All posts by Rob Atkinson

Medical Innovaiton

Investment in Medical Innovation Produces Immense Value for Patients, Economies

Earlier today, I participated in a panel discussion entitled “The Value of Medical Innovation to Patients, Economies and Societies”, which was a part of the Pharmaceutical Research and Manufacturing Association’s Annual Meeting. The discussion centered on one common theme – prioritizing medical innovation has far-reaching benefits for society.

In the U.S., public health problems take a toll not only on individual patients but also on society as a collective whole. The Milken Institute recently concluded that the most common chronic diseases cost the economy an estimated $1 trillion each year and that figure could rise to $6 trillion by 2050. More specifically, a study conducted by the Harvard School of Public Health and the World Economic Forum found that cancer costs the economy about $250 billion in 2010 and anticipated that expense to rise to at least $458 billion by 2030. Promoting and investing in medical innovation could significantly reduce these economic costs and improve public health outcomes.

In addition, the U.S. economy benefits tremendously from expanded medical innovations and the industries it promotes. The field, which accounts for $69 billion of U.S. economic activity, produces highly-skilled jobs that pay, … Read the rest

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What Manufacturing Renaissance?

It is now become accepted wisdom in economic circles that America is enjoying a manufacturing renaissance. As the general theme goes: American companies are no longer offshoring factories; foreign companies are building new factories here; cheap energy is allowing manufacturers in the United States to expand; and groups like the Boston Consulting Group are telling everyone not to worry, manufacturing will rebound. Wish that it were so. Unfortunately, reality appears to be more troubling

If a manufacturing resurgence was truly occurring we would see it in an expanded number of factories. In fact, according the U.S. Bureau of Labor Statistics (BLS) there are fewer U.S. factories today than there were two years ago. Moreover, the BLS’ Business Employment Dynamics survey indicates that net new manufacturing establishment openings (openings minus closings) has been negative every year since 1999. In 2012 alone, 3,000 more manufacturing establishments closed then opened. This is not to mention the fact that manufactures in America face one of the highest effective corporate tax rates in the world, while the federal government doesn’t support pre-competitive manufacturing research centers like our competitor nations (e.g. Germany, Japan, etc…)

To be Read the rest

The Nanny Police Are at IT Again

The Washington Post printed a story about how the Campaign for a Commercial-Free Childhood has submitted the opinions of six experts on child development to the Federal Trade Commission in support of CCFC’s complaint against toy maker Fisher-Price for marketing its “Laugh and Learn” app for infants and small children.

One of the six experts, Herbert Ginsburg writes, “Existing research suggests that infants and very young children are not cognitively ready to learn key abstract ideas about numbers. Although some children at the upper bounds of this age range might learn to parrot some number words they are highly unlikely to learn important concepts of numbers.”

To be sure I am not a child development expert (although I did study child development in college.) I am a parent of a wonderful daughter. When she was 19 months old I ran across a Fisher Price online game, “The ABC Game“, which taught infants and toddlers their letters. (This was pre-tablet so I used a laptop). My daughter would press keys on my laptop and up would pop a picture of the letter, a picture of an animal whose first … Read the rest

Chevy Volt Factory

Two Cheers for Martin Baily’s “U.S. Manufacturing”

It was with great interest and mostly pleasure that I read Martin Baily and Barry Bosworth’s new article in the Journal of Economic Perspectives, “U.S. Manufacturing: Understanding Its Past and Its Potential Future.”

The article attempts to analyze recent trends in U.S, manufacturing performance, including output and employment. This is an area ITIF has been working on for a number of years. And in the past, Baily has been skeptical of our analysis, which claimed that U.S. manufacturing was in fact worse off than official statistics, in part because of the overstatement of computers and electronics manufacturing output. So it was with great delight, and some surprise, to see that Baily and Bosworth have now embraced this analysis.  As they note, the fact that measured manufacturing output’s share of GDP has remained stable “is largely due to the spectacular performance of one subsector of manufacturing: computers and  electronics.” In fact, as ITIF showed, they also show that by taking out computers, overall real manufacturing output fell from 2000 to 2011, something that is unprecedented in our almost 250-year history.  They also rightly point out that the massive … Read the rest

IBM Super computer

Critique of OECD R&D Tax Credit Report

R&D is fundamentally important to economies because it is a primary source for innovation and new technologies. But markets rarely provide enough incentives for innovation on their own—innovations are expensive to create but easy to copy.

For those reasons many countries provide R&D tax incentives to companies that spend money on basic or applied research. The best way to think of this policy is as actually as a fix—R&D has positive benefits for the economy as a whole, but because individual companies have trouble capturing all the benefits of R&D they are unlikely to invest the socially optimal amount.

Tax breaks for businesses are fraught with controversy because they “distort” the market and according to conventional neoclassical economics thinking distortions are by definition bad, even if they are pro-growth. To be sure certain tax incentives outlive their usefulness, as they have in the fossil fuel industry, and some tax incentives are only on the books because they serve special interests, not the public interest.

