News Article | May 11, 2017
The received wisdom is that automation is stealing away jobs from humans—maybe quickly, maybe slowly, but stealing nonetheless. A new report attempts to provide a counter to that school of thought. An analysis of 165 years of U.S. labor history by the Information Technology and Innovation Foundation—a think-tank supported by the tech industry—reveals that America isn’t currently experiencing high levels of job churn (that is, the creation of new occupations and destruction of old ones). In fact, the results show the rate of churn is at a record low. ITIF argues that because labor disruption measured by that metric is small, technology isn’t having as profound an effect on jobs as many people seem to think—and it won't in the future, either. We do know that the arrival of robots in the workplace increases unemployment and decreases wages—but admittedly the claim that automation is causing that to be the case across the U.S. assumes that robots are actually being purchased, installed, and used. The truth is that many roles are so far more resistant to automation than some people would like to admit, and that the arrival of robots in the workplace may be slower than many people think. In the Wall Street Journal, Greg Ip goes a step further than that, using the new report as an opportunity to call out concerns about the erosion of jobs by automation as “baffling and misguided.” There’s an historical argument that can be asserted here, after all: that the labor market has seen far larger shocks as a result of mechanization in the past, and yet it’s always recovered. This time shouldn’t be any different. But history may not repeat itself. Our editor, David Rotman, did an excellent job of pointing out both sides of this argument a few years ago. One of the more compelling arguments against Ip and the ITIF's report is that, this time round, technologies are developing skills that are far more human-like than those that have gone before them—so they could wipe out many more of the skilled jobs that have so far resisted automation. There is clearly uncertainty, which means that it’s questionable to argue that the problem of automation stealing away jobs is a problem that can be roundly ignored—as the ITIF does when it reassures policymakers that they can "take a deep breath, and calm down" over the issue. History can indeed inform how we approach the future, but it’s perhaps unfair to compare the arrival of tractors on farms in the 1920s with machine learning software that can take the jobs of a junior lawyer. Still, the ITIF does draw one conclusion that it’s hard to argue with. It suggests that the lack of labor market churn is one of the factors that’s given rise to sluggish growth in productivity—the value of output for an hour of labor—over the past decade. Whoever’s right about the effects of robots on labor, we certainly agree that productivity needs a boost.
News Article | May 11, 2017
The battle to build chips for the AI boom is about to get serious. As machine learning has blossomed, the technique has become the hot ticket for businesses keen to innovate (or at least, sound like they plan to). That’s proven to be good news for anyone building hardware that runs AI software—and until now, that really meant Nvidia, which happily found that the graphics processors it had been making for years were surprisingly well-suited to crunching AI problems. But our own Tom Simonite explains that Nvidia’s dominance may be about to slide. Get The Download! Sign up here to have it delivered free to your inbox. Is automation actually doing enough to transform the labor market? We always hear that robots are taking jobs. Now a report by the industry-supported Information Technology and Innovation Foundation provides a counter. It says that 165 years of U.S. labor history show job churn is lower than in the past, suggesting that technology's impact isn't as pronounced as many think. Robots certainly fuel unemployment, but that assumes they're put to use—and many roles still aren't automated which may explain the result. It's questionable to argue the problem doesn't exist, but the ITIF's right about one thing: productivity needs a boost. Microsoft is looking beyond the smartphone for its next stab at success. At its annual developer conference this week, Microsoft continued an innovation push by describing its vision for the future. The plan, outlined by the Register: hulking AIs in the cloud, feeding smaller devices—not necessarily smartphones—each running their own nimble AIs. Described by Microsoft’s CEO, Satya Nadella, as the “intelligent cloud and intelligent edge,” it feels to us more like a natural evolution of the current cloud-and-smartphone combination. "Everyone starts ... with the 'brain' of the robot completely empty. The robot doesn't know anything about the world, but now we want those robots to learn new tasks?" —Claudia Perez-D'Arpino, from MIT’s Computer Science and Artificial Intelligence Lab, explains why it’s so important to build robots that can learn quickly.
