Edward Conard

Top Ten New York Times Bestselling Author

  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
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  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
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How Trade Deficits Reduce Economic Dynamism and Foster Increased Government Spending

Aside from having four years of work critiqued by someone who only read Tyler Cowen’s brief and narrowly focused review of my book… I do not say the “U.S. trade deficit is something that makes the government bigger.” I do say, trade deficits make the economy less dynamic.

Risk-averse savings do not constrain the growth of America’s knowledge-based innovation-driven economy. Risk-taking/underwriting and properly trained talent do. So far, trade deficits have flooded America with risk-averse savings. As evidenced by zero interest rates, America has little use for those additional savings (other than subprime consumption). If we fail to put those savings to work, growth, employment, and/or wages will be lower than if we had. The need to do so consumes our finite capacity and willingness to bear risk at a time when risk-taking constrains growth. Henderson assumes risk-averse savers eager to buy low-risk government-guaranteed debt will underwrite the risks that grow the U.S. economy if offshore savers buy U.S. government bonds. My book The Upside of Inequality: How Good Intentions Undermine the Middle Class argues that has not proven to be the case. It might be different if risk-averse savings constrained growth.

While I do not explicitly say that trade deficits make government bigger, idle risk-averse savings slow growth and reduce interest rates, which causes influential economists like Larry Summers to advocate for increased infrastructure investment despite little evidence of their efficacy. Lower interest rates also help lawmakers avoid tough spending tradeoffs.

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