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On December 4 to 6, the Center for Middle East Policy at Brookings hosted its 12th annual Saban Forum, titled “Israel and the United States: Yesterday, today, and tomorrow.” The 2015 Saban Forum included webcasts featuring remarks by Israel’s Minister of Defense Moshe Ya’alon, Chairman of the Yesh Atid Party Yair Lapid, National Security Adviser to President George W. Bush Stephen Hadley, Secretary of State John Kerry, Israeli Prime Minister Benjamin Netanyahu (via video), and former Secretary of State Hillary Rodham Clinton. The forum’s webcast sessions focused on the future for Israelis and Palestinians, Iran’s role in the Middle East, spillover from the war in Syria, and the global threat posed by the Islamic State and other violent jihadi groups.

Over the past twelve years, the Saban Forum has become the premier platform for frank dialogue between American and Israeli leaders from government, civil society, business, and the media. As a result, the Saban Forum is a seminal event, generating new ideas and helping shape the future of the U.S.-Israel relationship.

Join the conversation on Twitter using #Saban15

Video

• A conversation with Moshe Ya’alon, Israel’s minister of defense
• How to restore order in the Middle East
• Keynote address: U.S. Secretary of State John Kerry
• Address by Israeli Prime Minister Benjamin Netanyahu (via video)
• Keynote address: Former U.S. Secretary of State Hillary Rodham Clinton

Audio

• Saturday, December 5, 8:00pm - How to preserve Israel as a Jewish and Democratic state

Transcript

• Uncorrected Transcript--Keynote address: Former U.S. Secretary of State Hillary Rodham Clinton (.pdf)
• Uncorrected Transcript--Address by Israeli Prime Minister Benjamin Netanyahu (.pdf)
• Uncorrected Transcript--How to preserve Israel as a Jewish and Democratic state (.pdf)
• U.S. Department of State Release--Remarks by Secretary of State John Kerry (.pdf)
• Uncorrected Transcript--How to restore order in the Middle East (.pdf)
• Uncorrected Transcript--A conversation with Moshe Ya'alon, Israel's minister of defense (.pdf)

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• Uncorrected TranscriptKeynote addressFormer Secretary of State Hillary Rodham Clinton
• Uncorrected TranscriptAddress by Israeli Prime Minister Benjamin Netanyahu
• Uncorrected TranscriptHow to preserve Israel as a Jewish and Democratic state
• US Department of State ReleaseRemarks by Secretary of State John Kerry
• Uncorrected TranscriptHow to restore order in the Middle East 2
• Uncorrected TranscriptA conversation with Moshe Yaalon Israels minister of defense

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2016 Richard C. Holbrooke Forum

On February 5, the Foreign Policy program at Brookings hosted the American Academy in Berlin for the 2016 Richard C. Holbrooke Forum for a two-part public event focusing on the global refugee crisis. Brookings Isaiah Berlin Senior Fellow in Culture and Policy Leon Wieseltier delivered featured remarks on the moral dimensions of the refugee crisis. Wieseltier is currently completing an essay on certain moral, historical, and philosophical dimensions of the refugee crisis. Michael Ignatieff, Edward R. Murrow professor of practice at the Harvard Kennedy School, moderated a question and answer session following Wieseltier’s remarks.

The second panel featured experts addressing the first-step policies needed to ameliorate the crisis. Bruce Katz, Brookings centennial scholar, Tamara Wittes, director of Brookings’s Center for Middle East Policy, Elizabeth Ferris, research professor at Georgetown University and Brookings nonresident senior fellow, spoke to the multiple aspects of the refugee crisis. Brookings Executive Vice President Martin Indyk moderated the panel discussion.

Bruce Jones, vice president and director for the Foreign Policy program, provided introductory remarks.

Join the conversation on Twitter using #RefugeeCrisis

Video

• The global refugee crisis: Moral dimensions
• The global refugee crisis: Practical solutions

Audio

• The global refugee crisis: Moral dimensions and practical solutions

Transcript

• Uncorrected Transcript (.pdf)

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• 20160205_refugee_crisis_transcript

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A conversation with Deputy Secretary of State Antony Blinken

One year after the White House Summit on Countering Violent Extremism, the United States continues to adapt its efforts to blunt the appeal of violent extremism. As part of this effort, the State Department is launching a series of new initiatives to better coordinate the U.S. response to terrorist propaganda and recruitment.

On February 16, the Foreign Policy program at Brookings hosted The Honorable Antony J. Blinken, deputy secretary of state, for a discussion of the United States’ civilian-led initiatives to counter the spread of the Islamic State and other violent extremist groups. Blinken will chart the path forward, to include partnerships with industry and civil society, and outlined the challenges that lie ahead.

Brookings President Strobe Talbott offered welcoming remarks. General John Allen, senior fellow and co-director of the Center for 21st Century Security and Intelligence at Brookings, introduced Deputy Secretary Blinken, and Tamara Cofman Wittes, senior fellow and director of the Center for Middle East Policy at Brookings, joined Deputy Secretary Blinken in conversation following his remarks.

Join the conversation on Twitter using #CVE

Video

• New frameworks for countering terrorism and violent extremism
• American diplomacy best instrument against extremism
• Islamic State numbers lowest since 2014
• Common denominators of violent extremists
• Progress in Syria against Islamic State

Audio

• New frameworks for countering terrorism and violent extremism

Transcript

• Uncorrected Transcript (.pdf)

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• 20160216_cve_blinken_transcript

“When I go to meetings today, I see more women, and I see many more younger women coming into the field.  But what’s really struck me, as I’ve been thinking about this issue of women in foreign policy in the last couple years, is the difference between presence and voice.  There are many more women working in foreign policy today, but you don’t see the same proportion of women prominent in foreign policy speaking in the media, in senior positions, or even when you’re all in the room together sitting at the table and speaking as the lead speaker at a conference.  It’s that distinction between presence and voice and what accounts for that gap.  That’s what I find both fascinating and frustrating.”—Tamara Wittes

Show Notes

The Absence of Women from Middle East Policy Debates: An Update

Women still overlooked in vital peacekeeping process, study finds

An All-Women Symposium: The Missing XX-Factor

Foreign Policy Interrupted

Women Are Underrepresented In Cable News Segments On Foreign Affairs, National Security 

With thanks to audio engineer and producer Zack Kulzer, Mark Hoelscher, Carisa Nietsche, Sara Abdel-Rahim,  Eric Abalahin, Fred Dews and Richard Fawal.

Subscribe to the Intersections on iTunes, and send feedback email to intersections@brookings.edu.

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With the violence in the Middle East continuing, and further attacks on American soil in the name of Islam, the election campaigns have paid significant attention to policy issues related to the Middle East. But as both Republicans and Democrats prepare for their national conventions, how do Americans prioritize Middle East issues compared with other global priorities? Have public attitudes shifted in light of recent ISIS-inspired attacks overseas and at home and in response to heated campaign rhetoric? If so, in what direction?

On July 11, Brookings launched two new public opinion surveys focusing on American attitudes towards the Middle East, conducted by Nonresident Senior Fellow Shibley Telhami: One was conducted just two weeks before the Orlando shooting, the other taken two weeks after—thus providing an opportunity to evaluate any shift in public attitudes. In addition, some of the same questions were asked in Telhami’s polls the previous two years, thus providing a further opportunity to evaluate trends. One of the polls also includes a significant oversample of millennials (18-34) for further demographic analysis.

Telhami was joined in discussion by William Galston, the Ezra K. Zilkha Chair in Governance Studies at Brookings. Tamara Cofman Wittes, senior fellow and director of the Center for Middle East Policy at Brookings, provided introductory remarks and moderated the discussion.

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Video

• Orlando, the Middle East, and the U.S. election

Audio

• Orlando, the Middle East, and the U.S. election

Transcript

• Uncorrected Transcript (.pdf)

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• poll_presentation_FINAL
• 20160711_orlando_middle_east_opinion_transcript

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Many within the United States and others abroad continue to question the United States’ role in the world. Understandably, Americans have grown wary of the country’s role in the world, some asking whether the U.S. still has the power and influence to lead the international community, while others question why the United States must still take on this seemingly singular responsibility. On the eve of a major speech by President Obama addressing these questions, Senior Fellow Robert Kagan released a new essay entitled, "Superpowers Don't Get to Retire: What Our Tired Country Still Owes the World," which was published in the latest edition of The New Republic. Kagan argued that the United States has no choice but to be “exceptional.”

On May 27, the Foreign Policy program at Brookings and The New Republic hosted an event to mark the release of the Kagan essay and in advance of President Obama’s address to the U.S. Military Academy at West Point. Kagan, a senior fellow in the Project on International Order and Strategy at Brookings, was joined by The New Republic's Leon Wieseltier and The Washington Post's Fred Hiatt.

After the program, the panelists took audience questions.