But the R&D tax incentive doesn’t suffer from any of these problems. In fact, there is solid evidence that R&D incentives spur additional R&D spending and … Read the rest

Trans Pacific Partnership Leaders

Talking TPP: Getting Through to Negotiators

As final negotiations begin for the Trans Pacific Partnership (TPP) trade pact, it is essential that U.S. representatives understand the impact this agreement will have on our future. The TPP presents an opportunity to set the standard for future trade agreements, but implementing the wrong policies could do more harm than good.

Any TPP agreement must enable U.S. innovation and not finalizing an agreement is better than signing one that compromises America’s ability to create technologies and make advancements that benefit society. A key factor in protecting innovation through the TPP will be the assurance of strong intellectual property (IP) rights protections that promote investments in R&D and technology development and insure the free flow of information across borders.

As ITIF has noted, IP is a central component of the innovation ecosystem, which is a key factor in a healthy economy, in both developed and developing nations. For example, strengthening IP rights has been connected with increased inflows of foreign direct investment, rates of domestic innovation, and trade in high technology products.

A new ITIF report further examines the TPP and emphasizes the importance of designing an agreement that … Read the rest

consumers

Which Consumers Do Consumer Groups Represent?

Anytime the media covers an issue that might affect consumers, they ask so-called consumer groups for a quote as if these groups by definition represent consumer interests. Check that box. Case in point, a story in Saturday’s New York Times on Monsanto and Dupont Pioneer’s successful efforts to develop genetically modified soybeans that eliminate harmful trans-fats in soybean oil. The reporter argues that these new beans could help the image of the biotech industry because they are among first generation of GMOs that help consumers, rather than farmers.

What? So let me get this right. Past GMO efforts to reduce the costs of growing food (e.g. drought resistant seeds, seeds needing less pesticide application, etc.) don’t help consumers? It seems that the article is making the argument that anything that helps producers, by definition either doesn’t help consumers, or in fact harms them. In this framing, the implicit assumption is agriculture is a monopoly where all improvements in productivity are kept by the farmers, and not passed along to the consumers in the form of lower prices. Wow, did these people never study economics? Apparently not.

But this framing, … Read the rest

healthcare.gov header

Lessons from the ACA Health Insurance Marketplace Failure

One can’t pass a single day it seems without seeing in the news coverage of the problems with the Affordable Care Act’s Health Insurance Marketplace (HIM). But what is perhaps most surprising is not that the web site had problems, but that people are surprised that it had problems. The current process of managing and acquiring federal IT is largely broken and the failure of the HIM is simply the newest reminder of that dysfunction. We can just go down the list of past high-profile failures, including the delayed launch last year of USAjobs.gov, the FBI’s Virtual Case Files program, the Census Bureau’s handheld PC debacle, and the FAA modernization.

There are several reasons for this dysfunction. First, the contracting process does not work as it should. Larded up with an accretion of rules and requirements from past scandals and failures, only the most intrepid firms are able to manage the labyrinth called federal contracting. Moreover, as Congress has tried to use federal contracting to fulfill social policy goals that should be addressed with other policy tools, agencies must give preferences to a wide variety of businesses—small businesses, women-owned businesses, … Read the rest

intellectual-property-stamp

Balancing Innovation: Managing Current Needs with Future Success in Developing Countries

No one disputes the benefits of innovative technology. It has resulted in IT, medical, and energy advancements that have revolutionized the way we live our lives. What often goes unappreciated, however, is the time and resources invested that ultimately yields this progress. As I discussed on Friday as part of a panel at the Global Intellectual Property Center’s IP Summit, failing to acknowledge and respect intellectual property puts future innovation in jeopardy, and it is critically important that we educate developing countries on the benefits of protecting IP before it has lasting effects on not just the global innovation economy, but their own individual innovation economies

At a time when developing countries are not only trying to recover from the Great Recession, but also working toward building more prosperous economies, access to innovation is increasingly important. Unfortunately, all too often developing countries believe that to achieve their economic and social goals, they must focus on getting access to technologies (including pharmaceutical products, sometimes through issuing compulsory licenses) in the near-term, instead of setting up an environment of strong IP protection where innovation can flourish over the long-term. These actions are … Read the rest

American Broadband

What is a Fair Price for Broadband?

An updated report by the New America Foundation (NAF) examines whether we are getting a good deal on our broadband in the United States. It does so using fairly straightforward methods: cataloguing advertised prices and speeds for major cities around the world. Unfortunately, to paraphrase H. L. Mencken, for every complex problem there is an answer that is clear, simple, and wrong.

We covered the issue exhaustively in our report from earlier this year, The Whole Picture: Where America’s Broadband Networks Really Stand, and a number of blog posts responding to the original Cost of Connectivity report in 2012. However, their report update makes the same claims as the last one using the same logic: we therefore feel compelled to issue a very similar rebuttal. The NAF report fails to engage the issue in a way that helps us understand what is really going on in our broadband markets.

There are two important questions to consider when examining these broadband markets: are companies offering a fair price for high-quality broadband services given their costs, and are they competing in a way that will offer dynamic improvements in the future? … Read the rest