When it Comes to EXIM, SOEs Could Cost China

By Alex Benedict

The reauthorization of the U.S. import-export bank could be critical to U.S. companies who  in the wake of the trade war with China.

A recent piece of legislation sponsored by the House Financial Services committee Chairwoman, Rep. Maxine Waters (CA-43), and cosponsored by Vice Chairman Rep. Patrick McHenry (NC-10), would restrict certain transactions with Chinese state-owned enterprises (SOEs). This bill, H.R. 3407, the United States Export Finance Agency Act of 2019, would reauthorize‒or allow the continued subsidization of American exports. The Export-Import Bank of the United States (EXIM), which currently subsidizes the foreign transactions, could potentially be affected by the current state of the bill, which restricts EXIM’s ability to interact with Chinese SOEs. EXIM is the official export credit agency of the U.S. federal government and operates as a wholly owned federal government corporation that helps assist in financing and facilitating the export of U.S. goods and services.

While Republicans are generally more against EXIM than Democrats, the reauthorization of the bill is a bipartisan issue, with members of both parties on both sides of the debate. Many representatives are against EXIM to begin with, arguing that the Bank’s ability to subsidize foreign purchases of American-made products‒but not subsidizing American purchases of American-made products‒is harmful to American businesses.

This debate is particularly salient when it comes to China, whose SOEs have historically utilized EXIM subsidies. Given the recent economic and political tensions between the U.S. and China, reauthorization of EXIM‒with new specific restrictions in regard to China‒will face an uphill battle in Congress.

The Rise of Non-State-Owned Enterprises (NSEs) in Modern-Day China

The role of state-owned enterprises (SOEs) in the Chinese economy has changed substantially in the past forty years. SOEs had previously been at the core of Chinese economic reform, but recently have been surrounded by rapid and widespread privatization of enterprises throughout China as a result of the growing demand for global, and private, economic presence (Song 345). However, since the global financial crisis of 2007-2008, the majority of Chinese SOEs are not completely state-owned, but rather state-controlled shareholding corporations––corporations in which the state has majority stake, but there are privately owned shares––or fully privately owned corporations. This shift to privatization, which allows China to remain competitive in the ever-changing global economy, has been the main driver of China’s economic growth.

A research paper published by the National Bureau of Economic Research emphasizes the importance of distinguishing between non-state-owned entities (NSEs) that were previously SOEs, and those that were not. Former SOEs “enjoy lower interest rates, larger loan facilities, and more subsidies while suffering poorer performance than never-SOEs” (Harrison 4). In other words, former SOEs do not do as well as private enterprises who have no history of state-ownership, regardless of the state resources that were used for their upkeep.

Current and former SOEs still play an important role in the country’s heavy industries‒(oil, metals, and chemicals). NSEs have become more prevalent because of their flexibility in responding to market demands, something that classic and former SOEs have difficulty doing. This could be a result of how SOEs had been propped up by the Chinese government, allowing for extensive corruption and little efficiency when SOEs enter a global market that demands efficiency. As a result, in 2015, NSEs were responsible for upward of 70 percent of Chinese GDP, 78 percent of total employment, and over 70 percent of investment in research and development (“State-Owned Enterprises” 3).

As the Chinese government is encouraged to open its markets, the opportunity for expansion of these NSEs increases. SOEs have retreated from labor-focused industries, and now focus heavily on industries that are more crucial to the state itself (national security, business competitiveness). This shift of SOE focus and expansion of NSE territory is important for a number of reasons, primarily in terms of bolstering overall economic growth. Yet there’s pushback from the Chinese government, who sees itself as the sole controller of industries it deems of strategic importance‒ like electric and coal, aerospace, and military‒because a firm grip of these industries maintains a firm grip on the political economy of China as a whole. However NSEs have the potential to take over industries the state considers less critical.

How “Private” Are NSEs? True Levels of State-Ownership in NSEs

The decentralization of the economy gave rise to NSEs, which are primarily industrial collectives, principally township/village enterprises (TVEs)––market-oriented public enterprises under the purview of local governments based in townships and villages in China––and foreign-funded firms that satisfying labor-intensive industries like construction and retail (Song 349). There are still state-induced barriers preventing NSEs from entering critical sectors like petroleum and telecommunications, as well as other various industrial sectors. These barriers limit NSEs to industries the state does not monopolize. In addition to sector hurdles, NSEs still often face monetary barriers in competing with SOEs; government banks give preferential treatment to SOEs, making up an estimated 85% of all bank loans given out in 2009. SOEs oftentimes do not repay their loans, negatively affecting the economy that NSEs were initially permitted to help repair (“China’s Economic Rise” 27). As a result, SOEs contribute much more heavily to Chinese debt than do NSEs.

As NSEs began to enter the Chinese economy in the 1980s, they relied heavily on local governments to avoid interference from the federal government. This relationship proved symbiotic, with local bureaucrats, entrepreneurs, and natives benefitting jointly with the success of the NSEs. The majority of NSEs still maintain close working relationships with the state, but there has been a movement in recent years to separate the two. Regardless of company ties to the Chinese state, which comes with inherent political and personal advantages, increasing competition from the private sector has made it more difficult for state companies to function more efficiently than those that are privately-owned. However, SOEs and NSEs alike can find success internationally.

Enterprises in China can be categorized in three ways: 1) private enterprises, or NSEs; 2) SOEs; or 3) mixed enterprises with the state as the minority shareholder. In China, the effectiveness of complete privatization is unlikely, and the government often turns to a process of faux-corporatization to retain greater control of the economy. Mixed enterprises still have some state control, but the government holds far less than the majority of the firm’s shares and has no legal rights in regard to firm operations; however, mixed enterprises have the ability to promote government reforms in the corporate sector, as government interests can more readily align with private investors (Pargendler 2691-2).

Overall, a 2006 study conducted by the McKinsey Global Institute concluded that enterprises with majority-state ownership are 46 percent more productive than SOEs with no private ownership, and enterprises with minority-state ownership are 70 percent more productive (“Putting China’s Capital To Work”). Evident from the drop in percentage share of profits and much lower return on assets, the following graphic illustrates the ineffectiveness of SOEs as compared to private companies. The numbers are telling of the impact that maintaining control of these enterprises will have on productivity in the Chinese domestic and international economies.

Source: The Economist

EXIM and H.R. 3407

H.R. 3407 is part of a trade war perpetuated by the Trump administration’s own concern regarding Chinese economic strength and tries to address the struggles that the WTO has with economic regulation of Chinese enterprise. In a report on the U.S.-China Economic Relationship, the Brookings Institute writes that “state control over public and private businesses makes it difficult to distinguish between what is a public body and what is private, thereby making unclear whether…there is a rule or regulation issued by a public entity that is subject to WTO rules” (Meltzer).

The way to remedy the trade war is not to impose greater restrictions on business with Chinese SOEs, but to enact WTO guidelines. China is notorious for disregarding WTO rules, and the WTO is unequipped to reprimand China for its noncompliance. The trade war is already detrimental to American workers, especially farmers and manufacturers, whom the tariffs imposed by China affect most.

The reauthorization bill stipulates that any transaction that EXIM finances over $25 million relating to a Chinese SOE cannot be used to “provide material or financial support to the following policies and operations of China: 1) military or intelligence; 2) ‘One Belt, One Road’ initiative, a program started by Chinese President Xi Jinping. The initiative is to create “a vast network of railways, energy pipelines, highways, and streamlined border crossings” westward, southward, and throughout the rest of Asia, subsequently increasing the use of Chinese currency, the renminbi; 3) abuse of human rights, including freedom of speech” (FSC Majority Staff) [Chatzky]. Additionally, any SOE-related transactions greater than $25 million require the consultation of an appropriate federal agency, as well as a US Trade Representative’s certification within 60 days. H.R. 3407 will reauthorize EXIM if passed, but has a way to go before that happens.

While the presence of NSEs in China is increasing, the Chinese Communist Party (CCP) still retains control of China’s economy, hurting China if this bill is passed. But the passage of the bill with such heavy restrictions will also have severe implications on U.S. companies and businesses, many of which benefit from trading with China and its SOEs.

A Bipartisan Bill

The bill is contentious with Republicans and Democrats alike, many of whom have their qualms with the bank. Representatives on both sides of the aisle are worried about its impact on U.S. companies who do business with China. They see certain U.S. trade, especially that H.R. 3407 restricts with Chinese SOEs, as of economic importance and not detrimental U.S. foreign policy. Many business deals between U.S. companies and Chinese SOEs are thought to be simply transactional and not related at all to foreign policy.

