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Why market competition matters to equitable growth

Posted on July 30, 2018September 24, 2018 by Emilie Openchowski

With the launch of our new website, we are reintroducing visitors to our policy issue areas. Informed by the academic research we fund, these issue areas are critical to our mission of advancing evidence-based ideas that promote strong, stable, and broad-based economic growth. Through June and July, expert staff have been publishing posts on our Value Added blog about each of these issue areas, describing the work we do and the issues we seek to address. The following, and final, post is about Competition. For previous posts on other issue areas, please go to our Value Added home.

At first glance, competition in the U.S. economy may seem far afield of the topic of equitable growth. What could free markets have to do with wage stagnation? How could monopoly power impact macroeconomic growth? How could anticompetitive conduct or mergers exacerbate economic inequality? In other words, what could antitrust enforcement have to do with maintaining a healthy economy? As Sen. Amy Klobuchar (D-MN) has explained, “Everything. Let me repeat that. Antitrust has everything to do with our broader economy.”

Competition became a dominant issue in U.S. politics in the late 19th century. In response to fears of undue accumulation of economic power, the U.S. Congress passed the Sherman Antitrust Act of 1890, establishing that the government had a role to protect free markets and prevent the undue accumulation and abuse of monopoly power. Over time, antitrust enforcement ebbed and flowed, reaching a high point in the mid-1960s when Justice Potter Stewart quipped that the sole consistency in merger law is “the government always wins.”

By the late 1960s and 1970s, with the U.S. economy facing inflation and stagnant growth, a new critique, born at the University of Chicago, unsettled that consensus. It saw antitrust enforcement as more likely to be the problem than the solution. Based on economic theory and research, the “Chicago School” concluded that most mergers were efficient and beneficial. Aside from the most egregious conduct such as price-fixing, bid rigging, and mergers to monopoly, the Chicago School theorized that anticompetitive conduct was unlikely to work. When it did, the conduct would generate anticompetitive profits that would attract new competitors, so the anticompetitive effects were likely transient.

Much ink has been spilled about the actual impact of the Chicago School on antitrust enforcement. It has faced significant criticisms within the antitrust community, but even those critics agreed with many of its principles. By the turn of the past century, these principles shared broad agreement: Antitrust law had a limited but important role—a highly technocratic endeavor, relying on sophisticated economic analysis. Monopoly power and anticompetitive activity were the exception rather than the rule in the U.S. economy. As a result, the courts, often with the blessing of antitrust enforcers, were more skeptical of antitrust claims, narrowed the scope of the antitrust laws, and raised procedural barriers to antitrust claims, particularly in cases brought by private plaintiffs. There was a general sense that antitrust law and its impact on enforcement had struck the right balance, solving the problems it could without restricting market forces. Even the conservative federal judge Robert Bork, who had written the polemic The Antitrust Paradox in 1978, could write in the early 2000s, “The antitrust laws, in my opinion, are performing well, in fact better than at any time in the past seventy-five years.”

Recently, however, that consensus has begun to fray. First, courts—sometimes over the objection of government enforcers, as with the California Dental and American Express decisions, for example—continued their rightward turn. More importantly, new research questions how competitive the economy actually is. Labor economists have documented the pervasiveness of monopsony power, long thought to be a theoretical issue but not a practical one. There is increasing evidence that mark-ups and corporate profits are growing and are persistent. Firms are not just earning higher profits; they are also more likely to maintain that profitability over time. A falling share of national income is going to wages and a higher share is going to corporate profits. Macroeconomists are even beginning to include measurements of monopoly power in their macroeconomic models.

This all is important because the benefits of competition are broad, and research increasingly shows that the elimination of competition can contribute to problems that the Washington Center for Equitable Growth is dedicated to examining. Monopoly power, improperly gained or used, increases prices and raises the cost of living for consumers, contributing to economic inequality. Employers with monopoly power, known as monopsony power, are partially responsible for wage stagnation. Others argue that it is suppressing innovation and stifling entrepreneurship, which is at a historical low.

Certainly, no consensus has developed about whether the U.S. economy suffers from a monopoly problem. If there is a monopoly problem, then there may be many causes. So, it is worth asking to what degree competition policy in general—and the antitrust laws in particular—are responsible. Antitrust law should be the principle bulwark protecting competition in the marketplace. There are growing concerns that antitrust doctrine has become too lenient to business practices and too worried with the dangers of overenforcement to adequately protect competition.

Equitable Growth has been participating in this discussion for some time, with work addressing market power in the U.S. economy, the relationship between market power and stagnant wages, the impact of the current merger wave, and the role of competition, or lack thereof, in the communications industry. We have also begun examining the state of antitrust laws, analyzing important cases, highlighting scholarly work proposing new avenues for antitrust enforcement, and assessing the need for increased enforcement resources.

There are three related questions for competition policy in the United States today:

Is monopoly power prevalent in the U.S. economy?
If the answer to the first question is yes, then to what extent is lax antitrust doctrine responsible for the existence of monopoly power?
If the answer to the second question is to a significant extent, then what are the solutions to failures in antitrust doctrine in particular and competition policy more generally?

Going forward, Equitable Growth will continue to pursue these issues by promoting important research, connecting academic scholars to policymakers, and advocating for policies that will enhance competition. This month we launched a new series, “Competitive Edge,” in which antitrust experts will provide their thoughts on how to improve competition policy.

The stakes are much higher than an ideological battle or technical adjustments to a legal regime. The less competition in the marketplace, the harder it will be for the economy to expand and for economic opportunity to flourish.

Competition is a little like good health: You only appreciate it once you’ve lost it.

Weekend reading: “low unemployment, low wages” edition

Posted on July 27, 2018July 27, 2018 by Ed Paisley

This is a weekly post we publish on Fridays with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is the work we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

Equitable Growth this week announced that it will be awarding 24 grants this year, totaling close to $900,000 to economists and social scientists conducting research on how economic inequality affects economic growth and stability. This brings Equitable Growth’s total in grant awards to more than $3.8 million to more than 150 researchers in the last five years.

As part of the recent launch of our new website, Equitable Growth’s Elisabeth Jacobs authored a reintroduction of our work on family economic security. Jacobs discusses how the rise in income inequality over the past four decades was accompanied by shifts in families’ economic lives as women, particularly mothers, participation in the labor market expanded.

