Sen. Harry Reid has gone ahead with the so-called "nuclear option" to attempt to change Senate filibuster rules on some executive branch nominations, passing the rule change with a 52-48 vote. In their Vital Statistics on Congress report, Brookings Senior Fellow Thomas Mann and AEI Resident Scholar Norman Ornstein provide data on the number of attempted Senate cloture votes taken from 1979 to 2012, the 96th to 112th Congresses. The chart below demonstrates the average attempted cloture vote taken by party when that party was in the minority.

For more data on both attempted and successful cloture votes sine 1919, look up table 6-7 in Vital Stats (PDF).

Senior Fellow Sarah Binder, a leading expert on Congress and congressional history who called, in 2010, the Senate filibuster a "mistake," offered a recent analysis of Senate cloture votes, writing that "Counting cloture votes remains an imperfect — but still valid — method of capturing minority efforts to block the Senate."

More recently, Binder wondered whether "Democrats have the guts to go there and, if so, whether that compels any Republicans to stand down."

In the face of seemingly weekly terrorist attacks and reports that Islamic State affiliates are growing in number, political leaders are under pressure to take tougher action against ISIS and other violent extremist threats. Removing terrorists from the battlefield and from streets remains critical—President Obama announced last week that the United States will send 250 more special operations forces to Syria, for one, and other military, intelligence, and law enforcement efforts will be important. According to one assessment, the United States has spent $6.4 billion on counter-ISIS military operations since August 2014, with an average daily cost of $11.5 million. As a result of these and related efforts, the territory the Islamic State controls has been diminished and its leadership and resources degraded.

The more challenging task, however, may be preventing individuals from joining the Islamic State or future groups in the first place and developing, harnessing, and resourcing a set of tools to achieve this objective. Violent extremism is most likely to take root when communities do not challenge those who seek to radicalize others and can’t offer positive alternatives. Prevention is thus most effectively addressed by the communities themselves—mayors, teachers, social workers, youth, women, religious leaders, and mental health professionals—not national security professionals, let alone national governments. But it’s easier said than done for national governments to empower, train, and resource those communities. 

Political leaders around the globe are increasingly highlighting community engagement and the role of communities more broadly in a comprehensive counterterrorism strategy. States, however, continue to struggle with how to operationalize and sustain these elements of the strategy. 

Show us the money

First, there is the funding shortfall. Too many national governments continue not to provide local governments and communities with the resources needed to develop tailored community engagement programs to identify early signs of and prevent radicalization to violence. To take just one example of the disparity, the $11.5 million per day the United States spends on its military presence in Iraq is more than the $10 million the Department of Homeland Security was given this year to support grassroots countering violent extremism (CVE) efforts in the United States, and nearly twice as much as the State Department’s Bureau of Counterterrorism received this year to support civil society-led CVE initiatives across the entire globe. Although a growing number of countries are developing national CVE action plans that include roles for local leaders and communities, funding for implementation continues to fall short. Norway and Finland are two notable examples, and the situation in Belgium was well-documented following the March attacks in Brussels.

Prevention is thus most effectively addressed by the communities themselves...not national security professionals, let alone national governments.

At the international level, the Global Community Engagement and Resilience Fund (GCERF)—established in 2014 and modeled on the Global AIDS Fund to enable governments and private entities to support grassroots work to build resilience against violent extremism—has struggled to find adequate funding. GCERF offers a reliable and transparent mechanism to give grants and mentoring to small NGOs without the taint of government funding. Yet, despite the fact that “CVE” has risen to near the top of the global agenda, GCERF has only been able raise some $25 million from 12 donors—none from the private sector—since its September 2014 launch. This includes only $300,000 for a “rapid response fund” to support grassroots projects linked to stemming the flow of fighters to Iraq and Syria—presumably a high priority for the more than 90 countries that have seen their citizens travel to the conflict zone. The GCERF Board just approved more than half of the $25 million to support local projects in communities in the first three pilot countries—Bangladesh, Mali, and Nigeria. GCERF’s global ambitions, let alone its ability to provide funds to help sustain the projects in the three pilots or to support work in the next tranche of countries (Burma, Kenya, and Kosovo) are in jeopardy unless donors pony up more resources to support the kind approach—involving governments, civil society, and the private sector—that is likely needed to make progress on prevention over the long-term.

Go grassroots

Second, national governments struggle with how best to involve cities and local communities. Governments still have a traditional view of national security emanating from the capital. Although a growing number of governments are encouraging, and in some cases providing, some resources to support city- or community-led CVE programs, they have generally been reluctant to really bring sub-national actors into conversations about how to address security challenges. Some capitals, primarily in Western Europe, have created national-level CVE task forces with a wide range of voices. Others, like the United States, have stuck with a model that is limited to national government—and primarily law enforcement—agencies, thus complicating efforts to involve and build durable partnerships with the local actors, whether mayors, community leaders, social workers, or mental health officials, that are so critical to prevention efforts. 

Some members of the target communities remain skeptical of government-led CVE initiatives, sometimes believing them to be a ruse for intelligence gathering or having the effect of stigmatizing and stereotyping certain communities. As debates around the FBI’s Shared Responsibilities Committees show, there are high levels of mistrust between the government—particularly law enforcement—and local communities. This can complicate efforts to roll out even well-intentioned government-led programs aimed at involving community actors in efforts to prevent young people from joining the Islamic State. The trouble is, communities are largely dependent on government support for training and programming in this area (with a few exceptions). 

To their credit, governments increasingly recognize that they—particularly at the national level—are not the most credible CVE actors, whether on- or off-line, within the often marginalized communities they are trying to reach. They’re placing greater emphasis on identifying and supporting more credible local partners, instead, and trying to get out of the way. 

Invest now, see dividends later

On the positive side of the ledger, even with the limited resources available, new (albeit small-scale) grassroots initiatives have been developed in cities ranging from Mombasa to Maiduguri and Denver to Dakar. These are aimed at building trust between local police and marginalized groups, creating positive alternatives for youth who are being targeted by terrorist propaganda, or otherwise building the resilience of the community to resist the siren call of violent extremism. 

Perhaps even more promising, new prevention-focused CVE networks designed to connect and empower sub-national actors—often with funds, but not instructions, from Western donors—are now in place. These platforms can pool limited resources and focus on connecting and training the growing number of young people and women working in this area; the local researchers focused on understanding local drivers of violent extremism and what has worked to stem its tide in particular communities; and mayors across the world who will gather next month for the first global Strong Cities Network summit. Much like GCERF, these new platforms will require long-term funding—ideally from governments, foundations, and the private sector—to survive and deliver on their potential. 

Somewhat paradoxically, while the United States (working closely with allies) has been at the forefront of efforts to develop and resource these platforms overseas and to recognize the limits of a top-down approach driven by national governments, similar innovations have yet to take root at home. More funding and innovation, both home and abroad, can make a huge difference. For example, it could lead to more community-led counter-narrative, skills-building, or counselling programs for young people at risk of joining the Islamic State. It could also help build trust between local police and the communities they are meant to serve, lead to more training of mainstream religious leaders on how to use social media to reach marginalized youth, as well as empower young filmmakers to engage their peers about the dangers of violent extremism. And national prevention networks that aren’t limited to just government officials can help support and mentor communities looking to develop prevention or intervention programs that take local sensitivities into account. Without this kind of rigorous effort, the large sums spent on defeating terrorism will not pay the dividends that are badly needed. 

In March alone, at least nine cities across three continents were hit by terrorist attacks. Municipalities—from megacities to tertiary cities—continue to bear the brunt of such attacks: in the short term, they provide first response and take essential security measures; in the longer term, they suffer from the fallout of intercommunal tensions and economic slowdowns, which can last for years and spread beyond the target city.

Yet, post-attack discussions tend to be dominated by what national governments can do to prevent future attacks—whether through enhanced border security, law enforcement, intelligence, or military measures; or though intensified efforts to resolve underlying conflicts; or through more cooperation with foreign governments. This is understandable given the resources of national governments and their long-standing monopoly on force and foreign policy. Nevertheless, a small but growing number of cities and other local authorities are realizing that they have an essential role to play in countering violent extremism (CVE) as well.

Urban trend-setters

There is nothing new about cities coming to the realization that they need to act in the face of global challenges. Mayors and city-networks such as the C40 Climate Action Leadership Group have vocally engaged on the global stage to counter carbon emissions. Cities have frequently shown themselves to be generally more nimble and less averse to risk-taking than their national counterparts. Mayors operate under intense expectations to “get things done,” but when it comes to the threats of transnational violent extremism, what does that mean?

Much like with climate change and other global challenges where cities are becoming increasingly active stakeholders, cities are serving as laboratories for developing and testing innovative initiatives to prevent violent extremism from taking root, designed and implemented in collaboration with local communities. 

[C]ities are serving as laboratories for developing and testing innovative initiatives to prevent violent extremism from taking root.

The comparative advantages of local authorities are manifold: They are best positioned to understand the grievances that might make their citizens vulnerable to terrorist recruitment; to identify the drivers and early signs of violent extremism; to build trust between the community and local police; to develop multi-agency prevention efforts that involve families, community leaders, social workers, and mental health professionals; and to develop programs that offer alternatives to alienated youth who might otherwise be attracted to violence. 

Recognizing these advantages, local leaders are developing strategies and programs to address the violent extremist threat at each stage of the radicalization cycle. Cities across Europe have been at the forefront of these efforts, with Aarhus, Denmark often cited as a model. The approach of Aarhus involves both prevention and care, relying an extensive community-level network to help young people returning from Syria an opportunity to reintegrate in Danish society (provided they haven’t committed a crime) and mentoring to try to dissuade people from traveling to the conflict. 

In Montgomery County, Maryland, the county authorities are involved in a community intervention program that includes training for faith leaders, teachers, social service providers, police, and parents on how to recognize the early signs of extremism in underserviced immigrant communities. 

In Montreal, a $2 million, multi-disciplinary “anti-radicalization center” provides mothers who suspect their children may be vulnerable to radicalization or recruitment with resources that don’t involve contacting the police. The center focuses on training people how to identify the signs of radicalization and researching the drivers of radicalization in Montreal and what works to prevent its growth. 

Cities are dynamic actors, in part, because they have no problem borrowing from each other. Inspired by the Montreal initiative, Brussels opened a prevention-focused, anti-radicalization center, which—like the Montreal center—keeps the police out of the picture unless necessary to confront an imminent threat.

In Australia, both Victoria and New South Wales have set aside funds to support local NGO-led interventions that target individuals who may be radicalizing and build community resilience.

In Mombasa, Kenya, Governor Hassan Ali Joho is working with the regional parliament and local civil society groups to develop a county-level CVE strategy that includes a heavy focus on providing youth with positive alternatives to joining al-Shabab.