While opposition is a bipartisan front, there is a core group of fiscal conservatives who vehemently oppose EXIM. They oppose because of instances like the following: American company Boeing was able to sell their jets to AirIndia through EXIM subsidies, even though AirIndia is in direct competition for trade routes with American airline Delta. EXIM’s role allowed for AirIndia to offer lower fares for certain flights, beating out Delta and hurting American enterprise.

Just as opposition to EXIM is a bipartisan issue, so is its reauthorization without restriction. Members who represent districts with high levels of manufacturing or those that contain large American corporations (i.e. Boeing) will be more invested in the bank’s reauthorization without restriction since it is in the best interest of their district (and reelection).

While there are a multitude of problems with EXIM–especially that of promoting corporate welfare at the expense of the American people–shutting down EXIM likely will only further hurt U.S. companies. There are over 100 export credit agencies globally today, all of which will remain intact if EXIM is not reauthorized, putting foreign countries and companies at an inherent advantage over U.S. companies.

With the reauthorization of EXIM and the ongoing trade war, tensions are running high. The implications of H.R. 3407 on American businesses are real, but so are concerns of American business contributing to Chinese state-owned enterprises. While it may be true that China is a threat to U.S. global hegemony, restricting American enterprise, especially when other foreign EXIM-like banks go unaffected, is not the way to tackle this economic threat.

Works Cited:

Image: https://www.gtreview.com/news/global/expert-analysis-how-trading-companies-can-circumvent-protectionist-policies/

Chatzky, Andrew et. al. “China’s Massive Belt and Road Initiative.” Council on Foreign Relations. https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative

“China’s Economic Rise: History, Trends, Challenges, and Implications for the United States.”Congressional Research Service.

FSC Majority Staff. “Memorandum: June 26, 2019 Full Committee Markup.” The House Financial Services Committee.


Meltzer, Joshua, et. al. “The US-China economic relationship: A comprehensive approach” The Brookings Institute.

Pargendler, Mariana. “State Ownership and Corporate Governance” The Fordham Law Review. “Putting China’s Capital to Work: The Value of Financial System Reform.” McKinsey Global Institute.

Song, Ligang. “State-owned enterprise reform in China: Past, present and prospects.” China’s 40 Years of Reform and Development.

“State-Owned Enterprises in the Chinese Economy Today: Role, Reform, and Evolution.” University of Alberta China Institute.


Who Runs the Business World? Not Women, But Performance Suggests They Should

By: Alex Benedict

The glass ceiling is all too prevalent in Fortune 500 companies, where women are incredibly unlikely to find themselves on executive boards, and even less likely to find themselves as CEOs.

Moving Up the Ranks: Not Quick Enough

The Harvard Business Review studied the top performing two thousand companies in the world and found that a meager 1.5 percent (29) of CEOs were women. The Review found that the one trend among female CEOs is that they were twice as likely than men to have been appointed to the job by an outside firm. This insider mobility problem is one of many preventing women from moving ranks upward and making it to the top of their respective company. In short, misogyny is a staple of the American workplace. Women are more likely to be scrutinized by the media, and the appointment of a female CEO is covered three times more than the appointment of a male CEO, solely because they are such a rare occurrence. Northwestern University’s Kellogg school of Management conducted a study on this exact event, and found that when taking media coverage into account, the stock for a company with a recently announced female CEO dropped on average, 2.5 percent. However, when coverage of her appointment was minimal, there were positive market returns of about 2 percent. In any case, the announcement of a male CEO had a positive effect on the stock with or without extra media attention.

In 2017, though women and minorities had increasingly compiled more executive positions in white-male dominated companies in the United States Fortune 500, they still made up approximately 30 percent of all executive board positions by the end of that year. As of May 2018, Fortune reported that only 24 of their top 500 companies, or just under 5 percent, boasted female leadership in the role of CEO while 12 of those companies do not even have a single woman on their executive boards. Yet in 2016, women in the top ten most gender balanced countries, including Norway, Latvia, and Italy, received graduate degrees 21 percent more frequently than their male counterparts, and 64 percent of those women received degrees in law, social sciences, and business. This level of executive equality evidently has not yet reached the United States. While these figures may seem like incredible progress made since the turn of the century, it is in Fortune 500 companies’ best interests to further invest time and resources into improving board diversity and diversity throughout all levels and devise new gender-diversity based hiring practices to boost profits and gain an edge over the less diverse competition.

Some statistics:

In 2016, Deloitte Consulting Group conducted a study on board diversity in Fortune 500 companies in the U.S., specifically focusing on the inclusion of women and minorities. The results were nothing unexpected; just under half of Fortune 500 companies have a board diversity rate greater than 30 percent.

But in recent years, diversity figures have risen. The Pew Research Center records that the presence of female board members in Fortune 500 companies has more than doubled from 1995 to 2016, 9.6% to 20.2%, respectively. Between 2012 and 2016, board seats held by caucasian women had increased by 21.2 percent, while the number of caucasian men had decreased by 6.4 percent. Similarly, the presence of African-American women had increased by 18.4 percent within that period. But, as of May 2018, only two of the 24 female Fortune 500 CEOs are women of color, none of whom are African-American. Yet Deloitte is optimistic, and they predict that by 2026, these figures for women and minorities will further increase by 40 percent as long as white men continue to appear on boards by an average of one percent less frequently each year.

Image courtesy of the Pew Research Center.

Things have recently been looking better for U.S. booming business in the Fortune 100 than in the Fortune 500; the top 100 U.S. companies were composed of 35.9 percent women and minorities in 2016, as opposed to the 30.8 percent diversity found in the total compilation. Deloitte concluded that between 2012 and 2016, there was an increase of 15.4 percent of women in board seats, while there was a decrease in men by 4.7 percent.

The Pew Research Center, an empirical nonpartisan think tank, reports that as of 2017, only 5.4 percent of Fortune 500 CEOs were women. The Deloitte report also acknowledges this embarrassingly low statistic and states that this diversity trend might be upward, but it is too slow to keep up with the times. The findings state that “diversity is beginning to be viewed through a much wider lens to encompass a range of skills, experiences, and perspectives that could help safeguard an organization against new and emerging threats…it will be important for corporate boards to consider the benefits and skill sets that gender, racial, and ethnic diversity could bring to boardroom discussions.” The bottom line is that board diversity is good for business. The most notable benefit being that having board members of different backgrounds and with different perspectives allows for a greater opportunity to foster creativity, leads to more innovation, and consequently to greater success for the firm.

[1] Image courtesy of Statista. Historical Percentages of Women CEOs
This data can and should be seen as encouraging two ways: in just four years, women and minorities gained many executive roles in the largest companies in the U.S. But to continue this trend, companies must strengthen their diversity initiatives.

While these facts can be disheartening and discouraging, overall, firms will recognize that the presence of women usually correlates with greater growth and company.

Common Misconceptions and Prejudices

Fortune reported on a 2015 study by the Pew Research Center aimed at determining common perception of female ability in the male-dominated workplace. They concluded that most people, or 80 percent of their test group, agree that men and women are equally capable of successfully leading a business. But the results took a classically expected sexist turn when the respondents were asked about leadership in specific industries, including technology, energy, and finance companies. These findings correlate with the twelve Fortune 500 companies that, still in 2018, do not have a single female board member. Of these twelve, four are energy companies and two are financial.

Image courtesy of Pew Research Center.
Image courtesy of Fortune.

Seven of these twelve firms in this chart, none of whom sported significant diversity statistics on their executive boards, had negative returns over a five year period.

Reaping the Benefits

According to a 2016 study by the Peterson Institute for International Economics (PIIE), companies with more women in executive positions achieve higher profits. The study focused on 21,980 firms from 91 countries, and gross profit increased by at least fifteen percent in profitable firms where women represented thirty percent of the leaders. This conclusion gives nondiscriminating firms an edge, and the PIIE suggests that the success might actually be a result of more functional diversity. But the study disheartenedly concluded that sixty percent of these firms do not have a single woman on their respective executive boards. The PIIE study additionally suggests that board quotas, present in the majority of the countries surveyed in this study, have a negligible effect on the effectiveness of a firm. Of the countries included, U.S. companies’ female representation fell in the middle.

In the 2015 Pew Study, respondents also tended to agree that with more female leaders, both in business and in politics, would allow for greater national benefits in every aspect of life for women.

While the PIIE study proves that having more women in higher company roles positively impacts the effectiveness of the firms, the Institute attributes this success to both nondiscriminatory company practices and social norms and practices. But the 2015 Pew Study, regardless of the fact that its respondents agreed that women are perfectly qualified to fill male-dominated corporate roles, only shows that negative, sexist stigmas still exist, reinforcing the glass ceiling.

