most cases.

Regardless, we still don’t want to set laws that are morally, socially, or economically harmful. Culture and law are intimately linked. Legalizing abortion normalized it. Law creates boundaries to hold culture accountable.

Although culture is usually the catalyst for law, there are plenty of cases in which the opposite has been true. Consider, for instance, the Civil Rights Act of 1964. The CRA ended segregation in public places and banned employment discrimination. While some racism remains, Sen. Tim Scott can now confidently say that his family has moved from “cotton to Congress in one lifetime.”

President Trump deserves credit for being the most active pro-life president in our country’s history. We don’t want to just “limit” abortion or delight in the fact that it is declining according to some estimates. If we believe that abortion constitutes a brutal murder, then we need to fight for its abolition, period, just like we don’t only seek lower numbers of human trafficking, but to abolish human trafficking altogether.

A Trump administration will continue to advance life. A Biden administration will push us into the dark ages of abortion on demand, no questions asked, even if the baby is just about to be born or has been born alive and survived, as Democrat politicians have openly stated.

Jonathan Jakubowski is the author of “Bellwether Blues, A Conservative Awakening of the Millennial Soul.” Christos A. Makridis is a research professor with Arizona State University’s W. P. Carey School of Business, a senior adviser at Gallup, and a non-resident fellow at Baylor University. Peter Range is the director of the Office for Life and Justice of Catholic Charities in the Diocese of Toledo, and radio host of “Say Yes to Life” on Annunciation Radio of Northwest Ohio. These views are those of the authors and not on behalf of any affiliated institutions.

Amid coronavirus, the Great American Comeback is underway

This article was originally posted in The Hill.

Some people just placate; others get things done. Prior to the pandemic, real total household and nonprofit net wealth increased by 12.1 percent over the first 11 quarters of the Trump administration, concentrated among the bottom 50 percent of households that experienced a net increase of 47 percent; hourly wage growth for production and non-supervisory workers also hovered over 3 percent for over 17 consecutive quarters; and overall dependence on welfare declined as more people were lifted out of poverty.

But, the coronavirus pandemic has hit minorities, working class families and small businesses the hardest. While the CARES Act, and the subsequent executive order that President Trump signed following the failure for Congress to agree on a second round of stimulus, has helped inject some liquidity in peoples’ balance sheets, what we need is not more stimulus, but rather growth and long-run planning.

That’s why we have to keep building on the foundation that was developed prior to the pandemic.

The Trump administration knows that the secret to America’s greatness resides at the intersection of its people and timeless virtues. If people are empowered to learn, grow and contribute in their workplace and communities, we’ll all be better off for it. They’ve done this in three ways.

First, reshoring and modernizing our supply chain and industrial base. Although there is value in outsourcing some things, we cannot outsource everything. Trade is good, but only if it is reciprocal. Unfortunately, China, among others, has taken advantage of the United States by shipping low quality (and sometimes harmful) exports at superficially low prices that were only made possible through subsidies and regulatory arbitrage. That’s harmed the American worker in health and well-being, as well as labor market outcomes and a thinning of the middle class. By confronting these countries head on, rather than brushing past grievances under the rug, the Trump administration has increased employment in traditionally stagnant, or even declining, sectors beyond what people thought was possible. Moreover, regulatory reform has reduced the barriers to entry, strengthening competition and leading to greater wage growth.

Second, modernizing workforce development and investing in distressed communities. Given the pace of technological change, and the deterioration of traditional higher education and the college experience, we need to allow for and encourage other learning pathways, ranging from apprenticeships to coding bootcamps. That’s why the National Council for the American Worker (NCAW) has been such an integral ingredient in our approach towards upskilling in the 21st century. Already, the Pledge to America’s Workers has secured over 16 million new education and training opportunities for students and workers.