News Article | May 24, 2017
If congress agrees with Trump’s latest budget proposal, NASA will have about $561 million less to work with in 2018 than it did in 2017. The difference is fairly small — $561 million accounts for roughly a 3% cutfrom 2017's budget. With that said, significant programs will meet the chopping block because of it: NASA’s education program will completely shut down, along with at least four other missions related to studying asteroids or understanding Earth’s changing climate. “We’ve got $19.1 billion as an agency, and it really reflects the president’s and the administration’s confidence in us,” Lightfoot reportedly said at a presentation to employees in Washington. But others are not so pleased by the dropping investment. Stephen J. Ezell, president of global innovation policy at the Information Technology and Innovation Foundation, said that these programs "lay the groundwork for America’s workforce and industry to be competitive tomorrow." Axing them could stifle future generations — particularly millennials — from being world leaders in science, or from understanding how to cope with climate change. "This notion of cutting the Office of Education, I think is a misguided cut that leaves America worse off in the long run, and that’s not what a good budget should do,” Ezell said in a phone call, later adding, "It’s also critical that we understand the extent of and the cause of climate change. That’s always been an important mission. The Earth is a space system, right? Just like the moon is.” NASA's Office of Education, which organizes programs for students of all ages with the hopes of building a future American workforce that's competent in space, tech and sciences is in danger. It has its spiritual roots in U.S. President John F. Kennedy’s vision to keep Americans competitively vested in science globally, "feeding a generation of engineers that would later go onto the industry and make breakthroughs," Ezell said. The Plankton, Aerosol, Cloud, Ocean and Ecosystem satellite, a program designed to closely monitor Earth’s oceanic and atmospheric health, could be cut. The program would collect significant data on marine food webs, diversity of organisms at sea, interactions between the ocean and atmosphere and more. "We will take Earth’s pulse in new ways for decades to come," NASA's website reads. The Climate Absolute Radiance and Refractivity Observatory, a program that would give scientists detailed climate change projections gathered from a solar spectrometer, could be in trouble. "These tested climate records can be used to lay the groundwork for informed decisions on the mitigation and adaptation policies that address the effects of climate change on society," NASA’s website reads. Orbiting Carbon Observatory 3, a device designed to measure the distribution of carbon on Earth and how it’s being affected by fossil fuels and urban growth, might lose funding. Radiation Budget Instrument, a device that measures Earth’s reflected sunlight and thermal radiation, which affect climate and weather, could lose money. “Long-term satellite data from RBI will help scientists and researchers understand the links between the Earth’s incoming and outgoing energy,” NASA’s website reads, and could potentially help scientists forecast weather more accurately.
News Article | May 8, 2017
The prevailing narrative that the U.S. labor market is experiencing an unprecedented rate of technology-driven disruption couldn’t be further from the truth, according to a new analysis examining 165 years of Census data. In reality, the level of job churn—the rate at which some occupations expand while others contract—is now at a historic low, a new study by the Information Technology and Innovation Foundation (ITIF) finds. ITIF, the leading U.S. tech-policy think tank, warns that this misperception risks leading policymakers and the public to be wary of technological innovation and progress when they should instead be encouraging more of it to accelerate productivity, grow the economy, and improve living standards. “It has become an article of faith that workers in advanced economies are facing unprecedented levels of labor-market disruption and insecurity. But that assumption turns out to be completely wrong,” said Robert D. Atkinson, ITIF’s president and the report’s lead author. “People see Uber disrupting the taxi market, robots assembling cars, and artificial intelligence reviewing legal documents, and they assume no occupation is safe. But when you look at the data, you find we are actually in a period of relative tranquility. If opinion leaders continue suggesting we are in unchartered economic territory and warn that just about anyone’s occupation can be thrown on the scrap heap of history, then the public is likely to sour on technological progress and the policies that support it that will lead to more shared prosperity.” The ITIF report, part of the think tank’s @Work series on employment in the innovation economy, reviews U.S. occupational trends from 1850 to 2015, comparing the mix of occupations in the economy from decade to decade as reflected in Census data compiled by the University of Minnesota’s Minnesota Population Center. ITIF also assessed each occupation to judge whether increases or decreases in employment in a given decade were likely due to technological progress or to other factors. Overall, three main findings emerge from this analysis: ITIF’s report also enumerates methodological flaws in previous research that has helped drive the false narrative suggesting we will soon see an unprecedented rate of technology-driven labor disruption. For example, a frequently cited Oxford University study concluded that 47 percent of U.S. employment is at risk of computerization, but it included fashion models, manicurists, barbers, and school bus drivers as potentially automatable jobs. Atkinson suggests these are unlikely positions for automation, quipping, “Does anyone really want to let their middle school child ride an autonomous school bus without an adult present?” ITIF’s findings do not mean there is no need to help workers who are displaced, says Atkinson. “Policymakers should do more to improve labor-market transitions for workers who lose their jobs, regardless of the rate of churn or whether we are trying to speed it up or slow it down. From ensuring workers can receive unemployment benefits while they are in training for new jobs to establishing more support for lifelong learning, we must help people who lose jobs through no fault of their own. But that is true whether the job loss stems from short-term business-cycle downturns or from trends that lead to natural labor-market churn.” Overall though, Atkinson makes it clear that ratcheting down technological progress, by such ill-advised schemes as taxing robots, is not the answer. “Labor market disruption is not abnormally high. It’s at an all-time low. And predictions that human labor is just one high-tech ‘unicorn’ away from redundancy are likely vastly overstated, as they always have been. If there is any risk for the future, it is that technological change and resulting productivity growth will be too slow—not too fast—to raise living standards at the rate we want.”