Links from around the web

Kristin Butcher and Diane Whitmore Scanzenbach from the Center on Budget and Policy Priorities released their report “Most Workers in Low-Wage Labor Market Work Substantial Hours, in Volatile Jobs.” The report details the detrimental consequences that policy recommendations like taking away supplemental nutrition assistance and Medicaid benefits would have on exacerbating poverty and inequality. (CBPP)

How can it be that the U.S. labor market is so strong while wage growth remains so flat? University of Notre Dame economist Teresa Ghilarducci argues that wages aren’t increasing because productivity has been running ahead of wages, which led to stable prices but increased profits. (Forbes)

Inequality in the U.S. economy isn’t just visible through wages. Housing price inequality is an increasingly hot issue, but is it necessarily a bad thing? Megan Leonhardt discusses how states with greater home value inequality have a wider distribution of home values, meaning low-income families might have a better opportunity for homeownership. (CNBC)

The Economic Policy Institute released an interactive report showing just how dominant income growth at the top 1 percent has been. The report breaks down the ratio for the top 1 percent of earners to the bottom 99 percent of earners for every county across the United States. (EPI)

With record low unemployment, has there been a Trump bump in the economy? Matt O’Brien discusses how perhaps populism hasn’t paid off because fewer jobs have been added than expected and investments from the tax cut have been nonexistent. (WashingtonPost)

Friday figure

Figure is from “Equitable Growth’s: Assessing the economic effects of the Tax Cuts and Jobs Act”

Rethinking 20th century policies to support 21st century families

Posted on July 27, 2018September 24, 2018 by Emilie Openchowski

With the launch of our new website, we are reintroducing visitors to our policy issue areas. Informed by the academic research we fund, these issue areas are critical to our mission of advancing evidence-based ideas that promote strong, stable, and broad-based economic growth. Through June and July, expert staff have been publishing posts on our Value Added blog about each of these issue areas, describing the work we do and the issues we seek to address. The following post is about Family Economic Security. For previous posts on other issue areas, please go to our Value Added home.

As a raft of research illustrates, economic growth is increasingly concentrating at the top of the U.S. income distribution—a trend beginning in the 1980s and running right through to the present day, with historically high shares of national income flowing into the pockets of those at the very, very top of the income ladder. This rise in income inequality stands in stark contrast to the period of broadly shared economic growth that characterized the U.S. economy from the aftermath of the World War II through the early 1980s.

This rise in income inequality over the past four decades was accompanied by monumental shifts in families’ economic lives. Women’s labor market participation, especially that of mothers, shot upward. At the same time, the risk-sharing relationship between firms and workers fundamentally shifted, as new forms of health insurance, retirement benefits, and other forms of nonwage compensation pushed downside economic risk onto the shoulders of workers and their families. The result: destabilized household balance sheets and families’ lives, problems that are not adequately mitigated by outdated public policies grounded in New Deal-era assumptions about the way people live their day-to-day lives.

The Washington Center for Equitable Growth’s Family Economic Security portfolio focuses on understanding how this shifting constellation of risks to family economic well-being is shaping both microeconomic and macroeconomic outcomes. A focus on the family as a core economic concept allows for the examination of a host of concepts that are too often relegated to the sidelines in “serious” economic conversations. In the vast majority of both academic and policy research and analysis, the central unit for understanding economic well-being is the individual worker.

Consider the regular conversations about the health of the labor market, which is shaped by the U.S. Bureau of Labor Statistics’ monthly jobs report on individual unemployment rates and employer-based reports on individual jobs created. These numbers are obviously important, yet understanding the health of the economy requires putting each of those individual data points in the context of the economic relationships that shape the actual, lived experience of the individuals in question. And as hundreds of millions of Americans know from experience, nearly every worker is embedded in a family of some variety.

Understanding individual workers’ economic well-being requires understanding them in the context of their families. This is all the more true as family structures in the United States continue to evolve. A family perspective also allows for a multigenerational lens. We know that children’s long-term outcomes are shaped in important ways by their early experiences, but the impact of family may matter well beyond childhood. For instance, access to parental wealth may shape risk preferences in ways that impact innovation and entrepreneurship for adults. And the needs of elderly parents may fundamentally shape adult children’s economic well-being.

The idea of the family as a central focus for understanding broader questions of national economic importance is not new. Nobel Prize winner Gary Becker introduced the concept to mainstream economics, illuminating the idea of the family’s role in developing human capital through investments in children, the central importance of family-based consumption decisions for shaping both economywide demand and family well-being over time, the division of time between market work and household work, and the maintenance and development of adult human capital. More recent contributions include MacArthur Fellowship award-winner Nancy Folbre’s pathbreaking work on the central role of care work and other nonmarket labor in shaping the economic well-being of families, communities, and economies as a whole.

A growing body of research suggests that stabilizing families’ economic lives is good not only for the economic well-being of individual beneficiaries but also for the broader U.S. economy. The rise in women’s labor market participation, for example, creates a new set of challenges for many families, as women’s traditional role as family caregivers—for babies but also for elder relatives—is chaotically upended. Yet research on the consequences of providing paid family and medical leave show that well-designed policies may improve the outcomes of the children and elders receiving childcare and elder care, boost women’s long-term labor market outcomes, and decrease the likelihood that recipients need other public benefits such as supplemental nutrition assistance, Temporary Assistance for Needy Families, and Medicaid.

Equitable Growth’s paid leave research and analysis is illustrative of a broader set of underlying questions that shape our approach to advancing evidence-based ideas and policies that promote strong, stable, and broad-based economic growth. We want to better understand how structural economic shifts and demographic change affect the risks to family economic stability. How have public policies evolved—or failed to evolve—to mitigate these risks? What do these risks mean for the health of the U.S. economy as a whole? And what kinds of policy interventions are best suited to solving these challenges, particularly in the context of a rapidly changing labor market where the future of work may be organized very differently—with dramatically different consequences for families depending on their places on the U.S. income and wealth ladders. This is the core set of questions that our Family Economic Security portfolio seeks to answer.

