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The private pension system, together with Social Security, has provided millions of Americans with income security in retirement. But over the past thirty years, pension coverage has stagnated, leaving behind some vulnerable groups. Defined contribution plans have exposed workers to greater investment risk, while cash balance and other hybrid plans may have adverse effects on older workers caught in the transition. Pension regulations, infamous for their complexity, can be bewildering to policy analysts and policymakers. Private Pensions and Public Policies sheds timely and much-needed light on specific issues within the broader context and framework of pension reform. Contributors focus on topics that must be addressed in any reform effort, including the effects of the shift in emphasis toward defined contribution plans (after the 1974 Employee Retirement Income and Security Act) and hybrid plans (from the 1990s); regulatory issues such as nondiscrimination rules and contribution limits; how to increase the information available to participants and improve financial education; how participants in defined contribution plans make choices on questions such as asset allocation, back-loaded versus front-loaded saving, and annuities versus lump sum distributions; and the interaction of the private pension system with Social Security. Contributors include Robert L. Clark (North Carolina State University), Sylvester J. Schieber (Watson Wyatt Worldwide), Richard A. Ippolito (George Mason University School of Law), Alan L. Gustman (Dartmouth College), Thomas L. Steinmeier (Texas Tech University), John Karl Scholz (University of Wisconsin), Dean M. Maki, (JPMorgan Chase), William Even (Miami University of Ohio), Jagadeesh Gokhale (American Enterprise Institute), Laurence J. Kotlikoff (Boston University), Mark J. Warshawsky (TIAA-CREF Institute), Annika Sunden (Boston College), Andrew A. Samwick (Dartmouth College), David A. Wise (Harvard University), Joel Dickson (The Vanguard Group), Peter Merrill (PriceWaterhouseCoopers), Kent Smetters (Wharton School), Yuewu Xu (TIAA-CREF Institute), Janemarie Mulvey (Watson Wyatt Worldwide), Peter Orszag (Sebago Associates, Inc.), James M. Poterba (Massachusetts Institute of Technology), John B. Shoven (Stanford University), Clemens Sialm (University of Michigan), Leslie E. Papke (Michigan State University), Jeffrey R. Brown (Harvard University), and Michael Hurd (RAND Corporation).
The U.S. Perspective
Are liability "crises" an inevitable part of the modern industrial landscape? Does the inherent nature of the insurance industry promote recurring liability crises? What have been the effects of the liability reforms of the 1990s? Should lawyers be given de facto regulatory authority? This report provides perspective on these and other key issues concerning the law and economics of products liability. The authors begins with a brief description of the evolution of products liability doctrine in the U.S., up to the point of the liability crisis of the late 1980s. They discuss the economic implications of product risk for both consumers and producers, offer economic hypothesis on the implications of the increased scope of liability and subsequent reforms, and provide an update of trends in litigation and liability law. The book ends with a discussion of pending legislation and prospects for further improvements. Moore and Viscusi make the point that effective liability policy calls for a balancing of the incentives for improved public safety on one hand, and the benefits of new and existing products on the other.
New Perspectives on Government Performance
The U.S. Constitution calls on the government to "promote the general welfare." In this provocative and innovative book, a distinguished roster of political scientists and economists evaluates its ability to carry out this task. The first section of the book analyzes government performance in the areas of health, transportation, housing, and education, suggesting why suboptimal policies often prevail. The second set of chapters examines two novel and sometimes controversial tools that can be used to improve policy design: information markets and laboratory experiments. Finally, the third part of the book asks how three key institutions Congress, the party system, and federalism affect government's ability to solve important social problems. These chapters also raise the disturbing possibility that recent political developments have contributed to a decline in governmental problem-solving activity. Taken together, the essays in this volume suggest that opportunities to promote the common good are frequently missed in modern American government. But the book also carries a more hopeful message. By identifying possible solutions to the problems created by weak incentives, poor information, and inadequate institutional capacity, Promoting the General Welfare shows how government performance can be improved. Contributors include Eugene Bardach (University of California-Berkeley), Sarah Binder (Brookings Institution and George Washington University), Morris P. Fiorina (Stanford University), Jay P. Greene (University of Arkansas), Robin Hanson (George Mason University), Charles A. Holt (University of Virginia), David R. Mayhew (Yale University), Edgar O. Olsen (University of Virginia), Mark Carl Rom (Georgetown University), Roberta Romano (Yale Law School), William M. Shobe (University of Virginia), Angela M. Smith (University of Virginia), Aidan R. Vining (Simon Fraser University), David L. Weimer (University of Wisconsin-Madison), and Clifford Winston (Brookings Institution).