Read the full article»

Video

• America’s Leadership in the World and President Obama’s Foreign Policy
• America Has Never Been Isolationist
• Americans Take U.S.-Made World Order for Granted
• Obama Foreign Policy Looking for Dead Center of American Public
• Presidents Shouldn’t Hide Behind Polls on Foreign Policy

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• America’s Leadership in the World and President Obama’s Foreign Policy

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• Uncorrected Transcript (.pdf)

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• 20140527_americas_leadership_transcript

Editor's note: POLITICO Magazine released a list of the top 50 influential people in Washington, D.C., including Brookings Senior Fellow Robert Kagan and Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland, described as "the ultimate American power couple."

Victoria Nuland and Robert Kagan fell in love “talking about democracy and the role of America in the world” on one of their first dates. It’s a shared passion that hasn’t faded over time.

It was just two years ago that President Obama was gushing to aides about an essay that Kagan, a historian and author, wrote about the myth of American decline—a theme Obama echoed in his State of the Union that January. This year, Kagan’s sprawling New Republic essay, “Superpowers Don’t Get to Retire,” insisted on America’s enduring responsibility to shape the world order—and issued a direct challenge to a president who has summarized his own foreign-policy doctrine with a minimalist “don’t-do-stupid-s—t” directive. Obama promptly invited Kagan in for a West Wing consult, but it was also clear that Kagan had helped rouse the president’s Republican critics, who have been increasingly adopting Kagan’s argument that just because it’s been a decade of wearying war in Iraq and Afghanistan doesn’t mean America can roll up its superpower carpet and stay home when new crises, from Iraq to Russia to Syria, beckon.

Nuland, overseeing European and Eurasian Affairs at the State Department, has been a strong advocate of the engaged approach her husband favors as a crisis with Russia has unfolded on her diplomatic turf this year. The point was made, rather sensationally, in February, when a leaked audio recording of her F-bomb-laden diatribe about the fecklessness of the European Union, which she accused of not exactly playing a constructive role trying to end the growing conflict in Ukraine, appeared on the Internet. Nuland, a career Foreign Service officer, has been an impassioned advocate for democracy-building in Eastern Europe, and while she got pushback from European counterparts over her “f—k the EU” comment, the United States has been leading the effort to impose sanctions on Russia since President Vladimir Putin seized Ukraine’s Crimean Peninsula and waged a proxy war in the country’s east—dragging a reluctant Europe along pretty much every step of the way.

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On October 17, the Brookings Project on International Order and Strategy hosted a discussion with Brookings Senior Fellow Robert Kagan and MIT Professor Barry Posen on U.S. grand strategy. Amid a background of seeming geopolitical upheaval, the discussion focused on whether the United States should pursue a strategy that seeks to maintain U.S. pre-eminence and global leadership or whether the United States can or must adopt a more restrained posture.

In his May 2014 New Republic essay "Superpowers Don't Get to Retire," Kagan argued that the United States has an enduring responsibility and capacity to shape the world order.

Posen is the Ford international professor of political science and director of the security studies program at MIT. He is the author of the new book, Restraint: A New Foundation for U.S. Grand Strategy (Cornell University Press, 2014). Posen argues that consistent U.S. overreaching has led to numerous failures and unexpected problems and cannot be sustained. Posen urges the United States to adopt a strategy of restraint in the future use of U.S. military strength.

Brookings Fellow Jeremy Shapiro moderated the discussion.

Join the conversation on Twitter using #USStrategy

Audio

• U.S. Grand Strategy: World Leader or Restrained Power?

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• 20141017_us_grand_strategy_transcript

On October 17, the Brookings Institution’s Project on International Order and Strategy hosted two of the most prominent thinkers on American grand strategy to discuss whether Washington should remain forward-leaning in its posture, or if it should adopt a more restrained approach to global engagement.

The event was moderated by Brookings Foreign Policy Fellow Jeremy Shapiro, and featured a debate between Brookings Foreign Policy Senior Fellow Robert Kagan and Barry Posen, Ford International Professor at Massachusetts Institute of Technology.

Kagan argued that the United States has an enduring responsibility and capacity to shape the world order and must remain actively engaged abroad to prevent the international order from collapse. Posen, on the other hand, warned against American overreach in foreign policy and urged Washington to embrace restraint, focusing on its own national security interests and limiting engagement – particularly military - abroad.

In their discussion of the Middle East, both scholars sought to define American regional interests with greater precision. Posen argued that “affective” relationships, such as those with Israel, do not explain the U.S. defense budget dedicated to the region or contingency plans for the region. Posen also disputed the view that oil is the primary driver of U.S. regional policy, suggesting that threats to major suppliers could be managed with a less robust regional security commitment than Washington has traditionally maintained.

Kagan argued that President Obama is more intellectually inclined toward Posen’s strategy of restraint than most of his predecessors, and yet he too has been drawn into the Middle East. “It can’t just be pure stupidity that has had the United States involved in the Middle East as consistently as it has been for almost 70 years now, taking the place of the previous powers that had been involved in the Middle East,” he said.

Posen discussed U.S. efforts against the Islamic State group (also called ISIS or ISIL). He noted that President Obama’s rhetoric on ISIS has gone beyond what is prudent, describing the strategy as one of “containment that’s augmented by the promise of future counter-offensives and destruction.” Washington’s current strategy, Posen argued, has demobilized allies by enabling them to skirt responsibility for the crisis.

Posen and Kagan differed in their interpretations of the track record of American interventions in the region. Posen criticized American understanding of the causes and effects of intervention, saying that it is easier to oust a government than to generate internal consensus or transform a country into a stable democracy. By contrast, Kagan argued that the U.S. has never invaded a Middle Eastern country with the purpose of rearranging domestic politics.

There was little discussion of terrorism and nuclear proliferation, though Posen identifies these two threats as major items on which the U.S. should remain engaged. More information about Posen’s arguments can be found in his new book, Restraint: A New Foundation for U.S. Grand Strategy (Cornell University Press, 2014). Kagan’s argument for continued pre-eminence and engagement in grand strategy can be found in his influential May 2014 New Republic essay “Superpowers Don’t Get to Retire.”

For several years, President Obama has operated under a set of assumptions about the Middle East: First, there could be no return of U.S. ground troops in sizeable numbers to the region; and second, the United States had no interests in the region great enough to justify such a renewed commitment. The crises in the Middle East could be kept localized. The core elements of the world order would not be affected, and America’s own interests would not be directly threatened.

These assumptions could have been right, but instead they have proven to be wrong. The combined crises of Syria, Iraq, and the threat posed by the Islamic State (or ISIS) have not been contained. ISIS itself has proven both durable and capable, as the attacks in Paris showed. The Syrian conflict—with the resulting refugee flows—is destabilizing Lebanon and Jordan; it has put added pressure on Turkey’s already tenuous democracy; and it has exacerbated the acute conflict between Sunni and Shiite across the region. The multi-sided war in the Middle East has now ceased to be a strictly Middle Eastern problem. It has become a European problem, as well. The crisis on the periphery, in short, has now spilled over into the core.

Does this not call for a reassessment of the policies that have so far been tried in Syria and Iraq? Have not events in the Middle East, and now in Europe, reached the point where significant interests are at stake, thereby requiring a more substantial response by the United States?

Read Robert Kagan's more in-depth article on the subject in the Wall Street Journal.

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A conversation with U.S. Secretary of Commerce Penny Pritzker

Video

• Economic opportunities and the liberal international order

Event Information

On February 2 and 3, 2010, the Brookings Institution Metropolitan Policy Program and Lazard convened leaders from the public sector, energy, infrastructure, finance and venture capital communities for an in-depth conversation focused on innovative policy and business practices that will help build the next American economy.

California Governor Arnold Schwarzenegger and Pennsylvania Governor Edward G. Rendell provided the keynote remarks. Both stressed the need for strategic investments in innovative infrastructure and energy practices going forward.

Framing the conference was the notion that the next American economy must be export-oriented, low carbon, innovation-fueled and opportunity rich—an idea which has been proposed by leading economists such as Director of the National Economic Council Larry Summers. It is with this mindset that Brookings and Lazard put together high-level, dynamic panels that centered around the private sector needs for building out the next American economy—and the policy implications. Specifically, they focused on how the traditional industry leaders (e.g., utility companies), the new industry leaders (e.g., venture capital investors), and public sector leaders can work together to move our country forward, especially within the metro areas where the resources and networks that drive innovation are rooted.

Video

• The Keys to American Competitiveness

Audio

• The Next American Economy: Transforming Energy and Infrastructure Investment

Transcript

• Transcript (.pdf)
• Bruce Katz's delivered remarks (.pdf)

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• 0203_transcript
• 0203_nextecon_katz
• 0203_overview
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• 0203_nextecon_pres

Just weeks ago, Germany formally relinquished its title as the world’s top exporter to China. For 2009, China reported that its exports totaled $1.2 trillion as compared to Germany’s $1.1 trillion. The U.S. lost this title in 2003, when Germany surpassed our exports. What a difference a decade makes.