News Article | May 1, 2017
Data is the lifeblood of the modern global economy, yet 34 countries and counting have enacted unwarranted policy restrictions that make it more expensive and time consuming—if not illegal—to transfer data across national borders, says the Information Technology and Innovation Foundation (ITIF). ITIF provides a complete catalogue of these barriers to the flow of data and a review of studies detailing their economic costs in a new report out today. The practice of locking data behind geographic borders is costing the global economy billions of dollars—with the burden falling not just on trading partners, but also on the very countries that impose barriers on data, the tech-policy think tank finds. The report urges policymakers around the world to step up their efforts to roll back these unwarranted barriers to modern trade, especially in the countries that use them most, such as China, Russia, Indonesia, Nigeria, and Vietnam. “The use of data analytics in virtually all industries—both tech-driven and traditional—has streamlined business practices and increased efficiency. But it has also made the movement of data more important than ever,” said Nigel Cory, ITIF’s trade policy analyst and the report’s author. “While countries employ a range of rationales for blocking data—from protecting privacy to stimulating economic growth—none holds up under scrutiny. It’s time to push back. Policymakers should appeal to other nations’ self-interest: These policies won’t help them reach their privacy, security, or economic goals, but they’ll force all firms that use IT services to pay more—a self-inflicted wound that undermines economic growth and their own firms.” As Cory’s report explains, 34 countries have restricted data from leaving their borders, with many more considering similar laws. A review of the current research finds that these barriers impose significant costs: reducing U.S. GDP by between 0.1 and 0.36 percent; causing prices for some cloud services in Brazil and the European Union to increase by between 10.5 and 54 percent; and reducing GDP by between 0.7 and 1.7 percent in Brazil, China, the European Union, India, Indonesia, Korea, and Vietnam, all of which have either proposed or enacted data localization policies. Cory details two main drivers of these costs: At the firm level, barriers to data flows make firms less competitive, because companies are forced to spend more than necessary on IT services. At the country level, barriers make it harder and more expensive for domestic companies and citizens to gain global exposure, benefit from the research and best practices that accompany data flows, and utilize innovative new goods and services that rely on data. The report explains that concerns about privacy, cybersecurity, and economic growth are the main reasons countries give when they institute these policies. As Cory details, however, these rationales are faulty: -In almost all cases companies are bound to a nation’s privacy and data protection laws merely by doing business there—thereby establishing a legal nexus—so a firm cannot escape complying with a nation’s privacy laws simply by transferring data overseas. -The security of data does not depend on where it is stored, only on the measures used to store it securely. A secure server in Laos is no different from a secure server in Brazil. If anything, by allowing data to leave its borders, a country allows its companies and individuals to store their data with companies that use the most advanced measures to protect the data, regardless of where it is physically stored. -Countries are mistaken in believing that if they restrict data flows, they will gain a net economic advantage from companies relocating data-related jobs to their nation. As data centers have become more automated, the number of jobs associated with each facility has decreased, especially for technical staff. Conversely, by allowing local companies to store data anywhere in the world, these countries can reduce costs and make their firms and workers more productive, bolstering the local economy. Cory concludes with recommendations to policymakers in the United States and other countries for how to address this barrier to modern trade. He urges the Trump administration to: -Negotiate trade agreements that prohibit and eliminate digital barriers; -Devote more resources to, and develop better measures of, the digital economy and trade; -Initiate enforcement cases against countries that have enacted digital-protectionism policies; -Propose and negotiate a “data-services agreement” to address digital trade barriers; and -Propose and negotiate a “Geneva convention on the status of data” to establish international legal standards for government access to data. The report also urges policymakers in other countries to: -Recognize the critical role of data flows in promoting growth and innovation and abandon data-localization policies; -Promote international interoperability in privacy and data protection; and -Encourage international organizations, such as the World Trade Organization and the Organization for Economic Cooperation and Development, to focus on digital trade barriers. “Data flows are essential to today’s modern economy,” conclude Cory. “This fact will only become more evident as innovative firms and individuals around the world come up with new ways to leverage data. While we do not always know exactly what new innovations will look like, we do know that data will be central. The Trump administration, with the support of like-minded countries, needs to understand the importance of global data flows and step up efforts to prohibit and roll-back these digital trade barriers.”
