In the Council on Foreign Relations 2011 Independent Task Force on U.S. Trade and Investment Policy, we noted that many economists had begun to worry that growing U.S. trade with developing countries like China and India was holding down wage earnings among lower-skilled Americans. We quoted Paul Krugman, who had explored the issue thoroughly in the 1990s and was rethinking his earlier conclusion that the impact of trade had been small: “It’s no longer safe to assert that trade’s impact on the income distribution in wealthy countries is fairly minor,” Krugman wrote. “There’s a good case that it’s big and getting bigger.” But we noted that, unlike the 1990s, economists had not thoroughly examined the more recent evidence. Read more »

Last summer, after two years of growing uncertainty, systemic risk in the eurozone finally began to wane, as conditional commitments came together. Italy and Spain offered credible fiscal and growth-oriented reforms, and the European Central Bank, with Germany’s backing, promised intervention as needed to stabilize the banking sector and sovereign-debt markets.=Unfortunately, that trend may be reversing. Growth in the eurozone has turned negative overall, significantly so in the south. Unemployment stands at about 12% in Italy, and 38% for the young. Likewise, Spain’s unemployment rate is above 25% (and 55% for young people). And French economic indicators are slipping quickly. Read more »

This week, for the first time in more than ninety years, both houses of Congress put out their annual budget proposals before the White House, an anomaly that reflects the topsy-turvy world of fiscal politics in Washington today. The Obama administration has delayed its fiscal blueprint for a few more weeks, which White House officials blame on the chronic budget brinksmanship over the last several months. Read more »

There’s a striking number in Robert Pastor’s new Renewing America Policy Innovation Memorandum, “Shortcut to U.S. Economic Competitiveness: A Seamless North American Market.” Like many, I had assumed that, whatever one’s assessment of the overall impact of the North American Free Trade Agreement (NAFTA), that it had been largely successful in its primary goal of increasing trade and investment flows among the United States, Mexico, and Canada. Read more »

This summer, a billion-dollar project will begin to raise the road deck of the Bayonne Bridge that links Staten Island to Jersey City, and provides access to Manhattan via the Holland Tunnel. The project is not being undertaken because of safety concerns about the current bridge, but rather to allow larger container ships to pass underneath it and reach the Port of New York and New Jersey. It’s just one of several port projects in anticipation of the widening of the Panama Canal. Read more »

The European Commission, the EU’s antitrust authority, announced a decision earlier this week to fine Microsoft $731 million for violating the terms of a previous antitrust settlement, which analysts say may constitute a warning to other dominant multinational firms and signals the EU’s willingness to go farther than their U.S. counterparts. Read more »

This guest post is by Curtis Valentine, a Term Member with the Council on Foreign Relations and a Returned Peace Corps Volunteer (South Africa 2001-2003)

The continuous debates over domestic issues like immigration, education, the economy, and healthcare reveal what most of us already know: America is divided politically and economically. The results of the 2012 presidential and congressional elections suggest that most of us live amongst like-minded individuals. The disparity in income in America is among the highest of any developed country. A program of mandatory national service could help to bridge those divides, build greater unity, while putting millions of young people to work on the growing number of domestic challenges that compromise our economic and military competitiveness around the world. Read more »

Midnight. A fishing trawler lurches violently in a squall off the coast of Marseille. A seemingly lifeless body is spotted adrift off the bow, and fished out of the roiling sea. No identification. No memory. Only three enigmatic clues bizarrely implanted in the man’s hip: 000-7-17-12-0-14-26. Gemeinschaft Bank. Zurich. Read more »