HKS in the News July 20, 2012

1. How the Elites Built America's Economic Wall (Shoag) Bloomberg News

2. Maine near bottom for student improvement Associated Press

3. Employer match not strong motivator for 401(k) enrollment (Madrian) Employee Benefit News

4. No Need to Panic About Corn (Paarlberg) China Daily

5. Jokes About Fox News Creep Into Obama’s Comments as the Campaign Heats Up (Gergen) New York Times

How the Elites Built America's Economic Wall

Bloomberg News

July 19

Quoted: Daniel Shoag, Taubman Center

Topic: Research on the slowdown of income convergence in the U.S.

For a century, incomes became increasingly equal across the U.S., as poor states such as Alabama caught up to rich places like California.

Economists have long taught this history to their undergraduates as an illustration of the growth theory for which Robert Solow won his Nobel Prize in economics: Poor places are short on the capital that would make local labor more productive. Investors move capital to those poor places, hoping to capture some of the increased productivity as higher returns. Productivity gradually equalizes across the country, and wages follow. When capital can move freely, the poorer a place is to start with, the faster it grows.

“That’s one of the central relationships in macroeconomics,” says Daniel Shoag, an economist at Harvard University’s Kennedy School of Government. “It’s an extremely strong one, and we teach it in introductory macro because it’s one of the few macro facts that are predicted by a model that isn’t a tautology and that holds extremely well.”

In a new working paper, Shoag and Peter Ganong, a doctoral student in economics at Harvard, offer an explanation: The key to convergence was never just mobile capital. It was also mobile labor. But the promise of a better life that once drew people of all backgrounds to rich places such as New York and California now applies only to an educated elite -- because rich places have made housing prohibitively expensive.

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Maine near bottom for student improvement

Associated Press

July 18

Cited: Research by the Program on Education Policy and Governance

Topic: Response to the research findings

AUGUSTA — A new Harvard study that gave Maine low marks for student test score improvement serves as a wake-up call that more must be done to improve public schools, Gov. Paul LePage said today.

The study, "Achievement Growth: International and U.S. State Trends in Student Performance," put Maine second from the bottom among states for test score improvement between 1992 and 2011.

LePage said he's calling on the education commissioner, school administrators and teacher unions to implement new educational practices focused on student learning.

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Employer match not strong motivator for 401(k) enrollment

Employee Benefit News

July 20

Cited: Brigitte Madrian

Topic: Research on 401k savings programs

Employer matches aren’t as strong an inducement to get employees into the 401(k) plan as you might think, according toBrigitte Madrian, professor of public policy and corporate management in the Aetna Chair at Harvard’s Kennedy School of Government.

While matches are great for employees once they’re in the plan, they’re not the best tool to encourage enrollment in the first place, Madrian said during a Web briefing sponsored by State Street Global Advisors, which recently launched its Defined Contribution Investor Survey report.

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No Need to Panic About Corn

China Daily

July 20

Commentary by: Robert Paarlberg

Topic: Impact of drought on corn production

Severe heat and drought in the American Midwest have seriously damaged the maturing corn crop, triggering yet another food price panic. Ever since the memorable food price spike of 2008, it hasn't taken much of a drought in any grain-growing region to rattle the market. Two years ago it was a drought in Russia. Last year it was a near-drought in China's northern wheat belt. Now we have hot and dry weather in the US corn belt.

Because of very little rain over the past six weeks, roughly 30 percent of the entire corn crop in the United States is now rated in "poor" condition, compared to just 9 percent in poor condition at the same time last year. If rains do not fall soon, the damage will increase...

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Jokes About Fox News Creep Into Obama’s Comments as the Campaign Heats Up

New York Times

July 19

Quoted: David Gergen, Center for Public Leadership

Topic: Fox News political coverage

...Fox News tends to benefit when it covers Mr. Obama and the Democrats aggressively. Indeed, during the height of the 2009 spat between Fox News and the White House, the channel’s ratings grew 8 percent over all. And while many of its commentators and on-air guests may be rooting for a Mitt Romney victory, privately Fox executives say that a second Obama term could be the best thing that ever happened to their network....

Political experts said Mr. Obama’s swipes at Fox News then and now seem to be in keeping with a strategy to discredit his opponents, a tactic the campaign has deployed rather effectively.

“Whoever it is who may be a source of strength for Romney, they’re out there trying to discredit them in some fashion,” said David Gergen, an adviser to Presidents Ronald Reagan and Bill Clinton. “It’s an old tactic, and it often works.”

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Broadcast Notes

Linda Bilmes
WGBH Radio/Boston, “Emily Rooney Show,” 7/19
Topic: The rising cost of the war in Afghanistan

Victoria Budson, Women and Public Policy Program
NECN, "Morning Show ," 7/19
Topic: New Yahoo CEO

This selection of media appearances is compiled by the Office of Communications and Public Affairs.

To submit an item please email Jane Finn-Foley

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