Except for Mombasa, nearly all municipality-led CVE efforts are taking place in the global north. Throughout the world, mayors and other local leaders are not part of national-level conversations about how to prevent future attacks. If national governments insist on viewing national security issues like violent extremism as being the exclusive policy domain of the capital, they will miss crucial opportunities to address a threat that is increasingly localized. 

Part of the challenge is that, much like on other global issues, municipal authorities operate within the policy and bureaucratic frameworks of national governments. Those governments can enable or, just as frequently, impede effective local action. Thus, there is often a ceiling for local actors. Raising or breaking through the ceiling is particularly difficult in the security space, given the monopoly that many national governments want to maintain over issues of national security—even while recognizing the need for local solutions.

Flattening the CVE policy space

The good news is that in countries where local authorities can innovate and lead, energy around city-led CVE efforts is increasing. Cities are sharing lessons learned and challenges, with city-to-city networks like with the Strong Cities Network (SCN)—which held its first summit earlier this month in Antalya, Turkey—sprouting to facilitate cooperation.

Yet, a significant majority of SCN members are in countries where national governments already acknowledge local authorities’ key role in CVE. With a few exceptions, cities from large swathes of the globe—including in regions where the problem of violent extremism is most acute, like the Middle East and North Africa, as well as Asia—are not enabled to contribute to efforts to prevent violent extremism from taking root in their communities. 

CVE discussions in general should highlight ways in which national policymakers have enabled effective local CVE activities, as well as roadblocks and solutions. These discussions should also be brought into multilateral platforms such as the U.N. Global Counterterrorism Forum. 

A number of other steps could be taken to enhance vertical cooperation on CVE. For example, countries could involve municipal-level representatives (not simply the national ministry responsible for engaging with such authorities) in developing national CVE plans and provide such authorities with a role in implementation. National governments that already do this could start including representatives of cities in security and broader foreign policy dialogues, particularly with those that continue to resist their involvement. 

National governments should incentivize local authorities to work with their communities to innovate in this issue area. A public-private innovation fund could be established to support city-led CVE projects in countries where political will exceeds resources; those international donors committed to supporting local solutions to global challenges and increasing the involvement of local authorities in national security conversations should invest in such a fund and, more broadly, in building the capacity of city-level officials and practitioners in the CVE sphere.

None of these steps is likely to be an elixir—after all, the notion that national security issues should be handled exclusively at the national level is deeply entrenched. However, taking these steps can generate gradual improvements in vertical cooperation on CVE issues, much like we have seen with international and inter-agency counterterrorism cooperation involving national governments over the past decade. 

Ranking U.S. metro areas, or counties, or even countries, by some fixed metric is a straightforward and often useful way to start a deeper dive into a larger body of research. For example, the top 10 counties by share of taxpayers claiming EITC, or the top 10 metro areas by change in prosperity. But what if the phenomenon being measured is more complex, has interacting characteristics that make a top 10 list less useful?

In new research, Brookings Senior Fellow Alan Berube, along with his colleagues at the Metropolitan Policy Program, and John Irons of the Rockefeller Foundation, ask “What makes an economy inclusive?” Inclusive economies, they say, “expand opportunities for more broadly shared prosperity, especially for those facing the greatest barriers to advancing their well-being.” A new Rockefeller Foundation framework identifies five characteristics of inclusive economies: equity, participation, stability, sustainability, and growth.

A typical ranking approach would list the top 10 inclusive economies (or the bottom 10) based on some score derived from data. It turns out, however, that understanding the “trends and relationships that might reveal the ‘big picture’ of what makes an economy inclusive” doesn’t lend itself to typical ranking techniques, and instead requires looking at relationships among the characteristics to ascertain that “big picture.”

Take, for example, equity, defined as: “More opportunities are available to enable upward mobility for more people.” For this analysis, Brookings researchers used 16 discrete indicators—such as the Gini coefficient, median income of less-educated workers as a share of overall median income, and transportation costs as a share of income—to come up with an equity score for each of the 100 largest U.S. metro areas. (Likewise, each of the other four inclusive economy indicators are composites of many discrete indicators, for a total of about 100 across the five.) Looking at equity alone, the top 10 metro areas are:

1. Allentown, PA-NJ
2. Harrisburg, PA
3. Ogden, UT
4. Scranton, PA
5. Des Moines, IA
6. Salt Lake City, UT
7. Wichita, KS
8. Grand Rapids, MI
9. Pittsburgh, PA
10. Worcester, MA-CT

Top 10 lists can also be fashioned for the other four dimensions in the inclusive economies research, each showing a different mix of U.S. metro areas. For example, the top three metro areas in the growth characteristic are San Jose, CA; Houston, TX; and Austin, TX. For participation: Madison, WI; Harrisburg, PA; and Des Moines. Stability: Madison; Minneapolis, MN-WI; and Provo, UT. And, sustainability: Seattle; Boston; and Portland, OR-WA. In fact, 30 different metropolitan areas are present in the combination of the five inclusive top 10 lists, spanning the country from Oxnard, to Omaha, to Raleigh. The individual top 10 lists for each inclusive economy characteristic look like this:

Because these rankings each impart useful and distinctive information about metro economies, Brookings researchers next combined the data into an overall ranking of the 100 metro areas “based on their average rankings on individual indicators for each of the five inclusive economy characteristics.” Instead of generating a ranking from 1 to 100, the analysis produces a grid-like chart that shows how metro areas fare not only in terms of inclusiveness (top to bottom), but also along a left-to-right spectrum that demonstrates the trade-offs between growth and equity. Here’s a sample from the chart (visit and study the chart here; note that wealth is depicted but by itself is not part of the inclusive economy score):

One thing that stands out when considering this colorful chart against the disaggregated top 10 lists is how unrelated they seem to be. San Jose sits at the upper right position of the chart, suggesting that it ranks as one of the most inclusive metro economies, and yet it ranks only 51st on equity. By contrast, Allentown, PA—on the left of the second row—ranked first in equity, but lower on other measures. However, taken as a whole, both Allentown and San Jose are in the top 20 metro areas overall for inclusiveness. Detroit sits along the bottom row of the inclusiveness chart. Among the five characteristics, it posts its highest rank in growth (37th overall), with much lower ranks in the other categories, even though it ranks 29th for wealth. Las Vegas, NV, is one of the least wealthy metro areas (91st), but ranks 19th in terms of equity.

Berube and Irons point to what they call “a few important insights” about the chart and these data:

• Judged across all five characteristics, the “most” and “least” inclusive metro economies are geographically and economically diverse.
• More equitable metropolitan economies also exhibit higher levels of participation and stability. 
• Growth and equity vary independently across metropolitan areas. 
• Metro areas with similar performance across the five characteristics may not possess the same capacity to improve their performance.

For more detailed discussion, and the complete inclusive economies chart, see “Measuring ‘inclusive economies’ in metropolitan America,’ by John Irons and Alan Berube.

See also “A metro map of inclusive economies,” showing metro areas that are similar to others in these outcomes.

Finally, download detailed information on the composition of the 100 indicators used to measure the five inclusive economies indicators.

Los Angeles has long been a city associated with the common ills of urban excess: sprawl, homelessness, and congestion. More charitable descriptions paint it as West Coast paradise, boasting sunshine and celebrities in equal measure.

A three-day visit to downtown Los Angeles exposed the nuances behind these stereotypes. Hosted by the Los Angeles Downtown Center Business Improvement District, which is focused on strengthening downtown as an innovation district, our visit began as a real estate tour but quickly revealed regeneration and innovation activity that confounded our expectations. 

Downtown LA (DTLA)’s innovation district focuses not just on tech firms but also on historic LA industry strengths like fashion, design, and real estate. LA may have sat in the shadow of the Silicon Valley tech boom, but it appears to be revitalizing in time for the convergence economy, in which tech is no longer a separate sector but ingrained in all forms of economic and creative activity.

And at a time where firms are revaluing proximity, vibrancy, and authenticity, DTLA could not be in a better place. While a number of U.S. cities subjected their downtowns to a range of urban renewal initiatives, the urban fabric of DTLA is largely intact. Vibrant areas like South Broadway feature boutique hotels, a dozen theatres, and clothing stores and bars that exist in historic infrastructure like reclaimed theatres. There is an urban feel that is authentically LA.

The initial renaissance of DTLA began in the late 1990s, after the residential units within its 65 blocks had dwindled to just 10,000.

Along with transportation improvements, permissive planning policies such as adaptive reuse—which allowed commercial buildings to be converted into residential use—were instrumental in increasing DTLA’s residential population. Since 1999, the residential population and housing units have tripled. With new bars and restaurants springing up on every corner, it is no surprise that three-quarters of DTLA’s current residents are aged between 23 and 44.

Building on this residential surge, an increasing number of businesses are now setting up or relocating downtown.

DTLA office space has not always been an easy sell. Employers balk at the prospect of subjecting their workforce to the punishing commute. And Bunker Hill and the adjacent Financial District, the epicenter of the central business district, offers little more than unpopulated plazas and cubicled office space.

DTLA has worked to serve its newfound residential population and attract more workers and companies by retrofitting buildings to modern aesthetic standards. The exposed brickwork and ceiling equipment of many DTLA offices like those of Nationbuilder, an online platform used for political and civic campaigns, is not just a statement of style but a conscious decision to make downtown office buildings feel hospitable to creative firms. The BLOC, a 1.9 million square foot retail development, is essentially a mall that has been turned inside out, with the roof removed to reveal an open air plaza, unrecognizable from the fortress-style building that once sat in the same spot.

While downtown’s office blocks are a fantastic asset in attracting innovation activity, the area also boasts a vast amount of warehouse space. These larger footprints, most often used for textile or food production, are attracting a range of activities that require space or, in the case of Tesla’s Hyperloop, secrecy. Such industrial firms are interspersed with new art galleries and a historic knitting mill, proof of the area’s artistic heritage.

The individuals leading the drive for a DTLA innovation district, such as Nick Griffin, director of Economic Development for the Downtown Center Business Improvement District, are realistic about challenges, such as the lack of quality public space, and proactive in leveraging existing assets, such as the large supply of creative office space.

These efforts and LA’s distinctive industry strengths are combatting one of the biggest challenges to attracting businesses downtown: the strength of competing areas like Silicon Beach, which includes Santa Monica and Playa del Rey and offers an established tech ecosystem alongside an attractive location.

Another challenge? Like many U.S. cities, LA bears the scars of suburban sprawl and a legacy of under investment in public transportation. Congestion is a constant complaint.

But here too LA is making progress.

