Ending Net Neutrality: Dropping the Bottom Out of Innovation

This is the fourth in a four-part series. See also: part one, part two, and part three.

As discussed in previous blog posts, the potential for internet service providers (ISPs) to throttle speed to content providers (such as Netflix, CNN.com, MN2020.org, etc) that don’t pay a premium is a looming problem. If you’re unconvinced by arguments based on free speech principles and the justice of keeping access to ideas open, perhaps the economics of the end of net neutrality will be convincing.

ISPs are basically the only beneficiaries of net neutrality's discontinuation. Established content providers and start-ups are both in jeopardy from this policy change.

For established organizations, including news organizations, entertainment outlets, and gaming websites, the significant revenue needed to pay ISPs the premium to be “fast-laned” could slow expansion. According to the Institute for Policy Integrity, these new expenses mean “businesses would have less incentive to expand their sites and applications.”

Many start-up companies, regardless of their market, utilize the Internet for at least one of three things: 1) advertisement and brand recognition, 2) feedback and improvement and/or 3) product distribution. During a conference in Maine, Craig Aaron, president and CEO of Free Press, points out that the death of net neutrality “would hurt small start-ups and give cable companies an unfair competitive advantage over content providers that do not own their own delivery infrastructure.”

In 2006, for example, “Twitter” was unknown. But, due to its identical speed with Facebook, users were willing to try it out. Now, in 2014, Twitter is the third most used social network in the history of the Internet.

The economic debate over net neutrality comes down to where internet revenue distribution. ISPs argue it should go into their pockets, due to the physical infrastructure they must build to continue serving their customers. On the other hand, supporters of open speech, start-ups and content providers believe that the money should go to the innovators and providers of content, regardless of their corporate affiliation.

Progressives should stand for free speech, great educational opportunities, and a strong and competitive economy. That means standing up for net neutrality.


For a few additional introductions to the complex issue of Net Neutrality, try PBS Idea Channel’s discussion or The VlogBrothers “Net Neutrality Argument in 3 Minutes,” and, most helpfully, Vi Hart’s comprehensive Net Neutrality Review.

Posted in Economic Development | Related Topics: Economic Growth  Technology 

The Housing-Education Link

Housing policy is education policy, undeniably and inseparably. A new study further supports this idea.

Johns Hopkins researchers followed families using affordable housing and found that families at or below 200 percent of the poverty line who spend either more than half or less than 20 percent of their income on housing tend to observe adverse effects on children’s cognitive ability. The researchers suggest that, within this group, those who spend more than half of their income on housing aren’t able to afford as many additional supports for their children while those who spend less than 20 percent wind up in especially subpar living conditions.

Based on these associations, the researchers suggest that 30 percent is roughly the “sweet spot” for expenditures on housing relative to other goods and services. Unfortunately, nearly nine out of ten renters with particularly low incomes spent more than that at the time of the study.

Creating effective housing policy that provides enough reasonable, affordable housing to meet demand has proven persistently difficult. Despite several different strategies over the years, the results in the U.S. have been largely disappointing.

This isn’t to say that housing policy has no impact. The enduring effects of racist housing policy from the early and mid-20th century continue to haunt our society. It’s creating and sustaining equitable housing that has been the challenge.

The connections between housing situation and cognitive ability have obvious repercussions in education, where the effects of non-school factors have long been known to exert great influence over student performance. This makes sense; when the real life concerns of your home and neighborhood outweigh the perceived importance of school, focusing more energy on home life than on school is rational.

We need to think across many sectors when looking to address equity gaps. Gaps in housing quality, health quality, and income security all affect education, and the resultant education gaps go on to play a role in perpetuating housing, health, and income gaps (although disparities continue to exist between racial groups with the same levels of education). A broad-based equity agenda includes educational equity, but must also include other areas as well. Full-service community schools are one way of partially addressing some of these outside gaps, but we must push for equity in all aspects of our society if we are to achieve it in any one area.

Posted in Economic Development | Related Topics: K-12 education  Racial Inequalities  Poverty 

Go-To Banking, Part 2

Read part one

The expanding list of transportation options makes our multi-modal system stronger. All of these services should be lauded for its efforts. There is one catch, however. Each transportation service requires a debit or credit card as a payment option. For the 16.7 percent of Minnesotans who are unbanked or underbanked, debit and credit cards are out of reach.