News Article | April 20, 2017
KENOSHA, Wis. (AP) — In a story April 18 about a U.S.-Canada dispute over milk, The Associated Press reported erroneously that Canada had begun imposing import taxes on U.S. ultra-filtered milk. Canada changed its policy on pricing its domestic milk to cover more dairy ingredients, leading to lower prices for Canadian products including ultra-filtered milk that compete with the U.S. product. A corrected version of the story is below: President Donald Trump is turning back to the economic populism that helped drive his election campaign, signing an order he says should help American workers whose jobs are threatened by skilled immigrants KENOSHA, Wis. (AP) — Turning back to the economic populism that helped drive his election campaign, President Donald Trump signed an order Tuesday he said should help American workers whose jobs are threatened by skilled immigrants. At the headquarters of hand and power tool manufacturer Snap-on Inc., Trump signed an order that that asks the government to propose new rules and changes that will stop what he called abuses in a visa program used by U.S. technology companies. Dubbed "Buy American and Hire American," the directive follows a series of recent Trump reversals on economic policies. "We are going to defend our workers, protect our jobs and finally put America first," Trump declared, standing in front of an American flag fashioned out of wrenches. Much like some prior orders, however, Trump's executive action Tuesday essentially looks for detailed reports rather than making decisive changes. In this case, the reports are about granting visas for highly skilled foreign workers and ensuring that government purchasing programs buy American made goods as required by law. Trump chose to sign the directive at Snap-on Inc., based in Wisconsin, a state he narrowly carried in November on the strength of support from white, working-class voters. Trump currently has only a 41 percent approval rating in the state. He campaigned last year on promises to overhaul U.S. trade and regulatory policy, but his executive orders on those issues reflect the administration bowing somewhat to the limits of presidential power. Also, he has recently reversed several populist promises, including standing up to China, which he contended was manipulating its currency and stealing American jobs, and eliminating the Export-Import Bank, which he billed as wasteful subsidy. But Trump returned to Tuesday to the economic tough talk of his campaign, saying: "We're going to make some very big changes or we are going to get rid of NAFTA for once and for all," referring to the Clinton-era U.S. trade pact with Canada and Mexico. In his new directive, the president is targeting the H-1B visa program, which the White House says undercuts U.S. workers by bringing in large numbers of cheaper, foreign workers and driving down wages. The tech industry has argued that the H-1B program is needed because it encourages students to stay in the U.S. after getting degrees in high-tech specialties — and because companies can't always find enough American workers with the skills they need. The new order would direct U.S. agencies to propose rules to prevent immigration fraud and abuse in the program. They would also be asked to offer changes so that H-1B visas are awarded to the most-skilled or highest-paid applicants. The number of requests for H-1B visas declined this year by about 15 percent, or roughly 37,000 applications, but the total was still nearly 200,000, far more than the 85,000 limit. Tuesday's order also seeks to strengthen requirements that American-made products be used in certain federal construction projects, as well as in various grant-funded transportation projects. The commerce secretary is to review how to close loopholes in existing rules and provide recommendations to the president within 220 days. The order also asks agencies to assess the use of waivers. The trip brought Trump to the congressional district of House Speaker Paul Ryan, but Ryan was out of the country on a congressional trip. The president was greeted by Gov. Scott Walker outside Snap-on's headquarters. During his remarks, Trump weighed in on another economic issue, promising to find a solution to a trade dispute with Canada that has left dairy farmers in Wisconsin and New York without a market they had for a product called ultra-filtered milk, a protein liquid concentrate used to make cheese. Trump said Canada has been "very, very unfair" to dairy farmers and "we're going to start working on that." Canada changed its policy on pricing domestic milk to cover more dairy ingredients, leading to lower prices for Canadian products including ultra-filtered milk that compete with the U.S. product. About 70 dairy producers in both U.S. states are affected. As for the visa program, Democratic lawmakers and organizations ranging from the pro-business Chamber of Commerce to the Information Technology and Innovation Foundation say they welcome proposals to improve the visa program, though not always in line with Trump's ideas. Sen. Tammy Baldwin, D-Wis., urged Trump to skip further study and support her bill to rebuild U.S. infrastructure with American iron and steel. The Chamber