In November, Angelinos will vote on an extension of Measure R—a 2008 ballot initiative raising the sales tax to fund core transportation projects—to provide sustainable funding for transportation infrastructure and improve access to the city center through the metro system.

Other ambitious projects, such as the Regional Connector, a light rail subway through the middle of downtown, will have a profound effect on the area's connectivity. This project is not just about getting people to and from downtown—it will also have a transformative effect on public space. The city is working with Project for Public Spaces to redesign one of the Connector’s hubs, Pershing Square, with the aim of providing a public space where employees and residents can convene and collaborate.

Connectivity will play a vital role in the continuing success of DTLA’s resurgence. But the DTLA innovation district’s main opportunity lies in better serving and connecting the people who make it work. With hometown authenticity and civic commitment, DTLA is on its way to creating a city center that is greater than the sum of its parts.

Photo Credit: Hunter Kerhart

SUMMARY

The financial crisis that has been wreaking havoc in markets in the U.S. and across the world since August 2007 had its origins in an asset price bubble that interacted with new kinds of financial innovations that masked risk; with companies that failed to follow their own risk management procedures; and with regulators and supervisors that failed to restrain excessive risk taking.

A bubble formed in the housing markets as home prices across the country increased each year from the mid 1990s to 2006, moving out of line with fundamentals like household income. Like traditional asset price bubbles, expectations of future price increases developed and were a significant factor in inflating house prices. As individuals witnessed rising prices in their neighborhood and across the country, they began to expect those prices to continue to rise, even in the late years of the bubble when it had nearly peaked.

The rapid rise of lending to subprime borrowers helped inflate the housing price bubble. Before 2000, subprime lending was virtually non-existent, but thereafter it took off exponentially. The sustained rise in house prices, along with new financial innovations, suddenly made subprime borrowers — previously shut out of the mortgage markets — attractive customers for mortgage lenders. Lenders devised innovative Adjustable Rate Mortgages (ARMs) — with low "teaser rates," no down-payments, and some even allowing the borrower to postpone some of the interest due each month and add it to the principal of the loan — which were predicated on the expectation that home prices would continue to rise.

But innovation in mortgage design alone would not have enabled so many subprime borrowers to access credit without other innovations in the so-called process of "securitizing" mortgages — or the pooling of mortgages into packages and then selling securities backed by those packages to investors who receive pro rata payments of principal and interest by the borrowers. The two main government-sponsored enterprises devoted to mortgage lending, Fannie Mae and Freddie Mac, developed this financing technique in the 1970s, adding their guarantees to these "mortgage-backed securities" (MBS) to ensure their marketability. For roughly three decades, Fannie and Freddie confined their guarantees to "prime" borrowers who took out "conforming" loans, or loans with a principal below a certain dollar threshold and to borrowers with a credit score above a certain limit. Along the way, the private sector developed MBS backed by non-conforming loans that had other means of "credit enhancement," but this market stayed relatively small until the late 1990s. In this fashion, Wall Street investors effectively financed homebuyers on Main Street. Banks, thrifts, and a new industry of mortgage brokers originated the loans but did not keep them, which was the "old" way of financing home ownership.

Over the past decade, private sector commercial and investment banks developed new ways of securitizing subprime mortgages: by packaging them into "Collateralized Debt Obligations" (sometimes with other asset-backed securities), and then dividing the cash flows into different "tranches" to appeal to different classes of investors with different tolerances for risk. By ordering the rights to the cash flows, the developers of CDOs (and subsequently other securities built on this model), were able to convince the credit rating agencies to assign their highest ratings to the securities in the highest tranche, or risk class. In some cases, so-called "monoline" bond insurers (which had previously concentrated on insuring municipal bonds) sold protection insurance to CDO investors that would pay off in the event that loans went into default. In other cases, especially more recently, insurance companies, investment banks and other parties did the near equivalent by selling "credit default swaps" (CDS), which were similar to monocline insurance in principle but different in risk, as CDS sellers put up very little capital to back their transactions.

These new innovations enabled Wall Street to do for subprime mortgages what it had already done for conforming mortgages, and they facilitated the boom in subprime lending that occurred after 2000. By channeling funds of institutional investors to support the origination of subprime mortgages, many households previously unable to qualify for mortgage credit became eligible for loans. This new group of eligible borrowers increased housing demand and helped inflate home prices.

These new financial innovations thrived in an environment of easy monetary policy by the Federal Reserve and poor regulatory oversight. With interest rates so low and with regulators turning a blind eye, financial institutions borrowed more and more money (i.e. increased their leverage) to finance their purchases of mortgage-related securities. Banks created off-balance sheet affiliated entities such as Structured Investment Vehicles (SIVs) to purchase mortgage-related assets that were not subject to regulatory capital requirements Financial institutions also turned to short-term "collateralized borrowing" like repurchase agreements, so much so that by 2006 investment banks were on average rolling over a quarter of their balance sheet every night. During the years of rising asset prices, this short-term debt could be rolled over like clockwork. This tenuous situation shut down once panic hit in 2007, however, as sudden uncertainty over asset prices caused lenders to abruptly refuse to rollover their debts, and over-leveraged banks found themselves exposed to falling asset prices with very little capital.

While ex post we can certainly say that the system-wide increase in borrowed money was irresponsible and bound for catastrophe, it is not shocking that consumers, would-be homeowners, and profit-maximizing banks will borrow more money when asset prices are rising; indeed, it is quite intuitive. What is especially shocking, though, is how institutions along each link of the securitization chain failed so grossly to perform adequate risk assessment on the mortgage-related assets they held and traded. From the mortgage originator, to the loan servicer, to the mortgage-backed security issuer, to the CDO issuer, to the CDS protection seller, to the credit rating agencies, and to the holders of all those securities, at no point did any institution stop the party or question the little-understood computer risk models, or the blatantly unsustainable deterioration of the loan terms of the underlying mortgages.

A key point in understanding this system-wide failure of risk assessment is that each link of the securitization chain is plagued by asymmetric information – that is, one party has better information than the other. In such cases, one side is usually careful in doing business with the other and makes every effort to accurately assess the risk of the other side with the information it is given. However, this sort of due diligence that is to be expected from markets with asymmetric information was essentially absent in recent years of mortgage securitization. Computer models took the place of human judgment, as originators did not adequately assess the risk of borrowers, mortgage services did not adequately assess the risk of the terms of mortgage loans they serviced, MBS issuers did not adequately assess the risk of the securities they sold, and so on.

The lack of due diligence on all fronts was partly due to the incentives in the securitization model itself. With the ability to immediately pass off the risk of an asset to someone else, institutions had little financial incentive to worry about the actual risk of the assets in question. But what about the MBS, CDO, and CDS holders who did ultimately hold the risk? The buyers of these instruments had every incentive to understand the risk of the underlying assets. What explains their failure to do so?

One part of the reason is that these investors — like everyone else — were caught up in a bubble mentality that enveloped the entire system. Others saw the large profits from subprime-mortgage related assets and wanted to get in on the action. In addition, the sheer complexity and opacity of the securitized financial system meant that many people simply did not have the information or capacity to make their own judgment on the securities they held, instead relying on rating agencies and complex but flawed computer models. In other words, poor incentives, the bubble in home prices, and lack of transparency erased the frictions inherent in markets with asymmetric information (and since the crisis hit in 2007, the extreme opposite has been the case, with asymmetric information problems having effectively frozen credit markets). In the pages that follow, we tell this story more fully.

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The Roma people, the largest minority group in Europe and in many European countries, trail other ethnic groups in almost every characteristic that defines well-being. Perhaps of greatest importance, the Roma are less educated than other ethnic groups. But they also suffer from excess health problems, high unemployment, poverty, and political weakness. The Roma population of Bulgaria is certainly no less disadvantaged than the Roma in other countries. An especially poignant example of Bulgarian Roma disadvantage is that the death rate among children under age 1, a prime indicator of children’s health in any nation, is 25 per 1,000 for Roma children as compared with 9.9 for children of Bulgarian ethnic origin. The mathematics of death almost before life gets started is a symbolic indicator of the Roma burden in Bulgaria. Similarly, research conducted for UNICEF by the University of York shows that the poverty rate among Roma children in Bulgaria is 92 percent, perhaps the highest poverty rate for any ethnic group in Europe. By contrast, the poverty rate among children of Bulgarian heritage is less than half as high at 43 percent.

It is not surprising, then, that over at least the past decade, the European Union (EU) and most European governments, joined by the Open Society Foundation, the World Bank, and other organizations, have created important initiatives to address all these problems. It is possible to think that now is an historic moment in which European governments and dominant ethnic groups, after eight or nine centuries of the most pernicious types of discrimination against the Roma, are finally, albeit often reluctantly, admitting the problems facing their Roma populations and their own role in creating and sustaining these problems. Equally important, most of the Central and Eastern European (CEE) governments, where discrimination against the Roma has been and continues to be particularly intense, are gradually adopting policies to address the problems.

To the extent that the moment of Roma opportunity has arrived, perhaps the most important force moving Bulgaria and other CEE nations in the direction of integration and inclusion is the EU. In the period leading up to the ascension of Bulgaria and other CEE nations to membership in the EU, all the new member states were required to meet a host of conditions required by the EU as the price of admission. Among these conditions were laws outlawing discrimination and requiring equality of educational opportunity. The CEE nations complied with the EU directive to pass such laws, but implementation of the laws in Bulgaria and other nations has been something less than aggressive.

Nor is EU ascension the only force driving the CEE nations to reduce discrimination against the Roma and other minorities. The Open Society, the World Bank, and a number of other private organizations, including several Roma nongovernmental organizations (NGOs), have initiated a sweeping program to promote inclusion of the Roma in the civil society of the CEE nations. Called the “Decade of Roma Inclusion” (2005-2015) the initiative is notable for getting all the CEE nations (plus Spain) to participate, to commit themselves to activities designed to promote inclusion and nondiscrimination, and to make a financial commitment to a fund administered by the World Bank to promote the initiative. As a part of the initiative, Bulgaria and the other participating nations originated ten-year action plans. The Bulgarian action plan, the purpose of which is to create a set of goals and activities that will promote Roma integration, includes proposals for education, health care, housing, employment, discrimination and equal opportunity, and culture.

An important part of the Decade program was the establishment of the Roma Education Fund in 2005. Eight nations (Canada, Greece, Ireland, Netherlands, Slovenia, Sweden, Switzerland, and the UK), as well as several international agencies including the Open Society, pledged a total of 34 million Euros to support Fund activities during the Roma decade. The major goal of the fund is to “support policies and programs which ensure quality education for Roma, including the desegregation of education systems.”