The FDIC classifies unbanked as those people lacking any kind of deposit account at an insured depository institution such as a savings or checking account. Underbanked housholds have a bank account but also rely on Alternative Financial Services (AFS) like money orders, non-bank check cashing, payday loans, and prepaid debit cards. Each of these services exacts heavy fees, making these services more expensive than traditional banking.

While 16.7 percent of unbanked or underbanked households is too many people with too few options, it is the lowest percentage in the Upper Midwest (Wisconsin is at 18.7 percent). However, like so many of the great successes in Minnesota, there is a large disparity in who shares in that success. Whereas 14.8 percent of family households (as compared to non-family households) were without full banking services, 36.5 percent of households led by a single female were without full banking services. Of those making under $15,000 a year, 58.5 percent were fully banked. Only 39.5 percent of black households were fully banked, compared to 84.7 percent of white households. This is consistant with national disparities where 41.6 percent of black households are fully banked compared to 77 percent of white households. People across the county are working on different ways to give everyone access to banking options.

Chicago has come up with one solution to help those without banking services while serving its transportation mission. The Chicago Transit Authority (CTA) has switched to a new fare payment system called Ventra. Ventra operates similar to the Twin Cities' Metro Transit Go-To card in that a person can buy long term passes and store funds. Its additional feature makes it different. The Ventra card also functions as a prepaid debit card, usable anywhere debit cards are accepted. This may seem like a large jump but in fact is just a continuation of previous services.

The fare cards preceding Ventra, Chicago Card and Go-To, also stored money for later use. The transit service restricted transactions to their proprietary transportation services but the principle of a financial exchange instrument is the same. Eliminating the payment restriction allows people to save money in their transit account just as they would in a traditional bank account. This change would allow those without banking access to the services traditionally accessed though bank accounts.

The transition in Chicago has been controversial, however. The CTA outsourced fare collection and the prepaid debit card system to the private company Ventra rather than keep it agency managed like the Chicago Card. The outsourcing has led to price increases similar to what was experienced when Chicago sold all city parking meters to investment firms. When Ventra took over fare collection for the CTA, single fare tickets increased from $2.25 to $3.00. The one-day pass jumped from $5.75 to $10, a 74% increase. The prepaid debit card is similarly riddled with high costs and hidden fees. Though it is free to activate, Walletnerd.com estimates using the card will cost $188 per year. This is more expensive than most other prepaid debit cards. This is a good reminder that outsourcing government isn’t better for citizens. It might look cheaper on paper, but only because costs are externalized, especially to those already struggling.

Minnesota can improve on Chicago by implementing the system though the Go-To card. Met Transit would expand the functionality of Go-To cards by letting them act as savings accounts. Public oversight from the Met Council would prevent the price gouging seen in Chicago, giving everyone the opportunity for affordable transactional instruments, creating more options for the unbanked and underbanked.


(Banking data from the FDIC 2011 National Survey of Unbanked and Underbanked Households)

Posted in Economic Development | Related Topics: Public Transportation  Personal Finance  Poverty 

Clouds Hang Over Economic Reports and Forecasts

After a few decades of writing about economic reports, trends and forecasts, I've learned it is far easier to analyze what went wrong after the sky has fallen, not while it is falling. Simultaneously, it has been obvious over time that we should never assume the current situation won't change in the near or distant future.

What's prompting this is the rash of generally good news we keep getting about recovery in the Minnesota and national economies. But hanging over monthly and quarterly statistical reports of improved jobs and economic progress are warnings that global problems will slow the U.S. economy.

Minnesota's econnomy is a microcosm of the national economy. At the same time, Minnesota is more trade dependent and thus more exposed to the global economy than at least half the U.S. states.

Two reports this past week from the International Monetary Fund (IMF) serve as a warning. On July 23, the IMF said the U.S. economy slowed in the first quarter due to severe weather across much of the nation that, among other things, kept consumers away from shopping. A day later, the IMF revised downward its growth projections for the global economy, citing weaker growth in the U.S., Russia and major developing countries.

The IMF still sees growth through the coming year. But not all forecasters do.

Bernard Condon, writing in the UK's Independent newspaper, reported on economic forecaster David Levy's warning that the U.S. will likely fall into recession in 2015.