Even beyond these training and development opportunities, the designation of Opportunity Zones (OZ) from the Tax Cuts and Jobs Act (TCJA) has brought billions of dollars of investment into distressed communities by reducing the cost of investment in areas that need it most. For example, a recent report from the Council of Economic Advisers found that Qualified Opportunity Funds raised $75 billion in private capital that would have largely not been invested absent the OZ incentive. Moreover, OZs have contributed to a 1.1 percent increase in housing values, which totals an additional $11 billion in new wealth for homeowners in these areas. Given the growing disparities across cities and crowding out of the middle class, these gains are especially timely.

Third, technological dominance in artificial intelligence (AI) and work of the future. The Trump administration has consistently prioritized AI investments, ranging from reallocations of research and development (R&D) resources for strategic AI priorities to an expansion of talented workers within the federal government. Moreover, technological dominance doesn’t mean doing away with certain industries, such as agriculture and manufacturing, but rather embracing AI to make them even more productive and internationally competitive so that we can become more self-reliant as a nation.

Although some pundits in the media have been sounding the alarm about increases in coronavirus cases, these counts are much lower than some initial models predicted —not to mention that the pandemic was outside the United States’ control. Moreover, the fatality and hospitalizations rates have significantly over the past two months, particularly as immunity develops, better habits solidify and hospitals become better prepared. The battle for an economic and social revival is not yet over, but we’re running hard and in the right direction — let’s keep pressing forward.

Christos A. Makridis is an assistant research professor at Arizona State University, a non-resident fellow at Baylor University and a senior adviser at Gallup. Follow him on Twitter and Instagram @camakridis.

Keep Cutting Those Regulations

This article was originally posted in National Review.

Up until now, federal interventions to mitigate the damage of the coronavirus pandemic, such as the March $2.2 trillion relief package and the executive order recently issued by President Trump in the absence of congressional action, have been short-term in nature. Stimulus checks and corporate bailouts might buy us time, but a long-term economic recovery requires something more. For several years, the Trump administration has been pursuing a long-term structural reform that fits the bill: streamlining regulations. Prior to the pandemic, regulatory reforms were working. In the post-pandemic economy, we may need them even more.

The Trump administration is the first in decades to follow through on its commitment toward genuine regulatory reform. Between 2017 and 2019, federal regulatory restrictions declined by 1.5 percent overall, rather than continuing to increase, as they have since 1996. The retail-trade and health-care sectors experienced the greatest declines, at approximately 9.5 percent and 4.8 percent, respectively.

While many, including us, believe that these policies have been highly beneficial to the economy, the current sky-high unemployment should spur us to revisit the question of who exactly has been benefiting from regulatory reform. Have the administration’s pro-business policies delivered wage gains for the American worker? Or is it mainly just big business benefiting? This question is given added urgency by the fact that the regions and companies receiving more loans from the Paycheck Protection Program were not necessarily the more economically distressed regions or companies.

There are plenty of reasons to believe that, broadly speaking, Trump’s economic policies were benefiting more than just the highest earners before the economic shutdown. Real total household and nonprofit net wealth increased by 12.1 percent over the first 11 quarters of the Trump administration. According to a report from the Council of Economic Advisers in January, these gains were concentrated among the bottom 50 percent of households, which experienced a net increase of 47 percent. Moreover, hourly wage growth for production and non-supervisory workers also hovered over 3 percent for more than 17 consecutive quarters. SNAP (food stamp) enrollment, among other measures of welfare dependence, declined considerably because of declines in the poverty rate.

While it is always difficult to assign credit for such things, in this case, it’s legitimate to give plenty to the Trump administration. Kevin Hassett, former chair of Trump’s Council of Economic Advisers, explained in 2018 that there is a structural break for many macroeconomic indicators between the latter years of the Obama administration and those from the Trump administration.

What’s more, there was nothing random about the strong economic gains enjoyed by blue-collar workers prior to COVID-19. Rather, it is linked to the administration’s focus on regulatory reform, an approach that needs to continue after the reopening of the economy.