The overarching message here is that regardless of social stigma, women and minorities are perfectly capable of leading a company successfully. Diverse executive boards are actually better off than homogeneous ones, since more outlets for creativity and innovation are proven to lead to greater short term and long term growth. In order for firms to remain competitive in today’s day in age, this slow-moving but upward trend of diversification must continue.

Works Cited:

Brown, A. (17 March 2017). The Data on Women Leaders. Pew Research Center. Retrieved from http://www.pewsocialtrends.org/2017/03/17/the-data-on-women-leaders/#board-members.

Deloitte. (15 May 2017). Missing Pieces Report: The 2016 Board Diversity Census of Women and Minorities on Fortune 500 Boards. Deloitte. Retrieved from https://www2.deloitte.com/us/en/pages/center-for-board-effectiveness/articles/board-diversity-census-missing-pieces.html?id=us:2el:3dp:adbcenpr16:awa:ccg:020617.

Elejalde-Ruiz, A. Study: Share price drops when company touts new female CEO. Retrieved from http://digitaledition.chicagotribune.com/tribune/article_popover.aspx?guid=99343f8c-5ba5-4cae-aeeb-3b8c2f26da01.

Fairchild, C. (14 January 2015). Why so few women are CEOs (in 5 charts). Retrieved from http://fortune.com/2015/01/14/why-so-few-women-ceos/.

Fortune Editors. (7 June 2017). These Are the Women CEOs Leading Fortune 500 Companies. Retrieved from http://fortune.com/2017/06/07/fortune-500-women-ceos/.

Ibarra, H. and Morten T. Hansen. (21 December 2009). Women CEOs: Why So Few?. The Harvard Business Review. Retrieved from https://hbr.org/2009/12/women-ceo-why-so-few.

Lublin, J. (27 September 2016). How Companies Are Different When More Women Are in Power. The Wall Street Journal. Retrieved from https://www.wsj.com/articles/how-companies-are-different-when-more-women-are-in-power-1474963802.

Noland, M., Tyler Moran, and Barbara Kotschwar. (February 2016). Is Gender Diversity Profitable? Evidence from a Global Study. The Peterson Institute for International Economics. Retrieved from https://piie.com/publications/wp/wp16-3.pdf.

Zillman, C. (22 May 2018). These Are the 12 Fortune 500 Companies With Zero Women on Their Boards. Retrieved from http://fortune.com/2018/05/22/fortune-500-companies-women-boards/.

Article image retrieved from: http://www.telegraph.co.uk/sponsored/business/business-reporter/12031564/gender-diversity-in-workplace.html.

[1] https://www.statista.com/statistics/691192/share-of-women-ceos-fortune-500/


Leveling the Playing Field

By: Alex Benedict

While millions of dollars are pumped into the youth sports industry every year to provide aspiring athletes the best opportunities possible, research shows that individual drive is a better indicator of future athletic success than favorable circumstances.

Club youth sports have become a booming business since the turn of the century, displacing many local recreational initiatives. The requirements to participate in the youth sports industry–specifically the necessary commitment and funds–have become so time consuming that youths’ athletic schedules almost resemble that of professional athletes’. WinterGreen Research, a company that focuses on the industry, estimates that the industry is worth upwards of $15 billion and has grown 55% since 2010.

According to TIME, there is a 2% chance of high school athletes continuing their athletic careers at the top collegiate level. When it comes down to it, the money invested in obtaining an NCAA Division 1 or 2 athletic scholarship in many cases–including club teams, private coaching, and travel expenses–could have likely been saved and put towards a college education instead. 


There are potentially more than 20 million athletes between the ages of 6 and 18 who are specialized in one sport, or only participate year round at an intense level. The American Journal of Sports Medicine (AJSM) reported that youth athletes who participate in their primary sport for more than 8 months of the year are more likely to suffer overuse injuries.

The ASJM attributes this new trend of overspecialization to the “10,000 hours rule,” which attributes future successes to deliberate and constant practice. The rule is not as beneficial as widely believed; it is proven that athletes who play multiple sports at a younger age and then specialize when they get older are more likely to find athletic success in the sport they specialize in. Along with a higher risk of physical injury, research has shown that extremely competitive sports and sport specialization at a young age have additionally put children at a higher risk for depression and burnout. Travis Dorsch, the founding director of the Families and Sport Lab at Utah State University, concluded in his research that the more money a family puts towards their child’s athletic participation, the more pressure their child feels to perform, and the more likely they are to end up disliking the sport. With this being said, not every child or family has the privilege of investing this much money in their sport.

The socioeconomic side

The National Public Radio (NPR) published a survey in 2015 which asked parents of children involved in a competitive youth sport whether or not they wanted their child to advance to a professional level. Only 9% of parents with a college degree said that this was the ultimate goal, compared to 44% of parents with less than a high school degree. According to the study, sports are seen as a way to success for many parents.

In a study published by the Sociology of Sport Journal, there is a strong correlation between household income and youth athletic participation. The study again reinforced the NPR data that claimed that parents with college degrees were more likely to have their child involved in organized sports and physical activities. The study additionally concluded that the correlation between education, income, and childhood athletic participation diminishes as a child developes into their youth stage. With more access to athletic programs provided by schools and community initiatives, socioeconomic status appears to have a less remarkable impact than at the earlier stages of childhood development.

These findings were further supported by a study conducted by the International Journal of Behavioral Nutrition and Physical Activity in an analysis of participation based on social inequality. The study again concluded that the greatest indicators of childhood athletic participation are household income and parental education level. The Journal additionally emphasized that ethnic minority children were generally less likely to participate in organized sports, namely because of their neighborhoods or living circumstances.

The Aspen Institute’s Project Play initiative, whose goal is to give every child in the United States the opportunity to play sports, works to reduce inequality as a result of socioeconomic differences in youth participation of organized sports. The organization emphasizes the difficulty for many children to get the opportunity to play an organized sport at a young age based on multiple strong factors. The economic conditions of their schools and local communities are the second contributing factor behind income disparity. As the federal government and in turn local governments continue to cut funding, the likelihood of children in less economically prosperous communities receiving even the option to play a sport will continue to diminish.


Images courtesy of AspenInstitue.org

But the greatest factor affecting childhood participation is household income; the Aspen Institute concluded that the number of households that make less than $35,000 per year with a highly involved athletes is 10% less than households that make more than $75,000 with the highly involved athletes. The type of sports these athletes play also greatly depends on household income. For example, of soccer, baseball, football, and basketball, soccer has the least participation in households that make less than $25,000 per year, and the most participation of the four sports in households that make more than $100,000 per year. Overall, youth participation in these four organized sports drastically increases with household income.

It doesn’t matter how you get there

The International Review for Sociology and Sport concluded a similar study in 2016, instead focusing on the makeup of the top 929 NCAA Division 1 football recruits since 2006. Of the 929 recruits, 791 were black and 138 were white. The study’s primary focus was on the socioeconomic background of these top tier athletes and how their athletic and personal upbringings affected their path to the top.

The results were congruent with the other studies on athletic participation based on socioeconomic status. On average, black athletes came from more disadvantaged hometowns, while white athletes came from more privileged hometowns. The data showed that in white hometowns the racial composition was similar to the national average, and within black hometowns diversity was much less prominent. Overall, the study concluded that the top black recruits come from communities that were more socioeconomically disadvantaged with a higher percentage of blacks than the national average, and top white recruits come from communities that were less socioeconomically disadvantaged than the national average.

The study proposes two explanations for this phenomenon. First, opportunities provided to elite athletes from the two respective communities greatly differ. In more privileged communities there are more athletic opportunities present, including the chance to develop in an open environment. On the other hand, in more disadvantaged communities there are less resources and development opportunities present, but sports are used a mode of community formation and elite athletes are met with a high level of support. Second, the Journal attributes the success of these elite athletes to the ability and aspiration they themselves possess.

While the risk of burnout and overuse injury is there for any specialized youth athlete, disadvantaged children often are only able to see their success through the athletic lens. Sports are used as a way to success, and these setbacks are oftentimes not an option. As shown with the NFL data, white, advantaged athletes are disproportionately lower in drafting than black, disadvantaged athletes. Specialization is a privilege for many athletes, but it doesn’t always pay off in the end. If a larger amount of  disadvantaged children had the opportunity to be more involved in organized sports from a younger age, would there be an even greater percentage of these athletes defined as successful? Or does sport specialization not have the positive effects on athletic goals that it claims?


Works Cited:

Allison, R., Adrienne Davis & Raymond Barranco. (2016). A comparison of hometown socioeconomics and demographics for black and white elite football players in the US. International Review for the Sociology of Sport. Retrieved from http://journals.sagepub.com/doi/pdf/10.1177/1012690216674936.

Brunt, D. (3 May 2017). Money Has Ruined Youth Sports. TIME. Retrieved from http://time.com/4757448/youth-sports-pay/.

