Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

AI Summary. Paper wealth — asset price gains detached from real investment — drove nearly 60% of global household wealth growth in 2025, up from one-third historically. Only 20% came from net new real investment, compared to a 30% historical average.

Rebecca Anderson, Jan Mischke, Arvind Govindarajan, Sylvain Johansson, et al. McKinsey
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A McKinsey analysis finds global wealth is increasingly composed of “paper wealth,” driven by the rise of US equity values to 2.4x the book value of net corporate assets, and the debt of Chinese corporations, which grew to 80% of their real asset value.

Is global wealth growth becoming increasingly disconnected from real economic activity?

Core argument: Paper wealth drove ~60% of global household wealth growth in 2025, nearly double the one-third average from 2000–2024, as asset price gains increasingly decoupled from underlying economic activity.

In 2025, global wealth growth was driven to a greater extent by paper wealth, or nominal asset value growth decoupled from the real economy. Only 20% of household wealth growth was based on net new investment (real assets including machinery and equipment, homes and buildings, infrastructure, and intellectual property, less depreciation), compared to 30% on average from 2000 to 2024. Nearly 60% came from asset price growth above and beyond general inflation and negative net worth positions from other sectors. [For example, this includes equity value growth above net assets for corporations as well as government bonds greater than the book value of government assets]. This was a marked increase over the average from 2000 to 2024, when paper gains drove one-third of global wealth growth.

Takeaways by Macro Roundup® AI

  1. Paper wealth drove ~60% of global household wealth growth in 2025, nearly double the one-third average from 2000–2024, as asset price gains increasingly decoupled from underlying economic activity.
  2. Net new real investment—spanning machinery, buildings, infrastructure, and intellectual property net of depreciation—accounted for only 20% of household wealth growth in 2025, down 10 percentage points from the 2000–2024 average of 30%.

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  • The Summer I Turned Pretty — Capital spending booms historically peak when end-demand companies stagnate while equipment suppliers still thrive; today, semiconductor profits are rising even as the large cloud companies funding AI infrastructure see earnings and cash flow decline, raising doubt over who will sustain AI investment.
  • One Hundred Years in the U.S. Stock Markets — Btw January 1926 and December 2025, 60% of US firms had negative total returns relative to T-bills. 46 firms accounted for half of the $91T in net wealth…

Michael MacKenzie and Ye Xie Bloomberg
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So far this year, the US 30-year has traded beyond 5% for 27 days ~19% of trading days, the most since 2007.

The US 30-year bond yield is trading above 5% for the longest stretch since the dawn of the financial crisis, echoing investor concerns about a growing debt pile and sticky inflation. So far this year, the 30-year has traded beyond 5% for 27 days — or about 19% of all sessions, the most since 2007, according to data compiled by Bloomberg. It traded above that level for 50 days that year.

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  • How Sky-High Deficits Threaten the Bond Market — Long-term U.S. government bond yields are rising faster than short-term yields, signaling growing investor concern about deficits and inflation. Dealers now buy only 10–15% of bonds at auction, down from 40–50% in 2010, reflecting reduced willingness to hold government debt on their own balance sheets.
  • How Might Fiscal Policy Respond to the Rise of Artificial Intelligence? — A 0.5% annual productivity growth boost would reduce publicly held federal debt by 39% of GDP over 30 years, cutting roughly half of the projected rise from 101% to 175% of GDP, through higher tax revenue, slower spending growth relative to GDP, and debt dilution that outweighs higher borrowing costs.
  • The Budget and Economic Outlook: 2026 to 2036 — CBO projects a deficit of 5.8% of GDP in 2026, unchanged from 2025. Outlays, at 23.3% of GDP, will exceed their 50-year mean by 2.1pp; revenue of 17.5% is just…

Tan Kai Xian Gavekal
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In Q1 2026, US after-tax non-financial margins were estimated at 7.6%, just short of the post-1949 high of 8.2% in Q2 of 2021. Tan Kai Xian argues US corporate profits may not mean revert due to increased automation as the workforce shrinks relative to the economy.