of Commerce added that it would be a "mistake to close the door on high-skilled workers" who can contribute to the growth and expansion of American businesses and make the U.S. more competitive around the world. Trump has long pledged to support American goods and workers, but his own business record is mixed. Many Trump-branded products, like clothing, are made overseas. His businesses have also hired foreign workers, including at his Palm Beach, Florida, club. Snap-on makes hand and power tools, diagnostics software, information and management systems and shop equipment for use in agriculture, the military and aviation. In addition to 11 factories in the U.S., financial disclosures show it has plants in China, Argentina, Belarus, Brazil, Hungary, Italy, Portugal, Spain, Sweden and the United Kingdom. During his tour, Trump was shown metal boxes where cremated ashes are deposited. He called it "very depressing." Associated Press writers Paul Wiseman, Joshua Boak, Alicia Caldwell and Darlene Superville in Washington contributed to this report.
News Article | February 15, 2017
To "protect the American people from terrorist attacks by foreign nationals admitted to the United States," President Donald Trump recently signed an executive order that freezes travel for 90 days for citizens from Iraq, Syria, Iran, Sudan, Libya, Somalia, and Yemen. Additionally, the US Refugee Admissions Program was suspended for 120 days, and Syrian refugees have been indefinitely suspended from entry into the US. The order originally applied to all non-US residents from these countries, although the Trump administration later eased the restriction on green card holders. One group impacted by the ban is H-1B visa holders from the seven countries. There is also speculation that Trump will sign another executive order, with more specific changes to the H-1B visa program. This should not come as a big surprise, as Trump was vocal in his opposition to the program during his campaign, posting on his website "I will end forever the use of the H-1B as a cheap labor program, and institute an absolute requirement to hire American workers first for every visa and immigration program. No exceptions." "There's a lot of hostility to the H-1B program within the Trump administration, so I would expect that they're going to do significant damage to the program's viability," said Ava Benach, founding partner at immigration law firm Benach Collopy LLP. While specific changes to the H-1B visa plan are not confirmed, the travel ban has already impacted employers and workers. There are currently approximately 400,000 H-1B employees. The H-1B program is not the only visa foreign-born workers in the US use—there's the L-1, the F-1 OPT, and a handful of others—but it is the most widely used. And changes to the H-1B plan will certainly impact the tech industry, as tech companies are the primary employers of these visa holders. According to a report from the Partnership of a New American Economy, nearly 20% of the Fortune 500 companies were founded by immigrants. More than half of US startups worth over $1 billion have an immigrant founder. After the executive order was signed, tech leaders from Google, Amazon, Apple, Lyft, Netflix, and many other companies spoke out in opposition to the ban, worrying about how it will impact their current employees, as well as their potential to draw in high-level workers to increase innovation. With all of the changes around immigration under the Trump administration, it's worth pulling apart the fact from fiction. Here are some common myths about H-1B visas. H-1B visas are temporary work visas used by many employers who need to fill positions that require specialized skills—many of which are in the technology sphere. They can last up to six years. Each year, 85,000 of these visas are issued, and last year, there were 230,000 applicants. The visa holders come to the US legally, at the request of employers, and are generally not in competition with Americans who are searching for lower-level positions. The current process to hire an H-1B visa employee can be arduous. Companies invest in finding these employees from abroad when they cannot find them in the US, and put time, money, and legal fees into hiring them. They are also required to prove that they cannot find employees to fill the positions from the US. There are companies that go through less rigorous demonstration processes. Employers usually go to great lengths to hire employees on H-1B visas, and many are required to pay the legal fees to bring these workers into the US—which can cost up to tens of thousands of dollars. Because employers see these employees as critical to their business, many are willing to make the investment. According to Benach, who works with companies who have hired these employees, "employers are pretty firmly on their side in not wanting to put them in any sort of legal jeopardy." SEE: Trump's opposition to H-1B visas has experts concerned about filling high-skilled jobs Again, H-1B visa holders are sought-after workers that companies hire from abroad only when they are unable to find Americans to fill positions. Many companies are required to make a good faith effort to hire an American worker before