Even on the heels of their success, Germany has been cringing at the prospect of China surpassing them in total dollars generated by annual exports. In 2005, on the floor of the German Parliament, the state secretary for the Ministry of Transportation argued that Germany’s role in trade will slip without strategic, intermodal interventions to improve the movement of trade. His words highlighted the growing concern over the country’s competitiveness and conveyed that it was the federal government’s role to focus more intensively on freight. “There was a growing sense that freight was increasingly crucial to the country,” shared Johannes Wieczorek, head of freight transport and logistics for the Federal Ministry for Transport. Backed by Chancellor Merkel, Parliament voted overwhelmingly to support the development of a national strategy to strengthen the country’s logistics and freight. Less than two years later, Germany devised a national strategy that integrated all transportation modes, such as rail, roads, and waterways to accelerate the movement of freight across all parts of the country.

None of this was a minor accomplishment. In short order, the national government developed a strategy involving important stakeholders such as state and local leaders, ports, businesses, and environmental groups. 

The freight strategy, while vague on many details, outlines over 30 actions that signal where the federal government is headed: to shift more freight onto rail and waterways; to strengthen logistical gateways (such as ports) with more federal infrastructure money; and to increase funding for combined transport.

Germany’s National Port Concept is just one of these actions. It is essentially a list of priority ports that are to receive federal infrastructure investment funds given their national importance as trade gateways. Modeled after a similar effort for airports, both ports and airports will now use quantitative data to justify transportation funding. This empirically-driven process replaces a highly political one where earmarks are essentially designated by those in power. While it will clearly define who are the winners and losers, the Port Concept has sharpened federal decisionmaking on how and where to use transportation dollars wisely. Today, priority ports and airports will receive funding to create the best and most direct connections to high-speed railways and highways.

We could learn a great deal from Germany’s determination and focus. Although China surpassed Germany, a trend that was impossible to stave off in the long run, Germany is now well positioned to make sure they remain at the top of the list of the world’s top exporters. While we are just waking up to the reality that we need to increase our exports, as President Obama emphasized in his State of the Union Address, we have serious work in first improving our freight infrastructure to move our goods. Just a few days ago, U.S. DOT announced TIGER grants--funds largely focused on freight and ports. While a promising start, these grants are just a drop in the bucket in light of the level of investment needed. We would be wise to follow Germany and devise a national strategy to guide how and where to maximize every dollar for freight.

In partnership with the ESADE Business School and the City of Barcelona, the Metropolitan Policy Program planned and participated in three intensive days of learning in Barcelona in June 2011.  The focus of the session was to look at examples of strategies Barcelona, Spain and its greater metropolitan region is embracing to rebuild and re-invent their economies.  The goal is to share innovative ideas with U.S. metros engaged in similar initiatives as they face the challenge of moving to a new economic growth model.

This paper features brief synopses of the tours and meetings held with the City of Barcelona and the Catalonia Region on their economic development strategies.

Specific strategies include:

Barcelona Activa »

Click on any image below for a larger version

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• Download the Full Paper

Editor’s Note: During the Global Cities Initiative’s international forum in São Paulo, Bruce Katz delivered remarks on metropolitan areas and their potential to power national economies worldwide. The remarks were written by Katz and Julie Wagner.

The Metropolitan Future of Brazil and the United States
(This presentation is also available in Portuguese)

Good morning everyone.  It is a pleasure to be back in Sao Paulo with JP Morgan Chase, our partner in the Global Cities Initiative.  I am grateful for their support and leadership.

I first want to thank Governor Alckmin and Mayor-elect Haddad for their participation today and we fully welcome the opportunity to work with both of them and the city and state in the coming months and years.

This has been an extraordinary week for our delegation of mayors and business, civic, and university leaders from 10 major American cities and metropolitan areas.

We have seen firsthand the proud history and infectious energy and vibrancy of this great city and macro-metropolis.  We are grateful to Luiz Felipe D’Avila and the Centre for Public Leadership for co-sponsoring this forum today. We also owe a debt to others who have hosted and guided us this week—the State of Sao Paulo, particularly the State Secretariat for Metropolitan Development, Insper, the Commercial Association of Santos and the Port of Santos and the Brazil-U.S. Business Council, and the U.S. Embassy and Ambassador Shannon.

As Aod said at the outset, São Paulo is the first stop outside the United States in our five year Global Cities Initiative.  That is a deliberate choice.   The relationship between the United States and Brazil is a critical one.  Despite barriers, the economic and social ties between our two countries are strong and growing stronger.  Trade is booming.  Investment is up.  Tourism and business travel have never been higher.  And the recent state visits by presidents Obama and Rousseff send a clear signal that this is a partnership of the highest order. 

Yet there is hard work to do in both our countries. The U.S. and Brazil are undergoing major economic transitions. By global standards, both of us under-perform on exports, far trailing other countries.  The U.S. is shifting slowly back towards a more productive, sustainable economy after our worst downturn in 80 years; Brazil is moving forward towards a more open, outward looking economy.

Against this complex backdrop, our delegation comes bearing a simple proposition. The answers to national challenges lie, in great part, below the national level.

We live in a century where cities and metropolitan areas are driving national economies and the global economy. The U.S. and Brazil have 84 and 85 percent of our respective populations living in our cities and metropolitan areas … and these communities generate 91 percent of the GDP in the U.S. and 88 percent of the GDP in Brazil.  There is, in essence, no American or Brazilian—or German or Chinese—economy; rather our national economies represent networks of powerful city and metropolitan economies.

 Today, I will make three main points.

As the world urbanizes, cities and metropolitan areas have emerged as the engines of national economies.

As our economies globalize, cities and metropolitan areas act as the centers of international trade and investment.

To prosper today, cities and metropolitan areas need to drive their economic destiny.  In our federal republic, where power is shared across national, state and local governments, that requires new thinking about who does what. 

But, first things first; we cannot put forward a metropolitan playbook without first understanding what a metropolis is.  And the best way to do that is from the ground up.

On the right side of the screen you see the São Paulo metropolis, 20 million strong, 10^th most populous in the world.

On the left side of the screen you see Chicago, Mayor Daley’s hometown, with a population of 9.5 million, 26^th largest in the world.

Both of these metro areas cluster around core cities but cover large land masses and encompass multiple jurisdictions.

The São Paulo metro is more than 8,000 square kilometers in size, with more than half of your population living in the city proper and the remainder residing in 38 other municipalities.  

Chicago is close to 19,000 square kilometers in size with one third of the population living in the central city and the remainder spread across, incredibly, three states, 14 counties encompassing hundreds of separate municipalities and townships.

The assets São Paulo and Chicago need to compete nationally and globally are spread across their regions:

Clusters of workers;

Key colleges and universities;

Major hospitals and health care facilities;

A network of urban green space; and

The infrastructure—roads, rail and transit and airports—needed to move people, and freight

In other words, metro areas are the natural, organic geographies of the economy, clustered around central cities for sure, but also benefitting from the assets offered by satellite cities and suburban, exurban and rural areas.   

With that background, let me start with an irrefutable observation: cities and metropolitan areas are the 21^st century engines of national economies.

Since 1950, the world’s urban population has more than quadrupled in size.  Now sized at 3.6 billion people, it is expected to surpass 5 billion by 2030.

In 1950, 29 percent of the world’s population lived in cities and their metropolitan areas.  By 2009, the share surpassed 50 percent. By 2030, urban settlements will harbor more than 60 percent of the world’s population.

In many respects, the world is becoming more like us.  The United States and Brazil are two of the most highly urbanized countries with city and metro concentrations surpassing those of both mature economies in Germany, Britain, and Spain and emerging economies like China, India, and South Africa.  

Cities and metros do not just house people; they power economies.  Today Brookings released our annual Global Metro Monitor that tracks the economic performance of the world’s top 300 largest metropolitan economies.

Incredibly, we find that these metropolitan areas house a little under one fifth of global population but generate nearly half its total output.  Put simply: Metros around the world punch way above their weight.

Why are they so powerful? 

Because they cluster and connect firms, large and small, with ports and airports, transport and energy infrastructure, and a broad range of supportive institutions that supply skilled labor, advanced research and customized capital.    And when that happens, productivity improves, entrepreneurship rises, employment and wages increase.   

The dominance of metros holds true for both our countries, which house 13 and 76 of the top 300 global metros, respectively.

Your thirteen top metropolitan areas are home to one third of Brazil’s population, concentrate half of Brazil’s manufacturing output and your population with college education and account for 56 percent of national GDP and 63 percent of financial services output.