By joining the EU, Bulgaria and the other CEE nations brought themselves into a well-developed culture of inclusion and a complex system of interlocking laws and agencies that not only outlaw exclusion and discrimination, but provide funds to implement inclusion policies and to monitor the extent to which EU nations are aggressively implementing these laws. The laws and directives include the EU Charter of Fundamental Rights, the European Commission against Racism and Intolerance, the Racial Equality Directive, and several others. It would be a mistake to conclude that every EU member, even the original 15 EU nations with relatively more advanced economies and longer histories as democracies than the CEE nations, faithfully implement every component of the various legal requirements of being an EU member. Even so, EU requirements and funds have initiated both profound legal changes and a host of programs to increase the social, economic, political, and cultural inclusion of the Roma as well as studies and evaluations that bring some light to the actual situation of the Roma and other minorities in member nations. Given the all but inevitable distance between the laws on inclusion and discrimination the CEE nations passed in order to join the EU and the actual implementation of those laws, studies commissioned by various EU agencies and NGOs illuminate the gaps between policies and implementation.

An excellent example of such illumination is a 2006 study commissioned by the Economic and Scientific Policy program of the European Parliament. The report is a hard-hitting assessment of the status of Roma throughout Europe with regard to their legal status and socio-economic conditions. The latter category includes assessments of Roma exclusion from employment, education, social services, health care, and community integration. The upshot of the report is that although there may be some progress in these important areas of integration, the Roma are still a second-class group throughout the CEE nations. Seemingly, good laws have not yet produced good results. Laws may be changed, but changing human behavior and culture takes longer.

CEE governments and their defenders are reluctant to admit the lamentable lack of progress in Roma integration. In part for this reason, the European Commission, based on extensive evidence from evaluations, surveys, and news reports of often ferocious discrimination against the Roma, felt the need to publish “An EU Framework for National Roma Integration Strategies up to 2020” in April 2011. The need for a new framework is a clear signal that the EU Commission believes the CEE governments in general and Bulgaria in particular are not achieving the results the EU hoped for when it approved these nations for EU membership and is therefore trying to push the governments of these nations into further action.

Following publication of the Framework, the Open Society released one of the most thorough and provocative reports on the situation faced by the Roma in Europe and strategies that should be adopted to attack the wide range of Roma disadvantages. Appropriately entitled “Beyond Rhetoric,” the Open Society report includes entire chapters on two issues that I will examine in more detail below.

First, the Open Society strongly recommends that nations collect ethnically disaggregated data. Logically enough, the report holds that it is impossible to document the effects of policy initiatives on the Roma and other groups unless outcome data, including measures of health, education, housing, employment, income, and death rates by age, are collected for individual ethnic groups. So important are ethnically disaggregated data that the report goes so far as to recommend that, if necessary, governments should change their statistical systems to “incorporate ethnic data components into regular statistical surveys.” A second recommendation that deserves special attention is the report’s emphasis on early childhood education and care. Virtually every report about the Roma emphasizes the vital importance of education in fighting Roma exclusion, but the Open Society report strongly recommends that nations implementing the EU Framework should “give urgent consideration” to establishing an early child development fund to “support innovative early development programs and allow for scale up of what works.”

Beyond these specific recommendations, the Open Society report emphasizes that the EU Commission stated explicitly in its Framework document that “member states do not properly use EU money for the purpose of effective social and economic integration of Roma. As if this judgment, which seems to represent the views of many EU agencies, the World Bank, the Open Society, and many Roma groups themselves, needed additional reinforcement, a United Nations expert on minority issues visited Bulgaria this summer and called upon the government to “turn its policies on Roma integration into concrete action.” She went on to give what seems to represent the views of all these groups on the flaws in the Bulgarian government’s approach to fighting Roma exclusion: “Many policies seem to remain largely only rhetorical undertakings aimed at external audiences – official commitments that are not fulfilled in practice.” The result, according to the UN expert, is that “all the evidence demonstrates that Roma remain in desperate circumstances at the very bottom of the socio-economic ladder.” In particular, she mentioned that the access of Roma children to quality education “remains overwhelmingly unfulfilled.”

If CEE nations are now entering a period in which governments will be working, often ineffectively or at a very modest pace, to improve the conditions of the Roma, judging by the efforts of other nations to reduce discrimination against minority groups and by the stately rate of progress so far in the CEE nations, it can be assumed that the fight for Roma equality in Bulgaria will be measured in decades. In the U.S., for example, the Civil Rights movement of the 1950s and 1960s was largely successful. By the mid-1960s, vital court decisions had dismantled major parts of the system of legal discrimination against blacks and the federal government had enacted programs to ensure voting rights and other fundamental rights to blacks. To enhance the legal war on poverty and discrimination, the federal government also initiated an army of social programs designed to boost the education, health, employment, housing, and political participation of the poor in general and blacks in particular. Yet today, nearly half a century after achieving legal rights and the initiation of large-scale government inclusion programs, blacks (and Hispanics) still trail whites by large margins in education, income, housing, poverty levels, and health. Although achieving significant progress against discrimination may require decades or generations, discrimination will not diminish until strong legal, economic, and social forces are mobilized against it. Expecting a long struggle cannot be a reason not to begin.

If the history of making substantial progress in overcoming ethnic discrimination in the U.S. can serve as a rough comparison to the situation of the Roma in CEE nations, several factors are going to be vital in the fight of the Roma to overcome discrimination and exclusion in Bulgaria and throughout Europe. These factors include an antidiscrimination plan, aggressive implementation of the plan by all levels of government, leadership by the Roma themselves, educational progress by Roma children and young adults, political activism by the Roma people, a media committed to accurate reporting and fairness, and a civil society that reflects underlying public opinion favoring integration and opposed to discrimination. Most of these factors appear to be present in Bulgaria, often in rudimentary and brittle form, but present and in many cases moving in the right direction nonetheless. The progress that is just now beginning can be greatly enhanced by the efforts of groups that have the resources, the will, and the vision to roll up their sleeves and help promote Roma inclusion.

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On Valentine’s Day, even a dismal scientist’s mind turns to love. It’s a powerful feeling, with a value that goes far beyond the millions of chocolate boxes and bouquets that will be delivered this Feb. 14.

Survey data from the Gallup Organization, where Justin works as a senior scientist, allow us to take a uniquely deep look at the state of love around the world. In 2006 and 2007, Gallup went to 136 countries and asked people, “Did you experience love for a lot of the day yesterday?” It’s the largest such dataset ever collected.

The good news: Ours is a loving world. On a typical day, about 70 percent of people worldwide reported a love-filled day. In the U.S., 81 percent felt love, as did 81 percent of Canadians and 79 percent of Italians. Germany and the U.K. were less loving, with slightly less than 3 in 4 people reporting feeling loved. Surprisingly, the same was true of the supposedly romantic French. And if you’re in Japan, please hug someone: Only 59 percent of Japanese said they had experienced love the previous day.

Across the world as a whole, the widowed and divorced are the least likely to experience love. Married folks feel more of it than singles. People who live together out of wedlock report getting even more love than married spouses -- an interesting factoid for conservatives worried about the effects of cohabitation. Women get more love than men, particularly in the U.S.

Young Love

If you’re young and not feeling all that loved this Valentine’s Day, don’t despair: You’re not alone. Young adults are among the least likely to experience love. It gets better with age, ultimately peaking in the mid-30s or mid-40s in most countries before fading again into the twilight years.

Money is related to love. Those with more household income are slightly more likely to experience the feeling. Roughly speaking, doubling your income is associated with being about 4 percentage points more likely to be loved. Perhaps having more money makes it easier to find time for love.

That said, the data aren’t necessarily telling us that money can buy you love. It’s possible that other factors correlated with income, such as height or appearance, are the real source of attraction. Or maybe being loved gives you a boost in the labor market.

What’s perhaps more striking is how little money matters on a global level. True, the populations of richer countries are, on average, slightly more likely to feel loved than those of poorer countries. But love is still abundant in the poorer countries: People in Rwanda and the Philippines enjoyed the highest love ratios, with more than 9 in 10 people providing positive responses. Armenia, Uzbekistan, Mongolia and Kyrgyzstan, with economic output per person in the middle of the range, all had love ratios of less than 4 in 10.

Fun facts aside, we think there is a deeper and more consequential purpose to the study of love. Think about what love means to you. To us, it means caring about others and being cared for. Love is valuable, even if it is absent from both our national accounts and our political discourse.

In the language of economics, love is a form of insurance. It involves bonds of reciprocity that provide support when we’re feeling down, when we’re sick and when times are tough.

More broadly, love has the power to mitigate the free-rider and moral hazard problems associated with social (and private) insurance. Bailing out a bank might encourage executives to take bigger risks in the future, but helping loved ones down on their luck has fewer incentive problems because our loved ones typically care for us in return. Such mutually beneficial relationships make us all more resilient in times of crisis. This is why the household remains one of the most powerful institutions for organizing not just families but also our economic lives.

If we can find more love for our fellow citizens, our society will function better. Hard as this may be to achieve in an era when trust in government, business and one another is low, it’s worth the effort. When you expand the boundaries of trust and reciprocity, you expand the boundaries of what is possible.

Note: This content was first published on Bloomberg View on February 13, 2013.

Many scholars have argued that once “basic needs” have been met, higher income is no longer associated with higher in subjective well-being. We assess the validity of this claim in comparisons of both rich and poor countries, and also of rich and poor people within a country. Analyzing multiple datasets, multiple definitions of “basic needs” and multiple questions about well-being, we find no support for this claim. The relationship between well-being and income is roughly linear-log and does not diminish as incomes rise. If there is a satiation point, we are yet to reach it.

Introduction

In 1974 Richard Easterlin famously posited that increasing average income did not raise average well-being, a claim that became known as the Easterlin Paradox. However, in recent years new and more comprehensive data has allowed for greater testing of Easterlin’s claim. Studies by us and others have pointed to a robust positive relationship between well-being and income across countries and over time (Deaton, 2008; Stevenson and Wolfers, 2008; Sacks, Stevenson, and Wolfers, 2013). Yet, some researchers have argued for a modified version of Easterlin’s hypothesis, acknowledging the existence of a link between income and well-being among those whose basic needs have not been met, but claiming that beyond a certain income threshold, further income is unrelated to well-being.

