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Archive for November, 2010

Don’t Get Ahead of Yourself: The U.S. Needs a Comprehensive Long Term National Energy Plan

 A Response to the Coalition for Green Capital

In a previous post, I critiqued the Coalition for Green Capital/Center for American Progress comprehensive energy proposal titled Cutting the Cost of Clean Energy.  I made two key arguments.  First, the U.S. does not have all the clean technology it needs and simply creating a market for already mature technology through deployment and financing measures is not a long term solution to making clean energy cheap enough for widespread adoption.  Second, any comprehensive, national energy plan must include policy support at all stages of innovation, not just deployment, if we are to benefit from affordable, unsubsidized clean technologies.  The Coalition for Green Capital (CGC) has responded.

The bulk of their response is a misrepresentation of my argument.  CGC writes that I am presenting a false choice between supporting the development of breakthrough technologies and deploying already existing technologies.  This couldn’t be farther from the truth.  Instead, I explicitly argue that any comprehensive national energy policy must support the entire spectrum of innovation including basic science, RD&D, scale up, education, infrastructure, manufacturing, and deployment.

To a degree, CGC agrees with

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China’s Mobile Payments Market Expected to Become World’s Largest by 2013; Government’s Role Cited

A new report from research firm Celent finds that China is likely to become the world’s largest mobile payments market by 2013. The country’s mobile payments market is expected to grow 48 percent year-on-year to 410 million mobile users by 2013. The growth is in both remote payments (e.g. fund transfers and remittances through the mobile phone) and contactless mobile payments (e.g. using near-field communications technology to effect payment at subway turn styles, vending machines, or point of sale terminals in convenience stores or retailers). China is expected to have 400 million users of contactless mobile payments alone by 2015.

Celent’s report, echoing conclusions from ITIF’s own report, Explaining International Leadership in Contactless Mobile Payments, about how Japan and South Korea came to be at the world-frontier for contactless mobile payments, finds that government has played a key role in convening and catalyzing the development of China’s contactless mobile payments ecosystem. The report notes the huge potential for mobile payments in markets that have government support, close cooperation between financial institutions and mobile operators, high mobile phone penetration, and (in emerging countries’ cases) low bank card penetration. The report

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Berners-Lee, Jacobson, and the FCC

Rumor has it that FCC Chairman Julius Genachowski will circulate an order on Wednesday to put net neutrality on the agenda for the December meeting. If this happens, and it may not, rumor has it that the net neutrality framework will rely on a new theory of the FCC’s Title I jurisdiction, possibly Kevin Werbach’s interpretation of Section 706 of the Communications Act. Section 706 says:

The Commission and each State commission with regulatory jurisdiction over telecommunications services shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans (including, in particular, elementary and secondary schools and classrooms) by utilizing, in a manner consistent with the public interest, convenience, and necessity, price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.

It may seem like a bit of a stretch to use a section of the law that orders the FCC to remove barriers to network infrastructure investment to impose restrictions on network operator business practices, but stranger things have happened, and there is a nexus between network regulation

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UN Climate Negotiations and the Race to the Top (of the Clean Energy Heap)

The ongoing failure of UN climate negotiations – which resume in Cancun later this month – is often characterized as consigning the world to a “race to the bottom” on emissions. It’s a popular characterization of a complex, messy process. Before this rhetoric starts again, however, we wanted to take a minute to remind folks about the other race, for the development of clean technology. This race is in fact a “race to the top,” and fortunately, it’s happening whether climate negotiations are successful or not.

First, let’s unpack what this “race to the bottom” characterization means a bit. As the argument goes, binding international agreements are needed to stabilize atmospheric concentrations of greenhouse gas emissions. Views vary on these targets: some say we need to stabilize atmospheric concentrations of CO2-equivalent gases at 450 parts per million; others say 350; and others identify the goal of limiting temperature increases to 2 degrees Celsius above preindustrial levels.

Whatever the target, the feeling is that without a binding international agreement, nations will each choose (or not choose) their own path to reducing emissions. If nations have this freedom, competitive pressures will lead

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Don’t Believe Amity Shlaes (or most neo-classical economists): Obama’s Accelerated Depreciation Proposal Will Boost Economic Growth and is a Good Idea


President Obama recently proposed letting companies (big and small) expense 100 percent of the cost of their equipment purchases made late this year and in 2011. It’s a good idea. It would be an even better idea if the expensing were permanent. Given the slow growth of capital equipment investment by U.S. companies, particularly manufacturers, in the last decade, the non-competitiveness of the U.S. corporate tax code, and the dramatic decline in U.S. manufacturing output and jobs (and corresponding chronic and enormous trade deficits), you’d think that both sides of the aisle would jump on this.

But you’d be wrong. As they say, “it ain’t over ‘til the economists sing.” And when the economists sing these days, that usually means the neoclassical economists who dominate Washington policy making. They have almost veto-like power against fresh ideas like this one. Case in point: in a recent Bloomberg op ed by conservative economics writer Amity Shlaes says that allowing first-year capital equipment expensing is a bad idea. Oddly, some Democrats are pointing to the piece to question the wisdom of the President’s proposal. Shlaes states: “In reality, Obama’s idea isn’t such a

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The Energy Independence Trust: Where’s the Innovation Beef?