These metros range from Sao Paulo, 11^th largest economy in the world, to Baixada Santista, 295^th largest.    

Eleven of your metro areas are state or national capitals; this state is home to three of the 13 large metro areas.

Metro São Paulo takes its place among the world’s most populous and economically powerful metros.

You are home to one tenth of Brazil’s population, account for one-fifth of Brazil’s GDP and generate 57 percent of the GDP of this state.

For America’s part, our top 76 metros form the real heart of the U.S. economy. 

Housing 61 percent of our population, they concentrate a majority of our manufacturing output, gather our most educated people, and generate more than 68 percent of our national GDP.

They also make an outsized contribution on financial services and the production of patents. 

In the U.S., the top 76 metros range from New York, L.A., and Chicago to less well known communities like Allentown, Little Rock, and Harrisburg.

This leads to my second point: as economies globalize, cities and metropolitan areas act as the centers of international trade and investment.

Metros and trade are inextricably linked, and have been for millennia.   The Silk Road that connected Asia, Europe, the Middle East, and Northern Africa.   The Hanseatic League that grew from Hamburg and Lubeck to include 170 cities that monopolized trade in Northern Europe between the 13^th and 15^th centuries.  The great Italian city-states of Venice, Pisa, Genoa, and Amalfi.   

These historic networks offer essential lessons:

As a recent Brookings report concluded:

“Trade is essential to metros—it is how they grow their economies. And metros are essential to trade—they provide the specialization and market access that facilitates exchange among producers and consumers.” 

The top Brazilian and U.S. metros are our nations’ logistical hubs, concentrating the movement of goods and people by sea and by air.  In Brazil, 61 percent of foreign waterborne trade, measured by tonnage, passes through the seaports of the top metros; in the United States the equivalent share is over 66 percent. Passenger travel is even more concentrated; in both countries, close to 82 percent of international air travel passes through the airports of the top metropolitan areas.

Significantly, the top cities and metros in both our countries are magnets for foreign direct investment, particularly “greenfield FDI” where foreign entities invest in new facilities or expansions of existing facilities rather than just purchase domestic companies. 

From 2003 through September 2012, Brazil’s 13 accounted for 77 percent of greenfield FDI projects in Brazil and 59 percent of the jobs created through this key growth vehicle.  The top 76 U.S. metros also accounted for 77 percent of Greenfield FDI projects and 70 percent of the jobs created.

Brazil’s 13 are responsible for a third of all national goods exports; the share is substantially higher for the top U.S. metros.  Brookings research on U.S. exports shows that our top U.S. metros dominate the trade in manufacturing and services … and, given their edge in sectors like chemicals, consulting and computers, are on the front lines of commerce with China, Brazil, and India. 

In sum, our research has shown the collective centrality of our top cities and metros to the trading position of our nations. 

Yet metro economies do not exist in the aggregate; they have distinctive starting points and vary considerably in their trading prowess and intensity.  What makes São Paulo special on the global stage—your distinctive offer, your special investment potential—is different from what defines and drives Rio or Curitiba or Salvador.

São Paulo is Brazil’s premier global metropolis and the numbers reflect that.  Your metro houses 10 percent of Brazil’s population but:

• Your airports handle 26 percent of all passenger traffic in Brazil and 33 percent of all air cargo.
• Your macro metro neighbor, Santos, which we visited yesterday, is the busiest container port in South America and 43rd in the world.
• You are Brazil’s largest metropolitan exporter, producing 27 percent of all metropolitan exports of goods

• And from 2003-2011 you received 19 percent of all greenfield FDI in Brazil … in fact, more FDI than New York, LA, Chicago, Houston and San Francisco combined.

You trade with the world’s most prosperous cities, in the United States and elsewhere, but in particular ways given your distinctive industry clusters and sectors.

Given your substantial concentration in financial services (with 19 of the 25 top international banks present and the world’s third largest financial exchange), you interact naturally with New York and Miami in the U.S., London, Madrid, and Frankfurt in Europe and Shanghai, Tokyo and Hong Kong in Asia.

Despite the outward movement of industry, you still serve as Brazil’s main global platform for advanced manufacturing sectors like automotive, linking you closely with Detroit in the U.S., Milan and Stuttgart in Europe, and Nagoya in Japan.

The shape and structure of your economy puts São Paulo in an exclusive club of “global cities,” a definition drawn in the 1990s when the process of trade, investment, and globalization was seen as empowering a few command and control finance metros of the world.

But today, our notions of “globalizing cities” are more expansive, recognizing that all cities are fueled, to different degrees, by global investment and connected, in distinctive ways, via global commerce and exchange, global product and labor supply chains. 

The energy cluster in Rio finds common interest with the energy cluster in Houston through investments by Exxon Mobil, Chevron and Petrobras … and then further with energy firms in Amsterdam, Dar es Salaam, and Bogota.

Campinas’ hi-tech sector naturally links with the hi-tech cluster in San Jose’s Silicon Valley via elite universities, advanced R&D institutions, and global tech giants like IBM, Hewlett-Packard and Dell … and then further with tech clusters in Tokyo, Bangalore and Dublin.

As headquarters of Embraer, São Jose  dos Campos links via supply chains to Palm Bay, Florida, Harbin, China and Lisbon, Portugal.

In short, a new global map is being drawn in the world, not of nation to nation trade but of metro to metro exchange.

That leads to my final point: To prosper in the global economy today, metros need to drive their global economic destiny.

We have a three part playbook:

The playbook starts at home, with cities innovating locally to exploit their distinctive competitive advantages in the global economy.

In the U.S., cities and metropolitan areas are acting with intentionality in the aftermath of the Great Recession to devise and implement what we call “metropolitan business plans.”  The purpose: build on their distinctive competitive advantages in the traded sectors of the economy, given the crippling effect on housing and consumption.

The elements of business planning are fairly simple and straightforward

Each metropolis does a market assessment of their unique economic profile and potential … what goods and services they trade, which nations they trade with, where trade trends are likely to head given market dynamics here and abroad. 

Armed with this information, metros then set goals and objectives that build on their distinct advantages, devise strategies to meet those goals and establish metrics to gauge progress.

All these efforts are undertaken by a consortium of corporate, government, university and civic institutions that cut across jurisdictions, sectors, and disciplines and “collaborate to compete” globally.

Let me give you an example of how these business plans are helping cities and their metros grow jobs and restructure their economies.

Los Angeles, represented here by Mayor Antonio Villaragoisa, has devised an ambitious plan to grow exports by identifying and proactively supporting export ready firms in leading trade sectors like aerospace, computers, professional services, and film and television.  The L.A. system of trade is moving from a story of fragmentation, where no clear institution defines or drives decision-making, to a reality of coordination and collaboration, responsiveness and flexibility under one Los Angeles Regional Export Council.  The result: More firms will export more goods and services to more places producing more and better jobs.

We believe business planning holds great potential for São Paulo and other Brazilian metros.   Obviously, fixing the basics is a critical first step for economic growth: safe streets, quality schools, efficient transport and sound governance.  But a business plan might focus on increasing foreign direct investment in infrastructure necessary to reduce congestion, improve mobility, and enhance accessibility to jobs. 

The key is not what you focus on … but to decide your focus based on evidence and in a collaborative manner and then to hold yourself accountable through continuous assessment and measurement. 

Having innovated locally, cities must network globally—creating and stewarding close relationships with trading partners in both mature economies and rising nations.

The new global reality is leading to intricate networks of trading cities which grow together by linking together and learning together.

These networks obviously start with firms and ports that do business with each other.  

But, over time, networks extend to supporting institutions—governments, universities, business associations—that provide support for companies at the leading edge of metropolitan economies.

The city of Houston and the city of São Paulo, for example, executed a formal agreement earlier this year that commits each city to increase commercial relations, intensify scientific and technological connections, and facilitate information to tackle shared challenges.

Enterprise Florida, the principal export and investment organization in that state, opened an office in São Paulo in 2011 to help Florida companies expand trade.  APEX-Brasil, Enterprise Florida’s Brazilian counterpart, has its only U.S. location in Miami’s free trade zone.  There it executes projects like providing clean and renewable fuels to IndyCar, the American based auto racing body. 

The Ohio State University and the University of São Paulo have partnered to support the exchange of students and collaborative research.  Areas of recent focus: natural and mathematical sciences, medicine, and teacher training.  In 2014 Ohio State anticipates opening its third “Global Gateways” office in the world in São Paulo to further capitalize on these linkages.

Here is the simple message: We can see a network of trading cities emerging right here in São Paulo and it is a future characterized by multi-layered relationships across multiple dimensions and disciplines, interests and institutions. 

Finally, having innovated at home and networked globally, cities and metros must advocate nationally for federal and state policies and practices that will support metro growth.

Metros are engines, but they do NOT act alone.

