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. US government bond yields have returned to near two-decade highs despite a buyback program targeting long-dated debt, indicating that investor concern over rising government borrowing remains unresolved.

Michael MacKenzie and Alice Gledhill Bloomberg
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The 30-year yield rose ~7bps to as much as 5.27%, and the 10-year yield hit 4.71%, erasing “almost all” the gains that followed Treasury’s surprise decision to increase buybacks of longer-dated bonds.

Does government debt buyback activity actually reduce long-term borrowing costs?

Core argument: The 30-year Treasury yield surged 7 basis points to 5.27%, erasing virtually all gains from the Treasury’s surprise buyback announcement and signaling the intervention failed to calm investor concerns over fiscal sustainability.

US Treasuries erased almost all of the gains that followed the Trump administration’s surprise decision to increase buybacks of longer-dated bonds, signaling the move has done little to alleviate the angst about the surging government debt that has pushed some yields to the highest in close to two decades. The 30-year yield on Thursday rose over seven basis points to as much as 5.27%, where it was just ahead of the US Treasury Department’s announcement early Wednesday, before paring the gain. The 10-year yield touched 4.71%, just shy of its highest level since early 2025.

Takeaways by Macro Roundup® AI

  1. The 30-year Treasury yield surged 7 basis points to 5.27%, erasing virtually all gains from the Treasury’s surprise buyback announcement and signaling the intervention failed to calm investor concerns over fiscal sustainability.
  2. The 10-year Treasury yield reached 4.71%, approaching its highest level since early 2025, as surging government debt continues to pressure long-duration bonds.

Related Articles:

  • Bessent Boosts Debt Buybacks After Climb in Treasury Yields — The US Treasury doubled the size of its buyback operations for long-dated government debt to reduce upward pressure on yields, which had reached their highest level in nearly two decades.
  • The Coming Great Repression? — Higher public debt is historically associated with lower, not higher, government bond returns, as financial repression forces banks to hold low-yield bonds and cheap reserves, suppressing borrowing costs. This mechanism reduced British public debt by ~91% of GDP in 1945–55, dwarfing the contributions from inflation or budget surpluses.
  • The United States Capital Structure — Government bondholders hold the riskiest position in the U.S. fiscal structure, absorbing adverse shocks through inflation or financial repression, while entitlement recipients function as senior claimants whose payments are politically protected.

AI Summary. Emergency federal education grants during the pandemic did not measurably reduce student learning loss, partly because qualifying districts saw local revenues fall by ~$907 per pupil over three years — offsetting federal funds rather than supplementing them.

Jeffrey Clemens, Philip Hoxie and Stan Veuger National Bureau of Economic Research
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Exploiting a discontinuity in K-12 public school districts’ qualification for Covid emergency funding (ESSR), Clemens et al find that the funds did not mitigate learning loss. To a large extent, local districts used them to lower property taxes.

Emergency funding for K-12 public schools was an important component of recession spending packages during COVID, involving $190 billion in additional expenditure. We see no evidence that ESSER funds helped to mitigate learning loss, at least in the short run. We find no statistically significant evidence that districts increased expenditures in SY 2021 or SY 2022. We do find evidence that districts that qualified for additional ESSER funds had statistically significant reductions in local revenues that were in excess of their ESSER funds. This pass-through of federal funds may partially explain why ESSER had minimal impacts on learning loss for districts around the 5% poverty threshold. Our estimates suggest that over the three years, crossing the qualification cutoff for additional ESSER funds is associated with a $907 per pupil decrease in local revenues, or about 8% of the pre-COVID average. We show the decline in local revenues as an event study in Figure 3, which includes a flat pre-COVID trend in local revenues per pupil across the qualification threshold. In Table 5,Column 5 [], we can see that about 80% of the revenue decline came from decreases in revenues from property taxes, [which fell] by $718 per pupil across the 3 years. The findings apply specifically to districts in the neighborhood of the 5% poverty threshold for qualifying for additional ESSER funds.

Related Articles:

AI Summary. 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.

Karen Dynan, Douglas Elmendorf and Louise Sheiner National Bureau of Economic Research
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CBO baseline projects debt-to-GDP rising from 101% in 2026 to 175% in 2056. Dynan et al. study how AI might modify that projection. In all but their most optimistic scenario, TFP grows 0.5pp faster, and AI offsets 39–49 pp of that 74pp increase.

Does productivity growth from artificial intelligence solve the federal debt problem?

[In the Base Case], faster economic growth [improves the federal budget and debt outlook] through four channels. First, [higher] incomes increase federal revenue, [while] the progressive tax system [modestly] raises revenue relative to GDP. CBO [estimates] that a [permanent] 0.5 pp increase in annual TFP growth would raise revenue after [30 years] by 0.14% of GDP. Second, [although] faster growth increases [some] federal spending, spending rises [more slowly] than GDP, [reducing noninterest outlays] relative to GDP. Under our [assumptions], discretionary spending falls from 6.1% of GDP in 2025 to 4.5% in 2056. Third, because faster growth does not [change the stock of] existing debt, that debt becomes smaller relative to GDP. Fourth, [stronger] growth generally raises interest rates, increasing the [cost] of new borrowing and [refinancing] existing debt. This represents a partial offset to the [fiscal gains]. [On balance], additional annual TFP growth of 0.5 pp would lower publicly held federal debt after [30 years] by 39% of GDP relative to CBO’s extended baseline. CBO’s extended baseline shows federal debt rising from 101% of GDP in 2026 to 175% in three decades, so this hypothesized increase in growth would offset roughly half of that projected rise.