Levy, whose family started the Levy Forecast newsletter in 1949, pegged the collapse of the housing bubble and warned that it would lead to what we now call the Great Recession. His grandfather had called the 1929 stock market collapse that became the Great Depression.

One of the most troubling parts of Condon's article is the support the Levy forecast got from Eswar Prasad, a Cornell University economist. Prasad warned that the global economy is unsustainably riding on endless U.S. consumer spending. Future global recession recoveries will not be singularly buoyed or mitigated by US consumers.

Problems abroad can thus boomarang back and take down the U.S. economy.

These are valid points deserving our attenton or concern although there is little Minnesota can do about it except ride out the storms these clouds may bring. From our farms to factories to front offices, Minnesota is a trade dependent state. That is mostly good, but it does leave us vulnerable and makes a compelling case for greater economic diversification.

Posted in Economic Development | Related Topics: Economic Growth  International Trade 

Ending Net Neutrality: A Primer

Net neutrality is the concept that Internet Service Providers (ISPs) must treat all service consumer equally, regardless of bandwidth use. Currently, consumers and website creators buy access to the Internet at the same rate regardless of use. But, that could change.

Instead of allowing Minnesota 2020 or online retailing giant Amazon to be accessed at the same speed, the proposed tiered system could deliver Amazon to you at a faster speed than Minnesota 2020, simply because Amazon was able to pay your specific ISP (such as Comcast or Time-Warner Cable) more money for its bits to load faster.

The Federal Communications Commission (FCC) is proposing a rule to “protect and promote the Internet as an open platform enabling consumer choice, freedom of expression, end-user control, competition, and the freedom to innovate without permission, and thereby to encourage the deployment of advanced telecommunications capability and remove barriers to infrastructure investment.” The FCC has extended a public comment period on the issue of classifying ISPs as common carriers, so anyone (including you) can leave a comment on their website.

ISPs dislike this rule, because it treats them as common carriers. Common carriers (including buses, trains and cargo ships) cannot refuse or limit service to any user, since the service they provide can be accessed simply for a fee.

Classifying ISPs as common carriers is in the public’s interest because it ensures that anti-trust laws against monopolies are enforced and that the Internet maintains its status as a level playing field. Without this classification, ISPs could refuse to build high speed internet infrastructure in rural areas because they will not be turning an acceptable profit.

To put it simply, net neutrality is one of the most important undiscussed public policy issues. In subsequent posts, I will explain the specific implications that the loss of net neutrality could have in many different sectors that impact Minnesotans’ daily lives. There's much to think about it.

Read part two: Leaving K-12 Behind
Read part three: Greater Higher Ed Costs

Posted in Economic Development | Related Topics: Communication  Technology 

Good Jobs, Bad Jobs Reports for Clearwater County, Rural Minnesota

The Minnesota county with the highest unemployment rate in June also saw the greatest month-to-month improvement among Minnesota's 87 counties.

Clearwater County, in northwest Minnesota, had a full one percent drop in the official unemployment rate from May with unemployment falling to 9.5 percent in June from 10.5 percent in May and and from a painfully high 14 percent as recent as April.

The Minnesota Department of Employment and Economic Development (DEED) released June unemployment data for counties on Tuesday, July 22. Statewide, Minnesota is among the Top Ten states for low unemployment, at 4.5 percent, but the extremes of both high and low unemployment continue to be localized in counties far from the Twin Cities metro area.

Tom Burford, manager of the Farmers Publishing Co. community cooperative and editor of its Farmers Independent newspaper at Bagley, said he suspects the statistical improvement in the county unemployment rate reflects a return to more "normal" employment in June. "We really had awful spring weather," he said.

A few firms, such as component parts engineering and manufacturing company Team Industries at Bagley, have added jobs, he said. At the same time, no new factories or new businesses have opened in the county and started hiring in June.

Clay County is the Minnesota side of the Fargo-Moorhead metro area. It had the lowest unemployment rates in June at 2.8 percent. Stevens County, which had a statewide low of 2.6 percent unemployment rate in May, had its June rate bump to 3.0 percent.

The Canadian border county of Koochiching, meanwhile, saw June unemployment increase a tick to 9.2 percent, from 9.1percent in May, to join Clearwater County on the high end of the unemployment list.

