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Is the US Ready?

Preparing for Great-Power Competition

April 15, 2023

One of the few points of agreement between the Trump and Biden administrations has been the reorientation of American strategy toward great-power competition. But are American policymakers and the American people ready for the burdens of that challenge? In a new AEI report, Hal Brands, Peter Feaver, and William Inboden identify and “stress test” 17 key assumptions of this new consensus.

 

 

China’s economy is sharply rebounding after the COVID-19 pandemic, but will it be able to maintain high levels of growth into the middle of the 21st century? In new research for AEI, Derek Scissors forecasts these dynamics to suggest why China may not be able to keep up with the United States into the 2040s.

 

The Constitution grants Congress full power over foreign commerce. But Claude Barfield shows how the Inflation Reduction Act is causing the Biden administration to increasingly bypass congressional authorization for trade agreements.

 

How can we overcome that “acrimony and division” that increasingly define American public life? Daniel A. Cox suggests that the key lies in rebuilding our shared national purpose. “Instead of arguing over what we have and who we are in increasingly narrow terms,” Cox writes, “American politics should expand the horizon of what is possible.”

 

While most news coverage focused on Wisconsin’s Supreme Court election, Robert Doar highlights the overwhelming support a welfare work-requirement referendum just achieved in the state. As both parties struggle to build unifying agendas, Doar explains why “embracing work as the best path out of poverty might be a good place to start.”

How Important Are Minimum Wage Increases in Increasing the Wages of Minimum Wage Workers?

In a new journal article for Contemporary Economic Policy, Michael R. Strain and Jeffrey Clemens examine the key sources of wage growth for minimum wage workers. Analyzing data from the Current Population Survey, Strain and Clemens demonstrate that, contrary to conventional wisdom, minimum wage increases account for only a “modest fraction of the wage gains realized by minimum wage workers.” Instead, persistent employment, career progression, and positive macroeconomic conditions are vastly more impactful. Career progression in particular—switching industries and occupations—predicts wage growth six times larger than from minimum wage increases. Most workers do not spend their time working at a minimum wage level, so current policy debates need to move away from the overemphasis on increasing wage floors.

 

 

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QUOTE OF THE WEEK

Especially after SVBs [Silicon Valley Bank’s] failure, we must hope that it is not beyond the Fed’s grasp to anticipate that there will be many other casualties of its newfound monetary policy religion as high interest rates and a weaker economy increase the incidence of loan defaults.

Desmond Lachman