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Archive for December, 2012

Countries in Financial Recession Graphic

No Structural Change in the Economy: Are You Kidding

Image: Countries in Recession as of 2009. Red indicates countries officially or unofficially in recession.

There is a booming cottage industry among neoclassical economists to explain the Great Recession and unprecedented lagging US economic recovery as simply a function of the business cycle. The view is that this is just a deep down cycle and if we are patient all will be well. They believe this of course because the very nature of neoclassical economics cannot acknowledge structural change in economies.

The latest addition to this group-think comes from neoclassical economists Edward P. Lazear and James R. Spletzer in a non-peer reviewed article in the NBER Journal titled The United States Labor Market: Status Quo or A New Normal?. They argue that “[T]he current recession does not appear fundamentally different from prior ones, except that it is worse.”

And their logic behind such a claim? They claim that the relative decline in U.S. manufacturing jobs has been under way for a half century. Wow, this is truly stunning. U.S. manufacturing employment declined by just 2 percent in the 1990s, but as ITIF has pointed out, it fell by

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Energy Innovation: The Proper Definition and Why it’s So Crucial

Originally posted at Consumer Energy Report.

Innovation is Central to Making Clean Energy Cheap

The United States and the world face an urgent imperative to transform its energy system by developing and deploying low or zero-carbon technologies on a dramatic scale. And while developed regions like the United States and Europe might be willing to change their consumption patterns  and businesses to incorporate clean energy (though not significantly), developing nations can’t afford to pay the necessary premium for this access. And they shouldn’t have to, as they try to gain access to energy of any kind. As such, the only way the entire global energy system can transition to clean energy is if its cost is lower and its performance is equal to or greater than cheap fossil fuels like natural gas, coal, and oil.

Unfortunately, today’s clean energy technologies like wind, solar, electric vehicles, smart grids, and energy storage are more expensive and oftentimes performance-limited compared to their fossil competitors. Solar and wind power are intermittent without energy storage and still require significant advances in energy conversion efficiency. Electric vehicles are up to double the cost of comparable

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Countering David Frum: Super-Charging Energy Innovation through Public Investment

Originally posted at

Earlier this month, The Daily Beast columnist David Frum took the opportunity of a book review of Michael Grunwald’s The New New Dealto deride the idea of direct public investment in energy innovation: “The single largest chunk of federal stimulus spending – the almost $90 billion in direct federal investment in new energy technology – seems to have gone up into the ether leaving little behind,” Frum writes.  Unfortunately, Frum’s comments are just the latest misguided take on energy innovation policy and the role of public investments in spurring next-generation technology development.

Micro-scaled solar cells developed through public investments at Sandia National Lab. Photo citation: Department of Energy.

Change tends to come slowly to the energy industry, which is both capital and time-intensive and only three years have passed since the Stimulus. Nevertheless, Stimulus funds have clearly made a tangible, positive impact in that short time. As Grunwald wrote inTIME in August 2012, the Stimulus “revived the wind industry and the rest of the clean-tech sector from a near death experience.” “The Stimulus,” he continues, “has financed the world’s largest wind farm, a

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Wyden and Murkowski: The Great Senate Hope for Energy Innovation Policy in 2013

Originally posted at

West Virginia Senator Joe Manchin recently proclaimed in reference to possible energy policy in 2013, “I have never been more optimistic than I am right now with Ron Wyden and Lisa Murkowski.” That’s a bold statement in an energy policy debate known more for its political pitfalls like Solyndra and a Senate known more for mind-numbing gridlock and inaction. But it’s Wyden and Murkowski’s keen sense to move beyond the energy policy stagnation of years past that is fueling cautious optimism for future progress.. Here are some key areas of potential agreement and policy action to keep an eye on as the calendar flips to a new year:

Refreshing America’s Energy Agenda

In many ways, Senator Manchin is correct to be optimistic. Atop his new perch as Chairman of the Senate Energy and Natural Resources Committee, Senator Wyden (D-WA) and Committee Ranking Member Murkowski (R-AK) are in the driver’s seat for molding energy policy in the new year. The United States last officially refreshed its energy policy in 2007 with the Energy and Security Act. Since then clean energy has taken a small, but growing

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Getting SMARTer About Wielding ICT to Cut Emissions

The Global e-Sustainability Initiative (GeSI), an information and communication technology (ICT) industry partnership, just released a new report that details how expanded use of ICT could cut global greenhouse gas (GHG) emissions by 16.5% by 2020 and offset $1.9 trillion in gross energy and fuel costs. The report, SMARTer2020, was put together by The Boston Consulting Group and also finds ICT’s GHG abatement potential to be the equivalent to more than seven times the ICT sector’s emissions over the same time period. Clearly, ICT can play an important role in saving energy and mitigating climate change.

