Is Competitiveness Worth Defending?
About This Event
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Politicians often call for actions to enhance US competitiveness with other countries and chide their political rivals for pursuing policies contrary to that purpose. Meanwhile, segments of the academic community have largely written off national competitiveness as meaningless. Economist Paul Krugman went so far as to say that "the obsession with competitiveness is not only wrong but dangerous, skewing domestic policies and threatening the international system." In light of the academic challenge to the notion of competitiveness, AEI has gathered experts to research the value of competitiveness in different spheres. How do we define competitiveness, and is it worth pursuing as a policy goal? In what ways do countries compete in various areas, including education, intellectual property, health care and taxes?
This AEI conference will be the first of a two-part series in which scholars will present new research on competitiveness. Each paper will be presented by its author(s), followed by comments from an expert and questions from the audience.

8:45 AM
9:00 AM
9:15 AM
Competitive Tax Policy
JOEL SLEMROD, University of Michigan
ANDREW LYON, PricewaterhouseCoopers
10:15 AM
Rethinking Competitiveness
R. GLENN HUBBARD, Columbia Business School
CHRIS EDWARDS, Cato Institute
11:15 AM
11:30 AM
The Role of Innovation and Intellectual Property in Economic Competition
12:30 PM
1:00 PM
American Competitiveness and the Health Care System
MICHAEL E. CHERNEW, Harvard Medical School
MICHAEL E. CHERNEW, Harvard Medical School
STEPHEN T. PARENTE, University of Minnesota
2:00 PM
Education and Global Competitiveness: Lessons for the US from International Evidence
MARTIN WEST, Harvard Graduate School of Education
GROVER J. WHITEHURST, Brookings Institution
3:00 PM
Event Contact Information

For more information, please contact Veronika Polakova at [email protected], 202.862.4880.   

Media Contact Information

For media inquiries, please contact Véronique Rodman at [email protected], 202.862.4871.

Event Summary

WASHINGTON, SEPTEMBER 29, 2011—The concept of national competitiveness has implications both generally and for the fields of tax policy, intellectual property, health care and education. At an event at AEI Thursday, scholars from around the country examined and debated these ideas in a series of five panels. Joel Slemrod of the University of Michigan kicked off the event with a presentation on "Competitive Tax Policy."He framed his analysis in terms of three "unpersuasive economic arguments,"one of which stipulated that a policy cannot be accepted as good only because other countries have adopted it. He argued that the US system of taxing corporations distorts economic behavior on several margins, which is magnified by the global economy, and offered several policy prescriptions.

In "Rethinking Competitiveness," AEI's Kevin Hassett, noting the world is becoming "flatter,"extended the Tiebout Model, a well-known theory of local public finance, to the global economy. The panel's discussant, Chris Edwards of the Cato Institute, expressed opposition to the idea of governments changing their policies in response to an open global economy because micromanagement by governments is troublesome.

The third speaker, Robert J. Shapiro of Sonecon, addressed "The Role of Innovation and Intellectual Property in Economic Competition."He concluded that competitiveness lacks great importance in innovation. He also argued for protections to foster innovation and observed that where innovation occurs does not really matter, in part because aggregate innovation benefits the entire world community. The key is how quickly and readily innovations are implemented, the major indicator of production enhancement.  

Next, Michael Chernew of Harvard Medical School analyzed "American Competitiveness and the Health Care System."He pointed out the distinction between competitiveness, which implies a winner and loser, and efficiency, which can benefit all parties, and noted that we need to address the greatest problem plaguing the US health care system: its inefficiency.

Martin West's presentation on "Education and Global Competitiveness"concluded the event. Drawing on lessons from international evidence, he argued that competitiveness, while lacking a useful distinction from productivity, is still beneficial in education policy debates. As Chernew argued regarding health care, West asserted that the US education system suffers from inefficiency and concluded with several policy prescriptions. Overall, the event succeeded in reframing the policy debate and exploring new research topics.



