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Morning Brief: Protecting the Global Supply Chain

by Jonathan Masters
January 26, 2012

The White House announced a new strategy to protect the global supply chain of goods that are critical to U.S. national security and economic welfare. Among other things, the plan calls for improving the detection of threats (natural disasters, terrorism, piracy, etc.), building a resilient critical infrastructure, and fostering international collaboration.

International trade and investment. Some policymakers say trade deals offer unfair advantages to foreign firms but others see free trade as a way to spur economic growth and job creation. Leading analysts examine the debate over next steps in U.S. trade policy.

Education and Human Capital

Transitioning from College to Career

Graduates who exhibited little academic curiosity and weak critical thinking as college students have a harder time than their contemporaries as they begin their professional lives, according to a new report by Richard Arum and Josipa Roksa. The account follows up on the authors’ controversial book “Academically Adrift,” which argues that undergraduate  education is doing far too little to strengthen the intellectual capabilities of students.

Education and human capital. An education system beset by falling student performance and a flawed immigration system threaten U.S. capacity to develop a competitive workforce. Experts spell out ways of improving education and immigration policies.

Infrastructure

White House Calls for Infrastructure Funding

In his State of the Union address, President Obama proposed spending half of the planned savings from winding down the wars in Iraq and Afghanistan—approximately $440 billion over ten years– on national infrastructure projects (Reuters). Parts of the plan, especially expansion of high-speed rail, are likely to encounter opposition from congressional Republicans, though Republican Speaker John Boehner has said that infrastructure spending will be a high priority for this session of Congress.

Donna Cooper at the Center for American Progress praises the president’s infrastructure plan as essential to job creation and middle class growth, but contends GOP lawmakers are set on thwarting such investments by adding contentious proposals to weaken environmental reviews of projects.

Corporate Regulation and Taxation

Tax Incentives for U.S. Manufacturing

Speaking in the swing state of Ohio, President Obama laid out a series of tax proposals designed to encourage growth in domestic manufacturing (FT), including a 20 percent tax credit for the moving expenses of firms that relocate to the United States, and a doubling of the tax deduction for advanced manufacturing technologies from 9 to 18 percent. The White House also proposed establishing a minimum tax on the international income of U.S. businesses in an effort to discourage U.S. companies from keeping corporate profits offshore rather than re-investing them in the United States.

With the controversy continuing over GOP presidential candidate Mitt Romney’s record when he was chief executive of Bain Capital, James Suroweicki explains in the New Yorker how private equity firms, while often reviled as “job-destroyers,” do not perform significantly worse than most U.S. businesses with regard to layoffs. However, he says public concern should focus on how proficient these firms have become in financial gimmickry and manipulating the tax code.

Corporate regulation and taxation. Regulatory burdens, offshore employment, and tax-shelter abuses have fed debate over the scope of rules for U.S.-based businesses. Top economists and business experts offer solutions for addressing corporate taxes.

Innovation

Incentivizing Entrepreneurship

The Economist‘s Free Exchange blog compares the current tech-boom in Silicon Valley with that of the “roaring nineties,” and explores the relationship between a scarce labor market, salary growth, and the incentives for entrepreneurship.

Innovation. In the face of robust challenges from emerging markets such as India, Brazil, and China, the U.S. capacity to innovate could play a chief role in economic growth. Specialists on research and economic competitiveness examine how to spur innovation.

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