The existence of such a satiation point is claimed widely, although there has been no formal statistical evidence presented to support this view. For example Diener and Seligman (2004, p. 5) state that “there are only small increases in well-being” above some threshold. While Clark, Frijters and Shields (2008, p. 123) state more starkly that “greater economic prosperity at some point ceases to buy more happiness,” a similar claim is made by Di Tella and MacCulloch (2008, p. 17): “once basic needs have been satisfied, there is full adaptation to further economic growth.” The income level beyond which further income no longer yields greater well-being is typically said to be somewhere between $8,000 and $25,000. Layard (2003, p. 17) argues that “once a country has over $15,000 per head, its level of happiness appears to be independent of its income;” while in subsequent work he argued for a $20,000 threshold (Layard, 2005 p. 32-33). Frey and Stutzer (2002, p. 416) claim that “income provides happiness at low levels of development but once a threshold (around $10,000) is reached, the average income level in a country has little effect on average subjective well-being.”

Many of these claims, of a critical level of GDP beyond which happiness and GDP are no longer linked, come from cursorily examining plots of well-being against the level of per capita GDP. Such graphs show clearly that increasing income yields diminishing marginal gains in subjective well-being. However this relationship need not reach a point of nirvana beyond which further gains in well-being are absent. For instance Deaton (2008) and Stevenson and Wolfers (2008) find that the well-being–income relationship is roughly a linear-log relationship, such that, while each additional dollar of income yields a greater increment to measured happiness for the poor than for the rich, there is no satiation point.

In this paper we provide a sustained examination of whether there is a critical income level beyond which the well-being–income relationship is qualitatively different, a claim referred to as the modified-Easterlin hypothesis. As a statistical claim, we shall test two versions of the hypothesis. The first, a stronger version, is that beyond some level of basic needs, income is uncorrelated with subjective well-being; the second, a weaker version, is that the well-being–income link estimated among the poor differs from that found among the rich.

Claims of satiation have been made for comparisons between rich and poor people within a country, comparisons between rich and poor countries, and comparisons of average well-being in countries over time, as they grow. The time series analysis is complicated by the challenges of compiling comparable data over time and thus we focus in this short paper on the cross-sectional relationships seen within and between countries. Recent work by Sacks, Stevenson, and Wolfers (2013) provide evidence on the time series relationship that is consistent with the findings presented here.

To preview, we find no evidence of a satiation point. The income–well-being link that one finds when examining only the poor, is similar to that found when examining only the rich. We show that this finding is robust across a variety of datasets, for various measures of subjective well-being, at various thresholds, and that it holds in roughly equal measure when making cross-national comparisons between rich and poor countries as when making comparisons between rich and poor people within a country.

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"Happiness." "Contentment." "Subjective well-being." Can we measure how happy people are and if so, what can we do with this information? In this podcast, Carol Graham, the Leo Pasvolsky Senior Fellow and author of The Pursuit of Happiness: An Economy of Well-Being, explains how happiness/well-being research works and why it matters for public policy in the U.S. and globally.

In the podcast, Graham explains two dimensions of understanding well-being, the "Benthamite/hedonic" and the "Aristotelian/eudemonic." She explained them in this earlier publication:

Those of us involved focus on two distinct dimensions: hedonic well-being, a daily experience component; and evaluative well-being, the way in which people think about their lives as a whole, including purpose or meaning. Jeremy Bentham focused on the former and proposed increasing the happiness and contentment of the greatest number of individuals possible in a society as the goal of public policy. Aristotle, meanwhile, thought of happiness as eudemonia, a concept that combined two Greek words: "eu" meaning abundance and "daimon" meaning the power controlling an individual’s destiny.

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Show notes:

• "Why Aging and Working Makes us Happy in 4 Charts," Carol Graham
• Happiness Around the World, Carol Graham
• "The Decade of Public Protest and Frustration with Lack of Social Mobility," Carol Graham
• "Evidence for a midlife crisis in great apes consistent with the U-shape in human well-being," Andrew Oswald and others
• "You Can’t Be Happier than Your Wife: Happiness Gaps and Divorce," Cahit Guven and others
• Aristotle's definition of happiness
• The life of philosopher Jeremy Bentham
• Gallup World Poll

See more charts like this in Carol Graham's newest post on the relationship among work, age and happiness.

In a new essay, “The New Challenge to Market Democracies,” Senior Fellow William Galston argues that “the centrality of economic well-being in our politics reflects long-held assumptions about the purposes of our politics. If economic growth and well-being are in jeopardy, so are our political arrangements.”

Galston, the Ezra K. Zilkha Chair in Governance Studies, makes the case that economic growth and well-being are indeed in jeopardy for a variety of reasons, including: wage growth that has just kept up with inflation; family and household incomes that remain below their pre-Great Recession peak; the share of national income going to wages and salaries is as low as it’s been in nearly 50 years; and a difficult jobs situation in which workers are getting paid less, the number of people working part-time who want full-time work remains high, and few new jobs offer middle range incomes. “These trends,” Galston writes, “bode ill for the future of the middle class; many parents now doubt that their children will enjoy the same opportunities that they did.”

Galston offers three broad policy prescriptions related to employment and tax reform:

1. “We should adopt full employment as a high-priority goal of economic policy and welcome the wage increases that it would generate.”
2. “We should use the tax code to restore the relationship between wage increases and productivity gains.”
3. “We should adopt a strong presumption against provisions of the tax code that treat some sources of income more favorably than wages and salaries,” which includes scrapping tax expenditures that “disproportionately benefit upper-income investors.”

Calling economic growth a “moral enterprise” as well as a material goal, Galston—acknowledging economist Benjamin Friedman—concludes that:

the central question the United States now faces is whether the next generation will again achieve broadly shared prosperity or rather experience the stagnation of living standards. Broad prosperity is both the oil that lubricates the machinery of government and the glue that binds our society together. Economic stagnation means a continuation of gridlocked, zero-sum politics and a turn away from the spirit of generosity that only a people confident of its future can sustain.

Read “The New Challenge to Market Democracies.”

Volunteerism remains a powerful tool for good around the world. Young people, in particular, are motivated by the prospect of creating real and lasting change, as well as gaining valuable learning experiences that come with volunteering. This energy and optimism among youth can be harnessed and mobilized to help meet challenges facing our world today and accomplish such targets as the United Nations 2030 Sustainable Development Goals (SDGs).

On June 14, young leaders and development agents from leading non-governmental organizations (NGOs), faith-based organizations, corporations, universities, the Peace Corps, and United Nations Volunteers came together at the Brookings Institution to answer the question on how to achieve impacts on the SDGs through international service.

This was also the 10th anniversary gathering of the Building Bridges Coalition—a multi-stakeholder consortium of development volunteers— and included the announcement of a new Service Year Alliance partnership with the coalition to step up international volunteers and village-based volunteering capacity around the world.

Brookings Senior Fellow Homi Kharas, who served as the lead author supporting the high-level panel advising the U.N. secretary-general on the post-2015 development agenda, noted the imperative of engaging community volunteers to scale up effective initiatives, build political awareness, and generate “partnerships with citizens at every level” to achieve the 2030 goals.  

Kharas’ call was echoed in reports on effective grassroots initiatives, including Omnimed’s mobilization of 1,200 village health workers in Uganda’s Mukono district, a dramatic reduction of malaria through Peace Corps efforts with Senegal village volunteers, and Seed Global Health’s partnership to scale up medical doctors and nurses to address critical health professional shortages in the developing world. 

U.N. Youth Envoy Ahmad Alhendawi of Jordan energized young leaders from Atlas Corps, Global Citizen Year, America Solidaria, International Young Leaders Academy, and universities, citing U.N. Security Council Resolution 2250 on youth, peace, and security as “a turning point when it comes to the way we engage with young people globally… to recognize their role for who they are, as peacebuilders, not troublemakers… and equal partners on the ground.”

Service Year Alliance Chair General Stanley McChrystal, former Joint Special Operations commander, acclaimed, “The big idea… of a culture where the expectation [and] habit of service has provided young people an opportunity to do a year of funded, full-time service.” 

Civic Enterprises President John Bridgeland and Brookings Senior Fellow E.J. Dionne, Jr. led a panel with Seed Global Health’s Vanessa Kerry and Atlas Corps’ Scott Beale on policy ideas for the next administration, including offering Global Service Fellowships in United States Agency for International Development (USAID) programs to grow health service corps, student service year loan forgiveness, and technical support through State Department volunteer exchanges. Former Senator Harris Wofford, Building Bridge Coalition’s senior advisor and a founding Peace Corps architect, shared how the coalition’s new “service quantum leap” furthers the original idea announced by President John F. Kennedy, which called for the Peace Corps and the mobilization of one million global volunteers through NGOs, faith-based groups, and universities.

The multi-stakeholder volunteering model was showcased by Richard Dictus, executive coordinator of U.N. Volunteers; Peace Corps Director Carrie Hessler-Radelet; USAID Counselor Susan Reischle; and Diane Melley, IBM vice president for Global Citizenship. Melley highlighted IBM’s 280,000 skills-based employee volunteers who are building community capacity in 130 countries along with Impact 2030—a consortium of 60 companies collaborating with the U.N.—that is “integrating service into overall citizenship activities” while furthering the SDGs.

The faith and millennial leaders who contributed to the coalition’s action plan included Jim Lindsay of Catholic Volunteer Network; Service Year’s Yasmeen Shaheen-McConnell; C. Eduardo Vargas of USAID’s Center for Faith-Based and Community Initiatives; and moderator David Eisner of Repair the World, a former CEO of the Corporation for National and Community Service. Jesuit Volunteer Corps President Tim Shriver, grandson of the Peace Corps’ founding director, addressed working sessions on engaging faith-based volunteers, which, according to research, account for an estimated 44 percent of nearly one million U.S. global volunteers

The key role of colleges and universities in the coalition’s action plan—including  linking service year with student learning, impact research, and gap year service—was  outlined by Dean Alan Solomont of Tisch College at Tufts University; Marlboro College President Kevin Quigley; and U.N. Volunteers researcher Ben Lough of University of Illinois Urbana-Champaign.

These panel discussion directed us towards the final goal of the event, which was a multi-stakeholder action campaign calling for ongoing collaboration and policy support to enhance the collective impact of international service in achieving the 2030 goals.

This resolution, which remains a working document, highlighted five major priorities:

1. Engage service abroad programs to more effectively address the 2030 SDGs by mobilizing 10,000 additional service year and short-term volunteers annually and partnerships that leverage local capacity and volunteers in host communities.
2. Promote a new generation of global leaders through global service fellowships promoting service and study abroad.
3. Expand cross-sectorial participation and partnerships.
4. Engage more volunteers of all ages in service abroad.
5. Study and foster best practices across international service programs, measure community impact, and ensure the highest quality of volunteer safety, well-being, and confidence.

Participants agreed that it’s through these types of efforts that volunteer service could become a common strategy throughout the world for meeting pressing challenges. Moreover, the cooperation of individuals and organizations will be vital in laying a foundation on which governments and civil society can build a more prosperous, healthy, and peaceful world.