Except for Clay, statistical measures of employment and unemployment are influenced by thin numbers in demographic information in several rural counties. Clearwater County, with five incorporated cities that are all small towns, had only 8,695 residents in the 2010 Census. County seat Bagley, the county's largest city, had a population of 1,392.

As Burford noted, it doesn't take a huge number of jobs gained or lost to impact the unemployment rate in densely populated counties. Going forward, however, it will take jobs creation and higher paying jobs to lift people out of poverty and get unemployed people back into the jobs market.

Posted in Economic Development | Related Topics: Job Growth  Unemployment  Rural Minnesota 

Community Collaboration Helps Shape Policy

Public policy shapes and regulates our country, states, and municipalities but it can also strengthen and empower communities. Unfortunately, policy is too often created without enough (or any) input from those it affects. To change this typical top-down implementation framework, communities must organize their members to help fight for policies that they, collectively, are passionate about and will benefit from.

The Twin Cities Labor Chorus at the East Side Freedom Library

Minnesota is home to many unique communities—towns, neighborhoods, cultural communities, and others—that each face their own obstacles when trying to bring people together. Some communities experience large variation in ages, ethnicities, countries of origin, and languages, and these differences should be celebrated. While such celebration doesn’t always come easily, one way to help connect people is by sharing personal narratives, which help people empathize and create movements that win the policies that can help all different members.

My recent tour of the East Side Freedom Library opened my eyes to the necessity of community ties and collaboration. Formerly the community's St Paul branch library, one of three historic Carnegie libraries, it has been reinvented as a community space where members of the community can share their stories and research the area’s rich history. Peter Rachleff, the president and project visionary, shared with me his ideas of the many ways (plays, paintings, sculpture, readings, etc) people could tell their stories.

This combination of storytelling and historical research helps neighbors connect with and understand those around them, despite any barriers. These established connections can lead to further discussions and understanding, helping a group of people come together because of their differences to help change things for the better.

This type of hyper-localized community building is just one of many examples around the state. Others include: community centers run by local parks and rec boards and resident volunteers, schools that directly involve parents in their children’s education, and community gardens.

Too often people become disconnected from their neighbors, their town, or their city, and what they need is a connecting force or institution to bring them together. Public policy that builds these connections creates a feedback loop, empowering people to take control and shape future policies that affect their communities. We should expect more public policy to make stronger and more supportive communities where hopefully all people, no matter their differences, will benefit and thrive.

Posted in Economic Development | Related Topics: Libraries  Progressive Community 

Climate Change as an Economic Threat

Last Thursday, Governor Dayton charged Minnesota to eliminate coal from the state’s energy production. This aspiration is not only rooted in environmental concern; climate change poses a serious economic threat to the state. Reducing greenhouse gas emissions is the smartest business strategy to lessen the risk.

The Midwest faces a daunting financial future if we do not shrink our carbon footprint. According to a June report by The Risky Business Project, midwest agriculture is especially vulnerable. If no progress is made to slow rising temperatures, the entire region could face a decline of up to 63% in its crop yield by the end of the century.

Farmers can accommodate climate change with strategies like double-and-triple cropping, crop rotation, and seed modification but these adaptations come at a high price. Shifting new crops requires expensive new equipment and expertise which often impose economic losses.

Climate change could move agricultural business away from the Midwest to the Upper Great Plains, Northwest, and Canada. “This shift could put individual Midwest farmers and farm communities at risk if production moves to cooler climates,” the report warns.

As greenhouse gases accumulate, heat and humidity threaten Minnesota’s public health and economy. When temperatures of 95 degrees Fahrenheit or higher pair with high humidity, the danger of heat stroke and death increases. Research shows that from 2020 to 2039, Minnesota could see between 3 to 7 days every year with such dangerous temperatures and humidity levels.

With hotter conditions, labor productivity for outdoor workers will plummet. Demand for electricity to fuel air conditioning will increase, and costs for residential and commercial consumers will skyrocket.

By understanding the economic consequences of climate change, businesses and governments can integrate climate-related risks into their decisions on capital expenditures and infrastructure projects.

Governor Dayton’s action against unsustainable energy portrays the sentiment that must be adopted by all policymakers and business owners in order to mitigate climate change. Our economy depends on it.

