NEWSLINK, V7N3 In point of fact

Hooray for the home teams!
The Pentagon is gathering information in the field in order to assess how the U.S. won the war in Iraq so quickly. One emerging conclusion from some defense experts is that Massachusetts companies played a central role in giving the United States the technological superiority that defeated Iraq. And in this war, that technological edge went way beyond the Patriot missile. Defense analyst Loren Thomson says American soldiers won the war in Iraq because they had real-time access to the omniscient eyes of American satellites and were able to act immediately on that information. "The Networked Soldier," Fred Thys, April 29, 2003, WBUR-FM. www.wbur.org.

Welfare as we now know it
Eleven months ago, when the local unemployment rate was steadily rising, Shantrese Burkes was defying the trend. A welfare mom with three kids, she landed a $9-an-hour job as a cashier at a cafe attached to a gas station. She didn't stop there. Two promotions later, Burkes, 28, is earning $27,000 a year as the cafe's manager and is eyeing her next step up the ladder. Burkes could be a poster child for the welfare overhaul of 1996, when Congress limited lifetime benefits to five years and encouraged states to require recipients to go to work. At that time, advocates for the poor predicted that the program would end in disaster for those who lost their safety net. When, instead, welfare recipients flocked to jobs during the booming second half of the 1990s, advocates warned of an unraveling when the economy finally turned sour. The economy is now in its third sour year. But to the surprise of many of reform's loudest boosters, onetime welfare recipients have held on to most of their gains in the job market -- even as jobless rates among the general population are rising. Welfare rolls have remained level nationwide, and continued to decline in Chicago and other big cities. "The forecast that somehow a recession was going to dramatically undermine the gains we have seen in five years simply did not happen," said Wade F. Horn, assistant secretary for children and families at the Department of Health and Human Services. "The new welfare program is relatively recession-proof." Elizabeth Shogren, "New Welfare System Seen as 'Recession-Proof", Los Angeles Times, March 24, 2003.

All ZEV'd up and no sales to go

California regulators have decided to continue a controversial clean-car mandate and require automakers to sell 30,000 pollution-free vehicles a year by 2018. Automakers have resisted the California mandate, arguing they wasted billions of dollars developing and leasing limited-range battery electric cars that held little appeal for consumers. Last year, General Motors Corp. and DaimlerChrysler AG won a court injunction barring enforcement of the zero-emissions vehicle (ZEV) mandate. The court case is pending. The latest vote by the state's Air Resources Board ensures the ZEV controversy will continue for now. The auto industry now will be required to sell 250 pollution-free cars between 2005 and 2008, 2,500 clean models between 2009 and 2011, 25,000 between 2012 and 2014, and 50,000 between 2015 and 2017. By 2018, the industry will have to sell 30,000 zero-emissions vehicles a year. Individual company targets will be determined based on market share. In addition, the board set minimum sales targets -- by individual automaker -- for hybrid-electric and other clean technology vehicles. The move comes a month after the board appeared ready to abandon fixed numeric targets for so-called ZEVs in favor of incentives to market hybrids and other clean technologies. In the end, regulators opted to keep fixed numeric targets and deadlines in the hope that they will spur the commercialization of fuel cells and other ultra-clean technologies. The board also gave companies the option of fulfilling the targets adopted in 2001 that currently are tied up in the court challenge. It's going to be difficult because a lot will depend on market acceptance and market demand," Barthmuss said. "Clean cars remain the rule: California board sets new targets for automakers," Jeff Plungis, Detroit News, April 25, 2003.

No login to better learning

Claims that the Internet would revolutionize education and that students attending schools without Internet access would be left behind led to the creation of the E-Rate program in 1996. Operational in 1998, E-Rate provides up to $2.25 billion a year in subsidies to promote affordable Internet Connections for schools and libraries. Subsidy rates range from 20 to 90 percent. Schools with more poor students get higher subsidies. Two researchers from the National Bureau of Economic Research find that increased Internet access was not associated with better student scores on the math, reading, or the science sections of the Standford Achievement Test. The authors caution that it may be too early to see the positive effects from increased Internet acess because surveys show that most teachers are "novice or completely inexperienced" with computers. "The Impact of Internet Subsidies in Public Schools" Austan Goolsbee and Jonathan Guryan, (NBER Working Paper, No 9090), April 2003.

Like a Big Mac: The dollar has flipped! A run on the puns or is it buns?

Invented in 1986 as a light-hearted guide to whether currencies are at their "correct" level, burgernomics is based on the theory of purchasing power parity (PPP). This says that, in the long run, exchange rates should move toward rates that would equalize the prices of an identical basket of goods and services in any two countries. To put it simply: a dollar should buy the same everywhere. Our base is a McDonald’s Big Mac, produced locally to roughly the same recipe in 118 countries. The Big Mac PPP is the exchange rate that would leave burgers costing the same as in America....Many readers complain that burgernomics is hard to swallow.

But as a tool it makes exchange rate theory more digestable. Academic economists are taking burgernomics more seriously, chewing over the Big Mac index in almost a dozen studies. "Economics Focus," "McCurrencies: Hamburgers should be an essential part of every economist’s diet." The Economist, April 26, 2003.

Old Europe's stuck in first gear

The run-up to the Iraq war has exposed some big rifts between the United States and Europe. But the campaign against Saddam Hussein’s regime isn’t the only place where America and its traditional allies, such as France and Germany, seem to be drifting apart. In economic policy, the two sides of the Atlantic are also heading in sharply different directions, and the split is starting to show up in some critical measurements of growth and well-being. According to a new survey by the Conference Board, Europe's policies toward business and labor are inhibiting growth. Incomes and living standards over there are no longer catching up with those in the US, as they did earlier in the postwar period.
"Europe, U.S. may also be divided by a productivity gap," Andrew Cassel, Philadelphia Inquirer, March 31, 2003.