Brad DeLong: Worthy reads on equitable growth, July 20–26, 2018

Posted on July 26, 2018September 5, 2018 by Emilie Openchowski

Worthy reads on Equitable Growth:

We economists spend a lot of time looking at aggregates and averages. But it is equally important to get thick descriptions of what happens to individual people’s lives so that you know what your aggregate and average numbers mean. Blythe George does so in her working paper, “Them old guys … they knew what to do: Examining the impact of industry collapse on two tribal reservations,” in which she uses “46 in-depth interviews conducted on the Yurok and Hoopa Valley reservations.”
GDP has its place in our national public-sphere conversation because a new number is released roughly once a month—each quarter of the year has its own GDP number, and the U.S. Commerce Department’s Bureau of Economic Analysis releases advance, second, and third estimates for each quarter. And then there are benchmarking revisions. To attain an equal place in public-sphere consciousness, the distributional national accounts component would have to appear also once a month. It is not clear to me how to do that, but for some insights read Equitable Growth’s “Measuring U.S. economic growth.”
Back in the 1990s, we in the Clinton administration put Stephen Breyer on the U.S. Supreme Court in the belief that the court needed somebody who genuinely understood antitrust. But the Republican justices have given him zero deference, even though he knows the issues and they do not. This is an increasing problem, as noted by Fiona Scott Morton in a piece titled “There is a lot to fix in U.S. antitrust enforcement today,” the first in Equitable Growth’s new blog series, “Competitive Edge.” She starts with this: “Last month’s court decision allowing AT&T Inc. to acquire Time Warner Inc. is an example of the inability of our current system of courts and enforcement to prevent the decline in competition in the modern U.S. economy … Judge Richard Leon demonstrated a lack of understanding of the markets, the concept of vertical integration, corporate incentives, and the intellectual exercise of forecasting what the unified firm would do … a poor decision.”
It seems highly likely that more money for teachers (and less money for financiers and specialists) would produce a richer and a happier America. Read Meg Benner, Erin Roth, Stephenie Johnson, and Kate Bahn’s “How to Give Teachers a $10,000 Raise,” in which they write: “While CAP believes that a new federal investment is necessary to dramatically improve teacher pay, other efforts at the federal, state, and local levels are essential to maximize compensation for all teachers.”

Worthy reads not on Equitable Growth:

I continue to fail to find a single credible competitor in terms of providing the highest-quality daily tickler-to-read list than Mark Thoma’s “Economist’s View.”
At least as true now as it was when John Kenneth Galbraith began saying it half a century ago: “The modern conservative … not even especially modern … is engaged … in one of man’s oldest, best financed, most applauded, and, on the whole, least successful exercises in moral philosophy. That is the search for a superior moral justification for selfishness.”
Perhaps the biggest hole in growth economics is its inability to properly wrestle with the problem of how to build and entertain the communities of engineering practice that have the externalities that fuel so much of economic growth. The 2 percent per year rate of growth of labor efficiency seen over the past century comes from somewhere, after all. If it comes from activities such as research and development and science that together consume 2 percent of national income, that is a 60 percent per year net rate of return on such activities. We badly need to understand more about them. Read Pierre Azoulay, Erica Fuchs, Anna Goldstein, and Michael Kearney’s working paper, “Funding Breakthrough Research: Promises and Challenges of the “ARPA Model”.”
We really do not know what effect a trade war would have on the global economy. All of our baselines are based on what has happened in the past, long before the age of highly integrated global value chains. It could be small. It could be big. The real forecast is: We just do not yet know, writes Dan McCrum in “Trade tension and China.” He observes: “The war on trade started by the Trump administration is percolating through the world’s analytical apparatus. … Tariffs could be bad for the global pace of economic activity, but only if the economic warfare escalates.”
A very interesting paper by Achyuta Adhvaryu, Steven Bednar, Anant Nyshadham, Teresa Molina, and Quynh Nguyen: “When It Rains It Pours: The Long-run Economic Impacts of Salt Iodization in the United States.” My first reaction is that the effect of salt iodization is just too large—that iodine deficiency in utero is highly unlikely to rob you of 11 percent of your lifetime income. Thus I suspect that something has gone wrong with the identification. But I cannot figure out what. Great kudos to Nguyen and company for being willing to put this out there for us to look at.
Tim Duy writes in “Powell Wants to Create Some Mystery Around Fed Meetings” that “A slower or faster pace of rate hikes, an extended pause, or even a cut are all possibilities at this point.”

Equitable Growth announces 2018 class of grantees

Posted on July 25, 2018July 18, 2019 by David Evans

The Washington Center for Equitable Growth announced today that it will award 24 grants this year, totaling close to $900,000, to economists and other social scientists conducting research on the channels through which economic inequality affects economic growth and stability. This robust body of research, now totaling more than $3.8 million in grant awards to more than 150 researchers over 5 years, is the foundation on which Equitable Growth advances a deeper understanding of the role that public policy plays in promoting strong, stable, and broad-based economic growth.

In its 2018 round of grantmaking, Equitable Growth will award 12 grants to university faculty and 12 grants to doctoral students at universities across the United States. Awards in this year’s grant cycle total $895,000, an increase of almost 16 percent from 2017 funding. There will also be an additional $39,000 in co-funding from the Russell Sage Foundation.

The categories of research in which the organization awards grants are human capital and the labor market, innovation, macroeconomics, and how institutions (including government, corporations, and other large organizations) affect inequality and growth. Equitable Growth is especially interested in research that uses government and other new or innovative data sources to shed light on important economic questions.

“Equitable Growth is excited to support another round of scholars who are deepening our understanding of how economic inequality affects overall economic well-being and how we can promote more equitable growth,” said Washington Center for Equitable Growth’s Executive Director and Chief Economist Heather Boushey. “Each research question is an opportunity to fill in another piece of the puzzle,” she added, “and after 5 years of grantmaking, a clearer picture is emerging of the channels through which economic inequality may affect economic growth and stability. With this growing body of research, scholars are advancing our understanding of how to create a stronger economy—one that works for Americans up and down the income ladder.”

Equitable Growth’s academic grants are open to researchers affiliated with a U.S. university, and its doctoral grants are open to graduate students currently enrolled in a U.S. doctoral program. Here is the 2018 Request for Proposals.

Download full descriptions of the 2018 grants and a profile of each grantee below.