Posted in Economic Development | Related Topics: Agriculture  Economic Growth  Climate Change 

Decline in Hunting Permits Shows Shifting Leisure Trends

The romantic image of the hunter in Minnesota’s popular culture will continue to hold substantial weight with many Minnesotans. However, this image is becoming increasingly inaccurate. From our history as a leader in the fur trapping industry during the 18th and 19th centuries to annual expeditions for the November deer hunting season opener, Minnesotan’s relationship with hunting can be described as quixotic at best. We're not hunting nearly as much as we thought we were.

In the 12 years of data available from the Minnesota Department of Natural Resources there has been a marked stagnation in hunting and fishing licenses. The hunting license numbers remain at 2000 levels, despite state population growth, but with one significant difference. In 2000, only 400,000 hunting licenses were sold within the two weeks prior to the Deer Opener, whereas in 2011, nearly 550,000 of all licenses sold were.

This 5% increase in late licensure is indicative of the fact that fewer hunters are buying either life-time permits or permits for the entire season. That's a not insignificant pattern shift.

Licensed lifetime hunters and trappers number around 600,000 in Minnesota which only makes up 24% of the total licenses in a given year. These two data points suggest that deer hunting as a leisure activity, frequently indentified as male-dominated and time-consuming, is declining in popularity.

There are many factors contributing to this decline, including more women than ever in the workplace and the increased shared responsibility of parenting by both men and women in families. What these factors point to is, in fact, a shift in the general culture around hunting in Minnesota. Non-family, time-consuming activities seem to be experiencing declining participation.

Hunting is an increasingly time luxurious activity. Many people do not have the time or drive to spend multiple weekends a month apart from their families. But, hunting isn't the only leisure activity affected by work-life changes. Golf's popularity has been waning for the same basic reasons.

But what does declining hunting interest mean for Minnesota? It means that we are evolving and changing as a state. Leisure and recreational activities remain important but particular expressions won't remain constant. Lost licensing revenue and declining interest in hunting can and should prompt policy priority reflection. Growing demand must be accomodated just as decline must be recognized. Hunting isn't going away but it doesn't command the same attention that it once did. That's normal. Minnesota's policy planning response should be normal as well.

Posted in Economic Development

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The Power of the Digital Economy

Minnesota’s economy has the potential to be more efficient, accessible, and resilient, thanks to our head start in implementing new technology statewide.

Minnesota ranks second place in the U.S. digital economy score, according to The 2014 State New Economy Index. As employees, civilians, and voters, it is vital for Minnesotans to understand the value of a successful digital economy so the state can expedite more improvements.

The Information Technology and Innovation Foundation (ITIF) measured four aspects of the digital economy. The first weighs the usage of digital technologies in state government. Technological adaption fosters government productivity with resources like cloud computing, data analytics, kiosks, and mobile apps.

Governments that lack digital accommodations often struggle with administrative obstacles that frustrate and alienate the public. E-government enhances civilian accessibility to legal services with quick, easy methods for tasks like paying fees and taxes, renewing licenses, and submitting requests or complaints.

The report shares that state governments should aim for “breaking down bureaucratic barriers to create functionally oriented, citizen-centered government Web presences designed to give citizens a self-service government.”

By shrinking wait time and allowing citizens to deal with legal matters from their laptops or smart phones, digital innovation breeds more active interaction with government. This relationship leads to better representation of diverse populations and their needs, in addition to a stronger sense of trust, responsibility, and cooperation between the people and their leaders.

Online agriculture is another component of a digital economy. Farmers who use the Internet and computers for business consistently outperform those who do not.

The third factor in Minnesota’s top-rated digital economy is its widespread broadband adoption. Broadband access allows e-commerce to flourish, and it enables distance education, data transmission, community dialogue, and business communication.

Minnesota especially excels in the study’s healthcare IT ranking, which calculates the share of electronic prescriptions and health records. In 2011, Minnesota was the first state to enact a mandate encouraging e-prescriptions. 

Digitalized prescriptions and records cut costs and improve efficiency, but the future of health IT could also lead to video conferences with doctors, better access to specialists, and remote diagnoses if we continue to prioritize technological improvements in healthcare.

Minnesota must enhance financial incentives for innovation, support higher education, and strengthen entrepreneurial support to maintain the state’s progressive, accessible use of technology in business and government.

As a national leader in the digital economy, Minnesota is already strides ahead. But as our surroundings keep evolving, so must our efforts for further advancements.

Posted in Economic Development | Related Topics: Business Growth  Technology 

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