Gregory, S. (24 August 2017). How Kids’ Sports Became a $15 Billion Industry. TIME. Retrieved from http://time.com/4913687/how-kids-sports-became-15-billion-industry/.

Post, E., Trigsted, S., Riekena, J., Hetzel, S., McGuine, T., Brooks, M., Bell, D. (13 March 2017) The Association of Sport Specialization and Training Volume With Injury History in Youth Athletes. The American Journal of Sports Medicine. Retrieved from http://journals.sagepub.com/doi/pdf/10.1177/0363546517690848.

Sagas, M. & George B. Cunningham. (n.d.). Sports Participation Rates among Underserved American Youths. The Aspen Institute. Retrieved from https://assets.aspeninstitute.org/content/uploads/files/content/upload/Project_Play_Underserved_Populations_Roundtable_Research_Brief.pdf.

White, P. & William McTeer. (2012). Socioeconomic Status and Sport Participation at Different Developmental Stages During Childhood and Youth: Multivariate Analyses Using Canadian National Survey Data. Sociology of Sport Journal. Retrieved from https://www.humankinetics.com/AcuCustom/Sitename/Documents/DocumentItem/04_mcteer_SSJ_11_0130_186-209.pdf.

Witjes, A., Wilma Jansen, Selma H Bouthoorn, Niek Pot, Albert Hofman, Vincent W V Jaddoe, & Hein Raat. (2014). Social inequalities in young children’s sports participation and outdoor play. The Journal of Behavioral Nutrition and Physical Activity. Retrieved from https://link.springer.com/content/pdf/10.1186%2Fs12966-014-0155-3.pdf.

Image: https://creativemarket.com/suslo/682654-kids-playing-soccer

Cuomo’s College Plan: ‘Free’ But At a Cost

By: Alex Benedict

While it is a step in the right direction, New York’s free tuition plan has some wrinkles to be ironed out.

In January of this year, New York Governor Andrew Cuomo introduced a program to allow middle class students to attend two and four-year public colleges within the state for free. The Excelsior Scholarship, which was finalized by the state house and senate in April, will allow 940,000 middle-class families the opportunity to further their education. Starting in the fall of 2017, participants have the ability to attend a City University of New York (CUNY) or State University of New York (SUNY) “free” of charge.

The Excelsior Scholarship is the nation’s first accessible college program with a four-year option, and it has the potential to inspire other states to follow depending on the economic effects of the program. These effects will be realized once the plan is completely phased in and the first participants of the program graduate from their universities. The plan’s specifications include that any recipient of the scholarship must remain in New York to work after their graduation for the same number of years that they had received funding. The scholarship also puts a cap on how much a family can make annually; in 2017, the family must not earn over $100,000, but by the end of the phasing in 2019, that number will increase to $125,000.

Another requirement is that the recipient must attend school full-time, or take more than 12 credits, and be on track to graduate without delay. Just this semester at LaGuardia Community College in New York City, full-time enrollment has increased 5.25%, emphasizing the national trend to get students to take more than 12 credits per semester. Research has proven that students who take more than 12 credits per semester are more likely to graduate on time.

Defining ‘free’

While the program has honorable intentions, some of its requirements prevent lower-income students from participating. Oftentimes potential participants from the lower class cannot be full-time students because of the need to work, and the expenses that these students would mostly need help with–food, housing, books, and other living expenses–are not covered by the program. Contrary to how it is popularly known, the program doesn’t actually provide completely free college for its participants. Instead, known as a “last dollar” program, it covers the tuition that financial aid doesn’t.

Not hitting its mark

The cost of college—both public and private universities—has been on the rise since 1980, when it cost around $5,000 to attend a four-year private institution and half of that to attend a public school. In 2010, it was more than $35,000 for tuition alone at a private university, and around $15,000 for a public one. In the seven years since then, these figures have increased even further, $49,000 and $24,000 for private and public college educations, respectively.

Image courtesy of FeelTheBern.org.

Matthew Chingos, an economist at the Urban Institute, argues that the plan won’t help the potential students who need it the most. Instead, it will most benefit those whose families make too much to receive federal grants, but not still less than the cutoff for the Excelsior Scholarship. But the people who have historically needed help the most are those in the lower-class, or whose families make less than $40,000 per year.

Chingos also said that the plan could increase the competitiveness of SUNY and CUNY schools. While the program will increase the number of college attendees, it could also decrease the acceptance rate, as those who benefit most from Cuomo’s plan come from the higher end of the monetary spectrum.

Private becomes less prestigious

The average private university charges upward of $45,000 per year solely for tuition and room and board. Though this number has drastically increased over the past decade, private institutions are already forced to offer large amounts of financial aid to their students. As a result, two to three colleges close on average every year and this number is expected to increase since there is no way for private institutions to financially compete with minimally expensive state and city universities. Analysts of higher education believe that attendance at private universities will drastically decrease by the time this plan is completely phased in, stating that students will opt to go to public universities instead.

Many experts also believe that this trend towards implementing free tuition nationally will have a negative effect on the bond market, specifically those issued by these private institutions. But Mike Kantrowitz, expert on college financial aid and the president of consulting company Cerebly, Inc., said that the new program wouldn’t cause any private school to close its doors. He instead believes that private acceptance rates would increase, making them less competitive in order to keep enrollment up.

In March of 2017, The Commission on Independent Colleges and Universities (CICU) in New York published a report on the effects of the Excelsior Scholarship. The report stated that private universities could take a hit on their enrollment by 11%, equating to $1.4 billion lost in tuition. Yet, more prestigious and selective private universities would suffer less than those looking to create an academically and socially diverse student body.

Is staying in state worth it?

 The CICU also claims that the 11% reduction in private university enrollment would lead to a $224.3 million reduction in taxes paid to the state. It emphasized that public institutions would see enrollment increase by 16%, which would cost New York $1 billion more than projected. The report concludes that there may be far more unintended consequences and costs to the state than initially anticipated.

Recipients of the Excelsior Scholarship are also required to work in New York for the same number of years that they received the scholarship. If they break this contract, then the tuition becomes a loan that they must pay back to the state. If a student is pursuing graduate studies, they don’t have to pay back the scholarship assuming that they return to New York upon completion of their graduate degree.

Traditionally, state schools have offered lower-cost tuition to in-state residents because their tax dollars go to fund the schools. It is a tradeoff: you pay taxes to improve our colleges and universities, and they offer you lower tuition for your children. But many critics of the plan argue that it limits the opportunities for recent graduates, threatening them with debt if they choose not to stay.

What’s going to happen?

The Excelsior Scholarship is the first tuition-free program for both two- and four-year public institutions, but the idea started only for two-year programs, and is currently enacted in Arkansas, Oregon, and Rhode Island. California has even proposed a plan similar to that of New York. Each of these have stipulations like those found with New York’s plan, including the post-graduate work requirement and full-time student status.

Image courtesy of APLU.org.

Graduates from any university, but specifically public universities, are more likely to positively impact both local economies and society as a whole. In a study by the Association of Public and Land-Grant Universities (APLU), college graduates who hold a bachelor’s degree or higher contribute $381,000 more in taxes over their lifetime than those whose highest degree is a high school diploma. The employment rate of college graduates is 24% higher and annual income is $32,000 greater than high school graduates. Tennessee, which was the first state to implement a free-college program for community colleges and technical schools, has seen a growth of 30% in its freshman class numbers since its inception in 2015.

While this data does not focus directly on the effects of recent university graduates remaining in-state post-graduation, it can be expected that with higher enrollment and higher degree completion, the economy can expect a boost as more qualified people fill jobs within the state.


Chen, D. (2017, 11 April ). New York’s Free-Tuition Program Will Help Traditional, but Not Typical, Students. New York Times. Retrieved from https://www.nytimes.com/2017/04/11/nyregion/new-yorks-free-tuition-program-will-help-traditional-but-not-typical-students.html.

Commission on Independent Colleges and Universities ( 2017, March ) Report: Effects and Consequences of the Excelsior Scholarship Program On Private, Not-for-Profit Colleges and Universities. The Commission on Independent Colleges & Universities in New York. Retrieved from https://www.cicu.org/sites/default/files/2017-03/Report%20-%20Effects%20and%20Consequences%20of%20the%20Excelsior%20Scholarship%20Program%20-%203-9-17.pdf.

Douglas-Gabriel, D. (2017, 8 April ).  New York could become largest state to offer tuition-free public higher education. Washington Post. Retrieved from https://www.washingtonpost.com/local/education/new-york-to-become-the-largest-state-to-offer-tuition-free-public-higher-education/2017/04/08/3fe0563a-1c8b-11e7-9887-1a5314b56a08_story.html?utm_term=.03bb0d674bb8.