Download File
2018 Full grant descriptions

Human capital and the labor market

Seven academic grants and five doctoral grants will support research on how economic inequality affects the development of human capital and the smooth functioning of the labor market:

Academic

“Using IRS tax data to measure the long-term effects of California’s 2004 Paid Family Leave Act”
Tanya Byker (Middlebury College) and Martha Bailey (University of Michigan) will use IRS tax records to study the effects of California’s 2004 paid family leave insurance on labor market and family formation outcomes for both men and women.
“Using linked Census data to examine occupation mobility in the United States”
David B. Grusky (Stanford University), Jonathan Fisher (Stanford University),
Matthew Snipp (Stanford University), and Timothy Smeeding (University of Wisconsin, Madison) will develop a new dataset to analyze occupational mobility and economic mobility, creating a more nuanced understanding of what opportunity looks like in the United States.
“The organizational bases of discrimination”
David Pedulla (Stanford University) and Devah Pager (Harvard University) will use innovative field-based experimental methods to understand the dynamics of discrimination.
“Understanding men’s nonemployment using longitudinal data: Wage opportunities, employment dynamics, and long-term effects”
Ann Huff Stevens (University of California, Davis) will utilize new approaches to data analysis to investigate the role of declining wages in the long-term fall in male employment rates.
“The long-run impact of Temporary Disability Insurance on SSDI claims, earnings stability, and labor force participation”
Emily Wiemers (University of Massachusetts Boston), Randy Albelda (University of Massachusetts Boston), and Michael Carr (University of Massachusetts Boston) will use administrative data to explore the role of Temporary Disability Insurance policies in shaping long-term labor market outcomes, as well as the receipt of long-term Social Security Disability Insurance.
“Undirected migration”
Danny Yagan (University of California, Berkeley) seeks to understand whether out-migration is a channel through which people respond to and solve for local economic shocks.
“Trends in earnings volatility using linked administrative data”
James P. Ziliak (University of Kentucky) and Christopher R. Bollinger (University of Kentucky) will use survey-linked administrative data to develop a better understanding of earnings and earnings volatility, especially for those at the top and bottom of the distribution.

Doctoral

“Economic impacts of mentoring for disadvantaged youth: RCT evidence”
Alex Bell (Ph.D. candidate, Harvard University) will investigate the role mentoring can play in economic mobility for disadvantaged youth, including impacts on college attendance, employment outcomes, incarceration, and reliance on government assistance.
“What works and what workers try: Social mobility paths beyond the bachelor’s degree and the impact of racialized inequality”
Jasmine Hill (Ph.D. candidate, Stanford University) will explore how economic inequality shapes the perceptions and knowledge of opportunities and options among those in low-income communities of color in order to shed light on the mechanisms creating and prohibiting social mobility among “low-skilled” or noncollege-educated workers of color.
“Race, entrepreneurship, and urban revitalization”
Candace Miller (Ph.D. candidate, University of Virginia) will combine an analysis of the U.S. Census Bureau’s Survey of Business Owners with qualitative interviews and archival research to analyze how black-owned businesses’ growth, inclusion, and access to resources compares to that of white-owned businesses during periods of local redevelopment in Detroit.
“Parental resources and the career choices of young workers”
Matthew Staiger (Ph.D. candidate, University of Maryland) will use U.S. administrative data to investigate how parental resources influence the career choices of young workers, with a specific focus on the impact of parental resources on entrepreneurship and job mobility.
“The effects of paid sick leave on workers’ earnings dynamics: Evidence from Seattle”
Hilary Wething (Ph.D. candidate, University of Washington) will utilize administrative data from Washington state to study the impact of Seattle’s paid sick time ordinance on earnings, hours, employment levels, and earnings volatility of workers covered by the new law.

Macroeconomics

Two academic grants and three doctoral grants will support research on how economic inequality affects macroeconomic growth and stability:

Academic

“Income-specific consumption baskets and the interaction between inequality and monetary policy”
Andrei Levchenko (University of Michigan) and Javier Cravino (University of Michigan) will investigate how differences in consumption baskets among households may affect the transmission of U.S. monetary policy.
“The macro-effects of unemployment insurance: A simulation-based discontinuity design approach”
Andreas I. Mueller (Columbia Business School), Emi Nakamura (University of California, Berkeley), Jón Steinsson (University of California, Berkeley), and Miguel Acosta (Ph.D. candidate, Columbia University) will employ new methodology to explore the macroeconomic effects of previous unemployment insurance expansions to compare them to those triggered during the Great Recession.

Doctoral

“Posted wage rigidity”
Jonathon Hazell (Ph.D. candidate, Massachusetts Institute of Technology) will create new statistics to measure the rigidity of wages posted for new hires to understand employment dynamics during tight and slack labor markets.
“Wealth taxation and evasion: Quasi-experimental evidence from Colombia”
Juliana Londoño-Vélez (Ph.D. candidate, University of California, Berkeley) will leverage administrative data from Colombia and information released in the Panama Papers to estimate the impact of wealth taxes on reported wealth and on the use of tax-evasion strategies.
“Do pass-through owners pass tax burdens through to their workers?”
Max Risch (Ph.D. candidate, University of Michigan) will investigate whether and to what extent the compensation of employees of certain pass-through businesses changes in response to changes in the tax rates on the businesses owners.

Innovation

One doctoral grant will support research on how economic inequality affects the quantity and quality of innovation, and whether technological innovations, in turn, impact inequality:

“Automation threat and wage bargaining”
Antoine Arnoud (Ph.D. candidate, Yale University) proposes to study a novel mechanism through which automation in the labor market might have an impact on wages through the threat, rather than the actuality, of automation.

Institutions

Three academic grants and three doctoral grants will support research on how levels and trends in economic inequality impact the quality of social, economic, and political institutions contributing to economic well-being and growth, including changes in market structure:

Academic

“Firm wage policies and inequality: Evidence using matched employer-employee data”
Arindrajit Dube (University of Massachusetts Amherst) will investigate the source of differences in wages being paid to similar workers at different establishments, after accounting for individual differences, to quantify how sensitive wages are to local labor market conditions.
“The impact of antitrust on competition”
Fiona Scott Morton (Yale University School of Management) will collect empirical metrics of antitrust enforcement outcomes to create a novel dataset, which she will use to analyze merger effects beyond prices such as employment, and to determine whether mergers in the high-tech sector are motivated by increased efficiencies or by the elimination of competitors.
“Tax evasion by the wealthy: Measurement and implications”
Gabriel Zucman (University of California, Berkeley) and Daniel Reck (London School of Economics) will use administrative data and data leaked from financial and legal entities to improve estimates of tax evasion by the wealthy, which they will then use to construct revised estimates of income and wealth inequality in the United States.