hiring a foreign worker on an H-1B visa, according to the Department of Labor. And The New York Times reported that "employers are required to declare to the Department of Labor that hiring foreigners on the visas 'will not adversely affect the working conditions of U.S. workers similarly employed.'" It's important to point out that some companies can abuse the visa, and there are cases where American workers have trained replacements. "There are plenty of cases of exploitation of H-1B workers by major employers," said Ronil Hira, associate professor of political science at Howard University. Most notably, Disney abused the H-1B, hiring employees in low-wage jobs that replaced American workers. Still, "critics are worried about undercutting U.S. wages, which we have good data showing is not a widespread abuse," Adams Nager, economic policy analyst at the Information Technology and Innovation Foundation (ITIF). It may sound counterintuitive, but foreign-born workers bring resources into our country. Not only do they provide employers with the skills needed for certain jobs, but they have a financial impact, spending part of their salary here in the US. Also, studies have shown H-1B workers create opportunities for domestic counterparts as well, according to Nager. The rules around H-1B visas can be complex, and, as we've mentioned, there have been cases of companies abusing the system. We have heard from readers who have seen and experienced some of these kinds of abuses. It's also important to point out that some companies can abuse the visa, and there are cases where American workers have trained replacements. Many believe that the H-1B visa program should be amended, and some believe the lottery system should be abolished. Trump will likely sign an executive order soon with changes to the program, which TechRepublic will closely follow and report on. The bottom line is that we still don't know exactly how the H-1B visa will be altered. Still, changes to the plan will have a big impact on businesses and employees.
News Article | February 27, 2017
Amid news reports that the Trump administration is considering a budget blueprint developed by the conservative Heritage Foundation to slash trillions of dollars of federal spending, the Information Technology and Innovation Foundation (ITIF) today warned that key aspects of the Heritage plan are premised on erroneous assumptions, empirical inaccuracies, and misguided leaps of logic, and adopting these particular proposals would severely harm U.S. innovation, productivity, and competitiveness. ITIF, the top-ranked science and technology think tank in North America, concluded in its analysis that the country has suffered for more than a decade from chronic underinvestment in foundational areas such as science, technology, education, and infrastructure. Crippling key functions of the federal government that support business innovation and competitiveness, as the Heritage blueprint would do, would only compound the damage. “The administration and Congress need to recognize the difference between wasteful spending and critical investment,” said Robert D. Atkinson, ITIF’s president and the report’s co-author. “There are certainly federal programs that can be cut with little to no impact on economic growth. However, many federal programs compensate for serious market failures and play a pivotal role in ensuring the United States is succeeding in global economic competition. Unfortunately, Heritage dwells in a fictional world where market outcomes are by definition optimal, even if the winners aren’t on U.S. shores, and where government programs are by definition failures, even when there is evidence to the contrary. In the real world, we need to adopt a more nuanced, less ideological approach to put the U.S. economy, businesses, and workers in a position to flourish.” “The United States has suffered from private and public underinvestment for more than a decade,” Atkinson continued. “Crippling key functions of the federal government, which would be the consequence of adopting Heritage’s budget, will set the nation back even further.” The ITIF report breaks down Heritage’s doctrinaire errors in two major areas: trade and competitiveness, and energy and R&D. On the first, ITIF says the Heritage plan pretends that the United States and its industries are not in competition with other nations, because whatever the market produces is ideal by definition. ITIF argues that this simplistic worldview ignores the fact that if the United States loses traded-sector output to other countries, then it will also lose jobs and face more expensive imports. As ITIF points out, conservative governors and mayors recognize these facts and promote state-level economic development programs to maximize the benefits of economic competition. Federal programs like the Export-Import Bank, Manufacturing Extension Partnership, and the U.S. Interagency Trade Enforcement Center complement these efforts, and cutting them as Heritage proposes would only diminish U.S. competitiveness further. ITIF points out that Heritage’s plan also ignores market failures like the lack of investment in technology commercialization. While many of these investments do pay off, there is