Only national governments can set the rules of the road: enhancing access to foreign markets, enforcing trade agreements, opening up borders to immigrants and protecting intellectual property.  They can also help match domestic firms with potential global customers, provide export promotion support, and commit resources to modernizing logistics hubs.

As the world evolves as a network of trading cities, it is only natural that cities become more articulate and aggressive about the support they need from higher levels of government. 

In the United States, cities have found a receptive partner in the Obama Administration.  Key federal agencies—the International Trade Administration, the Ex-Im Bank, the Small Business Administration—have been central partners in guiding business plans with a particular focus on boosting exports.

Similar alliances could be built here.  As part of the Global Cities Initiative, the ESADE Business School mapped the trading system in São Paulo.  Their research clearly shows the central role of your federal and state governments in advancing the internationalization of your economy.  True success will come when these higher level entities align closely with your distinct assets and advantages.

Going forward, the advocacy of cities must extend beyond accessing the export promotion and finance programs of federal and state governments.  They must get to the heart of the matter.

The United States has had a North American Free Trade Agreement in place for 20 years with our partners, Mexico and Canada.

We have recently concluded important Free Trade Agreements with Colombia, Panama, and Korea.

President Obama was in Southeast Asia this month discussing the possibilities of a Trans-Pacific Partnership.

The 2011 Agreement on Trade and Economic Cooperation signed by President Obama and President Rousseff provides a platform to build on.

As they have expressed, we need a new vision for our Hemisphere … and for our two countries.

We are both growing with healthy demographics.

We both have an enormous pool of natural assets.

We both have a shared imperative to reorient our economies.

Empowered with the right policies, enabled with the right frameworks, we have the potential to grow together this century, powered by our major population and economic centers.

So that’s our playbook:

Innovate locally.  Network globally. Advocate nationally.

Let me end where I began. 

From the beginning of time, cities have been centers of commerce, formed along the roads and routes of trade. 

And so it is today.

The cities of our nations are powering our nations.

They are giving physical shape to the globalizing economy, seamlessly integrating the exchange of people, goods, services, energy, capital, ideas, and culture.

The promise of the Global Cities Initiative broadly is to capture and channel this energy into lasting, sustained networks and partnerships.

Our pledge as we leave here today is to work with you, partner with you, and ensure that the United States and Brazil bind together not just as two nations but as living, vibrant, powerful networks of trading cities and metropolitan areas.

For years, corporate campuses like Silicon Valley were known for innovation. Located in suburban corridors that were only accessible by car, these places put little emphasis on creating communities where people work, live and go out.

But now, as the economy emerges from the recession, a shift is occurring where innovation is taking place. Districts of innovation can be found in urban centres as disparate as Montreal, Seoul, Singapore, Medellin, Barcelona, and London. They are popping up in the downtowns and midtowns of cities like Atlanta, Cambridge, Philadelphia, and St. Louis.

These are places where advanced research universities, medical complexes, and clusters of tech and creative firms are attracting businesses and residents.

Other innovation districts can be found in Boston, Brooklyn, San Francisco, and Seattle, where older industrial areas are being re-imagined and remade, leveraging their enviable location near waterfronts and city centres and along transit lines. Innovative companies and talented workers are flocking to these areas in abundance.

Even traditional science parks like Research Triangle Park in Raleigh-Durham are scrambling to urbanise to keep pace with their workers' preference for walkable communities and their companies' desire to be near other firms.

In these districts, leading anchor institutions and start-ups are clustering and connecting with one another. They are coming together with spin-off companies, incubators, and accelerators in the relentless pursuit of new discoveries for the market.

These areas are small and accessible, growing talent, fostering open collaboration, and offering housing and office space as well as modern urban amenities. They are both competitive places and "cool" spaces.

The growth of innovation districts is being driven by private and civic actors like universities, philanthropies, business associations and business improvement districts. Yet local governments play an important role in accelerating the growth of districts and maximising their potential . Three roles stand out:

1) Mayors are leading efforts to designate districts

Barcelona's former mayor Joan Clos set his eyes on transforming his city into a "city of knowledge". Through extensive, focused public planning and investment, Clos designed an innovation district from the debris of a 494-acre industrial area, which was scarred and separated from the rest of the city by railroad tracks. His vision included burying these tracks, increasing access via a new public tram, designing walkable streets, and creating new public spaces and housing.

Today, the area is a 21st-century urban community with 4,500 firms, thousands of new housing units, and clusters of universities, technology centres, and incubators.

Across the Atlantic in Boston, former mayor Tom Menino declared the South Boston waterfront an innovation district in 2010. Menino persuaded innovators like MassChallenge to move to the district and exacted important concessions from developers (including land for innovation-oriented retail, shared labs and other spaces, and micro-housing) to help realise the district's vision.

2) Changing land-use laws to build spaces with a mix of facilities

Barcelona and Research Triangle Park, for example, developed bold master plans encouraging the "mixing" of large and small firms, research facilities, housing, restaurants, and retail and outlining where to create open spaces for networking. Cambridge, Massachusetts, by contrast, has allowed incremental moves from rigid, antiquated rules to encourage similar outcomes in Kendall Square .

3) Supporting scarce public resources with large private and civic investments

In New York , former mayor Michael Bloomberg deployed $100m in municipal capital to prepare the infrastructure necessary to lure Cornell and Technion universities to Roosevelt Island. In other cities, including St Louis and Seattle, local resources are financing infrastructure improvements to buttress and accelerate private growth.

Given that many innovation districts are adjacent to low-income neighbourhoods, cities like Philadelphia are considering smart use of school investments to prepare disadvantaged youth for good jobs in the Stem (science, technology, engineering, and math) economy.

As this decade unfolds, we should expect more cities to use their powers in the service of this new model of innovative, inclusive, and resilient growth.

This opinion originally appeared in The Guardian

Innovative activity and innovation districts are not evenly distributed across cities. Some metropolitan areas may have two or three districts scattered about, while other cities are lucky to have the critical mass to support even one strong district. London, however, a global city with nearly unparalleled assets, can best be understood as not just a collection of innovation districts but as a contiguous “city of innovation.” 

Our understanding of that innovative activity has taken a leap forward with the publication of a new report by the Centre for London called "Spaces to Think". Even for a paragon of innovation, a critique such as this is imperative if the city desires to maximize its assets while continuing to grow in a sustainable and inclusive manner. Much as we have recommended that urban leaders across the United States undertake an asset audit of their districts to identify key priorities, "Spaces to Think" focuses on 17 distinct districts, mapping their assets, classifying their typologies, and identifying governance structures.

The 17 study areas in "Spaces to Think"

The report provides lessons applicable to many cities.

Having identified, across all 17 districts, the three major drivers of innovative activity—talent, space, and financing—it becomes clear that the main hurdle for London, as a global magnet of talent and capital, is affordable physical space: “Increasing pressure for land…risks constraining London’s potential as a leading global city for innovation.” Similar to hot-market cities across the United States, many of the study areas of greatest promise are older industrial areas, such as Here East, Canary Wharf, and Kings Cross, where large plots of underutilized land have been reimagined as innovation districts. 

But who is prepared to undertake new regeneration projects? The report places significant responsibility on London’s many universities—whose expansions already account for much of the large-scale development opportunities in the city—for a “third mission” of local economic development. It is universities, the report notes, that are “devoting increasing amounts of money, resources, and planning to building new or redesigned facilities…pitched as part of a wider regeneration strategy, or the creation of an innovation district.” 

A second concern is the democratization of the innovation economy. Already a victim of rising inequality, London’s future growth must reach down the ladder. As we’ve argued, with intentionality and purpose, innovation districts can advance a more inclusive knowledge economy, especially given that they are often abut neighborhoods of above-average poverty and unemployment. Spaces to Think expands upon four key strategies: local hiring and sourcing practices for innovation institutions; upskilling of local residents through vocational and technical programs within local firms; increased tax yield, especially given recent reforms in which “local authorities retain 100 percent of business rates”; and shared assets and rejuvenation of place. This final lever requires inclusive governance that encourages neighborhood ownership of the public realm.

Finally, the report notes that, while there is much diversity of leadership in the study areas—some are university-led, some are entrepreneurial, some are industry-led—“good governance and good relations between institutions, are at the heart of what makes innovation districts tick.” This issue is at the heart of our work moving forward: identifying and spreading effective governance models that encourage collaboration and coordination between the public, private, and civic actors within innovation districts.

We are pleased that this future work will be strengthened by a new partnership between the Bass Initiative on Innovation and Placemaking and the Centre for London. The ambition of this Transatlantic Innovation Districts Partnership is to increase our mutual understanding of innovation districts found in Europe through additional qualitative and quantitative analysis and to integrate European leaders into a global network, all to accelerate the transfer of lessons and best practices from districts across the world.