The adoption of the Sustainable Development Goals (SDGs) and the Paris agreement on climate action present a unique opportunity to set the world on a path towards better and more sustainable development outcomes. Delivering sustainable infrastructure at scale lies at the heart of this agenda. Infrastructure is a major driver of growth and inclusive development. Delivered in more sustainable ways, it is also key to tackling climate change, as it currently accounts for around 60 percent of the world’s greenhouse gas (GHG) emissions. This means investing more, and better, in renewable energy, cleaner transport, efficient and resilient water systems, and smarter cities. 

The world will need to invest upwards of $6 trillion annually in sustainable infrastructure in the next 15 years, more than double the current level. As much as three-quarters of the incremental investment will need to take place in emerging and developing economies, with the largest part in middle-income countries. This presents a great challenge in mobilizing resources and better integrating climate sustainability in infrastructure. Strong and concerted actions will be needed across public and private sectors, and at national and international levels, including important transformations in the way infrastructure investment is developed, financed, and implemented. More than half of the financing will need to be mobilized from the private sector. 

Public policy has a central role to play in meeting this challenge, both because the public sector itself is a major investor in infrastructure and because public policy provides signals and sets the regulatory and institutional framework that influence the actions of private investors and consumers. Soundness, clarity, and credibility of public policy are especially important for infrastructure investments, given their longevity, public good characteristics, associated externalities, and inevitable and intimate links to government policies. There are four key roles for public policy:

• Articulating national strategies for sustainable infrastructure. Sustainability must be fully integrated in national strategies and plans; addressing one group of projects at a time will not do. The G-20 can provide leadership in setting out clear and coherent national strategies for sustainable infrastructure, linked to intended nationally determined contributions (INDCs) announced ahead of the Paris meeting. National infrastructure strategies should in turn be embedded in overall national investment and growth strategies and macroeconomic frameworks.


• Improving the policy environment. In getting prices right to shift incentive structures towards low-carbon infrastructure, the highest priority attaches to removal of fossil-fuel subsidies and implementation of carbon pricing. To attract more private investment, policy risk and costs of doing business must be reduced. Improvement of policy frameworks and financing mechanisms for public-private partnerships (PPPs) needs particular attention, as this will be an increasingly important investment modality.


• Strengthening public investment management. Public investment has in general been on a declining trend, exacerbating infrastructure gaps. This trend must be reversed. Also, public investment in research and development (R&D) in sustainable infrastructure should be boosted. Public investment management capacities will need substantial enhancement. Strengthening project pipelines is a priority, including incorporating sustainability criteria in project preparation, public procurement, and PPPs.


• Mobilizing financing. Governments must expand their own fiscal space, through tax and expenditure reform and better use of balance sheets, as well as find innovative ways to leverage more private finance and lower its cost. Carbon pricing and improved property taxation in particular have the potential to raise substantial revenue as well as improve the tax structure. With the large role of urban areas in sustainable infrastructure, subnational fiscal reform should empower cities. Through risk mitigation and other instruments, development capital (both traditional development assistance and new climate finance) should be used in ways to achieve more leverage. Multilateral development banks (MDBs) have a key role in this regard and their capacities will need to be boosted. Promoting infrastructure as an asset class will help unlock financing from the large pools of savings held by institutional investors. Middle-income countries in particular should step up efforts to develop domestic capital markets.

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Bernie Sanders may have had no foreign policy advisers until this week, but he can justly claim to have proposed one of the boldest and radical foreign policy ideas of the 2016 presidential campaign. In what he describes as the most important speech of his campaign—on Democratic Socialism at Georgetown University in November 2015—Sanders called on the United States to fight terrorism in the same way it waged the Cold War. He said: “We must create an organization like NATO to confront the security threats of the 21st century” and we must “expand our coalition to include Russia and members of the Arab League.”

NATO was created in 1949 to give the United States a way to forward-deploy its forces so they would immediately be entangled in a war if the Soviets attacked Western Europe. The most important feature of NATO was the mutual defense clause, whereby an attack on one would be treated as an attack on all. In a new NATO to fight terrorism, the United States could find itself having to deploy tens of thousands of troops throughout the Middle East to fight ISIS. The United States may even be treaty-bound to use its troops to fight alongside Russia in Chechnya. 

If that sounds very unlike Bernie Sanders, it's because it is. It is clear from the speech that Sanders had very little idea what NATO actually is or why it was founded. He was looking for a way to pass the burden of fighting terrorism on to other nations, particularly Muslim nations. Lacking any clear idea as to how to do this, a formal treaty must have seemed as good a way as any. Sanders would surely say that he meant an alliance without a mutual defense pact and without the United States taking the lead. But such an organization currently exists—it is called the counter-ISIS coalition. Presidents Bush and Obama also both sought ways to deepen cooperation with Russia and Arab countries on terrorism without a formal NATO-style alliance, which led to the situation Sanders decries. In any event, the new NATO served its purpose. Sanders could later claim to have given a speech on foreign policy. The specifics of the idea went un-scrutinized. 

Mind the gap

Bernie Sanders’ foreign policy remains a mystery because he has said so little about it. Unlike Donald Trump, who has been vocal about his foreign policy views for many decades, Sanders has focused his message on inequality and the nefarious influence of big money in politics. Recently though, he has begun to come out of his shell. He regularly invokes his opposition to the Iraq War in an effort to negate Hillary Clinton’s superior experience in foreign policy. Sanders clearly hopes that this vote will enable him to win over many Barack Obama supporters who remain suspicious of Clinton. In recent weeks, some foreign policy experts have sketched out how Sanders could build on Obama’s foreign policy legacy and distinguish himself from Clinton. 

Sanders-Obama is the real foreign policy fault-line in the Democratic Party.

The conventional wisdom of the foreign policy debate in the Democratic Party sees an Obama wing that is skeptical of military intervention and a Clinton wing that is more willing to use American power overseas. This is a paradigm that Sanders would certainly endorse and hope to capitalize on but it is not an apt description of the 2016 divide. There is a reason why Obama has come close to endorsing Clinton and has left no doubt that he sees her as his true heir. The gap between Sanders and Obama is much greater than between Clinton and Obama. Obama is an avowed globalist who looked outward, even as he was campaigning in Iowa in 2007. Sanders is a liberal nationalist who looks inward, not just in his rhetoric but in his policy. 

A Sanders nomination would be a striking repudiation not just of Clinton but of Obama’s worldview and message. Sanders-Obama is the real foreign policy fault-line in the Democratic Party. 

Obama 2008: Looking outward

Obama’s 2008 campaign is now shrouded in mythology. He is often described as unlikely a candidate as Sanders. Forgotten is the fact that weeks after he started, he secured the support of major donors and dozens of foreign policy experts. He was always the favorite of a particular part of the establishment. He was young but he had thought about the world and America’s role in it. In 2005, he hired Samantha Power to be his foreign policy adviser in the Senate. His 2006 book "The Audacity of Hope" had a chapter on foreign policy that culled ideas from think tank row. 

In April 2007, a full 18 months before the election, Obama gave a revealing interview to The New York Times' David Brooks in which he spoke about the influence that American theologian Reinhold Niebuhr had on his foreign policy. Niebuhr was a seminal figure in U.S. diplomatic thinking during the Cold War and is credited with developing the most sophisticated critique of American idealism. Obama said that Niebuhr provided:

“the compelling idea that there’s serious evil in the world, and hardship and pain. And we should be humble and modest in our belief we can eliminate those things. But we shouldn’t use that as an excuse for cynicism and inaction. I take away...the sense we have to make these efforts knowing they are hard, and not swinging from naïve idealism to bitter realism.”

Some of these themes would reappear in his extraordinary speech in Oslo in 2010 on receiving the Nobel Peace Prize. 

Throughout the 2008 campaign, Obama spoke about reviving American leadership and presenting a new face to the world. In his announcement speech in Springfield in 2007, Obama said “ultimate victory against our enemies will come only by rebuilding our alliances and exporting those ideals that bring hope and opportunity to millions around the globe.” In his acceptance speech in Chicago, he spoke to “those watching tonight from beyond our shores”. “Our stories are singular,” he said, “but our destiny is shared and a new dawn of American leadership is at hand.” 

Obama’s challenge in office, and the challenge of progressives after the Iraq War, was to develop a foreign policy that remained faithful to his internationalist ideals while resisting calls for large-scale military interventions. In this, his record was mixed. The Middle East stands out as a major failure but he had successes elsewhere. He helped rescue the international financial system, he deepened U.S. engagement in Asia, he negotiated several trade deals, and he secured a controversial nuclear deal with Iran. Throughout, he articulated a case for a liberal brand of American exceptionalism and for continued U.S. global leadership. 

Sanders 2016: Drawing inward

That is now at risk, not just by the prospect of a Trump presidency but also from within the Democratic primary. Sanders has had remarkable success with a campaign message that is entirely inwardly focused. Read his speeches, whether at Georgetown or on the stump, and you will see a sharp change of tone from Obama of 2008. Gone are the passages on a new era of American global leadership. Gone are the messages for people beyond these shores. Gone is the optimism about America’s global role. Gone too is the sense that the United States, flawed as it is, has a positive and indispensable role to play in upholding the international order. 

Rhetorically, Sanders is deeply pessimistic about the United States and its role in the world. For Sanders, America is not getting better—it’s getting worse, including on Obama’s watch. And, woe betide those who think that America can be any more successful abroad. In his Georgetown speech, he said that the first element of his foreign policy would be an acknowledgement of how America gets it wrong so frequently. In addition to the Iraq War, he mentioned the toppling of Mossadegh in Iran in 1953, of Arbenz in Guatemala in 1954, of Goulart in Brazil in 1964, and of Allende in Chile in 1973. 

[Sanders] offered no examples of how the United States has made the world a better place.

Apart from the ham-fisted description of NATO, he offered no examples of how the United States has made the world a better place. The toppling of foreign leaders is not, for him, even partially balanced out by successes in promoting democracy in Chile in 1987 or in Eastern Europe in the early 1990s, or in Indonesia in 1998. He did not mention the Kosovo intervention in 1999, which he actually supported at the time. The speech was not without irony however. Sanders organized the domestic section, on democratic socialism, around Franklin Delano Roosevelt’s 1944 State of the Union speech but made no mention of FDR’s heroic—and frequently risky—efforts to win the war and the post-war world.

As the campaign has progressed, Sanders has been pressed on what he would do if he were to be elected president. He said in a February Democratic debate that the “key doctrine of the Sanders administration would be no, we cannot continue to do it alone, we need to work in coalition.” The very idea that a Democratic candidate could make the unilateralist charge against Obama, one of the most multilateral presidents in modern American history, is itself remarkable and rather implausible. 

