Archive for the ‘American Enterprise Institute’ Category

US biofuels policy, global food prices, and international trade obligations

July 9, 2015 Comments off

US biofuels policy, global food prices, and international trade obligations
Source: American Enterprise Institute

Key Points

  • US energy policy requires that motor fuel is blended with large quantities of biofuels, produced from crops like corn and soybeans. This disrupts domestic production, prices, and trade for major crops.
  • Recent studies estimate that corn prices in the US are about 30 percent higher than they otherwise would be because of biofuel production, and staple food prices have increased worldwide by 20 percent.
  • International agricultural trade negotiations must expand beyond trimming farm payments to curtail the broader policy instruments that affect agriculture and, particularly, that divert large amounts of crops out of the food supply and drive up prices.

The paperwork pile-up: Measuring the burden of charter school applications

May 28, 2015 Comments off

The paperwork pile-up: Measuring the burden of charter school applications
Source: American Enterprise Institute

Key Points

  • Charter schools were created with a clear bargain in mind: charter authorizers would give operators autonomy to run schools as they saw fit as long as those schools met defined performance metrics.
  • Currently, the balance between accountability and autonomy is heavily tilted toward accountability, with charter authorizers requiring unnecessarily extensive, time-consuming applications.
  • Excising unnecessary or inappropriate requirements could shorten the average charter application by one-third, saving applicants more than 700 hours of work and avoiding wasting money that could be better spent educating students.

How fast are semiconductor prices falling?

May 22, 2015 Comments off

How fast are semiconductor prices falling?
Source: American Enterprise Institute

Editor’s note: This paper has been updated from the original version posted in July 2014.

The Producer Price Index (PPI) for the United States suggests that semiconductor prices have barely been falling in recent years, a dramatic contrast from the rapid declines reported from the mid-1980s to the early 2000s. This slowdown in the rate of decline is puzzling in light of evidence that the performance of microprocessor units (MPUs) has continued to improve at a rapid pace. Roughly coincident with the shift to slower price declines in the PPI, Intel — the leading producer of MPUs — substantially changed its pricing behavior for these chips. As a result of this change, we argue that the matched-model methodology used in the PPI for MPUs likely started to be biased in the mid-2000s and that hedonic indexes can provide a more accurate measure of price change since then. Our preferred hedonic index of MPU prices tracks the PPI closely through 2004. However, from 2004 to 2008, our preferred index fell faster than the PPI, and from 2008 to 2013 the gap widened further, with our preferred index falling at an average annual rate of 43 percent, while the PPI declined at only an 8 percent rate. Given that MPUs currently represent about half of U.S. shipments of semiconductors, this difference has important implications for gauging the rate of innovation in the semiconductor sector.

Internet traffic as a basic measure of broadband health

January 15, 2015 Comments off

Internet traffic as a basic measure of broadband health (PDF)
Source: American Enterprise Institute

Key Points

  • Internet traffic volume is an important indicator of broadband health, as it encapsulates and distills the most important broadband factors, such as access, coverage, speed, price, and content availability.
  • US Internet traffic is two to three times higher than that of most advanced nations, and the United States generates more Internet traffic per capita and per Internet user than any major nation except for South Korea.
  • The US model of broadband investment and innovation—which operates in an environment that is largely free from government interference—has been a dramatic success.
  • Overturning this successful policy by imposing heavy regulation on the Internet puts one of America’s most vital industries at risk.

For richer, for poorer: How family structures economic success in America

October 29, 2014 Comments off

For richer, for poorer: How family structures economic success in America
Source: American Enterprise Institute

The standard portrayals of economic life for ordinary Americans and their families paint a picture of stagnancy, even decline, amidst rising income inequality or joblessness. But rarely does the public conversation about the changing economic fortunes of Americans and their families look at questions of family structure. This is an important oversight because, as this report shows, changes in family formation and stability are central to the changing economic landscape of American families, to the declining economic status of men, and to worries about the health of the American dream.

Who’s making money on the Internet? Comparing ROIC across Internet sectors

October 13, 2014 Comments off

Who’s making money on the Internet? Comparing ROIC across Internet sectors
Source: American Enterprise Institute

One of the background questions in Internet policy debates concerns what and who contributes value to the overall system and who extracts profits. In a perfectly functioning market, profits will reward innovation, investment, and the creation of value for users; unfortunately, there exist very few perfect markets. A number of things distort market efficiency; government policy is certainly one such thing, and market power is another.

Return on invested capital (ROIC) is a very good way to evaluate competition, profitability, and leverage in capital-intensive industries.

According to Morningstar, firms with 15 percent or more ROIC for a number of years are most likely have a “moat” that protects them from competition.

So let’s look at three sectors: content creators such as Disney and Viacom, who create the movies and TV shows that we stream into our homes; network services firms such as Comcast and AT&T, who provide us with broadband networks; and Internet “edge services” such as Netflix and Google, who connect network users with content and services.

Solar radiation management: An evolving climate policy option

June 7, 2013 Comments off

Solar radiation management: An evolving climate policy option

Source: American Enterprise Institute

Measures to reduce greenhouse gas (GHG) emissions have long dominated public discourse about responses to man-made climate change. However, major institutional and political hurdles dim future prospects for controlling emissions. While adaptation to climate change can accomplish much, flawed institutions are likely to limit its efficacy.

Solar radiation management (SRM) appears to promise at least some capacity to offset the warming caused by the rising atmospheric GHG concentrations. SRM would seek to enhance and manage physical processes that currently reflect sunlight back into space. For example, most researchers have envisioned implementing this concept by adding to the layer of sulfuric acid that is already present in the lower stratosphere. All else remaining equal, global mean temperatures would fall even though GHG levels would not; the Intergovernmental Panel on Climate Change estimates that physical processes such as these already offset about 40 percent of global warming. By lessening the rise in temperature, SRM might lessen some of the risks of global warming.


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