Doctoral

“The labor market effects of minority political empowerment: Evidence from the Voting Rights Act”
Abhay Aneja (J.D. and Ph.D. candidate, Stanford Law School and University of California, Berkeley) and Carlos Avenancio (Postdoctoral fellow, Massachusetts Institute of Technology and assistant professor, Indiana University) will examine how African American enfranchisement through the Voting Rights Act affected a variety of economic outcomes for blacks in Southern states.
“Minimum wages and racial inequality”
Claire Montialoux (Ph.D. candidate, CREST and visiting Ph.D. candidate, University of California, Berkeley) and Ellora Derenoncourt (Ph.D. candidate, Harvard University) will research how effective basic and universal labor standards are at reducing group inequality in order to increase our understanding of how a higher wage floor and universal federal labor standards can impact the racial and gender wage gaps.
“Consumer protection law and mortgage markets”
Manisha Padi (Bigelow Fellow and Postdoctoral Fellow, University of Chicago Law School) will explore the role of consumer protection laws on U.S. mortgage market outcomes and consumer welfare.

The Washington Center for Equitable Growth is a nonprofit research and grantmaking organization dedicated to advancing evidence-backed ideas and policies that promote strong, stable, and broad-based economic growth. For more information, see www.equitablegrowth.org and follow us on Twitter and Facebook @equitablegrowth.

Weekend reading: “Metrics that matter for workers” edition

Posted on July 20, 2018July 20, 2018 by Ed Paisley

Equitable Growth round-up

Equitable Growth this week released a new factsheet breaking down how gross GDP statistics obscure other metrics that better track the ways growth affects Americans’ standards of living up and down the income ladder. In addition to recommending that a distributional component be incorporated into the National Income and Product Accounts collected by the federal government, this factsheet assembles Equitable Growth’s various research products on “disaggregating growth,” including Heather Boushey and Austin Clemens’ recent report on the topic.

Kate Bahn wrote a column this week reflecting on the recent Freedom & Justice Conference jointly hosted by the National Economic Association and the American Society of Hispanic Economists at Salish Kootenai College. The conference elevated contemporary research on economic challenges and opportunities facing Native American communities. In addition to reviewing several recent research papers in this field, Kate concludes with recommendations for policymakers for improving economic data collection on Native American communities.

In his weekly “worthy reads” column, Brad Delong highlights the work of our new wages lead economist Kate Bahn as well as a blog on U.S. wage growth by Equitable Growth alumnus Nick Bunker. Brad also summarizes recent research papers in macroeconomics, including work on optimal taxation by University of California, Berkeley economist and Equitable Growth steering committee member Emmanuel Saez and Harvard University economist and Equitable Growth grantee Stefanie Stantcheva as well as papers on tax evasion by UC-Berkeley economist and frequent Equitable Growth guest author Gabriel Zucman.

Capping off the week, we launched “Competitive Edge,” our new blog focused on antitrust enforcement, with Yale University economist Fiona Scott Morton’s inaugural post. In addition to introducing the aims of this new initiative, Professor Scott Morton discusses some of the avenues for reinvigorated antitrust enforcement, grounded in economic theory and legal precedent, that were highlighted by a recent volume of The Yale Law Journal. This volume brought together papers by top antitrust scholars from a conference last fall co-hosted by Equitable Growth and the American University Washington College of Law.

Links from around the web

Reflecting on the current state of the job market, Patricia Cohen points out that wages remain stagnant despite soaring corporate profits and almost eight years of consistent job growth. As this state of affairs stands in contrast to the heightened wage pressure typically expected from low unemployment numbers, Equitable Growth’s researchers have emphasized the role of monopsony—the labor market condition in which a small number of employers boast disproportionate power to set low wages without having to compete for workers. [nyt]

Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, delves into other causes of persistent wage stagnation. In particular, Bernstein points to inflation risks from a potential trade war, interest rate risks from the Federal Reserve’s expected monetary policy, and legal and policy decisions driving declining worker power vis-à-vis employers. [nyt]

Chandra Bozelko and Ryan Lo illustrate another widespread problem created by skewed power within labor markets: employment discrimination, in this case against formerly incarcerated workers. Despite evidence that ex-offenders are no more likely to be fired than other workers and that these workers are in many cases more productive than other workers, this population of Americans has an unemployment rate of 27 percent—higher than the total U.S. unemployment rate during the Great Recession—largely due to pervasive stereotypes among employers. [nbc news]

Unfounded sex stereotypes also persist in the contemporary U.S. labor market with negative consequences for women’s wages—consequences that in one case were challenged in court with facts and data. Tyler Pager details how nurses in New York state received a $20.8 million settlement after filing a lawsuit against the state for its exclusion of nurses from its male-dominated list of physically taxing jobs entitled to a wage premium. This case is consistent with Equitable Growth research demonstrating that wage penalties for female-dominated occupations are widespread and without basis in objective productivity levels. [nyt]

Claire Cain Miller summarizes recent research verifying that sex stereotypes persist in the home as well. Indeed, a new study by U.S. Census Bureau economist and Equitable Growth grantee Marta Murray-Close and her colleague Misty L. Heggeness comparing Census Bureau data with IRS tax returns finds that gender norms influence women and men’s self-reporting of their incomes. Notably, in heterosexual couples in which the woman earns more than her husband, the IRS data show that women report incomes 1.5 percentage points less than their true incomes whereas men report incomes 2.9 percentages points greater than their true level. [nyt]

Friday figure

Figure is from Equitable Growth’s, “Measuring U.S. economic growth.”

Competitive Edge: There is a lot to fix in U.S. antitrust enforcement today

Posted on July 19, 2018December 19, 2018 by Emilie Openchowski

Antitrust and competition issues are receiving renewed interest, and for good reason. So far, the discussion has occurred at a high level of generality. To address important specific antitrust enforcement and competition issues, the Washington Center for Equitable Growth is launching a new blog entitled “Competitive Edge.” This series will feature leading experts in antitrust enforcement on a broad range of topics: potential areas for antitrust enforcement, concerns about existing doctrine, practical realities enforcers face, proposals for reform, and broader policies to promote competition. We are honored that Fiona Scott Morton, has authored our inaugural entry.

The octopus image, above, updates an iconic editorial cartoon first published in 1904 in the magazine Puck to portray the Standard Oil monopoly. Please note the harpoon. Our goal for Competitive Edge is to promote the development of sharp and effective tools to increase competition in the United States economy.