The very idea that a Democratic candidate could make the unilateralist charge against Obama, one of the most multilateral presidents in modern American history, is itself remarkable and rather implausible.

But this has not deterred Sanders. He has repeatedly argued that the Obama administration has not done enough to get Muslim nations to fight ISIS. At Georgetown he declared, “We need a commitment from these [Muslim] countries that the fight against ISIS takes precedence over the religious and ideological differences that hamper the kind of cooperation we desperately need.” Quite how Sanders would accomplish this was left unsaid. The reason ISIS is difficult to defeat is because Muslim nations see other challenges, particularly the sectarian struggle with Iran, as a much greater threat to their vital interests. 

Simply saying that the president can will other countries to act contrary to what they see as their vital interests is about as plausible as Trump persuading Mexico to pay for his wall. Clinton has repeatedly recognized the challenges associated with persuading Muslim countries to take on more of the anti-ISIS fight, but Sanders has just doubled down on his charge against Obama. “I’ll be dammed,” he told CNN, “if the kids of Vermont have to defend the Royal Saudi family” and take the lead in the fight against ISIS, even if is just with air power. 

On economic policy, Sanders offers an even more radical departure from Obama’s legacy. Sanders has opposed all U.S. trade agreements throughout his political career, including General Agreement on Tariffs and Trade (GATT), the North American Free Trade Agreement (NAFTA), the Central American Free Trade Agreement (CAFTA), and the Trans-Pacific Partnership (TPP). In 2005, he sponsored a bill calling on the United States to withdraw from the World Trade Organization. He has called for tariffs to prevent American industry from investing in China, Vietnam, and Mexico. He was the only Democrat to vote against the Import-Export Bank and he opposed the expansion of the H1-B visa program for high-skilled workers. 

He has offered no positive vision for the world economy and sees it as a zero sum game—either American workers’ win or other nations do. Obama indulged in anti-trade rhetoric, as has Clinton, in the heat of a primary campaign, but Sanders is different. He has consistently sought to disengage from the global economy—the same one that Obama did so much to save in 2009. This is no small matter. As the global economy flirts with recession and a new crisis, this time originating in China, the rest of the world is asking if America can continue to lead or if it is all tapped out. 

He has consistently sought to disengage from the global economy.

A President Sanders would not try to destroy America’s alliances like Donald Trump or leave the Middle East entirely like Rand Paul. But, he would surely try to hide from the world and tend to matters at home. He will be immediately tested by allies and adversaries alike as they try to find the limits of his commitments. All presidents are tested of course—especially those, including Obama and Clinton, who promise to focus on the home front— but they usually try to respond in a resolute way to dispel the concerns. Obama sent additional troops to Afghanistan in 2009, for example. Sanders will probably resist the pressure and focus on his domestic agenda, thus exacerbating foreign crises. He would surely feel a sense of betrayal as America’s allies failed to take up what he considered to be a fair share of the burden. 

America in the world?

2016 is a very different world than 2008. Then, Obama and Democrats saw a world that was full of opportunity, despite the financial crisis and wars in Iraq and Afghanistan. They believed the United States could offer a new face, and a new form of leadership, to the world. When we look back on 2016, it will surely be the year when the United States and much of the rest of the world faced a choice about whether to look outward or turn inward. It is not just the Republican and Democratic primary. Britain will vote on June 23 whether to leave the European Union. Germany and much of the rest of Europe will decide whether to close its borders to refugees.

When we look back on 2016, it will surely be the year when the United States and much of the rest of the world faced a choice about whether to look outward or turn inward.

Of all these tests, the biggest by far is in the United States. Republican and Democratic foreign policy populism is different, of course. Trump and his supporters are both terrified by threats from overseas and determined to lash out as viciously as possible against anything and everything associated with them. To his great credit, Sanders has not peddled fear of the other. His supporters are not frightened by the world. But they are disappointed in it and largely agnostic about what happens outside the United States. The left used to be inherently internationalist, but today Sanders sees no opportunity to lead, only risks of becoming embroiled in someone else’s problems. Sanders will not tear down the liberal international order but he does want to avoid doing much to uphold it. 

Sanders, his aspiring advisers, and much of the media have an interest in situating his foreign policy worldview within the Obama-Clinton paradigm but it is simply not consistent with what he is saying or with what he has done in the very recent past (never mind decades ago). Obama and Clinton obviously differ on some elements on U.S. foreign policy. It is not about large-scale invasions, as is commonly thought. Clinton is not about to send tens of thousands of ground troops to Syria. Rather, she tends to favor small-scale action early on in a conflict to tip the balance while Obama is extremely cautious about a slippery slope. Clinton also tends to see world politics more in terms of power politics while Obama often speaks as if we are headed toward a post-national, more global system. But this all pales in comparison to fundamental questions about whether the United States ought to be engaged in the world, not just militarily but also economically. Obama was elected on a platform of renewing American leadership in the world. He will soon find out if Democrats want to stay on the broad path he set.

Not the least worrying feature of these chaotic times is that the members of my transatlantic analyst tribe—whether American or European—have stopped being smug or snarky about goings-on on the other side of the Atlantic. For two decades, the mutual sniping was my personal bellwether for the rude (literally) health of the relationship.

No more. Now my American neocon buddies are lining up to sign scorching open letters against the GOP frontrunner, begging the Brits not to brexit, and lambasting Obama because he’s not doing more to help German Chancellor Angela Merkel. Heck, they would even let him take in Syrian (Muslim Syrian, if necessary!) refugees if it helps her. 

My fellow Europeans have been shocked into appalled politeness by the recognition that The Donald has genuine competition in the U.K.’s Boris Johnson, France’s Marine le Pen, Hungary’s Viktor Orban, the Netherlands’ Geert Wilders, Slovakia’s Robert Fico, Turkey’s Recep Tayyip Erdoğan, or Russia’s Vladimir Putin. They recognize that the roar of Trump’s supporters is echoed on streets and social media websites across their own continent—including in my country, Germany, which is reeling after taking in more than a million refugees last year.

Adding to the general weirdness, parliamentarians of Germany’s Die Linke (successor to East Germany’s Communist party) have been casting longing glances at the Bernie Sanders phenomenon. "Who would have thought a democratic Socialist could get this far in America?" tweeted Stefan Liebich. His fellow Member of Parliament Wolfgang Gehrcke, a co-founder of the West German Communist Party DKP in 1968, wistfully confessed his regret on German national radio recently at never having visited the United States. The Linke has been getting precious little traction out of the turmoil at home, despite their chief whip Sahra Wagenknecht, who rocks a red suit and is herself no slouch at inflammatory rhetoric.

Like [political elites], we [analysts] mostly ignored or took for granted that the essential domestic underpinnings of foreign policy were hardwired into our constitutional orders: political pluralism, economic opportunity, inclusion.

One would have to be made of stone not to be entertained by all this. Rather less funny is the fact that we, the analysts, have been as badly surprised by these developments as the politicians. We are indeed guilty of much of the same complacency that political elites are currently being punished for on both sides of the Atlantic. Like them, we mostly ignored or took for granted that the essential domestic underpinnings of foreign policy were hardwired into our constitutional orders: political pluralism, economic opportunity, inclusion. In other words, a functioning representative democracy and a healthy social contract. 

That was a colossal oversight. George Packer’s "The Unwinding" is a riveting depiction of the unraveling of America. Amanda Taub, Thomas Frank, and Thomas Edsall have written compelling recent pieces about the fraying economic and social conditions which offer a potent explanation for the current dark mood of much of the American electorate. Yet "Europe" could be substituted for "America" in many of these studies with equal plausibility. 

A thread which runs through all these analyses is the enormous fear and anger directed at international trade—a feeling stoked masterfully by Trump, but likewise by his European counterparts. Another common element is the increasing inability of representative democracy and its politicians to deal with these problems—whether because they are being deliberately undermined (e.g. by Russia), or are simply overwhelmed by it all. 

“Europe“ could be substituted for “America“ in many of these studies with equal plausibility.

The implications for foreign and security policy are already on view. Western governments find themselves increasingly on the defensive at home as they try to grapple with fierce divisions in Europe and in the transatlantic alliance on how to handle war and human misery in the Middle East, to prevent Europe’s eastern neighborhood from succumbing to failure, to save a faltering transatlantic trade agreement, and to support and protect the liberal global order. Even Chancellor Merkel, who has been pushing hard for an EU-Turkey deal to manage the flow of refugees to Europe, is finding herself besieged at home by an insurgent challenger in form of the right-wing Alternative for Germany (AfD).

So, as you watch the primaries in Washington, D.C. and Wyoming (March 12) and Florida, Illinois, Missouri, Ohio, and North Carolina (March 15), you may also want to give some attention to three regional elections in my country. Three of Germany’s sixteen states or Länder—Baden-Württemberg, Rhineland-Palatinate, and Saxony-Anhalt—go to the polls, on what Germany’s media are already calling Super Sunday. The AfD, which was only founded in 2013 (when it narrowly missed the 5 percent threshold to get into the federal legislature), is already present in five states. It is expected to rake in double-digit percentages in all three upcoming votes.

One thing’s for sure already: There will be little to be smug about.

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Editors’ Note: How do states manage their armed forces, domestic politics, and foreign affairs? Stephen Cohen, senior fellow with the India Project at Brookings, has studied this and a range of other issues in Southeast Asia since the 1960s. In a new book, titled “The South Asia Papers: A Critical Anthology of Writings,” Cohen reflects on more than a half-century of scholarship on India, describing the dramatic changes he has personally witnessed in the field of research. The following is an excerpt from the book’s preface.

[In the 1960s, questions about how states manage their armed forces] were not only unasked in the South Asian context by scholars; they were also frowned on by the Indian government. This made preparation both interesting and difficult. It was interesting because a burgeoning literature on civil–military relations in non-Western states could be applied to India. Most of it dealt with two themes: the “man on horseback,” or how the military came to power in a large number of new states, and how the military could assist in the developmental process. No one had asked these questions of India, although the first was relevant to Pakistan, then still governed by the Pakistani army in the form of Field Marshal Ayub Khan.

***

During my first and second trips [in the 1960s] my research was as a historian, albeit one interested in the army’s social, cultural, and policy dimensions. I discovered, by accident, that this was part of the movement toward the “new military history.” Over the years I have thus interacted with those historians who were interested in Indian military history, including several of my own students. 

While the standard of historians in India was high in places like the University of Calcutta, military history was a minor field, just as it was in the West. Military historians are often dismissed as the “drums and trumpets” crowd, interested in battles, regiments, and hardware, but not much else. My own self-tutoring in military history uncovered something quite different: a number of scholars, especially sociologists, had written on the social and cultural impact of armed forces, a literature largely ignored by the historians. While none of this group was interested in India, the connection between one of the world’s most complicated and subtle societies, the state’s use of force, and the emergence of a democratic India was self-evident. 