One Year On
A good deal has been done to improve the safety of Americans on their own soil since the attacks of September 11, 2001. Yet there have been numerous setbacks. The Bush administration and Congress wasted at least six months in 2002 due to partisan disagreement over a new budget for homeland security, and as one consequence, resources were slow to reach first responders across the country. Most improvements in homeland security have focused on “refighting the last war”—improving defenses against attacks similar to those the country has already suffered. Not enough has been done to anticipate possible new kinds of terrorist actions. Policymakers have also focused too much attention on the creation of a department of homeland security—rather than identifying and addressing the kinds of threats to which the country remains vulnerable. While the creation of a cabinet-level agency focusing on homeland security may have merit, the authors of this study argue that the department will not, in and of itself, make Americans safer. To the contrary, the complexity of merging so many disparate agencies threatens to distract Congress and the administration from other, more urgent security efforts. This second edition of Protecting the American Homeland urges policymakers to focus on filling key gaps that remain in the current homeland security effort: identifying better protection for private infrastructure; using information technology to share intelligence and more effectively “connect the dots” that could hold hints to possible terrorist tactics; expanding the capacities of the Coast Guard and Customs Service, as well as airline transportation security; dealing with the possible threat of surface-to-air missiles to airliners; and encouraging better coordination among intelligence agencies. While acknowledging the impossibility of preventing every possible type of terrorist violence, the authors recommend a more systematic approach to homeland security that focuses on preventing attacks that can cause large numbers of casualties, massive economic or societal disruption, or severe political harm to the nation.
Securitization After the Mortgage Meltdown
There is little dispute that the mortgage meltdown of 2007, created by irresponsible lending and lax oversight, helped lead to the global financial crisis. Why were these securities backed by subprime debt so desirable to so many seemingly sophisticated investors? The answer lies in distorted incentives, opaque securitization structures and a willingness to believe that house prices would continue to rise indefinitely and the hope for super-normal returns. In Prudent Lending Restored experts from the United States, Europe, and Japan draw a timeline of key events along the road to our most recent recession. Providing an in-depth analysis of the causes of the subprime mortgage meltdown, they propose reforms, including a more simplified securitization process with emphasis on oversight to encourage more prudent lending. This timely volume the collaboration between the Brookings Institution and the Nomura Institute of Capital Markets Research argues that securitization can and should have a brighter future, and they lay out ways that will make that possible.
Contributors: Jennifer E. Bethel (Babson College), Robert E. Eisenbeis (Federal Reserve Bank of Atlanta), Allen Ferrell (Havard Law School), Günter Franke (Konstanz University, Germany), Jack Guttentag (University of Pennsylvania), Gang Hu (Babson College), Tetsuya Kamiyama (Nomura Institute of Capital Markets Research, Tokyo), Kei Kodachi (NICMR), Jan P. Krahnen (Goethe University Frankfurt, Germany), Joseph R. Mason (Louisiana State University), Igor Roitburg (Default Mitigation Management LLC), and Eiichi Sekine (NICMR).
The rejuvenation of Europe as a totalitarian century ends and a global century begins is a remarkable story. This book brings together the three dynamics of Europe's position at this extraordinary moment: European monetary union, the deepening of intra-EU cooperation, and the widening of the EU and NATO to take in central European members. It looks at the broad political and policy implications of EMU and shows how the United States views this integration. Elizabeth Pond, a longtime observer of events in Europe and Russia, sees these developments as the beginning of a new postnational European system that is replacing the centuries-old nation-state system. She shows how belligerence and anarchy have faded away on the European continent as compulsory cold war cooperation becomes a habit and as French-German reconciliation becomes the pattern for reconciliation between other old enemies. She follows NATO's transformation into a reluctant peacemaker in Bosnia and the United States' decision to remain a European power. She describes the leap of faith needed to create European monetary union and charts the magnetic attraction of both NATO and the EU in shaping the democratic, economic, and social revolutions in central Europe. She warns about the strains that will face the transatlantic relationship when the euro is on a par with the dollar as a reserve currency. And she concludes by agreeing with former Polish foreign minister Wladyslaw Barteszewski that we are witnessing, after the original birth of European consciousness a millennium ago, the rebirth of Europe.