A GeSI press release summarizes SMARTer2020’s findings:

The new research study identifies GHG abatement potential from ICT-enabled solutions ranging across six sectors of the economy: power, transportation, manufacturing, consumer and service, agriculture, and buildings. Emission reductions come from virtualization initiatives such as cloud computing and video conferencing, but also through efficiency gains such as optimization of variable-speed motors in manufacturing, smart livestock management to reduce methane emissions, and 32 other ICT-enabled solutions identified in the study. Some ICT-driven solutions such as smart electricity grids reap benefits at the national level, whilst others

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Authoritarians Win, Internet Loses in Dubai

efore Thanksgiving, we released a report on the World Conference on International Telecommunications (WCIT) in Dubai, warning that some bad things were likely to happen at this obscure confab of the 193 nation ITU. We were particularly worried about four things:

  1. Attempts to impose international interconnection fees, similar to PSTN practice.
  2. Attempts to expand censorship and surveillance in autocratic states
  3. China's desire to convert ITU-T “Recommendations,” which are voluntary technical standards today, into mandatory regulations.
  4. Russia's desire to transfer the management of Internet addresses and assigned names  and numbers from ICANN to the ITU.
Most other people were worried about the outcome of WCIT, but a few were full of sunshine and roses all along: ... Read the rest

Immigration Policy: Is the U.S. the International Champ, or Chump?

Let’s consider an analogy. Consider a sports franchise. This franchise has the best playbook, best players in the lineup and arguably great management (staff and coach). This team has a great fundamental game, and recently won 3 national championships. But the team faces a problem; their super-stars are getting older, and some are in the process of moving on. New players are still interested in playing for the team because of their recent success, but there is a strange problem facing the team.

They spend a significant amount of their money and time training newly drafted team members. But just as the athletes are hitting their prime, the team always seems to trade their up-and-coming stars to other franchises for their most inexperienced players. They still have a few of the older, well-known players, but they aren’t retaining any of their up-and-coming talent. So, where do you think this franchise is headed?

It’s pretty clear that a successful team’s lineup needs to have players in all phases of their career so that there is a smooth transition. Without this, you end up like my basketball team during the first decade

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5 Q’s on Data Innovation with Dr. Dan Riskin

Dr. Riskin is the CEO of Health Fidelity, a leading provider of natural language processing solutions. He is also a Consulting Assistant Professor of Surgery at Stanford University and practices one day a week out of the Stanford affiliate hospitals. I recently had the opportunity to get his thoughts on how data-driven innovations are transforming the health care industry.

Castro: In what ways do you see data changing health care today?

Riskin: Data is used daily to define a new generation of healthcare. Not only do patients do research on the internet, request medical support by e-mail (in some systems), and share their own medical stories online, but the actual care delivered now includes apps and remote technologies that offer supplemental care. The most fundamental change related to healthcare is the redefinition of practice, often known as data-driven healthcare. Data-driven healthcare is a big data approach to healthcare, leveraging information learned from treating millions of patients to personalize care for the few. This turns a half century of medical practice using evidence based medicine on its head. Instead of defining care for millions based on a randomized trial performed

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Cold Dead Hands

Sparks Will Fly at Spectrum Incentive Auctions Hearing

Tomorrow the House Energy and Commerce Committee will hold a hearing with all five FCC commissioners to examine the upcoming spectrum incentive auction. The committee memo on the hearing says the two main issues to be examined are “unlicensed spectrum and bidder eligibility,” two areas of perpetual friction between the Committee’s Republican leadership and the Democratic majority at the FCC. The auction was authorized by the 2012 Public Safety and Spectrum Act, so the Commission is required to abide by its conditions, and the Committee isn’t at all convinced that the FCC has its heart in the right place.

The two key issues are among the most contentious issues in U. S. spectrum policy because they deal with the first order allocation of spectrum in the civilian sector between free, unlicensed uses and fee-based, licensed ones on the one hand, and limits on licensed spectrum holdings on the other. So the structure of the auction will determine how much of the spectrum relinquished by TV broadcasters will go to licensed uses and who can buy the licenses.

The FCC is under pressure to increase allocations for unlicensed beyond the dictates

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Man Digging Hole in Ground

Spoons: For Eating From the Trough of Growth, or for Digging a Pointless Hole?

Today, prominent economist Paul Krugman posted an op-ed on the negative impacts of technology and productivity gains on the economy. Krugman claims that the economy is “deeply depressed” and that this can be primarily attributed to two sources: (1) losses of jobs due to technology driven productivity gains and (2) monopolists capturing all the profit for themselves.

For his second point,  Krugman cites as evidence that “recent college graduates had stagnant incomes even before the financial crisis struck.” Unfortunately, this dismisses the work done by Hanushek and Helpman that has revealed that quality of education is the key, not number of years of education. The fact is quality of education has fallen over time at both the primary and tertiary levels, while quantity has increased specifically at the tertiary level. As of a 2006 study, among U.S. college seniors, just 34, 38 and 40 percent were proficient in prose, document, and quantitative literacy, respectively. Therefore, the average wage that a college graduate receives should be dropping in real terms. It’s not about power-struggles, it is about lack-of-skills.

Krugman goes on to claim “that technology has taken a turn that

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