The  Coalition for Green Capital (CGC) and the Center for American Progress (CAP) have thrown their cap into the policy maelstrom left in the wake of failed cap and trade by offering their Cutting the Cost of Clean Energy 1.0 Plan. 

The plan focuses on infrastructure, regulation, and deployment financing.  It would create an Energy Innovation Trust that can borrow funds from the Treasury to offer low- cost financing for clean energy development projects, smart grid development, and energy efficiency projects for homes and businesses.  Complementary tax breaks would further incentivize energy efficiency retrofits and investment in clean energy facilities and manufacturing.

There are definitely some things to like here. The plan has the right message of “making clean energy cheap,” and it also addresses the critical gap in government support for clean tech deployment.  But despite its being advertised as such, it is not a comprehensive” approach to dealing with energy because any comprehensive and effective clean energy plan would put the majority of its efforts in supporting clean energy innovation, not deployment.

The plan wrongly assumes that the U.S. has all the

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U.S.-China Economic and Security Review Commission Issues 2010 Annual Report

The U.S.-China Economic and Security Review Commission released its 2010 Annual Report this morning, issuing stark findings that the Chinese government continues to pursue a mercantilist-based export-led economic growth strategy, with an intentionally undervalued currency at its core, while continuing to fail to meet the promises made as part of its accession to the WTO. The Commission’s report echoes many of the arguments ITIF made about China’s and other countries’ mercantilist technology export-led economic growth strategies in a report called The Good, The Bad, The Ugly, and The Self-Destructive of Innovation Policy.

The Commission reports that continuing problems with China’s implementations of its WTO commitments, “Can be traced to China’s pursuit of trade-distorting government intervention intended to promote China’s domestic industries and protect them from international competition.”  The report continues, “China has failed in some notable areas to fulfill the promises it made nine years ago when it joined the WTO. Specifically, China is adopting a highly discriminatory policy of favoring domestic producers over foreign manufacturers. Under the guise of fostering ‘indigenous innovation’ in its economy, the government of China appears determined to exclude foreigners from bidding on government

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FAA Should Re-Evaluate In-Flight Restrictions on E-Book Readers

Government should encourage public policies that foster innovation and at ITIF we try to make suggestions for how policymakers can do this better. Some of the proposals from ITIF try to make substantial structural change—like creating a National Innovation Foundation—but others are more prosaic. One example of the latter is my recommendation that it is long past time for the Federal Aviation Administration (FAA) to revisit its in-flight restrictions on the use of e-book readers and other portable electronic devices during take-off and landing. Allowing the use of these devices would eliminate one of the greatest disincentives for frequent travelers to buy an e-book reader and related digital content.

The restriction on e-book readers is certainly not the first airline regulation to be chided as obsolete. The Transportation Security Administration (TSA) is known (and often criticized) for many arcane restrictions and policies created in the name of security. For example, British Airways chairman Martin Broughton recently denounced the security screening requirements that passengers remove their shoes and laptops for individual inspection calling the measures “completely redundant.” And passengers have been justifiably confused about which electronic devices require must be

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Defining the Internet

One of the more interesting comments filed with the FCC in its recent Further Inquiry into Two Under-Developed Issues in the Open Internet Proceeding was filed by a group of illustrious computer industry stalwarts such as Apple hardware designer Steve Wozniak, computer spreadsheet pioneer Bob Frankston, Stupid Network advocate David Isenberg, and former protocol designer David Reed. Their comments are interesting because they come from such a diverse and accomplished group of people and also because they’re extremely hard to follow (one of the signers told me he almost didn’t sign on because the statement was so unclear.) After reading the comments several times, asking the authors for clarification, comparing them to previous comments by a similar (but larger) group known as “It’s the Internet, Stupid,” and to an even older statement by a similar but still larger group called the Dynamic Platform Standards Project (DPSP), I’m comfortable that I understand what they’re trying to say well enough to explain.

The author of these three statements is Seth P. Johnson, a fellow from New York who describes himself as an “information quality expert” (I think that means he’s a database

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Time for “Repatriation Easing”


In recognition of the sluggishness of the U.S. economic recovery and the fact that it had already taken aggressive steps to get the economy back on track, the Fed recently announced that it would engage in “quantitative easing” (QE) to increase the money supply by buying $600 billion in government securities from the marketplace. This is expected to increase lending to businesses and drive the price of the dollar down, both helpful steps.

But while QE is welcome, it’s not enough, not when unemployment remains above 9 percent, and, as EPI points out, October’s positive job growth rate would have to continue unabated for 20 years before the economy would achieve prerecession unemployment rates. I don’t know about you, but to paraphrase William Shatner, “That’s Just Too Damn Long.”

Some argue for more direct fiscal stimulus, but for political reasons that’s off the table. So what’s left? President Obama is rightly taking the Chinese to task for manipulating their currency to boost their exports, but any action here is likely to be slow, especially given the fact that the U.S. has been timed at best in confronting

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