A Q&A with Dennis Lower, president and CEO, Cortex Innovation Community

As leaders scan the landscape for strong examples of innovation districts, their tour is hardly complete without learning of the Cortex Innovation Community—an innovation district in the heart of St. Louis. We sat down with Dennis Lower, president and CEO of the Cortex Innovation Community to learn what kinds of interventions and instruments are driving their success.

What is the Cortex Innovation Community?

Cortex is the region’s largest innovation hub, generating 3,800 tech-related jobs and over $500 million in investment in the last 14 years. It’s located close to downtown and built on the intellectual assets and resources of St. Louis’ leading universities, a premier health care provider, and the Missouri Botanical Garden. The focal point is the 200 acres of old industrial land that one time separated these institutions but that now stitches them together. At full build-out, Cortex will likely generate $2 billion of development and create 13,000 jobs.

What sets Cortex apart from other innovation districts?

Of course, every district is distinctive and unique, building off its local character, culture, and assets. What sets Cortex apart, I would argue, is that we literally have billions of dollars of academic, cultural, and recreational assets in the neighborhoods that surround the district, which other places simply do not have.

We are bookended by two universities—Washington University and St. Louis University—each a magnet for international students and each with a reputation for research and academic excellence. Washington University, for example, was one of five consortium members funded by the National Institutes of Health to map the human genome. These universities, together with the University of Missouri-St. Louis, are the academic bedrock of our local innovation ecosystem.

Recent demographic analysis tells us we are now the most diverse employment environment in the region no matter how you slice it, including by age, ethnicity, and educational attainment.

Another Cortex advantage is the neighborhood that surrounds us. In addition to historic housing, the Grand Center arts district is to the east, to the west is Forest Park, which contains the St. Louis Zoo, fine arts and history museums, two golf courses, the St. Louis Science Center, abundant walking and biking trails, and the internationally renowned Botanical Garden. Restaurant corridors are to the north and south. I tell you all this to say that Cortex is where innovation, tech, culture, and community collide—and people are hungry for this mix.

Cortex Innovation Community is also a tax-exempt 501(c)3 that oversees the design and development of the innovation district. What makes your nonprofit unique in managing this district?

Cortex has been designated the master developer to transform an old industrial district into a center for innovation and commercialization. We are in a particularly advantageous position because the state and the city have granted the 501(c)3 powers of eminent domain, the power to abate taxes, and the power to approve or reject building plans. From a traditional economic development perspective, these powers have been critical in overcoming obstacles that land speculators sometimes put in our way. We have not had to use this power very often, fortunately. Only a handful of properties were acquired under the threat of eminent domain, and we reached an impasse only twice, sending us to court to purchase those properties. We take this responsibility seriously and only use eminent domain powers sparingly. We have a good reputation with the public as a result.

Can you describe one accomplishment you are particularly proud of?

We knew that to jump-start an innovation district it was essential to build entrepreneurial density. We developed an unorthodox strategy of sorts in that we built a concentration of innovation assets all within a block of each other. Today, we have six innovation centers, each with its own community and programming: the Center for Emerging Technologies, a traditional technical assistance incubator for information technology, bioscience, and consumer/manufacturing products; the BioGenerator, an accelerator with shared wet lab space and $3 million of shared core lab equipment; TechShop, a premier maker work space for prototyping and creating; the Cambridge Innovation Center–St. Louis, a co-working office and lab startup space); Venture Café–St. Louis, a shared public space for the startup community to meet weekly with 8 to 12 unconventional breakout educational sessions; and IdeaLabs/MedLaunch, a unique university graduate/undergraduate incubator that develops new technology to solve clinical problems. This strategy is working beyond our wildest expectations. It’s the “secret sauce” for supercharging our district’s innovation ecosystem. 

Venture Café: one of the six innovation centers that weekly draws together over 500 entrepreneurs from all technology sectors.

Can you highlight one particularly interesting innovation or invention coming out of Cortex? 

Let me highlight two. We have over 200 companies in Cortex—there’s too much innovation happening here to highlight only one!

First, we have a medical device company that is changing the way infectious diseases are diagnosed. Its products can rapidly detect bacterial infections, determine if the infection is resistant to a range of antibiotics, and provide clinicians with patient-specific guidance to treat infections quickly and accurately. Their first product can diagnose urinary tract infections in just three hours.

And then we have a company tackling the biggest challenge in agriculture today—preventing insects, diseases, and weeds from destroying food crops. This company is developing a cost-effective technology to produce and topically deliver RNAi for agricultural crops. Put simply, this technology helps plants develop desired genetic traits without the use of genetically modified organisms, or GMOs. This could be transformative.

Many people have asked us how innovation districts are supporting inclusive growth. There is a concern that innovation districts are focusing on innovation to the exclusion of employment of city residents, who may not possess the skills or education the district’s businesses are seeking.

We look at inclusion as an integral part of our work and mission at Cortex. We currently have six inclusion initiatives and will soon introduce two more. One of those is the development of a magnet high school in the St. Louis Public School District, the Collegiate School for Medicine and Biosciences. Working closely with the school district’s superintendent and an important group of institutional and civic leaders, we have been developing an urban high school centered on one of the major strengths of our Cortex sponsors—bioscience. We recruited our first class in 2013, providing instruction in a small, temporary school, and in 2015 moved to a permanent location that can support 400 students.

The students come from all across the region, representing the largest spread of zip codes of any regional public school. Currently, 53 percent of the students are African American, 23 percent are Asian, and 22 percent are white, representing a great mix. Last year’s proficiency testing in math and English revealed that we ranked first across the entire public school system. I find this particularly gratifying because a number of incoming freshmen were not performing at grade level. What this tells us is given the opportunity, creative teaching approaches, and a supportive structure, these kids will excel quickly. With our incoming 9th grade class this August, we will have a full complement of freshmen to seniors, graduating our first class in 2017.

Perhaps one of these students will find the next cure for cancer. To me, this illustrates an important part of our district’s DNA—to grow and cultivate innovation talent for the future.

The tide of uncertainty that has swept the United Kingdom after its vote to leave the European Union has spared few—including its emerging class of innovation districts.

These hubs of innovation—where anchor institutions, such as universities and R&D laden companies cluster and connect with startups, incubators, and a host of public spaces, coffee shops, retail and housing—are now asking themselves important questions that will affect their future. Will the U.K. broker a deal to continue free trade with Europe? Will access to talent across Europe be curtailed? Will the devalued pound keep U.K. advanced manufacturers competitive for the medium to long term? Will European Union legal frameworks be replaced with a regulatory platform that continues to support advanced sectors? What will happen to EU funding on science and innovation, such as Horizon 2020?

Of course, innovation districts are no stranger to uncertainty, if not chaos. These districts thrive on random mixing, on smashing different kinds of disciplines and people together to generate new ideas and new products for the market. In this close-knit, highly networked ecosystem, chaos breeds creativity. At the same time, the backbone of districts is a clear regulatory and legal framework with rules on intellectual property, investment, and funding streams. The twinning of chaos and certainty is what makes these places simply superb spaces to incubate new technology, aggregate talent, and experiment in linking placemaking with innovation.

Yet from the distinctive innovation districts in London to those emerging in the middle of England, such as in Sheffield and Manchester, to those rising in Scotland, such as in Glasgow, this moment of uncertainty could be not only painful—it could be downright dangerous. 

In the face of such uncertain times, the temptation will be to sit back and wait for the cards to fall. But this tempered, conservative approach is ironically the more risky tactic.

We recommend another path.

Now is the time for the institutions and firms that are driving innovation districts to strengthen their competitive position and expand their reach.

Now is the time to try new forms of collaboration between universities, large companies, and local enterprises.

Now is the time to test more democratic modes of innovation with maker spaces, fab labs, and shared infrastructure and equipment.

Now is the time to forge new partnerships with other innovation districts in the United States and Europe to share promising strategies around commercialization, networking, and financing.

Now is the time to apply new energy to creative placemaking, including strengthening the innovation–place nexus around key nodes and applying quick interventions around traffic calming, bike lanes, and pop-up gathering spaces. 

U.S. cities and innovation districts have demonstrated that progress can persist even when higher levels of government are adrift. U.K. cities and districts can do the same.

November's U.S. Bureau of Labor Statistics (BLS) employment report showed continued improvement in the job market, with employers adding 211,000 workers to their payrolls and hourly pay edging up compared with its level a year ago. The pace of job growth was similar to that over the past year and somewhat slower than the pace in 2014. For the 69^th consecutive month, private-sector payrolls increased. Since the economic recovery began in the third quarter of 2009, all the nation’s employment gains have occurred as a result of expansion in private-sector payrolls. Government employment has shrunk by more than half a million workers, or about 2.5 percent. In the past twelve months, however, public payrolls edged up by 93,000.