How Losses and Layoffs Affect Older Workers
The economic downturn that began in 2008, the most severe in decades, has hit older Americans hard. Many have seen huge losses to their 401(k)s. In numerous cases the value of homes the largest investment most older Americans have ever made has diminished considerably. In addition, large numbers of American workers, including those 50 and older, have lost their jobs and may have difficulty replacing them. Suddenly the future seems a whole lot less certain, throwing years of planning into doubt. In Reconsidering Retirement, economists Courtney Coile and Phillip Levine go beyond the headlines to explain how the economic crisis will affect the future plans and well-being of older Americans.
Amid well-publicized reports that older workers needed to stay on the job because of the crisis, the number of U.S. workers claiming Social Security retirement benefits actually rose substantially from 2008 to 2009. The authors maintain that job loss has been the culprit, leading to premature retirement, and while this trend may have been less noticed, it is perhaps the more significant outcome of the crisis.
Coile and Levine examine the three major characteristics of the recession thought to influence retirement behavior: decline in the stock market, reduced housing values, and a weak labor market. The authors find that lower home prices did not actually affect retirement behavior but that the decline in the stock market did lead some workers to delay retirement, while a weakened labor market actually forced more older workers with fewer skills into retirement. As a result, these early retirees, who rely on Social Security, face a lifetime of lower benefits.
"Workers affected by weak labor markets are more numerous than those affected
by poor stock market returns, are more likely to have low socioeconomic status,
and have a more substantially reduced income for the rest of their lives."
From the introduction
"Public discussion has focused on the effects of the stock market crash and has
failed to recognize that most of the workers who are affected by stock losses
come from the upper tail of the income distribution. Similarly, falling house
prices have received considerable attention although they have had little impact
on workers' retirement decisions. The most pressing problem older workers currently
face is the labor market, which has received little attention."
From chapter 8
The legacy of recessions is that those most in need usually are last to reap the benefits of an economic recovery. While the lion's share of media coverage after the economic downturn of 200809 has gone to the plight of older workers who remain employed, Courtney Coile and Phillip Levine examine the effects of the economic crisis on all workers approaching retirement age. Some of their findings are counterintuitive and will surprise many analysts and readers.
In particular, they shine a light on lesser-skilled workers forced into early retirement a number estimated at 378,000 workers. These workers will be forced into early involuntary retirement, drawing from Social Security sooner and receiving lower retirement income.
This important book provides a complete picture of older workers today, how they will transition into retirement, and what we can do to assist them as the recession persists.
How to Achieve Better Transparency, Service, and Leadership
Many countries are still struggling to adapt to the broad and unexpected effects of modernization initiatives. As changes take shape, governments are challenged to explore new reforms. The public sector is now characterized by profound transformation across the globe, with ramifications that are yet to be interpreted. To convert this transformation into an ongoing state of improvement, policymakers and civil service leaders must learn to implement and evaluate change. This book is an important contribution to that end.
Reforming the Public Sector presents comparative perspectives of government reform and innovation, discussing three decades of reform in public sector strategic management across nations. The contributors examine specific reform-related issues including the uses and abuses of public sector transparency, the "Audit Explosion," and the relationship between public service motivation and job satisfaction in Europe.
This volume will greatly aid practitioners and policymakers to better understand the principles underpinning ongoing reforms in the public sector. Giovanni Tria, Giovanni Valotti, and their cohorts offer a scientific understanding of the main issues at stake in this arduous process. They place the approach to public administration reform in a broad international context and identify a road map for public management.