Edelson, D. (2016, 14 October ). How do college graduates benefit society at large? Association of Public & Land Grant Universities. Retrieved from http://www.aplu.org/projects-and-initiatives/college-costs-tuition-and-financial-aid/publicuvalues/societal-benefits.html.

Levine, A. (2017, 13 April ). New York Today: Free College, but With Caveats. New York Times. Retrieved from https://www.nytimes.com/2017/04/13/nyregion/new-york-today-free-college-but-with-caveats.html.

Mulhere, K. (2017, 26 April). How a Harvard Economist Would Make Free Tuition Even Better. Time. Retrieved from http://time.com/money/4756428/free-college-tuition-degree-completion-matching-grant/.

Mulhere, K. (2017, 4 January). New York’s Free Tuition Proposal Isn’t Quite as Good as It Looks. Time. Retrieved from http://time.com/money/4622007/new-york-free-college-tuition/.

Randall, D. (2017, 23 May ). Bond market braces for impact of New York’s free tuition plan. Reuters. Retrieved from http://www.reuters.com/article/us-college-bonds/bond-market-braces-for-impact-of-new-yorks-free-tuition-plan-idUSKBN18J19C.

Smith, A. (2017, October 13). The impact of New York’s free tuition program on two community colleges. Inside Highered. Retrieved from https://www.insidehighered.com/news/2017/10/13/impact-new-yorks-free-tuition-program-two-community-colleges.

Tuition-Free Degree Program: The Excelsior Scholarship. (2017, 14 September ). Retrieved from https://www.ny.gov/programs/tuition-free-degree-program-excelsior-scholarship.

What’s the Price Tag for a College Education? (n.d.) Retrieved from https://www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064.

Zinshteyn, M. (2017, 6 January ). Who benefits from New York’s free college plan? The Hechinger Report. Retrieved fromhttp://hechingerreport.org/benefits-new-yorks-free-college-plan/.

Good in Theory: Insurance Sales Across State Lines

Ideally, the sale of insurance across state lines would drive down the price of plans. But in reality it will do the opposite for people who need them the most.

By Alex Benedict and Wiley Lauerman

In March of 2010, the Obama Administration enacted the Affordable Care Act (ACA), a health care bill with the goal of making healthcare more affordable and accessible to many people who were previously unable to access appropriate care.

Under the ACA, multiple demographics of people are protected from grossly extraordinary medical bills. This includes those with pre-existing conditions, who cannot be refused care because they have a condition, which constitutes any condition obtained before applying for a new insurance plan. The plan also allows for young adults to remain under their parent or guardian’s plan until the age of 26, prevents insurance companies from imposing lifetime limits on its customers, and provides preventative services to people enrolled in job-related health plans.

Between 2010 and 2016, 17.6 million Americans gained health insurance, and for the first time in history 9 in 10 Americans have health insurance, 129 million Americans have been protected from insurance denials, and 105 million Americans have benefited from the 10 Essential Health Benefits (EHBs). While there are flaws with the Act, an enormous amount of Americans have benefited from its enactment.

Image courtesy of nytimes.com

This image represents the progress made in reducing the percentage of uninsured Americans during President Obama’s second term. Since 2013, there has been substantial progress in the northeast, but regions in the south and southwest have still struggled to increase enrollment in the ACA. This can be attributed to poor insurance rates even before the enactment of Obamacare. On the whole, the ACA has been successful in substantially increasing the number of insured Americans.

Across State Lines

Allowing for the sale of insurance plans across state lines has been a key component of multiple pieces of legislation that would replace the ACA. Ideally, this would decrease the price of premiums by injecting more market competition in the form of insurance plan providers. More companies would be competing for the consumers’ business, which would drive the price down and thereby making health insurance more affordable and accessible.

However, this strategy is unlikely to drive down the cost of plans sold in state markets due to the intricacies of the relationship between insurers and local health care providers. When partnered with deregulation and the stripping of EHBs from mandated services covered, insurance sales could prove to be lethal.

The multi-state approach is by no means a new idea, having been first addressed legislatively in 2005. While the regulation (or lack thereof) of insurance plans had historically been left to the states, Rep. John Shadegg’s Health Care Choice Act of 2005 was the first time the sale of insurance across state lines would have been federally authorized.

Many components of this bill still remain as the blueprint for more recent pieces of health care legislation. Perhaps the most consequential aspect of this is that the laws of the state where an insurance plan is created would be enforceable outside the confines of that states. In other words, plans sold across state lines would not be subject to the laws in the state of the consumer, rather the laws of the state where the plan was created. From a Federalist standpoint, the effect would have been two-fold. On one hand, it maintains the responsibility of health insurance regulation to the states. On the other it impedes a state’s right to enforce its own laws.

It is important to note that Section 1333 of the ACA allows for two or more states to enter into “health care choice compacts,” provided the plans sold are approved by the Secretary of Health and Human Services and offer minimum coverage standards as outlined in the ACA, including all 10 EHBs. This mechanism of consumer protection along with the required covered services ensures that health care costs do not shrink for those least likely to use it at the catastrophic expense of the sick.

Local Costs of Healthcare

Health insurance premiums are determined largely by the local costs of health care and the provider networks established by insurance companies. These networks are crucial relationships with local physicians and facilities which allow for lower overall healthcare costs for individual subscribers in that specific network region. But these networks generally become less effective as they become more geographically removed from consumers of health service providers, since insurers are oftentimes unable to negotiate profitable agreements with providers without buying into previously established networks. Because of this location barrier, insurance providers from one state have been unsuccessful in establishing provider networks in alternate states.

Those who propose allowing for the sale of plans across state lines often disregard how these complex local relationships are the main determinant of prices for health care services. This is best illustrated by the fact that before the ACA was enacted, states had complete jurisdiction to pass legislation to encourage intrastate competition. Only six states passed such legislation, and no insurance companies were successful in selling plans outside of their region. When these state legislatures were asked why there was not an increase in market competition, the most prevalent response involved the difficulty to establish or buy into an existing provider network.

Image courtesy of NCSL.org

The Importance of EHBs

The 10 EHBs are a key feature of the ACA. The ACA mandates that every insurance plan in every state cover these 10 benefits, establishing that services like maternity care and drug and alcohol rehabilitation are affordable for those who need such treatments. This coverage requirement also ensures that costs for the healthy do not shrink at the expense of those who genuinely need these benefits. Opponents of the EHB requirement argue that they should not have to pay for benefits that they will not end up using.  Mental health and substance abuse rehabilitation, pediatric dental and vision care are among the most highly contested.

When the entire risk pool is not held responsible for the funding of all essential benefits,  an immense burden is placed on those who need the services in question. For example, when the pediatric dental benefit is offered only to children, meaning that they are the ones funding this service, it costs each individual thirty dollars per monthly premium. Conversely, when both adults and children are held accountable for the funding of the benefit, it is only an additional five dollars to each individual’s monthly premium. While adults are contributing to a plan that they will not even use, they are helping to ensure that children are able to receive adequate dental care at a reasonable cost.

EHBs provide fuller coverage for more people, but this regulation impedes the goal of insurance sales from state to state. Since the benefits create a price floor, increasing premiums for healthy people who may normally buy less extensive plans, sales across state lines is pointless; no plan in State B will be less expensive than the cheapest plan in State A. If the EHB mandate were to be removed, this would be detrimental to individuals with preexisting conditions. But healthy individuals, who may return to purchasing cheap, “bare bones” plans with limited coverage, could also find themselves in trouble if their health were ever to deteriorate unexpectedly.

Insurance sales across state lines will be useless in reducing rising healthcare premiums while EHBs are a mandate across plans and while providers still struggle to form extensive provider networks in other states.

Dangerous Deregulation

Where this plan of action begins to become dangerous is when it is paired with deregulation of mandated covered services. This would allow states to again set their own benefit requirements, as was the case before the ACA. Many health policy researchers have predicted that a “regulation free-for-all” would result in insurance companies establishing domiciles in the least regulated states so they can then offer less extensive, “bare bones” plans.  These plans have lower premiums, but higher out of pocket costs, and would be tailored to the healthiest people who do not spend a lot on health care services.

There would also be deregulation in that insurance companies could again deny coverage to people who they believe will cost them more money.  Intuitively, these deregulations will lead to a segmentation of the national risk-pool where those who don’t spend as much would be paying significantly lower premiums, but those who are more likely to spend more will be forced to buy significantly more expensive plans in the most regulated states.