US corporate profit margins remain elevated by historical standards. In the first quarter of 2026, US after-tax non-financial margins were estimated at 7.6%, only just below the post-1949 high of 8.2% reached in the second quarter of 2021. The second-quarter earnings season has also begun strongly, according to FactSet data. Employee remuneration as a share of gross value added for US non-financial corporate businesses declined from 66% in the fourth quarter of 2001 to 56% in the first quarter of 2026. [Will Denyer argued] "When strong demographic growth powers rapid demand growth, companies concentrate on expanding capacity and sales—on growing along with the growing market. That means they tend to focus less on their margins—less on getting the biggest profit they can out of every dollar of revenues. In contrast, when demographic growth is subdued, and hence there is less potential demand growth, companies are not so bent on expanding capacity as fast as they can, and are far more interested in squeezing the maximum possible margin from every dollar of sales."

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AI Summary. US equity supply is turning positive for the first time in over two decades, as a surge in IPOs and large share sales by major technology companies outweighs the buybacks and privatizations that have shrunk the stock market since 2003.

Kate Duguid and Emily Herbert The Financial Times
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Goldman Sachs estimates net US equity issuance in 2026 will be ~ flat for the first time since 2003, driven by the decline in buybacks and an increase in equity issuance.

Is the era of shrinking equity supply finally ending?

Core argument: The bank expects an even greater influx of new shares in 2027, as lock-up periods on this year’s IPOs expire.

Goldman Sachs estimates net supply of equity in the US — measured by new shares hitting the market less equity removed by buybacks or companies going private — will be almost flat in 2026, having been in negative territory since 2003. The bank expects an even greater influx of new shares in 2027, as lock-up periods on this year’s IPOs expire. Sixty US companies have gone public this year, raising nearly $40bn, the highest year-to-date deal value since 2021, according to data from Dealogic that excludes listings of blank-cheque companies. Goldman expects that figure to rise to a record $225bn this year following the raft of big listings. SpaceX is aiming to raise as much as $86bn in its IPO later this week. Share sales by companies already on public markets could represent a bigger shift. Alphabet last week raised nearly $85bn in a historic equity raise to fund its vast AI investment, a sale expected to turn the Google owner into a net issuer of stock for the first time in 11 years, according to George Pearkes, an analyst at Bespoke Investment Group.

Takeaways by Macro Roundup® AI

  1. The bank expects an even greater influx of new shares in 2027, as lock-up periods on this year’s IPOs expire.
  2. Goldman expects that figure to rise to a record $225bn this year following the raft of big listings.

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  • One Hundred Years in the U.S. Stock Markets — Btw January 1926 and December 2025, 60% of US firms had negative total returns relative to T-bills. 46 firms accounted for half of the $91T in net wealth…
  • Capital Allocation — The American corporate sector has been substantially self-financing since 2000. Net equity issuance is negative even after taking stock-based compensation…
  • Capital Is Making a Comeback — Btw 1985-2021 the capital intensity of the American economy was relatively flat as a rise in intangible investment was offset by a decline in tangible…

AI Summary. Large-company dominance has extended competitive advantage periods since 2000, with returns on invested capital for the information technology sector averaging 19% versus a long-run median of 10.8%. For every 100 public companies, only 18 survive long-term, meaning models that assume perpetual growth systematically overvalue most firms.

Michael Mauboussin and Dan Callahan Morgan Stanley
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The Competitive Advantage Period (CAP), the period in which the market implies a firm can earn a return greater than its cost of capital, for most firms is 5–20 years, as ROIC regresses to the mean. Persistence of ROIC has increased, driven by a small number of large firms since 2000.

How does competitive advantage duration impact firm valuation in the tech sector?

Core argument: 82% of 13,800 U.S. public companies (1976–2019) delisted or merged, resulting in median listing tenure of 6.8 years and invalidating.

The data suggest that persistence in ROIC is up since 2000 and that large companies are the main beneficiaries of the implied expansion in CAPs. To illustrate the point, the aggregate ROIC for the information technology sector was 19% versus the median of 10.8% from 1970 to 2024. As striking, the aggregate ROIC for the sector has been greater on average than the ROIC for the 75th-percentile company (i.e., the ROIC below which 75% of data fall), since the Great Recession. This means a small number of large companies are determining the aggregate figure for the sector. From 1926 to 2025, the average listing time for a public company in Bessembinder’s database was 11.7 years, and the median listing time was 6.8 years. About 9% of listed companies at the beginning of 2026 were more than 50 years old. Modeling perpetual growth without considering mortality can create a mismatch. Exhibit 7 shows what happened to about 13,800 U.S. public firms that started trading between 1976 and 2019, excluding financial firms. For every 100 companies, 18 survived and 82 died. Of those that died, 43 were the result of mergers and acquisitions. The other 39 were delisted for reasons other than M&A, with the majority of those for “cause.” This happens when a company files for bankruptcy or fails to meet certain requirements set by an exchange.