less than optimal private-sector activity because these investments are viewed as too long-term or risky. Programs like the Small Business Innovation Research (SBIR) and Small Business Technology Transfer initiatives, which Heritage suggests cutting, counter this market failure. The ITIF report argues that unfortunately, Heritage’s ideological position predisposes it to detest government programs despite evidence of their success. For example, a recent study found that for every dollar the Air Force spent on its SBIR program, it returned $3.60 in sales and 50 cents of additional outside investment or venture capital. With regard to energy and R&D, ITIF argues that by calling for the elimination of all climate-related programs and for massive cuts to basic R&D, the Heritage proposal blithely disregards the scientific consensus on climate change. This is not just bad environmental policy; it also makes no sense as an economic program, says ITIF. In particular, the report argues that the Heritage plan ignores biases in the energy market that favor incumbents and the complementary nature of public and private investment in this space. ITIF argues that if the United States fails to accelerate its progress toward cheaper, cleaner energy, then the pressure for a regulatory and tax response to reduce reliance on dirty energy will grow. What Heritage fails to understand is that federal support for clean-energy innovation in the near term will limit the need for such costly and heavy-handed responses later. “America’s economic and energy challenges are too great for policy to be shaped by ideological extremists, either on the right or the left,” said Stephen J. Ezell, ITIF’s vice president for global innovation policy and the report’s lead author. “Targeted federal government programs to help businesses in America are not crony capitalism. They are smart economic development programs, the very same kind that the most conservative Republican governors champion. To foster an innovative and competitive economy in a turbulent and sometimes hostile world, the U.S. government must use an array of tools, but use them judiciously. Heritage’s kit contains only one tool: the axe.”
News Article | February 21, 2017
Reforming America’s corporate tax code is one of the most important things Congress can do to boost U.S. economic growth, argues the Information Technology and Innovation Foundation (ITIF) in a new report out today. But given the tax code’s complexity and the divisive political environment, the country’s top tech-policy think tank urges lawmakers to focus first and foremost on provisions that spur the kinds of investments that drive innovation, productivity, and competitiveness and avoid getting bogged down in disagreements over less impactful measures that could derail broadly beneficial reform. The new report outlines the five “must-have” policies that ITIF says corporate tax reform has to include to increase innovation and competitiveness, and five “nice-to-have” policies that should not hold up the reform process if lawmakers cannot reach agreement on them. “This could be a once-in-a-generation opportunity to reform the U.S. tax code to increase domestic investment, productivity, innovation, and competitiveness—especially in the traded sectors that are so critical to economic growth,” said Joe Kennedy, ITIF senior fellow and the report’s author. “Policymakers need to keep their eye on the ball, though. By concentrating on a few key measures, Congress and the administration can reach consensus faster and avoid letting less-critical proposals bog down or derail the reform process.” For corporate tax reform to successfully boost economic growth by accelerating innovation and productivity, ITIF argues it must include the following components: 1. A substantially lower corporate statutory rate; 2. A maximum rate on foreign profits of 15 percent, with credit for foreign taxes and the elimination of deferred taxes on foreign profits; 3. An enhanced research and development tax credit; 4. An innovation box; and 5. Strong incentives for capital investment. “Any tax reform bill that includes these provisions deserves support,” said Kennedy. Kennedy warns that there is a real danger that disagreements over a host of other items could prevent a majority of legislators from reaching agreement on the most important components. These include individual tax reform, a lower effective rate, border adjustability, immediate expending, and interest deductibility. Although many of these “nice-to-have” reforms would be beneficial, they should not be allowed to jeopardize the overall reform effort. “Compared to other industrialized nations, the U.S. tax code is antiquated, burdensome, and way overdue for reform. But it’s easy to underappreciate the scale of the job before Congress,” concluded Kennedy. “In order for corporate tax reform to succeed in boosting economic growth, lawmakers should focus on the most essential changes that will have the greatest effect on innovation and competitiveness. Leaders need to push the hardest for consensus on these items and then move quickly toward compromises on other issues. Otherwise, we may have to wait another generation to finally fix the corporate tax code.”