Related Articles:

  • Can AI Avert the Impending Federal Budget Crisis? — Higher economy-wide productivity growth raises incomes but also accelerates healthcare inflation, so a productivity surge from 1.8% to 2.7% raises GDP per capita from $102,000 to $110,000 by 2035 while pushing healthcare spending from 21% to 21.7% of GDP.
  • U.S. Treasury Investors Are Long in AI — U.S. government debt acts as a leveraged bet on long-run productivity growth, because tax revenue rises automatically with faster growth while spending commitments stay flat. Each 0.1 percentage point increase in permanent productivity growth raises the fundamental value of government debt by $1.3tn, implying a 71 basis point decline in
  • 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…

AI Summary. Taxing unrealized capital gains reduces average founder ownership at exit by ~25% but raises the share of entrepreneurs with positive payoffs from ~16% to ~47%, because tax credits on failed ventures provide insurance that partly offsets dilution costs.

Eduardo Azevedo, Florian Scheuer, Kent Smetters and Min Yang National Bureau of Economic Research
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~84% of venture backed founders end with zero exit value, while the top 2% capture ~80% of total exit value. Accrual-based taxation would reduce mean founder ownership stakes at exit by ~25%, but with fully refundable tax credits, raise the share of founders with >0 payoffs to ~47%.

Does taxing unrealized gains help or hurt entrepreneurial risk-taking?

Core argument: Accrual-based capital gains taxation reduces founder ownership by ~25% at exit vs. realization-based taxation, yet increases positive payoff probability from.

This paper examines how taxing unrealized capital gains affects entrepreneurship, combining a dynamic career-choice model with new evidence on all U.S. venture capital backed startups. Figure 1a plots a histogram of the positive company exit values. The distribution spans several orders of magnitude and is relatively similar to a lognormal, but with a right skew and fatter right tail. A stylized model highlights a key trade-off: accrual-based capital gains taxes dilute successful founders by forcing additional share sales before exit, a well known concern, yet they also provide insurance through tax credits to founders whose ventures fail, an aspect often overlooked. Quantitatively, advance taxation substantially reduces founders' ownership at exit: average founder shares fall about 25% under accrual-based taxation relative to realization based taxation. At the same time, accrual taxation increases the fraction of entrepreneurs with positive payoffs from around 16% to nearly 47%. Embedding these outcomes in a career-choice framework shows that the insurance value of accrual taxation partly offsets dilution costs: less risk-averse founders favor realization-based taxes, while more risk averse ones prefer accrual-based taxes. The strength of this insurance channel depends on the highly skewed distribution of entrepreneurial payoffs and the design of loss provisions under accrual-based taxation.

Takeaways by Macro Roundup® AI

  1. Accrual-based capital gains taxation reduces founder ownership by ~25% at exit vs. realization-based taxation, yet increases positive payoff probability from.
  2. Risk-averse entrepreneurs prefer accrual taxation’s loss provisions despite ownership dilution, while less risk-averse founders favor realization-based taxation, driving heterogeneous career.
  3. Accrual taxation’s insurance channel partly neutralizes dilution costs by expanding the fraction of founders achieving positive returns, demonstrating that tax.

Related Articles:

AI Summary. A shift of ~$200bn in worker pay into corporate profits as stock-based compensation could explain roughly one-third of the long-run decline in labor's share of income, as stock ownership allows high earners to receive tax-preferred pay recorded as profits rather than wages.

Owen Zidar and Eric Zwick The Everywhere Millionaire
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Zidar & Zwick suggest about one‑third of the post‑1970s drop in labor’s share is due to stock‑based pay to workers, in addition to the one‑third they already attribute to pass‑through income. That leaves only around one‑third for genuine shifts in technology, power, etc.

Does tax-preferred stock compensation explain the labor share decline?

Core argument: $200bn in missing labor compensation since the late 1970s drives roughly one-third of the labor share decline, reflecting tax-advantaged stock.

In our data for 2017, after adjustments for the rise of pass-throughs, we report employee compensation of $7.2 trillion and corporate value added of $12.2 trillion. The unadjusted corporate profits number (which excludes partnership profits) is $1.7 trillion. If we could find around $200 billion of “missing” labor compensation, that would account for about a third of the fall in the labor share since the late 1970s. Thus, if workers owned a bit above 10% of those corporate profits via stock compensation, then that would cover the difference. Distributing this amount across the top 10% of public company employees, of which there are 4.2 million, this ownership would imply an additional $40,000 or so in pay. The aggregate numbers are thus quite plausible in terms of how much pay might have shifted to corporate profits serving as tax-preferred payments to high earners.