Contributors include: Michael Barzelay, Nicola Bellé, Andrea Bonomi Savignon, Geert Bouckaert, Luca Brusati, Paola Cantarelli, Denita Cepiku, Francesco Cerase, Luigi Corvo, Maria Cucciniello, Isabell Egger-Peitler, Paolo Fedele, Gerhard Hammerschmid, Mario Ianniello, Elaine Ciulla Kamarck, Irvine Lapsley, Peter Leisink, Mariannunziata Liguori, Renate Meyer, Greta Nasi, James L. Perry, Christopher Pollitt, Adrian Ritz, Raffaella Saporito, MariaFrancesca Sicilia, Ileana Steccolini, Bram Steijn, Wouter Vandenabeele, and Montgomery Van Wart.
Using the experience of postwar Western Europe as a benchmark, José Antonio Ocampo and his colleagues assess how regional financial institutions can help developing countries—often at a disadvantage within the global financial framework— finance their investment needs, counteract the volatility of private capital flows, and make their voices heard. The 1997 Asian financial crisis generated extensive debate on the international financial architecture. Through this discussion, it became clear that services by financial institutions— including adequate mechanisms for preventing and managing financial crises, and instruments for safeguarding global macroeconomic and financial stability—are undersupplied. Furthermore, private international capital markets provide finance to developing countries in a way that effectively reduces the ability of those nations to undertake countercyclical macroeconomic policies. International capital markets ration out many developing countries, particularly the poorest, from private global capital markets. While these deficiencies in the financial architecture are clear, the post-1997 debate has done little to evaluate the role that regional institutions could play in improving global financial arrangements. Regional Financial Cooperation aims to fill that important gap. Contributors include Ernest Aryeetey (Institute of Statistical, Social and Economic Research, University of Ghana), Georges Corm (Saint Joseph University, Beirut), Roy Culpeper (North-South Institute, Ottawa), Ana Teresa Fuzzo de Lima (Institute of Development Studies, University of Sussex), Stephany Griffith-Jones (Institute of Development Studies, University of Sussex), Julia Leung (Hong Kong Monetary Authority), José Luis Machinea (ECLAC), Jae Ha Park (Korean Institute of Finance),Yung Chul Park (Korea University), Fernando Prada (FORO Nactional/International, Lima), Guillermo Rozenwurcel (School of Politics and Government, University of San Martin, Argentina), Francisco Sagasti (FORO Nacional/Internacional, Programa Agenda: Peru), Kanit Sangsubhan (Fiscal Policy Research Institute of Thailand), Alfred Steinherr (European Investment Bank, Luxembourg and University of Bozen-Bolzano), Daniel Titelman (ECLAC), and Charles Wyplosz (Graduate Institute of International Studies, Geneva, and Center for Economic Policy Research).
The Promise of North American Integration
The North American Free Trade Agreement (NAFTA) was launched amid great hopes and controversy in 1994. More than a dozen years later, progress toward economic integration has stalled. Mexico's economy remains far behind those of Canada and the United States, and such pressing issues as energy security remain unaddressed. In Requiem or Revival? scholars and policymakers from all three nations dissect NAFTA's failure to fulfill its early promise and evaluate the prospects for further integration. The authors explore the interaction between regionalism and multilateralism, the impact of the "new trade" agenda, and NAFTA's unresolved problems migration, security, and energy. Recognizing the limits of the NAFTA framework, they examine its relationship to the Free Trade Agreement of the Americas negotiations and the Doha Development Round, and they discuss various ways in which NAFTA could be revamped or improved. The result is an intriguing volume offering important insights on the future of economic integration in North America and beyond. Contributors include Chantal Blouin (North-South Institute), Theodore H. Cohn (Simon Fraser University, emeritus), I. M. Destler (University of Maryland), Charles F. Doran (Johns Hopkins UniversitySAIS), Christina Gabriel (Carleton University), Sergio Gómez Lora (IQOM, Inteligencia Comercial), Jerry Haar (Florida International University), Laura Macdonald (Carleton University), Gordon Mace (Université Laval), Isidro Morales (University of the Americas), Glauco Oliveira (University of Southern California), Antonio Ortiz Mena (CIDE), Jeffrey J. Schott (Peterson Institute for International Economics),Anne Weston (North-South Institute),Tamara Woroby (Towson University, Johns Hopkins UniversitySAIS), and Jaime Zabludovsky (Soluciones Estratégicas).