***

A new generation of scholars and experts, many of them Indians (some trained in the United States) and Indian Americans who have done research in India, have it right: this is a complex civilizational-state with expanding power, and its rise is dependent on its domestic stability, its policies toward neighbors (notably Pakistan), the rise of China, and the policies of the United States. 

The literature that predicts a conflict between the rising powers (India and China), and between them and America the “hegemon,” is misguided: the existence of nuclear weapons by all three states, plus Pakistan, ensures that barring insanity, any rivalries between rising and established states will be channeled into “ordinary” diplomatic posturing, ruthless economic competition, and the clash of soft power. In this competition, India has some liabilities and many advantages, and the structure of the emerging world suggests a closer relationship between the United States and India, without ruling out much closer ties between China and India. 

There remain some questions: Can the present Indian leadership show magnanimity in dealing with Pakistan, and does it have the foresight to look ahead to new challenges, notably environmental and energy issues that require new skills and new international arrangements? Importantly, some of the best work on answering these questions is being done in India itself, and the work of Kanti Bajpai, Amitabh Mattoo, Harsh Pant, C. Raja Mohan, Rajesh Basrur, and others reveals the maturity of Indian thinking on strategic issues. It has not come too soon, as the challenges that India will face are growing, and those of Pakistan are even more daunting.

In the past decade, a remarkable shift has occurred in the development landscape. Specifically, acknowledgment of the central role of the private sector in contributing to, even driving, economic growth and global development has grown rapidly. The data on financial flows are dramatic, indicating reversal of the relative roles of official development assistance and private financial flows. This shift is also reflected in the way development is framed and discussed, never more starkly than in the Addis Abba Action Agenda and the new set of Sustainable Development Goals (SDGs). The Millennium Development Goals (MDGs), which the SDGs follow, focused on official development assistance. In contrast, while the new set of global goals does not ignore the role of official development assistance, they reorient attention to the role of the business sector (and mobilizing host country resources).

The U.S. Agency for International Development (USAID) has been in the vanguard of donors in recognizing the important role of the private sector to development, most notably via the agency’s launch in 2001 of a program targeted on public-private partnerships (PPPs) and the estimated 1,600 USAID PPPs initiated since then. This paper provides a quantitative and qualitative presentation of USAID’s public-private partnerships and business sector participation in those PPPs. The analysis offered here is based on USAID’s PPP data set covering 2001-2014 and interviews with executives of 17 U.S. corporations that have engaged in PPPs with USAID.

The genesis of this paper is the considerable discussion by USAID and the international development community about USAID’s PPPs, but the dearth of information on what these partnerships entail. USAID’s 2014 release (updated in 2015) of a data set describing nearly 1,500 USAID PPPs since 2001 offers an opportunity to analyze the nature of those PPPs.

On a conceptual level, public-private partnerships are a win-win, even a win-win-win, as they often involve three types of organizations: a public agency, a for-profit business, and a nonprofit entity. PPPs use public resources to leverage private resources and expertise to advance a public purpose. In turn, non-public sectors—both businesses and nongovernmental organizations (NGOs)—use their funds and expertise to leverage government resources, clout, and experience to advance their own objectives, consistent with a PPP’s overall public purpose. The data from the USAID data set confirm this conceptual mutual reinforcement of public and private goals.

The goal is to utilize USAID’s recently released data set to draw conclusions on the nature of PPPs, the level of business sector engagement, and, utilizing interviews, to describe corporate perspectives on partnership with USAID.

The arguments regarding “why” PPPs are an important instrument of development are well established. This paper presents data on the “what”: what kinds of PPPs have been implemented and in what countries, sectors, and income contexts. There are other research and publications on the “how” of partnership construction and implementation. What remains missing are hard data and analysis, beyond the anecdotal, as to whether PPPs make a difference—in short, is the trouble of forming these sometimes complex alliances worth the impact that results from them?

The goal of this paper is not to provide commentary on impact since those data are not currently available on a broad scale. Similarly, this paper does not recommend replicable models or case studies (which can be found elsewhere), though these are important and can help new entrants to join and grow the field. Rather, the goal is to utilize USAID’s recently released data set to draw conclusions on the nature of PPPs, the level of business sector engagement, and, utilizing interviews, to describe corporate perspectives on partnership with USAID.

The decision to target this research on business sector partners’ engagement in PPPs—rather than on the civil society, foundation, or public partners—is based on several factors. First, USAID’s references to its PPPs tend to focus on the business sector partners, sometimes to the exclusion of other types of partners; we want to understand the role of the partners that USAID identifies as so important to PPP composition. Second, in recent years much has been written and discussed about corporate shared value, and we want to assess the extent to which shared value plays a role in USAID’s PPPs in practice.

The paper is divided into five sections. Section I is a consolidation of the principal data and findings of the research. Section II provides an in-depth “data picture” of USAID PPPs drawn from quantitative analysis of the USAID PPP data set and is primarily descriptive of PPPs to date. Section III moves beyond description and provides analysis of PPPs and business sector alignment. It contains the results of coding certain relevant fields in the data set to mine for information on the presence of business partners, commercial interests (i.e., shared value), and business sector partner expertise in PPPs. Section IV summarizes findings from a series of interviews of corporate executives on partnering with USAID. Section V presents recommendations for USAID’s partnership-making.

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A conversation with USAID Administrator Gayle Smith

On March 30, Global Economy and Development at Brookings and the Modernizing Foreign Assistance Network (MFAN) hosted Gayle Smith, administrator of U.S. Agency for International Development (USAID) for an address on the fifth anniversary of the USAID policy on evaluation.

A principal recommendation of the Presidential Policy Determination on Global Development, signed by President Obama in 2010, was greater accountability for U.S. foreign assistance funds, including evaluation of development programs. In 2011, USAID adopted a formal policy on evaluation and since has average some 200 evaluations a year.

Among the issues that will be addressed during the event are the success and challenges in implementing the evaluation policy, the use of alternative evaluation methods, and building a system and process for turning evaluations into learning. Administrator Smith was introduced by Brookings Senior Fellow George Ingram. Following her address, he moderated a panel discussion of Ruth Levine, Wade Warren, and Jodi Nelson.

 Join the conversation on Twitter using #AIDeval

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As of last week, it has been a full year since the U.S. Export-Import (Ex-Im) Bank—the government export credit agency which lends money to foreign buyers of American exports—has been unable to approve loans over $10 million. This is because Senator Richard Shelby, Republican of Alabama, is single-handedly holding up the nomination of a third member to the Ex-Im Bank’s five person board; all transactions over $10 million require board approval, and short of its required quorum of three members, no major loans can get through. Looking beyond the immediate fight over Ex-Im, however, underlying trends in both American and international politics suggest commercial diplomacy is on the rise.

The Ex-Im Bank is but one of many instruments of American commercial diplomacy; there is a wide range of policies the government uses to actively help individual American companies compete abroad. Through the Overseas Private Investment Corporation (OPIC), the U.S. government sells political risk insurance to American firms investing in “risky” developing countries. Moreover, U.S. ambassadors frequently lobby foreign governments to award procurement contracts to American firms. Similarly, officials from the Department of State, Department of Commerce, and Office of the U.S. Trade Representative often advocate for U.S. companies involved in investment disputes with foreign governments. What distinguishes active commercial diplomacy from general foreign economic policy—such as signing trade agreements—is that in involves deploying the resources and reputation of the government to help specific firms in particular transactions, rather than broadly setting the rules of the road for all firms to follow. It represents a significantly greater co-mingling of interests and activities between public and private actors.

While both Secretary of State John Kerry and Secretary of Commerce Penny Pritzker have placed considerable emphasis on advancing commercial diplomacy, the long running struggle to keep Ex-Im operating underlines the political fault lines that cut through the issue. On the one hand, as highlighted in the Ex-Im fight, commercial diplomacy can be criticized as crony capitalism or corporate welfare. Government resources are being used to support private gains. Thus those who prefer free and unfettered markets may see commercial diplomacy as simply another form of unnecessary government intervention, akin to industrial policy. At the same time, as globalization has come under attack from both the left and the right in this election cycle, it is easy to see how encouraging further globalization through commercial diplomacy could face populist pushback. Those supporting commercial diplomacy tend to favor greater integration in the global economy—a view which has found little support in the 2016 campaigns to date.

And yet, the current trends in American political debates over globalization may ultimately presage more, not less, reliance on commercial diplomacy. If politicians increasingly view the global economy through a zero-sum, mercantilist lens, they may be more eager to use the power and purse of the U.S. government to help American firms “win” abroad. Indeed, Congress, which has historically been more protectionist than the executive branch, has also consistently pushed the State Department to do more to actively defend the interests of U.S. companies operating overseas (see, for example, here and here). Aggressively fighting to help U.S. companies win contracts and compete abroad could be one plank of an “America First” policy. Thus even if America, and the world, becomes more protectionist, foreign economic policy may become even more preoccupied with assertive commercial diplomacy, even as interest in seeking mutual benefits through economic liberalization subsides.

If the U.S. government does start to prioritize more actively helping American firms in their foreign operations, it will still have a ways to go to catch up to many other countries. China, of course, is well known for using state resources to advance the commercial goals of Chinese firms venturing abroad—which should not be surprising, given that many of these firms are state-owned enterprises. But a number of other advanced democracies—including Japan, Korea, Germany, and France—also have closer and more coordinated relationships between big business and government than the U.S. does. And most of these countries show no signs of slowing down. As a recent report (PDF) from the Ex-Im bank notes, “In the wake of slowing global growth, foreign export credit agencies are becoming more aggressive.” In fact, some of these agencies are capitalizing on Ex-Im’s current plight, offering American companies export financing in return for the promise of job creation. General Electric Co., for instance, recently announced it would expand production in France because Coface, the French equivalent of Ex-Im, will finance GE projects in a number of emerging markets—the type of financing that GE used to get from Ex-Im.

Looking forward, unilateral disarmament in the competitive world of commercial diplomacy—as the U.S. is currently doing with the Ex-Im Bank—is likely to become increasingly rare. The ultimate effects of this accelerating international competition, in both economic and political terms, remain to be seen.

In this presentation Robert Puentes provides a deeper understanding of trends that are impacting metropolitan America and how those trends may impact the demand for multi-family housing in the coming decades. The presentation stresses several key points including dramatic changes in household formation, the plight of older, inner-ring "first" suburbs, and the increasing diversity reflected in both cities and suburban areas.

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