Last month’s court decision allowing AT&T Inc. to acquire Time Warner Inc. is an example of the inability of our current system of courts and enforcement to prevent the decline in competition in the modern U.S. economy. In the case of that merger, the Antitrust Division of the U.S. Department of Justice gets credit for making an attempt to block what it viewed as an anti-competitive transaction. What’s more, that view proved prescient after the now-merged firm almost immediately raised prices after executives testified that the synergies from the deal would immediately cause lower prices.

The court decision of U.S. District Judge Richard Leon demonstrated a lack of understanding of the markets, the concept of vertical integration, corporate incentives, and the intellectual exercise of forecasting what the unified firm would do. And so, not surprisingly, it produced a poor decision. The Supreme Court decision in Ohio v. American Express Company further weakens antitrust enforcement by complicating the analysis and raising the standard of proof for platform business cases.

There are many other settings where consumers deserve similar efforts to protect competition and where the two federal antitrust agencies have yet to take enforcement steps. This spring, both Bruce Hoffman, director of the Bureau of Competition in the Federal Trade Commission, and Makan Delrahim, assistant attorney general at the Department of Justice’s Antitrust Division, have publicly called for assistance in both finding new cases to bring and developing theories of harm. Fortunately, a new volume of The Yale Law Journal—bringing together top antirust scholars and papers presented at a conference last fall that was co-hosted by the American University Washington College of Law and the Washington Center for Equitable Growth—has just come out to meet this pressing need.

The recommendations in the issue do not require novel applications of antitrust law or innovative interpretations of antitrust law. They are low-risk and high-return cases for U.S. antitrust agencies to bring. But enforcement in these areas will require the agencies to look beyond old markets with lots of precedent, and instead analyze the products that consumers are now buying such as online hotel bookings, credit cards, technology standards, and mutual funds, or markets where consumers are selling such as labor markets. These are markets that do not have established jurisprudence or a recent history of enforcement, with the notable exception of American Express. More novel cases are harder to bring because an existing draft complaint is not already sitting in the files of the enforcement agencies.

The papers in the issue of The Yale Law Journal identify the types of cases the agencies should be pursuing such as anti-competitive most-favored-nation clauses. Consumers are buying ever-more goods and services online, and yet the contracts governing those prices have been subjected to no scrutiny in the United States. In Europe, an online travel agent such as Expedia Group Inc. may not require a hotel to keep its price equal or higher at all travel agencies that compete with Expedia; hotels are expressly allowed to give whatever discounts they prefer to different travel sites. In contrast, this price-increasing behavior remains effectively legal in the United States.

The Yale Law Journal issue also lays out the rationale for the agencies’ bringing cases involving harm to sellers, including employees, as this is a source of anti-competitive harm as much as higher prices. With some exceptions, antitrust enforcement has typically stayed away from these kinds of cases. Whether due to fear, doctrinal uncertainty, or misperceptions, this disclination should change.

Then there is the argument for using antitrust enforcement to end abuse by standard-setting organizations. New technologies are a key area where enforcement must keep up with consumers’ purchasing habits. Communication standards (such as those found in cellular technology—for example the so-called Long-Term Evolution standard), which are set by a standard-setting organization, often define the boundaries of competition. By a variety of conduct, some patent holders have exploited this standard-setting process across many technologies to undermine competition and harm consumers. Absent antitrust enforcement, this abusive conduct could delay the roll-out of the Internet of Things or increase its cost. The Yale Law Journal articles make a compelling case that economic theory and empirical evidence strongly support such actions. Although under Assistant Attorney General Delrahim—an acknowledged patent hawk—DOJ action protecting consumers in this area is unlikely, but at the FTC, Chairman Joe Simons was active in this area in his previous role as the FTC’s director of the Bureau of Competition, bringing the Rambus and Unocal cases.

Second, there are areas where the agencies may need to defend current doctrine or push back against mistaken doctrine. This category includes reaffirming the presumption in horizontal merger cases, redoubling efforts on vertical mergers after the AT&T-Time Warner decision (with full credit to the DOJ for bringing the case), and pushing back on doctrines that appear to limit the role of antitrust in pursuing predation cases. Further, in times of deregulation, active and vigorous antitrust enforcement is even more critical.

Multisided platforms such as credit cards, news sites, and auctions present old economic theories in a new setting, which courts find confusing. Although the Supreme Court’s recent decision in the American Express case limits the government’s ability to enforce the antitrust laws, the agencies must continue to be aggressive in their defense of competitive markets. Many platform cases will need to be brought promptly in order to clarify just how much protection from the antitrust laws the American Express decision will give these businesses.

Finally, there are important new areas for enforcement that require study of the kind only the agencies can do. Mutual funds that hold significant stakes in competing firms, such as the largest four domestic airlines, have the potential to lessen competition. The agencies have the power to examine communications between mutual funds and the companies they hold. Without such study, policymakers cannot learn the true impact on markets of many large, common owners. If that impact turns out to be significant and enforcers have done nothing to learn about it, then they will contribute to exposing U.S. consumers to more anti-competitive harm.

In its entirety, The Yale Law Journal issue lays out an initial roadmap of cases that are well-grounded in economic analysis and legal precedent. Enforcement in these areas would make U.S. markets more competitive. I have mailed a copy of this issue to both Chairman Simons and AAG Delrahim in the hopes that they find the content responsive to their call for enforcement assistance from the academic community. Each author has kindly agreed to answer any questions the agencies might have about their articles. I look forward to seeing the enforcement choices of these agencies in the year ahead.

I will close by, noting that this recent issue does not even analyze the conduct of the large technology companies that we often hear concerns about today. In the legislative realm, the U.S. Congress needs to increase the staff (with a larger budget) at both agencies to allow them to match their enforcement efforts to Gross Domestic Product. Competitive problems grow with the economy, but we have let our enforcement efforts stagnate. There is much still to do in this area to protect competition in the United States and the American consumer.

—Fiona M. Scott Morton is the Theodore Nierenberg Professor of Economics at the Yale University School of Management.

