As ITIF documents in 25 Policy Recommendations for the 2013 America COMPETES Reauthorization, Congress is currently considering a wide range of options for reforming U.S. high-skill immigration policy. The Senate Gang of Eight’s immigration reform legislation would create an additional 25,000 visas for foreign students graduating from U.S. universities with a Masters or Ph.D. in science, technology, engineering, and mathematics (STEM) fields. And the Startup Act 3.0 would make it 50,000 such visas for STEM graduates and introduce a “startup visa” for qualified immigrant entrepreneurs. As the Kauffman Foundation finds in Give me Your Entrepreneurs, Your Innovators: Estimating the Employment Impact of a Startup Visa, immigrant-entrepreneur founded startups could generate as many as 1.6 million new jobs after ten years (assuming that 75,000 visas are granted and that half the startups are technology or engineering companies).

To be sure, a startup visa could have a beneficial impact on U.S. economic and employment growth, but why limit this dynamic only to foreign entrepreneurs looking to invest in starting new businesses? Why not extend visas to foreign individuals investing substantially into ongoing federally funded research and development (R&D) activities at … Read the rest

Yesterday, US stocks experienced a brief plunge in price due to a bogus tweet on the Associated Press’ Twitter page regarding explosions taking place at the White House. While the market impact was literally momentary, the larger issue of investor confidence plays to the narrative that the financial markets are truly not the domain of the average investor. Yet another example that it’s not your grandfather’s stock market any longer. And such thinking impacts the average investor’s confidence in the system that financial innovation has wrought.

Here’s an excerpt from CNBC regarding the incident:

“When the market  briefly skidded after a hacked AP Twitter account reported explosions at the White House, we saw the first real-time demonstration of robo-trading riding on the back of social media.

The plunge in the market was so quick that it obviously was not the result of individuals reading the phony news and deciding what action to take. Computers were making the trades-or, more precisely, ending the trades.

“It’s not so much that the computers initiated trades. What happened is that they canceled the orders, so the bids come out of the market. That causes a crash,” a … Read the rest

Q.E.D.

(Source: OECD)… Read the rest

On Capitol Hill yesterday, ITIF hosted an event making the social and economic case for autonomous vehicles. The event featured presenters from Toyota, Google, and Texas Instruments, as well as DC Councilmember Mary Cheh, who introduced the Autonomous Vehicles Act of 2012, which authorizes autonomous vehicles to operate on the District’s roadways. (Similar legislation has also been enacted in California, Florida, and Nevada and introduced in nine other states.) Collectively, the panelists made the case that the advent of automated driving (i.e. driver assistance) technologies—and ultimately fully autonomous vehicles—is poised to deliver tremendous safety, personal mobility, environmental, productivity and efficiency, and economic benefits.

Regarding safety, with human error the definite or probable cause of 93 percent of traffic accidents, autonomous vehicles could dramatically reduce accident incidence because they will obey all traffic laws, won’t speed, and won’t drive while distracted, tired, texting, or inebriated. This could significantly ameliorate the over 4 million traffic accidents which occur annually on U.S. roadways and which cause more than 35,000 traffic fatalities (almost 100/day) and an estimated $450 billion in economic losses. In the meantime, a range of automated driver assistance technologies, … Read the rest

Innovation is one of America’s most prized assets. If our country is going to successfully compete on the global stage over the course of the next several decades, we must develop the new technologies, businesses and industries that will allow us to keep pace. President Obama’s just-released budget for 2014 contains several key components that further this goal.

ITIF applauds the President’s $1 billion request to create a series of manufacturing innovation institutes that will help propel advanced manufacturing and rejuvenate a sector of our economy that has been hit especially hard over the past decade. The National Network for Manufacturing Innovation will create 15 advanced manufacturing centers across the country that will spur research, development and deployment of next generation technologies, products and processes. As ITIF has shown, improving manufacturing innovation is central to enhancing American competitiveness and furthering economic development and business creation.

On energy innovation, the President’s budget request continues to push for greater public investment in the development of new clean energy technologies. The budget proposes boosting clean energy research to nearly $5 billion, a 15 percent increase compared to the FY2013 Continuing Resolution (CR) … Read the rest

After already slashing R&D funding, the Sequester is about to deliver another kick in the teeth to American competitiveness: it’s going to sharply reduce our ability to measure it. This one comes courtesy of the Bureau of Labor Statistics, which announced last month that the sequestration has forced it to eliminate its International Labor Comparisons (ILC) program, a neat little database that adjusts foreign data to a common framework, allowing you to compare the traded sector health and competiveness of the United States against that of other countries.

This may not sound like much, but in the nerdy world of competitive analysis economics, it’s huge. No one else provides this data to the same extent as ILC. The OECD does a bit,^[i] but their data are rife with warnings about the perils of cross-country comparison among their indicators. Moreover, the OECD has little-to-no data on the big boys such as China and India, which renders its data useless for any “big picture” comparisons of our competitive health. Other organizations, such as the UN Industrial Development Organization, provide limited competitiveness data that is vastly incomplete.

In contrast, the ILC … Read the rest

I have just finished a fascinating book about the history of phone hacking from the 1950s to the 1980s, Exploding the Phone by Phil Lapsley. The phone system was one of the first communications networks in America, and as such, just like today, it attracted its share of amateur hobbiests who wanted to understand how it worked, including finding out how to make free long distance calls, conferences calls and the like. While Apple founder Steve Wosniack may have been the first to create a “blue box” using digital instead of analogue technology (a blue box is the term for an electronic box made to mimic sounds on the phone system in order to trick the phone network into doing what the user wanted) he was hardly the first young person to “hack” the phone system. It turns out that a whole network of folks—what became known as Phone Phreaks emerged, and many became loosely tied into a network that compared notes on best practices. Some were high school students bored with school and fascinated with telephony, others college students also bored with classes. Several of the most prominent were blind students … Read the rest

Amidst the furor over the Sequester there is another critical policy issue being debated and it concerns the U.S. government’s role in the International Monetary Fund (IMF). The Obama administration is seeking Congressional authority to change the voting process at the IMF, and in particular, to give China a much larger role. But the last thing the U.S. government should be doing is strengthening the ability of China to shape IMF policy, especially given its unrepentant, mercantilist practices.

Established after WWII, the IMF was charged with overseeing the international monetary system and encouraging member countries to eliminate exchange restrictions that hindered trade. As a result, under IMF rules, each member country has agreed not to engage in “protracted, large-scale intervention in one direction in the exchange market.”

These are nice words but in practice they have been rendered largely meaningless. The IMF has proven unwilling to take action to curtail currency manipulation or similar egregious actions China and other nations have engaged in to distort global trade, hurt the U.S. economy and advance their domestic economic interests.

Case in point, the IMF’s Executive Board concluded its 2010 Article IV consultations … Read the rest

It may not seem like an important enough topic and certainly one that some would say has questionable relevance to the more clear cut areas of innovation (technology, processes, managerial, to name a few), but I would argue that Financial Innovation should be at least on the radar screen of every policy maker charged with the responsibility of understanding and then administering public policy decisions. For Financial Innovation – the creation of products and services designed for use in the financial markets and real economy – has the power to alter an essential lifeblood of the global economy: the capital raising function of the financial markets.

To the degree that companies seeking to access the capital markets are enhanced or impaired has a direct impact on their ability to manage their existing capital and contemplate their future capital. And herein lies the issue of most direct relevance. For, if a company’s ability to fund its present and future operations is impacted (e.g. through a higher cost of capital) due to the fact that investor confidence has declined, then all other facets of innovation are impacted.

It is in this regard … Read the rest