A closer look at the data tells a consistent story. In original calculations using Bureau of Economics data and QuantGov, a machine-learning and policy-analysis tool developed by Mercatus Center researchers, we found that the industries that saw the greatest declines in regulatory restrictions enjoyed the greatest growth in compensation per worker. Specifically, we put together data on 70 industry sub-sectors. In addition to finding that the 2017–19 decline in regulatory restrictions came at a time when real compensation per worker grew by 3 percent, we found that each 1-percentage point decline in regulatory restrictions from 2017 to 2019 came with a 0.05-percentage-point increase in real-compensation growth per worker.

Is that big or small? Here’s another way to think about it: The Trump administration’s regulatory reforms have arguably accounted for roughly one-tenth of the overall growth in compensation per worker we saw over these years. Given that income grows for many reasons, ranging from technological progress to competitive forces, anything with a sizable, measurable impact is a big deal.

Today, policies that promote economic growth and innovation are especially important — particularly if very generous unemployment-insurance benefits continue to discourage reentry into the labor force after the next round of stimulus. Of course, some regulation is required for competitive markets and a just society. But where we draw the line matters.

Thanks to the Trump administration’s regulatory experiment, it’s becoming clearer that regulatory and tax reforms benefit the American worker — not just the rich. Continuing these reforms would help ensure that U.S. citizens are back on the path to economic recovery once the crisis ends.

Christos A. Makridis is a research assistant professor with Arizona State University’s W. P. Carey School of Business, a senior adviser at Gallup, and a non-resident fellow at Baylor University. Patrick A. McLaughlin is a senior research fellow and director of policy analytics with the Mercatus Center at George Mason University.

It’s union power, not safety issues, that’s determining which US schools reopen this fall

This article was originally published in the New York Post.

It’s back-to-school season, but millions of students won’t be going back to the classroom. Teachers are fighting tooth and nail to prevent reopening public schools for in-person learning — in the name of safety. Yet our just-released study suggests that these reopening decisions have more to do with influence from teachers’ unions than safety concerns.

In New York City, the Department of Education’s proposal to offer families a hybrid of part-time in-person instruction and remote learning starting Sept. 10 met with fierce opposition. Teachers’ groups poured into the streets to protest the plan, including with props such as fake body bags. Mayor de Blasio pushed back the opening after threatened strikes.

It’s happening nationwide. New data published at Education Week indicate that 78 percent of the nation’s 50 largest public districts aren’t planning to reopen with any in-person instruction.

Using data on the reopening decisions of 835 public districts covering about 38 percent of all students enrolled in K-12 public schools in the country, our study finds that school districts in places with stronger teachers’ unions are much less likely to offer full-time, in-person instruction this fall.

For example, our models indicate that school districts in states without right-to-work laws are 14 percentage points less likely to reopen in person than those in states with such laws, which prevent unions from requiring membership.

A 10 percent increase in union power is associated with a 1.3 percentage-point lower probability of reopening in person. In Florida, for example, 79 percent of 38 school districts in the Education Week dataset are planning to offer full-time in-person instruction to all students. However, in New York, a state with much stronger teachers’ unions, none of the 21 school districts included in the dataset are planning to do the same.

We also find that a one percentage point increase in union membership at the state level is associated with a 1.5 percentage point lower probability of reopening in person. Then, too, a 10 percent rise in union workers at the county level is associated with around a one percentage point decline in the probability of reopening in person in the fall.

These results are remarkably consistent across various analytic models and even after controlling for differences in county demographics, including age, gender, marital status, race, population, education, political affiliation, household income and COVID-19 cases and deaths per capita.

By contrast, reopening decisions are unrelated to COVID-19 risk as measured by recent cases per capita and deaths per capita in the county. That is also consistent with recent evidence that the biggest factor in what people believe about the pandemic is political affiliation — not COVID-19 risk or even demographic factors, such as age and race.

None of this means that teachers’ unions have bad intentions. Pushing against reopening schools in person could make sense from cost-benefit analysis, if it minimizes health risks for union members while maintaining about the same level of benefits in terms of job security and wages. In fact, virtual instruction can mean ­more benefits for union members: It can reduce their child-care responsibilities, hours of direct instruction and commute times.