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Speaker Biographies

Joel Slemrod is the Paul W. McCracken Collegiate Professor of Business Economics and Public Policy at the Stephen M. Ross School of Business at the University of Michigan, and professor and chair in the Department of Economics. He also serves as director of the Office of Tax Policy Research, an interdisciplinary research center housed at the Ross School of Business. He has been a consultant to the US Department of the Treasury, the Canadian Department of Finance, the New Zealand Department of Treasury, the South Africa Ministry of Finance, the World Bank and the Organisation for Economic Co-operation and Development. From 1992 to 1998, Mr. Slemrod was editor of the National Tax Journal, and he was a co-editor of the Journal of Public Economics from 2006 to 2010. He is the co-author with Jon Bakija of Taxing Ourselves: A Citizen’s Guide to the Debate over Taxes, the 5th edition of which will be published by MIT Press in 2012.

Andrew Lyon
is a principal in the National Economics and Statistics group of PricewaterhouseCoopers LLP. He provides economic analysis to clients on federal tax, budget and regulatory matters. His recent focus includes analysis of the Obama administration's international tax proposals and tax reform proposals. Mr. Lyon has testified before Congress on a range of issues and provided analysis on tax reform options to President George W. Bush's Advisory Panel on Federal Tax Reform. Before joining PricewaterhouseCoopers, he was on the faculty of the University of Maryland's economics department. He served for two years as deputy assistant secretary for tax analysis with the Department of Treasury, where he was responsible for providing economic advice and analysis on all aspects of federal taxation. He received the Internal Revenue Service Commissioner's Award and the Treasury Department's Distinguished Service Award. Mr. Lyon has also served on the staffs of the President's Council of Economic Advisers and the Joint Committee on Taxation. He has written numerous articles covering a wide range of tax issues, including distributional analysis of tax reform, international taxation, consumption taxation, the effects of tax policy on the stock market, and social security financing, as well as a book on the alternative minimum tax.

Kevin A. Hassett is the director of economic policy studies and a senior fellow at AEI. Before joining AEI, he was a senior economist at the Board of Governors of the Federal Reserve System and an associate professor of economics and finance at the Graduate School of Business of Columbia University, as well as a policy consultant to the Treasury Department during the George H. W. Bush and Clinton administrations. He served as an economic adviser to the George W. Bush 2004 presidential campaign, chief economic adviser to Senator John McCain during the 2000 presidential primaries and senior economic adviser to the McCain 2008 presidential campaign. Mr. Hassett also writes a column for National Review. 

Chris Edwards
is the director of tax policy studies at the Cato Institute and editor of the Downsizing the Federal Government website. He is a top expert on federal and state tax and budget issues. Before joining Cato, he was a senior economist on the congressional Joint Economic Committee, a manager with PricewaterhouseCoopers and an economist with the Tax Foundation. Mr. Edwards has testified before Congress on fiscal issues many times, and his articles on tax and budget policies have appeared in the Washington Post, Wall Street Journal and other major newspapers. He is the author of Downsizing the Federal Government and co-author of Global Tax Revolution. He was also a member of the Fiscal Future Commission of the National Academy of Sciences.

Robert J. Shapiro
is the chairman and cofounder of Sonecon LLC, a private firm that provides advice and analysis to senior executives and officials in US and foreign businesses, governments and nonprofit organizations. He is also a senior policy fellow at the Georgetown University McDonough School of Business, adviser to the International Monetary Fund, chairman of the US Climate Task Force, director of the Globalization Initiative at the New Democrat Network, co-chair of American Task Force Argentina and a director of the Ax:son-Johnson Foundation. Mr. Shapiro was undersecretary of commerce for economic affairs from 1997 to 2001. Before that, he was co-founder and vice president of the Progressive Policy Institute and the Progressive Foundation. He was the principal economic adviser to Bill Clinton’s 1992 campaign and a senior economic adviser to the Gore, Kerry and Obama presidential campaigns. Mr. Shapiro also served as legislative director and economic counsel for Senator Daniel Patrick Moynihan (D-NY) and as a fellow of Harvard University, the Brookings Institution and the National Bureau of Economic Research.