The good news on employment gains in November was sweetened by revised estimates of job gains in the previous two months. Revisions added 8,000 to estimated job growth in September and 27,000 to job gains in October. The BLS now estimates that payrolls increased 298,000 in October, a big rebound compared with the more modest gains in August and September, when payrolls grew an average of about 150,000 a month.

Average hourly pay in November was 2.3 percent higher than its level 12 months earlier. This is a slightly faster rate of improvement compared with the gains we saw between 2010 and 2014. A tighter job market may mean that employers are now facing modestly higher pressure to boost employee compensation. The exceptionally low level of consumer price inflation means that the slow rate of nominal wage growth translates into a healthy rate of real wage improvement. The latest BLS numbers show that real weekly and hourly earnings in October were 2.4 percent above their levels one year earlier. Not only have employers added more than 2.6 million workers to their payrolls over the past year, the purchasing power of workers' earnings have been boosted by the slightly faster pace of wage gain and falling prices for oil and other commodities.

The BLS household survey also shows robust job gains last month. Employment rose 244,000 in November, following a jump of 320,000 in October. More than 270,000 adults entered the labor force in November, so the number of unemployed increased slightly, leaving the unemployment rate unchanged at 5.0 percent. In view of the low level of the jobless rate, the median duration of unemployment spells remains surprisingly long, 10.8 weeks. Between 1967 and the onset of the Great Recession, the median duration of unemployment was 10.8 weeks or higher in just seven months. Since the middle of the Great Recession, the median duration of unemployment has been 10.8 weeks or longer for 82 consecutive months. The reason, of course, is that many of the unemployed have been looking for work for a long time. More than one-quarter of the unemployed—slightly more than two million job seekers—have been jobless for at least 6 months.  That number has been dropping for more than five years, but remains high relative to our experience before the Great Recession.

If there is bad news in the latest employment report, it's the sluggish response of labor force participation to a brighter job picture. The participation rate of Americans 16 and older edged up 0.1 point in November but still remains 3.5 percentage points below its level before the Great Recession. About half the decline can be explained by an aging adult population, but a sizeable part of the decline remains unexplained. The participation rate of men and women between 25 and 54 years old is now 80.8 percent, exactly the same level it was a year ago but 2.2 points lower than it was before the Great Recession. Despite the fact that real wages are higher and job finding is now easier than was the case earlier in the recovery, the prime-age labor force participation rate remains stuck well below its level before the recession. How strong must the recovery be before prime-age adults are induced to come back into the work force? Even though the recovery is now 6 and a half years old, we still do not know.

Editor’s note: The following remarks were prepared and delivered by Gary Burtless at a roundtable sponsored by the American Tax Policy Institute on January 7, 2016. Video of Burtless’ remarks are also available on the Institute’s website. Download the related slides at the right. 

To eliminate suspense from the start: Nothing I am about to say undermines the popular narrative about recent inequality trends.  For the past 35 years, U.S. inequality has increased.  Inequality has increased noticeably, no matter what income definition you care to use.  A couple of things you read in the newspaper are untrue under some income definitions. For example, under a comprehensive income definition it is false to claim that all the income gains of the past 2 or 3 decades have gone to the top 1 percent, or the top 5 percent, or the top 10 percent of income recipients.  Middle- and low-income Americans have managed to achieve income gains, too, as we shall see.

Tax policy certainly affects overall inequality, but I shall leave it for Scott, David, and Tracy to take that up. Let me turn to my main job, which is to distinguish between different reasonable income measures.

The crucial thing to know is that contradictory statements can be made about some income trends because of differences in the definition of income.  In general, the most pessimistic statements about trends rely on an income definition that is restrictive in some way.  The definition may exclude important income items, items, for example, that tend to equalize or boost family incomes.  The definition may leave out adjustments to income … adjustments that tend to boost the rate of income gain for low- or middle-income recipients, but not for top-income recipients.

The narrowest income definition commonly used to evaluate income trends is Definition #1 in my slide, “pretax private, cash income.”  Columnists and news reporters are unknowingly using this income definition when they make pronouncements about the income share of the “top 1 percent.”  The data about income under this definition are almost always based on IRS income tax returns, supplemented with a bit of information from the Commerce Department’s National Income and Product Account (NIPA) data file.

The single most common income definition used to assess income trends and inequality is the Census Bureau’s “money income” definition, Definition #2 on the slide.  It is just the same as the first definition I mentioned, except this income concept also includes government cash transfer payments – Social Security, unemployment insurance, cash public assistance, Veterans’ benefits, etc.

A slightly more expansive definition (#3) also adds food stamp (or SNAP) benefits plus other government benefits that are straightforward to evaluate. Items of this kind include the implicit rent subsidy low-income families receive in publicly-subsidized housing, school lunch subsides, and means-tested home heating subsidies.

Now we come to subtractions from income. These typically reflect families’ tax obligations.  The Census Bureau makes estimates of state and federal income tax liabilities as well as payroll taxes owed by workers (though not by their employers).  Since income and payroll taxes subtract from the income available to pay for other stuff families want to buy, it seems logical to also subtract them from countable income. This is done under income Definition #4.  Some tax obligations – notably the Earned Income Credit (EIC) – are in fact subtractions from taxes owed, which would not be a problem in the case of families that still owe positive taxes to the government.  However, the EIC is refundable to taxpayers, meaning that some families have negative tax liabilities:  The government owes them money.  In this case, if you do not take taxes into account you understate low-income families’ incomes, even as you’re overstating the net incomes available to middle- and high-income families.

Now let’s get a bit more complicated.  Forget what I said about taxes, because our next income definition (#5) also ignores them.  It is an even-more-comprehensive definition of gross or pretax income.  In addition to all those cash and near-cash items I mentioned in Definition #3, Definition #5 includes imputed income items, such as: 

• The value of your employer’s premium contribution to your employee health plan;
• The value of the government’s subsidy to your public health plan – Medicare, Medicaid, state CHIP plans, etc.
• Realized taxable gains from the sale of assets; and
• Corporate income that is earned by companies in which you own a share even though it is not income that is paid directly to you.

This is the most comprehensive income definition of which I am aware that refers to gross or pre-tax income.

Finally we have Definition #6, which subtracts your direct and indirect tax payments.  The only agency that uses this income definition is principally interested in the Federal budget, so the subtractions are limited to Federal income and payroll taxes, Federal corporate income taxes, and excise taxes.

Before we go into why you should care about any of these definitions, let me mention a somewhat less important issue, namely, how we define the income-sharing group over which we estimate inequality.  The most common assessment unit for income included under Definition #1 (“Pre-tax private cash income”) is the Federal income tax filing unit.  Sometimes this unit has one person; sometimes 2 (a married couple); and sometimes more than 2, including dependents.

The Census Bureau (and, consequently, most users of Census-published statistics) mainly uses “households” as reference units, without any adjustment for variations in the size of different households.  The Bureau’s median income estimate, for example, is estimated using the annual “money income” of households, some of which contain 1 person, some contain 2, some contain 3, and so on.

Many economists and sociologists find this unsatisfactory because they think a $20,000 annual income goes a lot farther if it is supporting just one person rather than 12.  Therefore, a number of organizations—notably, the Luxembourg Income Study (LIS), the Organisation of Economic Cooperation and Development (OECD), and the Congressional Budget Office (CBO)—assume household income is equally shared within each household, but that household “needs” increase with the square root of the number of people in the household.  That is, a household containing 9 members is assumed to require 1½ times as much income to enjoy the same standard of living as a family containing 4 members.  After an adjustment is made to account for the impact of household size, these organizations then calculate inequality among persons rather than among households.

How are these alternative income definitions estimated?  Who uses them?  What do the estimates show?  I’ll only consider a two or three basic cases.

First, pretax, private, cash income. By far the most famous users of this definition are Professors Thomas Piketty and Emmanuel Saez.  Their most celebrated product is an annual estimate of the share of total U.S. income (under this restricted definition) that is received by the top 1 percent of tax filing units.

Here is their most famous chart, showing the income share of the top 1 percent going back to 1913. (I use the Piketty-Saez estimates that exclude realized capital gains in the calculation of taxpayers’ incomes.) The notable feature of the chart is the huge rise in the top income share between 1970—when it was 8 percent of all pretax private cash income—and last year—when the comparable share was 18 percent.  

I have circled one part of the line—between 1986 and 1988—to show you how sensitive their income definition is to changes in the income tax code.  In 1986 Congress passed the Tax Reform Act of 1986 (TRA86). By 1988 the reform was fully implemented.  Wealthy taxpayers noticed that TRA86 sharply reduced the payoff to holding corporate earnings inside a separately taxed corporate entity. Rich business owners or shareholders could increase their after-tax income by arranging things so their business income was taxed only once, at the individual level.  The result was that a lot of income, once earned by and held within corporations, was now passed through to the tax returns of rich individual taxpayers. These taxpayers appeared to enjoy a sudden surge in their taxable incomes between 1986 and 1988.  No one seriously believes rich people failed to get the benefits of this income before 1987.  Before 1987 the same income simply showed up on corporate rather than on individual income tax returns.