Future Legislation

Most of this research is “hypothetical” in that this strategy has never been utilized, either because they are ineffective or hard to establish due to federal regulations. There have been multiple legislative attempts to repeal and replace the ACA, including Senator Rand Paul’s Obamacare Replacement Act and Representative Tom Price’s Empowering Patients First Act. Both of these Acts explicitly repeal the ACA’s required EHBs and allow for the sale of insurance plans across state lines.

However, since President Trump assumed office with a GOP majority in both the House and Senate, the main mechanism for repeal and replace has come in the form of the American Health Care Act (AHCA) in the House and the Better Care Reconciliation Act (BCRA) in the Senate. While recent GOP attempts to repeal the ACA are presently forestalled, there will most certainly be imminent legislative attempts at health care reform.

In its original form, the AHCA maintained the mandated coverage for the ACA’s EHBs. However, conservative House GOP members (Freedom Caucus) did not see this as a stern enough repeal of what they considered to be federal overreach in ACA mandates. Moderate Republicans (Tuesday Group) were discouraged by the bill’s corresponding CBO report that predicted massive decreases in amounts of insured people. The bill was eventually pulled from the House floor by Speaker Ryan.  Enter the MacArthur Amendment…

The addition of what is referred to as the MacArthur Amendment, proposed by New Jersey Representative Tom MacArthur, would allow states to apply for a “waiver,” thereby allowing them to disregard federal mandated coverage for EHBs if they can show that it will lead to lower premiums while maintaining or raising the number of people with insurance.

And you may be asking yourself is, “Who will be deciding whether or not to allow states to disregard EHBs?” Representative Tom Price, who submitted a bill to Congress that would dismantle EHBs and encouraged for the sale of plans across state lines, is now Secretary of Health and Human Services Tom Price and will be in charge of determining whether or not states can throw out federal regulations. The addition of this amendment was enough for the House GOP to get the votes necessary to pass the AHCA.

The BCRA, the Senate version of the health care bill released this past June, contains the same waiver provision and, while the vote is delayed, will be coming to the Senate floor for a vote in the not-too-distant-future. The CBO score affiliated with the Senate bill predicts that 22 million people will lose insurance by 2026. There seems to be a perfect storm occurring which will result in a sharp increase in health care costs for those with pre-existing conditions who need access the most.

The argument in favor of deregulation and interstate commerce is easy and, to be fair, true. A study published in 2008, before the ACA mandated EHBs, found that each mandated benefit increased the price of premiums. This seems intuitive, in that if you require more services be covered than the average price for insurance will rise. Proponents say that deregulation will increase personal freedom, in that consumers can pick, or not pick, the plan that offers services they want, not what the government forces them to buy. The argument culminates in the same way that most “free market” arguments do by insisting that a national marketplace will increase competition and drive down healthcare costs, and in in the most superficial sense, they are absolutely right.

What gets lost in this argument is two-fold. The basic purpose of insurance is that everyone pays into a fund that they may never utilize, in exchange for the security in that if they ever do need it, they will not be eviscerated financially or in their health status.  Secondly, free market solutions only work if both the consumer and the producer are on “equal footing”, so to speak.  If you are completely healthy and you wanted to buy insurance in any state, it is true that many states and companies would compete for your business and you would get a lower price than you would be paying today.  But if you are one of the possibly 1 in 2 Americans who would qualify as having a preexisting condition, insurance companies realize they have the advantage in these negotiations and either drastically over-price plans or deny coverage altogether.  It has been seen time and time again that free market solutions do not apply when the issue at hand is an individual’s health.  It has become the consensus among more and more Americans that no one in the wealthiest nation in the world should be financially degraded for a disease they may have had no part in causing.  The ACA is not perfect, but EHBs, and the ACA in general, have been a step in the right direction to ensure health security for millions of people.



Image: Orszag, Peter. Why Allowing Health Insurance Sales Across State Lines Won’t Help. http://www.insurancejournal.com/news/national/2017/03/07/443794.htm

Bayram, R. (17 March, 2017). Are essential health benefits here to stay? Retrieved April 25, 2017, from http://www.milliman.com/insight/2017/Are-essential-health-benefits-here-to-stay/.

Blumberg, L. (June 2016). Sales of Insurance across State Lines. Retrieved April 25, 2017, from http://www.urban.org/sites/default/files/publication/81866/2000840-Sales-of-Insurance-across-State-Lines.pdf.

H.R. 2355 – Health Care Choice Act of 2005. (2005-2006). Retrieved April 25, 2017, from https://www.congress.gov/bill/109th-congress/house-bill/2355.

Jensen, J. and Trish Riley. (February 2017). Selling Health Insurance Across State Lines. Retrieved April 25, 2017, from http://nashp.org/selling-health-insurance-across-state-lines/.

Office of the Assistant Secretary for Planning and Evaluation. (1 November, 2011). At Risk: Pre-Existing Conditions Could Affect 1 in 2 Americans. Retrieved July 11, 2017, from https://aspe.hhs.gov/basic-report/risk-pre-existing-conditions-could-affect-1-2-americans.
Office of the Assistant Secretary for Planning and Evaluation. (28 June, 2008). Consumer Response to a National Marketplace for Individual Insurance. Retrieved July 11, 2017, from https://aspe.hhs.gov/report/consumer-response-national-marketplace-individual-insurance.

Proposals to Replace the Affordable Care Act – Rep. Tom Price Proposal. (January 2017). Retrieved April 25, 2017, from http://files.kff.org/attachment/Proposals-to-Replace-the-Affordable-Care-Act-Rep-Tom-Price.

Proposals to Replace the Affordable Care Act – Senator Rand Paul Proposal. (February 2017). Retrieved April 25, 2017, from http://files.kff.org/attachment/Proposals-to-Replace-the-Affordable-Care-Act-Senator-Rand-Paul.

Saltzman, E. and Christine Eibner. (September 2016). Donald Trump’s Health Care Reform Proposals: Anticipated Effects on Insurance Coverage, Out-of-Pocket Costs, and the Federal Deficit. Retrieved April 25, 2017, from http://www.commonwealthfund.org/~/media/files/publications/issue-brief/2016/sep/1903_saltzman_trump_hlt_care_reform_proposals_ib_v2.pdf.

Sanger-Katz, M. and Quoctrung Bui. (31 October, 2017). The Impact of Obamacare, in Four Maps. Retrieved July 8, 2017, from https://www.nytimes.com/interactive/2016/10/31/upshot/up-uninsured-2016.html.

Selling Insurance Across State Lines. (February 2017). Retrieved April 22, 2017, from https://www.actuary.org/content/selling-insurance-across-state-lines-0.

The White House. (2 March, 2016). FACT SHEET: The Affordable Care Act: Healthy Communities Six Years Later. Retrieved July 8, 2017, from https://obamawhitehouse.archives.gov/the-press-office/2016/03/02/fact-sheet-affordable-care-act-healthy-communities-six-years-later.

U.S. Department of Health and Human Services (n.d.). About the ACA. Retrieved July 8, 2017, from https://www.hhs.gov/healthcare/about-the-aca/preventive-care/index.html.

Hot or Not: One Way to Clean Up America

“The United States should take notes from Sweden’s environmentally protective waste-conversion initiative. But is the new administration willing to listen?”

By Alex Benedict

     For three decades, since Sweden began to burn its trash to create energy for the country, there has been debate over the system’s efficiency. Many scientists and environmentalists claim that the chemical emissions are harmful, and that it takes an unreasonable amount of energy to achieve the final product. On the other hand, proponents of this waste-to-energy (WTE) method provide evidence of environmentally sound practices with more positive results than classic energy providers like coal and oil. Though there still tends to be pushback, more from big oil firms than dubious scientists, WTE is burning its way to the top and is likely to become one of the most popular methods of reusing and recycling consumer waste.


Scandinavian Trendsetting

     Since 1975, Sweden has worked to increase the amount of waste recycled and has succeeded in doing so – only 38 percent of waste was recycled then, whereas more than 99 percent of all waste produced domestically is recycled today. This drastic increase has provided heat for 810,000 homes and electricity for 250,000 homes. Additionally, homes have shifted their waste-disposal practices to allow for this increase in energy production. In 1998, just over 1 million households relied on landfills as a means of waste disposal and almost 1.5 million homes relied on WTE. In 2007, less than 200,000 homes relied on landfills, whereas almost 2.25 million used WTE practices as means of disposal. Material recycling has also increased by about 1 million homes in those 9 years.

Screen Shot 2017-04-11 at 11.35.26 AM

Figure courtesy of AvfallSvergie.se

     In Sweden, one year of burning trash created the same amount of energy as 1.1 million cubic meters of oil, without all of the environmental impacts – carbon dioxide emissions have been reduced by at nearly 2.2 million tons per year. The country has actually become so efficient at WTE recycling that there is the threat of running out of trash to burn. So Sweden has made a business out of it – they have begun to handle the trash of their European neighbors for a price of $43 per ton. In 2014, the country made almost $100 million in revenue as a result of the 2.3 million tons of garbage it imported and incinerated.