John H. Makin is a resident scholar at AEI and a principal at Caxton Associates. Mr. Makin has been an adviser to numerous US government agencies, the Federal Reserve System, and the Bank of Japan. He is a member of the Council on Foreign Relations and the Economic Club of New York. Mr. Makin joined AEI in 1984 after a distinguished career in academic research. He is the author of numerous books and articles on financial, monetary, and fiscal policy, and he writes AEI's monthly Economic Outlook.

Michael Chernew
is a professor in the Department of Health Care Policy at Harvard Medical School. His research activities focus on several areas, most notably the causes and consequences of growth in health care expenditures, geographic variation in medical spending and use and value-based insurance design. Mr. Chernew is a member of the Medicare Payment Advisory Commission, an independent agency established to advise the US Congress on issues affecting the Medicare program. He is also a member of the Congressional Budget Office’s Panel of Health Advisors and Commonwealth Foundation’s Commission on a High Performance Health System. In 2000, 2004 and 2011, he served on technical advisory panels for the Center for Medicare and Medicaid Services that reviewed the assumptions used by the Medicare actuaries to assess the financial status of the Medicare trust funds. He is a faculty research fellow of the National Bureau of Economic Research, co-edits the American Journal of Managed Care and is a senior associate editor of Health Services Research. In 2010, Mr. Chernew was elected to the Institute of Medicine of the National Academy of Sciences and serves on the Committee on the Determination of Essential Health Benefits.

Stephen T. Parente is the Minnesota Insurance Industry Endowed Chair of Health Finance in the Department of Finance in the Carlson School of Management at the University of Minnesota. He specializes in health economics, health insurance, medical technology evaluation and health information technology. He has extensive experience directing empirical analyses using primary and secondary databases and is acknowledged as a national expert on using administrative databases, particularly Medicare and health insurer data, for health policy research. He has consulted for several of the largest health care organizations, including UnitedHealth Group, Blue Cross and Blue Shield, Johnson and Johnson, Medtronic, Pfizer, Merck, Johns Hopkins Hospital and various government agencies. Mr. Parente has been the principal investigator on large funded studies regarding consumer-directed health plans, health information technology and health policy microsimulation. He is currently on the governing board of the Health Care Cost Institute and is the founding director of the Medical Valuation Laboratory, a nine-college interdisciplinary effort to accelerate medical innovation from scientists, clinicians and entrepreneurs. Mr. Parente teaches graduate-level courses in health economics, information technology and medical technology evaluation and is an adjunct faculty member at Johns Hopkins University.

Martin R. West
is an assistant professor of education at the Harvard Graduate School of Education; deputy director of Harvard’s Program on Education Policy and Governance; and an executive editor of Education Next, a journal of opinion and research on education policy. He is also a research affiliate of the Taubman Center for State and Local Government at Harvard Kennedy School and of the CESifo Research Network. Mr. West’s research focuses on the politics of K–12 education policy in the United States and institutional and policy effects on student achievement and noncognitive skills. His most recent book (co-edited with Joshua Dunn), From Schoolhouse to Courthouse: The Judiciary’s Role in American Education (Brookings Institution Press), examined the increase in court involvement in education policymaking over the past half century. He has also published widely in academic journals and outlets including Education Next, Education Week, Vox and the Wall Street Journal. Before joining the Harvard faculty, Mr. West taught at Brown University and was a research fellow in governance studies at the Brookings Institution.

Grover J. "Russ" Whitehurst is the Herman and George R. Brown Chair and director of the Brown Center on Education Policy at the Brookings Institution. Previously, he was director of the Institute of Education Sciences at the US Department of Education, US assistant secretary for educational research and improvement, chair of the Department of Psychology at the State University of New York at Stony Brook and academic vice president of the Merrill-Palmer Institute. Mr. Whitehurst is a widely respected and influential leader in education research and policy in the United States and around the world. His specializations include program evaluation, teacher quality, preschools, national and international student assessments, reading instruction, education technology and education data systems.

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