News Article | February 15, 2017
On Friday, US President Donald Trump signed an executive order to temporarily suspend the US Refugee Admissions Program and immigration from seven Muslim-majority countries. The move sparked protests around the country, and raised questions about what it would mean for US businesses and foreign-born workers. Refugee admissions will be suspended for 120 days, in an effort to review and alter the vetting process for potential candidates. The order also aims to limit the number of refugees to 50,000 people within the fiscal year 2017. In fiscal year 2016, the US admitted around 85,000 refugees, of which 38,901 were Muslim. Immigration will be suspended for 90 days from Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen as a result of the order. At the Pentagon on Friday, Trump said that he was "establishing new vetting measures to keep radical Islamic terrorists out of the United States." SEE: Trump's opposition to H-1B visas has experts concerned about filling high-skilled jobs Lawmakers around the country have pushed back against the order, with many politicians stating their opposition as well. When it led to a man being detained at Kennedy Airport, Missouri Senator Claire McCaskill tweeted that it made her "want to throw up." American businesses, especially those in the tech sector, also felt the effects of the executive order. Silicon Valley leaders such as Google CEO Sundar Pichai, Apple CEO Tim Cook, and others publicly denounced the ban, with some going as far as to provide legal and emotional support for foreign-born workers. Adams Nager, an economic policy analyst for the Information Technology and Innovation Foundation, said that the order limits what US businesses could accomplish. "The United States wants to draw top talent from all across the globe," Nager said. "If we limit our options of who we allow to come into this country, the simple truth is we limit the effectiveness of our workforce and our immigration program—we're not choosing from the best of the best anymore, which is a problem." Trump is known for his stated opposition to the to the H-1B visa, a specialized work visa that is widely used in tech companies. The H-1B program only has a limited number of visas to give out each year, capped at 65,000, and there are concerns that the executive order is a foreshadowing of a coming cut to that program. It has also been reported by USA Today that a draft of an executive order to overhaul the H-1B program has been written up. However, Nager doesn't think that the order will further limit the number of visas available. Instead, he thinks that it will eliminate the lottery process for the H-1B program and move it to a review for the best applicants. Nager also said that the current immigration ban probably won't affect many tech workers, as the majority of H-1B workers are from Eastern Europe, India, or China. However, it will affect some, and it could put some employers in a tough spot. "If there are cases where an individual has not yet gotten to the United States, but was scheduled to come for an H-1B visa, that comes at a large cost to companies. Imagine hiring someone and then just having them not show up to work," Nager said. "Obviously, there's extenuating circumstances here, but that's going to do a lot of damage to the company." If you believe that some employees at your organization may be affected by the executive order, there are some practical steps you can take. Kim Thompson, partner and chair of Fisher Phillips' Global Immigration Practice Group, said that employers should start by suspending international work travel for employees who are from one of the seven countries listed in the order. "Similarly, you should encourage them to remain in the United States and to indefinitely postpone any personal travel plans outside of the United States if possible, even if they have a valid H-1B visa or green card," Thompson said. Another part of the executive order was a suspension of the Visa Interview Waiver Program, and Thompson said that could lead to longer visa wait times. "If a visa application is necessary, you should be prepared for your employees to remain outside of the United States for an extended period of time," Thompson said. Being that the order is so recent, its effects and the information around it are evolving rapidly, said Susan Cohen, founder and chair of Mintz Levin's Immigration Practice. As such, employers should be proactive in communicating with employees and keeping their information up to date. "HR and legal departments must be brought up to speed about affected employees and everyone must be educated about the situation and its rapid evolution," Cohen said. Additionally, Christian Zeller, an immigration attorney with Maney | Gordon | Zeller, P.A., said that "business leaders should evaluate their foreign national employees' immigration status, and if they qualify to become permanent residents, petition for them. If a business leader has foreign national employees who are permanent residents, encourage them to become U.S. citizens."