      Other countries have started to catch on to this trend, starting with Sweden’s Scandinavian siblings. In Norway, one full-capacity plant in Oslo has the ability to provide heat and electricity to 56,000 homes and all of the city’s schools. In Denmark, landfills only take 3% of consumer waste, and the remainder is recycled and incinerated. While these two countries have not quite caught up to Sweden, their annual progress toward the ultimate goal of minimizing landfilled waste is not far off.


Trashy Emissions

     In the last 50 years, recycling initiatives have increased, reducing the total amount of waste brought to landfills. But there is still work to be done, especially in the United States (US), where in 2015, only 7 percent of waste was converted into energy – the remaining 93% was left in landfills, where garbage is encased in clay and plastic and buried under dirt. This casing is not designed to break down waste – both industrial and household – but rather to store it.

     Not only is the landfill system wasted energy, it is also harmful to the environment. Since waste is stored in an oxygen-free space, bacteria in the waste produces methane gas, which is a greenhouse gas responsible for global warming. The Environmental Protection Agency (EPA) states that every ton of landfill waste converted to energy reduces greenhouse gas emissions by half of a cubic ton. One-third of US landfills have the technology in place to capture these, but even then, less than one-third of the gases are actually captured and converted.

     Though there is also evidence of some negative emissions as a result of trash incineration, many countries have just about perfected a way to convert their waste into energy without negatively affecting the environment. When municipal solid waste (MSW) is burned, less harmful substances are emitted than when trash sits in a landfill. But since they are bound in the ash produced from burning, they are easier to control and easier to recycle further. With the implementation of WTE recycling practices, energy production in Sweden has increased while dioxins released into the air from landfilled trash has significantly decreased.

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Figure courtesy of AvfallSvergie.se


What About Recycling?

     When it comes to WTE, not everything can be recycled via incineration. Batteries, light bulbs, and other types of electrical waste, newspapers, and packaging all cannot be converted into energy in this fashion. But this is not to say that they cannot be recycled at all. Electrical waste, newspapers, and packaging are recycled with alternate methods, separate from the burnable trash. Additionally, metals must be sorted out to be melted down separately for reuse. Though this seems like a tedious process, the end result outweighs the intermediary costs.

     While trash burning has become the most popular way to deal with unpopular waste, it is not to say that recycling initiatives have halted. Between 2008 and 2011 in the US, recycling efforts increased by 18.5 million tons, while landfilling decreased by just shy of 23 million tons. This for the most part can be attributed to governmental recycling programs created by the EPA. But with the new administration rolling back environmental initiatives and protections, this progress may stagnate during the next four years.


The Dilemma

In the US, there are five states that are close to achieving a sustainable system of waste management: Connecticut, Maine, Massachusetts, Minnesota, and New Hampshire are combining recycling efforts, composting, and WTE to make them the most environmentally friendly waste managers in the country. The policies enacted in these states are primarily a result of the state’s wealth. There is a strong correlation between poverty and low recycling rates, which can be attributed to the expensive nature of trash collection and recycling initiatives. Mississippi, Alabama, Louisiana, Idaho, and Oklahoma have consistently been some of the poorest states over the last decade, and they are also the worst at recycling, composting, and WTE practices. In all of these states in 2008, less than 10 percent of all waste was either recycled or composted. Alabama and Oklahoma are the only ones of these five states to incinerate waste, and even so it was less than 5 percent.

The same can be said for low-income populations within wealthier states. Based on a study by Columbia University, regions of the country that are less economically prosperous tend to have lower rates of recycling. Specifically, in major cities with high populations of low-income Americans, the use of landfills is not the most economically efficient way to handle waste. In New York City, Harlem and the South Bronx are among the worst neighborhoods at recycling. They are also among the poorest, making recycling initiatives less of a priority.

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Figure courtesy of EcoMaine.org

     As there will be a need for a large initial investment in capital to convert landfills into WTE plants, the poor states and regions will find it difficult to take the first step. However, the payoff will outweigh the costs in more ways than one. The 6,000 landfills across the country could be converted to WTE plant, and fees from these new centers would be greater than those of landfills, ensuring that there was still incentive to work in them. Additionally, shifting to WTE would have positive effects on public health, reducing global warming emissions, as well as providing more jobs.

     Government agencies like the Department of Energy (DOE) have made strides in encouraging national use of renewable energy. A clean energy revolution has been expanding throughout the country since the turn of the 20th century, with the help of both the government and of the private sector. Specifically in the last ten years, President Obama had put into place a Climate Action Plan, outlining ways to combat climate change via shifts towards renewable energy and away from environmentally harmful fossil fuels. The private sector is reliant on policies put into place by the government, so any cuts made to the DOE, specifically its Office of Energy Efficiency & Renewable Energy (EERE), could potentially stagnate any further investment from private firms.


A Cleaner Future?

     By 2050, the Department of Energy’s National Renewable Energy Laboratory (NREL) says that renewable energy can provide 80 percent of the electricity in the United States. This includes biopower, concentrating solar power, geothermal power, solar photovoltaics, and wind turbines. When WTE incineration is included in this estimate, the U.S. could reach 80 percent even sooner.

     Despite these efforts, the US has not made notable progress towards renewable energy in any recent administration. Professor E. Donald Elliott of Yale Law School attributes this to the structure of the US government. He breaks the impediments into three categories – fragmented authority, separation of powers, and changing policies. Elliott writes that each individual state’s ability to regulate its energy sources is a foundational problem in the spread of more environmentally-sound practices. Half of the country has invested in WTE technology, but the federal government struggles to encourage this progress on the other half that refuses to prioritize green energy. Additionally, divided political parties and the different branches of government make it difficult to promote renewable energy, since no one party or branch has complete control over the decision and law-making. Lastly, with every election comes an influx of new politicians, new ideas, and new agendas, which oftentimes, as seen with the results of the 2016 presidential election, hinders or reverses progress made on the front of green energy.

     Even though the Obama era was filled with investment in green-energy initiatives, the majority of them wind, water, and solar-based, the administration did not do too much with WTE initiatives, simply because waste management is something run by private firms and state governments. Since the era began in 2008, state governments have worked toward incorporating more WTE into their waste-disposal methods. But with the Trump Era just beginning, more widespread additions of WTE may be hard to accomplish, especially with Congressional and Presidential agendas to take into account.

     President Trump has proposed throughout his campaign and presidency that he would roll back initiatives put in place by President Obama combating climate change. He started this with his nominee for Secretary of Energy, Rick Perry, who was once on the board of directors at Energy Transfer Partners, one of the companies behind the construction of the polarizing Keystone XL pipeline – something President Obama halted but Trump reinstated.

The pattern continued and on March 28, Trump issued an executive order rolling back Obama’s Clean Power Plan, which reduces the electricity sector’s carbon footprint. Trump has also said that he would get the US out of the Paris Climate Agreement, a pact of 197 countries to each marginally reduce their carbon pollution, even though walking away from the agreement would have detrimental effects on the US’s material interests.

     Additionally, Trump has made remarks about how he plans to cut the budget of the EPA and offices of the DOE by almost a third. Evidently, environmental protection, let alone green energy, is not one of the President’s top priorities. Trump has said that there needs to be a trade-off: environmental protection or economic development, not both. But the EERE says that any tampering with the multi-billion dollar renewable energy market could also have economically detrimental consequences. The SunShot initiative, launched during the Obama administration, aims to make solar energy a competitive market by 2020. The budget cuts to the EERE would, of course, be much more than to the DOE’s offices for fossil and nuclear energy.

     While the United States can’t expect to be environmentally progressive in the coming four years, we can still take that extra sliver of thought and put our plastic bottles in the blue bin.



Image source: Flickr

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Themelis, N. and Charles Mussche. (2014, July 9). 2014 Energy and Economic Value of Municipal Solid Waste (MSW), Including Non-Recycled Plastics (NRP), Currently Landfilled in the Fifty States. Retrieved April 5, 2017, from http://www.ecomaine.org/wp-content/uploads/2014/07/2014_Energy_value_of_MSW_Columbia_7.9.2014.pdf.
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China, in the Kitchen, with a Candlestick

Lawmakers are going to have to start pointing fingers in the right direction if they have any hope of solving the country’s unemployment issues. “

By Alex Benedict

     Though the slowdown of industrialization—a shift from a manufacturing goods-based economy, to a more service-based economy—has made the GDP “lighter,” according to Alan Greenspan, the former chairman of the Federal Reserve, President Trump’s desire to shift jobs back to the U.S. may reverse this phenomenon. However, the existence of such a problem to fix, and the achievability of his “plan,” or lack thereof, is up for debate.