Takeaways by Macro Roundup® AI

  1. 82% of 13,800 U.S. public companies (1976–2019) delisted or merged, resulting in median listing tenure of 6.8 years and invalidating.
  2. Competitive Advantage Period: The Neglected Value Driver.
  3. This means a small number of large companies are determining the aggregate figure for the sector.

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Marco Del Negro, Elena Elbarmi, and Michael Pham Federal Reserve Bank of New York
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Using a model that extracts common trends in multiple series, FRBNY estimates that both global and US r* rose by about 1pp post-COVID to ~0.5%. The neutral rate had fallen from 3% in the early 1990s to < 0% after the GFC, and even further in the 2010s.

After the late 1980s, we can talk of a global r*, since the trends in real rates are one and the same across advanced countries [see charts in gallery]. We provide a measure of “global” r* using data on short- and long-term yields and inflation for several countries, based on an econometric model that extracts the common trend in real rates across all the countries in the sample. Global r* fell from about 3% in the early 1990s to below 0% after the financial crisis. It continued declining in the 2010s and then rose by about 1 percentage point after COVID. By and large, the U.S. r* has tracked global r* since the late 1980s, except that it declined comparatively more in the aftermath of the financial crisis. The dashed black line in the chart shows the posterior median of global r* with the shaded areas showing the 68 and 95% coverage intervals. The dotted black line shows the posterior median of U.S. r*.By 2024, the end of the sample, the Bayesian “median posterior” estimates of both global and U.S. r* are around 0.5% (more precisely, 0.31 and 0.46). The large posterior coverage intervals shown in the chart are there to remind us that extracting trend from cycle is a difficult task. [But although] the level of r* is very uncertain, the model is able to detect changes in r* over time with greater statistical confidence. The first row of the table [] reports the decline in global and U.S. r* from 1990 to 2019, by our calculations. The median estimate of the decline is about 3.5pp for both the world and the U.S. Although the exact magnitude of the decline is uncertain, there is no question statistically that such a decline in r* had taken place from the 1990s to before COVID.

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Torsten Sløk, Rajvi Shah, and Shruti Galwankar Apollo
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While 81% of American firms with revenue greater than $100mm are private, S&P 500 firms made up over half of economy-wide corporate profits at the end of 2025, while representing 18% of the workforce.

Most of the time in financial markets is spent on discussing Nvidia, Apple and Coca-Cola, but these firms and the rest of the S&P 500 companies only make up a very small part of the US economy. For example, employment in S&P 500 companies is only 18% of total US employment. Similarly, capex by S&P 500 companies is only 21% of total capex in the US economy. [Notable] facts about public markets and private markets: [One] employment in S&P 500 companies is 18% of total US employment. [Two] employment in firms with more than 500 employees is 24.9 million, and total US employment is 160 million. [Three] privately owned firms account for almost 80% of job openings. [Four] 81% of firms with revenues greater than $100 million are private. [Five] Less than half of all corporate debt outstanding is from S&P 500 companies. [Six] S&P 500 profits make up roughly half of economy-wide corporate profits. [Seven] Capex by S&P 500 companies is 21% of total capex in the US economy. Bottom line: Public markets are a small part of the overall economy.

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Torsten Sløk Apollo
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Since 2007, the S&P 500’s operating margins have grown 4pp to 16% as a share of revenue. All of the increase has come from tech-related sectors. Operating margins for non‑tech firms have been stable at ~9%.

Operating margin measures the share of revenue left after covering operating expenses such as wages, materials and overhead. The chart shows that over the past 20 years, all of the increase in the S&P 500’s operating margin has come from tech‑related sectors [Tech related includes communication services, consumer discretionary and information technology], while operating margins for non‑tech companies have stayed near 9%.

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