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All posts by Scott Andes

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Why California’s GMO Labeling Proposition Should be Defeated

This November, California voters will be asked to decide whether food that has been “genetically modified (GM)” should come with a special GM label.  Proponents of proposition 37, or the “Right to Know” initiative, argue that “in a democratic, free-market society, consumers get to make informed choices about what we eat and feed our families,” i.e., a GM label will help consumers make informed choices. Sounds simple enough. What could possibly be the downside to a small label that presumably enables greater consumer decision making?

First, labels such as this are never about education and open consumer choice, but about limiting people’s interest in harmful substance. Labels are one of many public policies that aim to “nudge” consumer behavior away from a product. As Richard Thaler and Cass Sunstein outline in their well-known book Nudge, consumers are fickle, uncertain, and look for cues to make decisions. Thaler and Sunstein use the example of putting fruit first in cafeteria lines. Because people irrationally fill up their trays with things at the beginning of cafeteria lines, one way to “nudge” people to eat healthy is to put healthy food first. Mandatory

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Agriculture Innovation: When a Fish is More Than Just a Fish

The Food and Drug Administration seems to be moving closer to approving genetically modified salmon for sale in the United States.  While 80 to 90 percent of corn and cotton in the United States are genetically modified (GM) this would be the first time a GM animal is sold for human consumption.  The fish developed by AquaBounty Technologies has an added growth gene that enables it to grow twice as fast and fifty percent larger.  Opponents, ranging from fishermen and their regional elected officials to environmentalists and religious groups, have begun calling AquaBounty’s salmon “Frankenfish” and claiming that a GM fish would endanger consumers, infect local stocks, destroy the environmental ecosystem, and generally constitute playing God.  Two pieces of legislation have been introduced in Congress that would either ban the fish outright or require a “transgenic” label.

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China’s Reverse Robin Hood: Stealing Intellectual Property from the Poor

Many of the facts relating to the globalization of intellectual property (IP) theft over the last decade are not debatable.  For example, IP theft has decreased the market share of U.S. firms and destroyed or prevented the creation of millions of U.S. jobs.  While currently 18 million Americas are employed in IP-intensive industries, the U.S. economy loses over $20 billion annually to IP theft and in 2007 IP theft reduced global trade by 5 to 7 percent.

However once one gets beyond a simple fact-based analysis the debate over IP theft becomes more contentious.  Specifically when it comes to policy prescriptions such as the true societal cost of IP theft, enforcement strategies and stakeholders rights, there is significant disagreement.  One of the most contentious elements of IP theft is how to deal with developing countries.  As technology spreads to emerging markets, specifically in Eastern Europe and Asia, faster than legal frameworks to prosecute IP violations, theft has steadily risen.  For example, although emerging markets only account for 20 percent of the software market, they make up 45 percent of software piracy.  China is a particular conspicuous violator.  According to the

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The Innovation Impact of UK Budget Cuts

Budget cutting fever has officially reached the UK.  Last week Chancellor of Exchequer George Osborne announced that the government would be cutting spending by £83 billion (on average 19 percent of agency budgets) and increasing taxes by £29 billion a year to reduce Britain’s £245 billion deficit.  As usual, there is no consensus amongst economists what the economic effects of the budget cuts will be.  Some argue doing so is a timely and necessary step towards austerity while others warn with the UK economy expected to only grow at a lackluster rate of 1.2 percent this year now is not the time to risk damping demand through budget cuts and the job cuts associated with them.  But as ITIF has argued in the past (here, here and here), when it comes to deficit reduction, the devil is in the details.  While fiscal discipline can help spur growth, it’s only if it doesn’t come at the expense of key investments to support innovation and productivity growth.  Sacrificing programs and policies that support innovation does more harm than good.  So how will

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Is America Really #1 in Innovation?

Last month the World Economic Forum released its 2010-2011 Global Competitiveness Report.  Among the 131 countries analyzed, the United States ranks fourth overall for global competitiveness (down from ranking second in 2009 and first in 2008) but ranks number one for innovation. Such a finding should comfort policy analysts and policy makers who have long augured America is losing its innovation edge. It seems, while we could do better in overall global competiveness, when it comes to innovation the United States is the gold standard.  All is well.

But what are studies like the Global Competitiveness Report actually measuring?  According the methodology section of the report, over two-thirds of the indicators are derived from what the WEF calls the “Executive Opinion Study.”  The survey asks business leaders throughout the world questions such as, “How would you rate the protection of property rights, including financial assets, in your country? [1 = very weak; 7 = very strong].”  For the report’s innovation subsection only one of the indicators—utility patents per million population—is based on hard data.

The WEF argues surveys help form qualitative data for metrics that hard data are otherwise unavailable. 

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Giving Innovation Economics a Chance

Budget deficits are emerging as one of Washington’s chief economic obsessions, with both liberal and conservative economic camps opining about the deficit’s effect on the economy. Robert Samuelson’s recent column in the Washington Post describes how the major economic doctrines—particularly Keynesian and monetarists (or supply-siders)—interpret the fiscal impact of budget deficits.

Keynesians believe budget deficits (either from increased spending or reduced taxes) can stimulate the economy, leading to more demand and therefore more jobs. As Paul Krugman’s recent arguments have demonstrated, they believe that when unemployment rates are high job creation should not be sacrificed on the altar of deficit reduction. In contrast, many neoclassical economists, especially conservative supply-siders, argue that big government deficits reduce national savings and increase interest rates while also contributing to financial uncertainty and reducing private sector investments.

While Samuelson rightly points out the differing perspectives of the Keynesian and supply-siders, he misses what they have in common. Neither of them considers the role of innovation in their growth models or distinguishes between spending and investment. And with this omission they fail to see what particular types of deficit spending can be harmful to the economy

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