US and the Global Economy

     After the signing of the North American Free Trade Agreement in 1994 by the United States, Canada, and Mexico, manufacturing jobs in the U.S. increased marginally. The trade agreement reduces tariffs between the three countries and makes it easier for domestic companies to invest in one of the other two economies. Under the agreement, U.S. exports to Mexico and Canada increased 258 percent, especially in agricultural and manufactured goods. If President Trump were to eliminate or renegotiate NAFTA, as he had promised time and time again during his campaign and presidency, the result would likely not be beneficial to American workers.


     The United States also plays an enormous role in the global economy. In 2008, the U.S. produced approximately 19 percent of the worldwide manufacturing output, and about 22 percent of U.S. manufactured goods were exported.  According to the National Association of Manufacturers, U.S. multinational corporations employed 22.4 million people domestically, while 5.4 million people were employed abroad. This data has remained relatively consistent in the 9 years since.


An Important Clarification

     The expansion of foreign trade has had negative effects on some domestic manufacturers, but international trade, overall, has allowed for companies to export more of their products. Arguably the greatest benefits of manufacturing overseas are that labor costs can be reduced by almost 80 percent, and companies can find workers willing to become skilled in their respective fields. While the United States is prosperous, the economies of many other nations, such as China, India, and Pakistan, by virtue of their large work force, allow for workers to be paid lower wages.


     Thus, while the import of Chinese goods has increased 14 percent since 1992, overall imports from all Asian countries decreased by 19 percent. President Trump has claimed throughout his campaign and thus far into his presidency that trade with China is the largest culprit for the displacement of U.S. manufactured goods, when in reality, China has only replaced other countries as the United States’ trading partner.


The Real Culprit

     The turn of the 21st century marked the shift in US manufacturing job opportunities. Between 2000 and 2007, manufacturing positions in the U.S. dropped 20 percent. And the availability of these jobs has since consistently decreased every year. As per a study conducted by Ball State University, 85 percent of the 5.4 million manufacturing jobs lost in the U.S. during this time can be attributed to technological change, not international trade. Advances in technology have allowed for jobs that were previously performed by humans to be replaced by machines. Thus while production efficiency was greater, and production was higher, there were fewer physical workers employed in the work force.


     The majority of blue-collar manufacturing jobs have been most affected by the shift towards technology in recent years, but this is not to say that technology is leaving white-collar jobs alone; these professions—surgeons, salespeople, and analysts, for example—are being challenged as well. Many experts agree that though technological change may take away old jobs, it always naturally opens up new avenues of employment. These advancements may displace workers in many manufacturing jobs, but this progress also stimulates both the need for, and the training of, highly skilled worker in manufacturing and in other fields.


Blind to The Enemy

     Many members of Congress like to argue that foreign trade is to blame for the decrease in domestic manufacturing jobs. They are joined by President Trump, who has recently threatened companies that move U.S. manufacturing jobs abroad with a “big border tax” — a suggested 35 or 45 percent of the price of the good manufactured. But this gesture would likely only harm the U.S. economy, potentially even sinking it into depression. If it costs foreign countries more money to import their goods into the U.S., imports will decrease, and in turn cause American exports to decrease as well.


     Nearly all retailers and consumers would be affected by such a move. The tariff could have profound effects on foreign firms’ desire to invest in the U.S., as companies are always looking for the option with the lowest trade barriers. Not to mention that if imports are restricted, many Americans will be left with less disposable income, since a large proportion of lower income Americans rely on the cheap price of imported goods.


     All the while, President Trump’s businesses source many of their products from China and other countries where wage laws allow him to manufacture what they need at minimal costs. How’s that for hypocrisy?


Image: http://i2.cdn.turner.com/money/dam/assets/150512043017-jobs-threatened-by-robots-780×439.jpg

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Ydstie, J. (2017, January 25). Trump Vows ‘Big Border Tax’ For U.S. Manufacturers That Move Jobs Abroad. Retrieved March 12, 2017, from http://www.npr.org/2017/01/24/511456873/trump-vows-big-border-tax-for-u-s-manufacturers-that-move-jobs-abroad


A Politically Fueled Sunday

“Politics did not take a break for Super Bowl LI.”

By Alex Benedict

What’s more American than the Super Bowl? Regardless of whether or not they support the teams playing, Americans congregate, eat food, and cheer for men hurling themselves at one another for the common goal of victory. But while these men were embodying everything that is thought to be the ideal American qualities: strength, ability, wealth; companies took it upon themselves to show the viewership of one of the biggest nights in American television that there is significantly more to America than just football.

The belligerent xenophobia and misogyny that seem to be plaguing the nation in recent days have been met by protests, marches, rallies, and, evidently, advertisements geared towards the third of America just eager for another hilarious Doritos commercial.

The most coveted television time slots are on this first Sunday night in February, where more than 111 million people tuned in to watch the New England Patriots take on, and come back to take down, the Atlanta Falcons in the first overtime in Super Bowl history. This happened to be a night of more than one first, where a myriad of advertisements, and even Lady Gaga’s halftime performance, were laced with political undertones and calls for American equality and inclusion. Commercials from Coca-Cola, Budweiser, Audi, 84 Lumber, Airbnb and Google, to name a few, attempted to put into perspective the gravity of the political and social climate in America today.

Though these advertisements may have been less controversial and more unifying if premiered at previous Super Bowls, Donald Trump’s new political grip on America has globally-empowered companies promoting equality and inclusion using their television presence.

The fifty-first Super Bowl took place one week after the newest and most polarizing face of the Land of the Free placed a ban on the entry of people from seven Middle Eastern Muslim-majority countries. But a commercial by Coca-Cola, among commercials by other businesses, emphasized the beauty of American unity, composed of the many different ethnicities, races, and religions that make America so incredibly diverse.

The same message was portrayed in a commercial by 84 Lumber, a supplier for construction goods, which criticized President Trump’s border wall plan by depicting a mother and daughter traveling to the United States in pursuit of a better life. It sparked extreme controversy, and Fox, the channel airing the Super Bowl, refused to play the full advertisement.

This strong theme of inclusion echoed through many more ads, including one by Airbnb, which emphasized belonging and acceptance. Another advertisement by Budweiser voiced the message that the xenophobic mindset is an antiquated one, as immigrants are not a detriment to the country, but rather a boon to society.

Though these advertisements may have had good intentions, many took them as otherwise: polarizing and unnecessary. Viewers unleashed on 84 Lumber on all forms of social media, probing the company to quell the outrage over the unintentionally controversial ad. The company’s Facebook account wrote, “President Trump has previously said there should be a ‘big beautiful door in the wall so that people can come into this country legally.’ We couldn’t agree more.” Twitter users responded to the ad by calling customers of the company to cancel their contracts and look for a new construction provider, many claiming that by encouraging the “door in the wall,” the company was encouraging the displacement of the jobs of legal Americans by illegal immigrants, specifically from Mexico.

The Super Bowl, along with other national events that epitomize America, may have positive aspirations of unity, but can end up further driving the country apart. Many Americans look to come together with their fellow Americans, all while the event unintentionally stigmatizes the un-American outsider. Football is America’s sport, America’s pride and joy. Today, this is arguably even more relevant than the sport’s identity as an inclusive, dream-ready image of the past century. But is it also ironic to use this platform of American identity to advertise for the inclusion of everyone when football itself is essentially exclusive to America?

Irony was evidently abundant Super Bowl Sunday in the TV time surrounding the game, especially since what many companies were advocating for is not the way in which the National Football League operates. To use this platform for politically motivated commercials advocating for the equal respect of all people is ignorant to the fact that the NFL itself fails to treat everyone with respect. Or at the very least, the organization fails to condemn its players who fail to treat others with respect. Is it hypocritical for these advertisers to use an organization that fails to stand for the messages that they are portraying?

With that being said, the advertisers during the event do not reflect the culture perpetuated by many players. The NFL has historically been notorious for failing to reprimand its players for domestic violence, illegal firearm possession, DUIs, and more; a poor representation of the league, but not necessarily of its supporters. Football is unquestionably American, even if the actions of some of its players are not a representation of the masses.

However, the companies knew what they were getting themselves into with these advertisements, since after all, by expressing their views through images in this type of venue, they aren’t preaching to the choir. The commercials are attempts to enlighten others to the best of their ability, even it involves utilizing a platform that does not necessarily support the causes at hand. But to be a fan of the game does not mean that you have to be a fan of the culture, of the National Football League, or of this current national administration.

These commercials proved that in order for the Super Bowl to have truly been one of the most American nights of the year, the diverse greatness of America cannot be forgotten.

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