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Brad DeLong: Worthy reads on equitable growth, July 13–19, 2018

Posted on July 19, 2018July 26, 2018 by Emilie Openchowski

Worthy Reads on Equitable Growth:

I have not yet welcomed the extremely sharp Kate Bahn to Equitable Growth: Kate Bahn: “Her areas of research include gender, race, and ethnicity in the labor market, care work, and monopsonistic labor markets. … She was an economist at the Center for American Progress. Bahn also serves as the executive vice president and secretary for the International Association for Feminist Economics. … She received her doctorate in economics from the New School … and her Bachelor of Arts … from Hampshire.”
Very much worth reading from Equitable Growth alum Nick Bunker: “Puzzling over U.S. wage growth,” in which he makes the point that “hiring has not been particularly strong during this recovery.”

Worthy reads not on Equitable Growth:

Here is the website for Gabriel Zucman, Ludvig Wier, and Thomas Torslavon’s work on missing profits from tax avoidance and tax evasion (yes, I have decided I should spend some time occasionally listing paper authors in reverse alphabetical order): “The Missing Profits of Nations.”
Wealth inequality measures have been grossly understating concentration because of tax evasion and tax avoidance in tax havens. This paper by Annette Alstadsæter, Niels Johannesen, and Gabriel Zucman estimates the amount of household wealth owned by each country in offshore tax havens: “Who owns the wealth in tax havens? Macro evidence and implications for global inequality.”
The “optimal tax” literature in economics has always been greatly distorted by the fact that models simple enough to solve bring with them lots of baggage that leads to misleading—and usually antiegalitarian and antiequitable growth—conclusions that would not follow if we had better control over our theories. Here Emmanuel Saez and Stefanie Stantcheva make significant progress in resolving this problem: “A simpler theory of optimal capital taxation.” They begin: “We first consider a simple model with utility functions linear in consumption and featuring heterogeneous utility for wealth.”
I am genuinely confused here: Do we have an “eastern heartland” problem? Or do we have a “prime age male joblessness” problem? Those two problems would seem to me to call for different kinds of responses. Yet Lawrence H. Summers, Edward L. Glaeser, and Ben Austin are smooshing them into one in “A rescue plan for a jobs crisis in the heartland.” They write: “In Flint, Mich., over 35 percent of prime-aged men—between 25 and 54—are not employed.”
I think that this is a very important thing to remember: The Fed’s view—and the zero-marginal-product workers view—and a lot of other pessimistic views about the economy’s noninflationary speed limit for recovery and growth were totally, catastrophically wrong over the past decade. The people who strongly advocated for such views thus had a badly flawed Vision of the Cosmic All. Thus I think there is no reason to put a weight higher than zero on their current views of how the world works—unless they have publicly and substantially done the work to mark their beliefs to market. Certainly the Federal Reserve has not yet done so, argues Timothy B. Lee in his Twitter comment that “Every additional month of strong employment growth and weak wage growth makes people who said we were near full employment in 2014, 2015, 2016, and 2017 look wronger.”
If real wages are not growing faster than productivity, then we are not yet at full employment. We aren’t, says Matthew Yglesias on Twitter: “I think it [a labor shortage] would be a good thing, but it’s also mostly fake. We had a labor shortage in 1999 and it was glorious. I think we’ll get there again. But not yet.”
The Trump administration and the Republicans who enable it do not understand that disrupting value chains does not get you the benefits in terms of shifting the terms-of-trade in your favor that (with no retaliation) tariffs can in the “optimal tariff” literature when levied on finished goods. Read Chad P. Bown’s Twitter comment that “BMW says it will build more of its SUVs overseas and NOT IN SOUTH CAROLINA because of China’s retaliation on US autos in response to Trump’s tariffs.”
People are not effective price-sensitive consumers for health insurance. We can argue why they are not. But first we need to admit that they are not, argue Zarek C. Brot-Goldberg, Amitabh Chandra, Benjamin R. Handel, and Jonathan T. Kolstad in “What does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics.” They write: “We leverage a natural experiment at a large self-insured firm that required all of its employees to switch … to a nonlinear, high-deductible plan.”
The empirical studies are finding more and more hysteresis—in the sense of a persistent downward shadow cast by a recession—than I would have believed likely. I keep hunting for something wrong with these studies. But there are too many of them. And they all—at least all those published that cross my desk—point in the same direction such as Karl Walentin and Andreas Westermark’s “Stabilising the real economy increases average output,” They note that “DeLong and Summers (1989) … argue that (demand) stabilisation policies can affect the mean level of output and unemployment.”
Here is another study that finds a lot of hysteresis—an ungodly amount—by Christina D. Romer and David H. Romer: “Why Some Times Are Different: Macroeconomic Policy and the Aftermath of Financial Crises.” They write: “Analysis based on a new measure of financial distress for 24 advanced economies in the postwar period shows substantial variation in the aftermath of financial crises.”
I think this a very interesting framework presented by Daron Acemoglu, but it is, I think, too simple to be of material use in trying to understand what is going on in the real world: “Directed Technical Change.” He writes: “Whether technical change is biased towards particular factors is of central importance.”
A paper I badly need to read—and to read today—by Talia Bar and Asaf Zussman, is “Partisan Grading,” in which they write: “We study grading outcomes associated with professors in an elite university in the United States who were identified.”
Nick Stern is right: Discount rates are highly endogenous to scenarios—and go way, way down in true catastrophe scenarios in which insurance is not possible. Societal discount rates cannot be read off of imperfect capital markets. Climate change studies that start from either the assumption of a pure positive real intertemporal discount rate or from financial market perfection are, I think, as close to worthless as anything on God’s Green Earth. Read Nicholas Stern, “Public economics as if time matters: Climate change and the dynamics of policy,” in which he observes that “subjects such as the dynamics of innovation, of potentially immense and destabilising risks, and of political economy, together with technicalities around non-linearities and dynamic increasing returns.”
How, again, is President Donald Trump supposed to win a breath-holding contest with an authoritarian regime that both controls its media and sees little downside in redirecting resources to cushion the impact on potentially noisy losers, asks Paul Krugman in “How to Lose a Trade War.” He writes: “Trump’s declaration that ‘trade wars are good, and easy to win’ is an instant classic, right up there with Herbert Hoover’s ‘prosperity is just around the corner.’”

Freedom & Justice Conference highlights economic research on Native Americans

Posted on July 18, 2018July 18, 2018 by Emilie Openchowski

The National Economic Association and the American Society of Hispanic Economists hosted their annual Freedom & Justice Conference this past June at Salish Kootenai College, a four-year Native American tribal college in Montana. The location of the conference was designed to highlight the research being done on economic issues facing Native Americans, as well as the difficulty in conducting this research.