A final point:  The chart displayed in SLIDE #6 is the source of the widely believed claim that U.S. inequality is nowadays about the same as it was at the end of the Roaring 1920s, before the Great Depression.  That is close to being true – under this income definition.

Census “money income”: This income definition is very similar to the one just discussed, except that it includes cash government transfer payments.  The producer of the series is the Census Bureau, and its most famous uses are to measure trends in real median household income and the official U.S. poverty rate. Furthermore, the Census Bureau uses the income definition to compile estimates of the Gini coefficient of household income inequality and the income shares received by each one-fifth of households, ranked from lowest to highest income, and received by the top 5 percent of households.

Here is a famous graph based on the Bureau’s “median household income” series.  I have normalized the historical series using the 1999 real median income level (1999 and 2000 were the peak income years according to Census data).  Since 1999 and 2000, median income has fallen about 10 percent.  If we accept this estimate without qualification, it certainly represents bad news for living standards of the nation’s middle class. The conclusion is contradicted by other government income statistics that use a broader, more inclusive income definition, however.

And here is the Bureau’s most widely cited distributional statistic (after its “official poverty rate” estimate).  Since 1979, the Gini coefficient has increased 17 percent under this income definition. (It is worth noting, however, that the portion of the increase that occurred between 1992 and 1993 is mainly the result of methodological changes in the way the Census Bureau ascertained incomes in its 1994 income survey.)

When you hear U.S. inequality compared with that in other rich countries, the numbers are most likely based on calculations of the LIS or OECD.  Their income definition is basically “Cash and Near-cash Public and Private income minus Income and Payroll taxes owed by households.”  Under this income definition, the U.S. looks relatively very unequal and America appears to have an exceptionally high poverty rate.  U.S. inequality has been rising under this income definition, as indeed has also been the case in most other rich countries. The increase in the United States has been above average, however, helping us to retain our leadership position, both in income inequality and in relative poverty.

We turn last to the most expansive income definition:  CBO’s measure of net after-tax income.  I will use CBO’s tabulations using this income definition to shed light on some of the inequality and living standard trends implied by the narrower income definitions discussed above.

Let’s consider some potential limitations of a couple of those definitions.  The limitations do not necessarily make them flawed or uninteresting.  They do mean the narrower income measures cannot tell us some of the things that users claim they tell us.

An obvious shortcoming of the “cash pretax private income” definition is that it excludes virtually everything the government does to equalize Americans’ incomes.  Believe it or not, the Federal tax system is mildly progressive.  It claims a bigger percentage of the (declared) incomes of the rich than it does of middle-income families’ and especially the poor.  Any pretax income measure will miss that redistribution.

More seriously, it excludes all government transfer payments.  You may think the rich get a bigger percentage of their income from government handouts compared with middle class and poorer households.  That is simply wrong.  The rich get a lot less.  And the percentage of total personal income that Americans derive from government transfer payments has gone way up over the years.  In the Roaring 1920s, Americans received almost nothing in the form of government transfers. Less than 1 percent of Americans’ incomes were received as transfer payments.  By 1970—near the low point of inequality according to the Piketty-Saez measure—8.3 percent of Americans’ personal income was derived from government transfers.  Last year, the share was 17 percent. None of the increase in government transfers is reflected in Piketty and Saez’s estimates of the trend in inequality.  Inequality is nowadays lower than it was in the late 1920s, mainly because the government does more redistribution through taxes and transfers.

Both the Piketty-Saez and the Census “money income” statistics are affected by the exclusion of government- and employer-provided health benefits from the income definition. This slide contains numbers, starting in 1960, that show the share of total U.S. personal consumption consisting of personal health care consumption.  I have divided the total into two parts. The first is the share that is paid for out of our own cash incomes (the blue part at the bottom).  This includes our out-of-pocket spending for doctors’ charges, hospital fees, pharmaceutical purchases, and other provider charges as well as our out-of-pocket spending on health insurance premiums. The second is the share of our personal health consumption that is paid out of government subsidies to Medicare, Medicaid, CHIP, etc., or out of employer subsidies to employee health plans (the red part). 

As everyone knows, the share of total consumption that consists of health consumption has gone way up.  What few people recognize is that the share that is directly paid by consumers—through payments to doctors, hospitals, and household health insurance premium payments—has remained unchanged.  All of the increase in the health consumption share since 1960 has been financed through government and employer subsidies to health insurance plans. None of those government or employer contributions is counted as “income” under the Piketty-Saez and Census “money income” definitions.  You would have to be quite a cynic to claim the subsidies have brought households no living standard improvements since 1960, yet that is how they are counted under the Piketty-Saez and Census “money income” definitions.

Final slide: How much has inequality gone up under income definitions that count all income sources and subtract the Federal income, payroll, corporation, and excise taxes we pay?  CBO gives us the numbers, though unfortunately its numbers end in 2011.

Here are CBO’s estimates of real income gains between 1979 and 2011.  These numbers show that real net incomes increased in every income category, from the very bottom to the very top.  They also show that real incomes per person have increased much faster at the top—over on the right—than in the middle or at the bottom—over on the left.  Still, contrary to a common complaint that all the income gains in recent years have been received by folks at the top, the CBO numbers suggest net income gains have been nontrivial among the poor and middle class as well as among top income recipients.

Suppose we look at trends in the more recent past, say, between 2000 and 2011.  That lower panel in this slide presents a very different picture from the one implied by the Census Bureau’s “money income” statistics.  Unlike the “money income numbers” [SLIDE #9], these show that inequality has declined since 2000.  Unlike the “money income numbers” [SLIDE #8], these show that incomes of middle-income families have improved since 2000.  There are a variety of explanations for the marked contrast between the Census Bureau and CBO numbers.  But a big one is the differing income definitions the two conclusions are based on.  The more inclusive measure of income shows faster real income gains among middle-income and poorer households, and it suggests a somewhat different trend in inequality.

Researchers have long known that the rich live longer than the poor. Evidence now suggests that the life expectancy gap is increasing, at least here the United States, which raises troubling questions about the fairness of current efforts to protect Social Security.

There's nothing particularly mysterious about the life expectancy gap. People in ill health, who are at risk of dying relatively young, face limits on the kind and amount of work they can do. By contrast, the rich can afford to live in better and safer neighborhoods, can eat more nutritious diets and can obtain access to first-rate healthcare. People who have higher incomes, moreover, tend to have more schooling, which means they may also have better information about the benefits of exercise and good diet.

Although none of the above should come as a surprise, it's still disturbing that, just as income inequality is growing, so is life-span inequality. Over the last three decades, Americans with a high perch in the income distribution have enjoyed outsized gains.

Using two large-scale surveys, my Brookings colleagues and I calculated the average mid-career earnings of each interviewed family; then we estimated the statistical relationship between respondents' age at death and their incomes when they were in their 40s. We found a startling spreading out of mortality differences between older people at the top and bottom of the income distribution.

For example, we estimated that a woman who turned 50 in 1970 and whose mid-career income placed her in the bottom one-tenth of earners had a life expectancy of about 80.4. A woman born in the same year but with income in the top tenth of earners had a life expectancy of 84.1. The gap in life expectancy was about 3½ years. For women who reached age 50 two decades later, in 1990, we found no improvement at all in the life expectancy of low earners. Among women in the top tenth of earners, however, life expectancy rose 6.4 years, from 84.1 to 90.5. In those two decades, the gap in life expectancy between women in the bottom tenth and the top tenth of earners increased from a little over 3½ years to more than 10 years.

Our findings for men were similar. The gap in life expectancy between men in the bottom tenth and top tenth of the income distribution increased from 5 years to 12 years over the same two decades.

Rising longevity inequality has important implications for reforming Social Security. Currently, the program takes in too little money to pay for all benefits promised after 2030. A common proposal to eliminate the funding shortfall is to increase the full retirement age, currently 66. Increasing the age for full benefits by one year has the effect of lowering workers' monthly checks by 6% to 7.5%, depending on the age when a worker first claims a pension.

For affluent workers, any benefit cut will be partially offset by gains in life expectancy. Additional years of life after age 65 increase the number years these workers collect pensions. Workers at the bottom of the wage distribution, however, are not living much longer, so the percentage cut in their lifetime pensions will be about the same as the percentage reduction in their monthly benefit check.

Our results and other researchers' findings suggest that low-income workers have not shared in the improvements in life expectancy that have contributed to Social Security's funding problem.

It therefore seems unfair to preserve Social Security by cutting future benefits across the board. Any reform in the program to keep it affordable should make special provision to protect the benefits of low-wage workers.

Editor's note: This piece originally appeared in The Los Angeles Times.