The problem is that teachers aren’t the only stakeholders in the reopening debate. Keeping schools closed hurts families that need in-person options. Plus, ­remote learning provided by public districts may turn out to be a disaster for many students already falling behind.

A better solution: Governments should fund students directly, so they can take their education dollars to the schools of their choice. After all, education funding is supposed to be for educating students, not protecting traditional public schools when other options are available. School districts have the power to choose their own reopening plans. Let’s give families a choice, too.

Civil unrest isn't just fueling political partisanship — it's undermining the economic recovery too

Originally appeared in The Hill, September 3, 2020

The United States is suffering from not only a public health crisis, but also an identity crisis. Many of the principles that were once honored are now under attack. Basic rules, such as law and order, have been characterized as racist and sources of systemic injustice.

While we need to vigorously continue the search for a vaccine and pursue smart policies that allow for a permanent reopening of the economy, we also need to obtain safety and security in our cities once again. Already, many people are fleeing the cities. In addition to the impact that remote work has had on the decision about where to live, more residents are growing concerned about the safety for themselves and their families—and “voting with their feet” by moving elsewhere.

But, what about the small businesses that cannot just pick up their bags and go?

To understand the quantitative effects that civil unrest has been having on the economy, I collected data on small businesses (e.g., employment and hours worked) from HomeBase and the intensity of Black Lives Matter riots from Google Trends across 47 metropolitan areas. Although BLM search queries are an imperfect measure for the intensity of riots, it is a reasonable proxy if residents respond to civil unrest by searching online for information in their area either out of support or fear.

Using these data between June and August, I found that a 10 percent increase in BLM search intensity is associated with a nearly percentage point decline in the number of hours worked among employees in the business, relative to pre-pandemic levels. Results are similar when using other measures of small business activity, such as business shutdowns or overall employment. Moreover, results are similar when focusing on a narrower window of time (e.g., July to August).

Why is there such a strong negative association? For starters, small businesses are concentrated in the retail and hospitality sectors. If people are afraid to go out to eat or shop, then consumption on local goods will decline. Even from a practical perspective, we’ve seen how many of these protests, in addition to turning violent, have even led participants to halt traffic and block off roads. And, since economic sentiment is a powerful driver of demand for retail services, uncertainty and civil strife is likely to lead to more precautionary behavior among residents and prospective investors.

These are not just conservative talking points. Even Portland’s police chief has pointed out that the violence has taken away from the BLM movement, prompting many people to turn away from the movement — even if they don’t want to publicly voice their reservations.

Unfortunately, what we’re seeing unfold before our eyes is not a new phenomenon and should not come as a surprise. For example, recent research found that peaceful protests from the civil rights movement led to greater political support for civil rights, whereas the violent protests had the opposite effects. Moreover, others have found that violent riots during the 1960s led to persistently lower values for black-owned property. In fact, these declines are estimated to have contributed to a 10 percent loss in the total value of black-owned residential property in urban areas.

One of the big differences that we’re stuck with today – for better or for worse – is the presence of social media, which can amplify some of the loudest (and most harmful) voices. For example, my research has found that the decline in consumption over the pandemic was roughly twice as large because of the fear-factor that spread throughout social media. If we were all behaving “rationally” based on our local experiences, consumption would not have fallen so much. The same goes for these riots: bad news spreads more rapidly, causing even more fear and uncertainty. If we want to have a genuine economic recovery, we’re going to need to do more than just find a vaccine. We will need to return law and order to our cities so that people feel safe and secure.

Fortunately, we don’t need to repeat the mistakes of the past. We have timeless principles to stand on that have endured even more tumultuous times, ranging from the domestic implosion during the Civil War to the threat of Nazi Germany during World War II. If we learn from the past and listen to one another, we’ll emerge out of the current economic and social crisis even stronger than before.

Christos A. Makridis is an assistant research professor at Arizona State University, a non-resident fellow at Baylor University, and a senior adviser at Gallup. Follow him on Twitter and Instagram @camakridis.