Native Americans face some of the bleakest economic outcomes among minority groups in the United States, including the highest poverty rate of any racial group. Yet there is a dearth of research understanding the economic dynamics facing those who make up 2 percent of the U.S. population. The lack of sufficient data, as well as the context needed to do high-quality research, makes it difficult to determine the most effective policies to ensure equitable opportunity and access to the gains from economic growth.

At the Freedom & Justice Conference, economist Randall Akee—associate professor at the University of California, Los Angeles in the Department of Public Policy and American Indian Studies, as well as a David Rubinstein Fellow in the Economic Studies Program at The Brookings Institution—gave a lunchtime keynote address that highlighted the challenges in doing research on indigenous Americans. Akee noted that these communities are varied within the United States, ranging from Alaska Natives to Native Hawaiians, American Samoans and Taino and Chamorro Pacific Islanders to the many North American Native American tribes. Yet he explained that they are all connected to a pre-invasion and pre-colonial past upon which they maintain distinct identities—ones based on different historical, political, and legal frameworks, as well as culture that need to be considered when conducting accurate research.

Notable past research on Native Americans demonstrates the importance of context in understanding how policy influences economic outcomes. Akee’s keynote reviewed examples of research including studies on the impact of assimilation, criminal justice, land-tenure institutions, and the effects of poverty alleviation on children’s future outcomes. One such example was recent research by economists Valentina Dimitrova-Grajzl at the Virginia Military Institute and Peter Grajzl and A. Joseph Guse at Washington and Lee University, showing how the adoption of state law rather than federal law on Native American reservations increased crime, attributed to jurisdictional confusion and lack of enforcement, and negatively impacted median household income. These outcomes were complicated by the impact of race and language and demonstrate how analysis needs to consider nonrandom effects such as these to avoid bias in economic research and subsequent policy recommendations flowing from the evidence.

Akee’s own recent research on the impact of poverty alleviation on political engagement—reviewed in his lunchtime keynote and since published as a National Bureau of Economic Research working paper with economists William Copeland and E. Jane Costello at Duke University, John B. Holbein at Brigham Young University, and Emilie Seimonova at John Hopkins University—relies on a so-called natural experiment within the “Great Smoky Mountain Study,” a longitudinal study of children in rural western North Carolina. Midway through the years of study, a casino opened up on the Eastern Cherokee Reservation that distributed a proportion of profits to all adult tribe members, regardless of income level or employment status. This unconditional cash transfer enabled the four researchers to examine its effects. They found that the cash transfers increased civic engagement as measured by future voting of those who were ages 13 to 17 when their families began receiving the allotment. Importantly, they found that the impact was greater for low-income families, effectively closing the participation gap between high- and low-income individuals among the Eastern Cherokee as they became voters.

Unfortunately, due to data limitations, even researchers with the backgrounds to understand the broader context of the society and culture of Native Americans often take necessary shortcuts in their analysis, while others don’t know that they are using faulty measures or variables in their analysis. One example Akee brought up was that some measures of economic well-being may not be directly applicable to the experience of these communities such as overcrowded housing for some traditional tribal homes with a single room. Likewise, years of schooling measures often do not reflect traditional knowledge, yet people can be considered masters of cultural or other practices that have great value to their communities.

What’s more, common economics research on topics such as income distribution are complicated by which measure one uses when studying Native Americans alone or in combination with other races. When studying income levels on reservations, a researcher needs to consider whether to examine only tribe members or the entire population of the reservation. These lessons can apply broadly to underrepresented demographic groups in economic research across the many indigenous American communities. These issues can lead to problematic research that would not stand up in other areas of economics that have more readily available data, and particularly areas that have data surveys designed to address standard pitfalls and common questions.

This lack of data, in turn, reinforces a perception that research in this subject area is not pure economics, but rather history or anthropology. This may further diminish pressure for government statistical agencies to collect sufficient data, through oversampling, with well-designed surveys in order to conduct high-quality econometric analysis. The potential for improving economic opportunities for Native Americans is constrained by the lack of evidence-based research that can demonstrate how policies impact these communities, and why high-quality data is necessary for doing policy analysis for many underrepresented groups.

—Thank you to Randy Akee for sharing his presentation materials, as well as his helpful feedback on this column.

Measuring U.S. economic growth

Posted on July 16, 2018August 10, 2018 by Emilie Openchowski

Each quarter, the U.S. Bureau of Economic Analysis releases its Gross Domestic Product report, which measures the value of goods and services produced in the United States. These numbers drive our national conversation about economic growth, yet they provide precious little information about the well-being of most Americans. The solution is to add a distributional component to our System of National Accounts that would tell policymakers and the general public not only the average growth of the economy, but would also report income growth for the rich, poor, and middle class.

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Measuring U.S. economic growth

In recent decades, income inequality in the United States has been rising, and larger shares of economic growth have flowed to the very top of the income distribution—the most wealthy. From 1980 to 2014, pretax income growth for the top 1 percent of all earners was 204 percent in the United States, far above the national average of 61 percent. Over the same time period, pretax incomes for the bottom 50 percent of individuals grew by just 1 percent.¹

Therefore, the official GDP growth statistic may bear little resemblance to the experience of most Americans. Because it is a report of average growth across everyone in the United States, as incomes at the very top skyrocket, they drag the average up with them, making GDP growth less and less representative. (See Figure 1.)

Figure 1

Better understanding how economic growth in the United States is shared among income groups, geographic regions, and demographic groups will have a significant and lasting impact on how policymakers and economists alike gauge economic progress and evaluate policy.

Key takeaways

The measurement of GDP has fostered a national fixation on “growing the pie” that ignores how growth is distributed. That conventional wisdom has become antiquated, as more and more of the nation’s growth has accrued to the top 1 percent.
Policymakers interested in combatting rising income inequality cannot evaluate the effectiveness of their policies without a consistent, high-quality measure of how economic growth is distributed.
Existing statistics on inequality and the distribution of economic gains produced by the federal government do not account for all income, vastly underestimate the income of top earners, or are not given the level of attention received by other major economic statistical products.
A distributional component could be added to the National Income and Product Accounts, at least in part. The United States could include many of the most desirable features of such a system, although some others may require investments in new statistical infrastructure.