Takeaways by Macro Roundup® AI

  1. $200bn in missing labor compensation since the late 1970s drives roughly one-third of the labor share decline, reflecting tax-advantaged stock.
  2. Top 10% of public company employees ($40k additional implicit pay via equity ownership) concentrate gains that would equal $200bn aggregate.
  3. $12.2tn corporate value added vs. $7.2tn employee compensation reveals labor’s shrinking claim on output, as tax-preferred equity arrangements redirect worker.

Related Articles:

  • Why the Labor Share Keeps Falling: Taxes! — Tax code changes account for roughly one-third of the decline in the worker share of U.S. business income since 1978, as firms shift from corporate to pass-through structures to reclassify wages as profits and reduce tax burdens.
  • Human Capitalists — Equity Based Compensation ~45% Of Total Comp Of High-Skilled Labor, Including It In Labor Share Cuts Decline of Labor Share Since The 1980’s By 60%.
  • Capitalists in the Twenty-First Century — Most income at the top of the US income distribution is non-wage income, primarily derived from private business profits, according to @MatthewSmith…

AI Summary. Government bondholders hold the riskiest position in the U.S. fiscal structure, absorbing adverse shocks through inflation or financial repression, while entitlement recipients function as senior claimants whose payments are politically protected.

Hanno Lustig The Two Cents
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Lustig argues that bondholders in advanced economies are realizing they are facing higher inflation risk and thus may “sit at the bottom of the capital structure rather than the top,” given transfer recipients’ political power.

Are government bondholders bearing the true cost of fiscal imbalance?

Core argument: I cannot generate the requested takeaways because the provided article summary contains no numerical data, comparisons, or quantifiable findings. The.

Social Security is typically referred to as the third rail of American politics. If you buy into that notion, then these retirees collecting Social Security and Medicare checks, the boomers, effectively sit at the top of the US capital structure. If you pursue the analogy with the corporate capital structure, then these beneficiaries are effectively the most senior bondholders. They own the safest tranche. The owners of the Treasurys, the bondholders, sit at the bottom of the capital structure rather than the top. The Treasury owners end up with the riskiest tranche, absorbing adverse fiscal shocks through either surprise inflation or financial repression, or a combination of both. And there is a lot of risk to be absorbed.

Takeaways by Macro Roundup® AI

  1. I cannot generate the requested takeaways because the provided article summary contains no numerical data, comparisons, or quantifiable findings. The.
  2. To proceed, please provide source material with concrete metrics such as: deficit-to-GDP ratios, spending figures, inflation rates, Treasury yield spreads.

Related Articles:

AI Summary. Raising payroll taxes to fix Social Security's funding gap preserves earned benefits but reduces take-home pay without added compensation, shrinking labor supply and slowing economic growth.

Andrew Biggs American Enterprise Institute
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Biggs argues that “fair” approaches to restoring Social Security solvency – those that do not cut already accrued benefits – are less effective than “unfair” ones that do, because the latter incentivize increased work effort, raising growth and revenue.

Does preserving Social Security benefits require sacrificing economic growth?

Core argument: A 5.2 pts payroll tax increase to 17.6% drives reduced labor supply and slower economic growth vs. the status quo.

Imagine that Social Security reform follows the fairness model, in which accrued benefits are paid in full but the rate at which future benefits are earned is reduced. A simple way to do this is to increase the payroll tax rate To keep Social Security permanently solvent, meaning through 75 years and beyond, would require an immediate and permanent increase in the payroll tax rate [from] 12.4% to 17.6%. The higher rate would decrease labor supply and reduce economic growth. [Consider] an alternate reform, which looks clearly unfair: fix Social Security’s funding gap entirely by reducing accrued benefits that Americans already have earned. As of 2025, Americans had accrued $54 trillion in Social Security benefits. Social Security’s unfunded obligation as of 2025 was $26 trillion. So, roughly, this means cutting Americans’ “earned benefits” in half. [Analyzing the 1977 reform that undid the notorious 1972 “double-indexing” of benefits, a group of economists], using SSA earnings data, found that, for every dollar of lost benefits, the affected Americans increased their earnings by 61 cents. Moreover, these additional earnings would be taxed by Social Security, further strengthening the program’s finances. In effect, this makes cutting benefits a “cheaper” way to fix Social Security than raising taxes, because people respond in ways that also increase tax revenues.

Takeaways by Macro Roundup® AI

  1. A 5.2 pts payroll tax increase to 17.6% drives reduced labor supply and slower economic growth vs. the status quo.
  2. $54 trillion in accrued Social Security benefits vs. the unfunded obligation reveals that benefit cuts would reduce growth drag but.

Related Articles:

  • Social Security and Trends in Wealth Inequality — .@sc_cath @mjmill611 and @NatashaRSarin calculate that the market value of future Social Security benefits represented 49% of the wealth of the bottom 90% in…
  • How Federal Spending is Distributed by Age — Retirees receive 62 cents of every age-assignable federal dollar, driven primarily by Social Security and Medicare, which together account for 80% of all federal spending directed at adults over 65.
  • The Great “Transfer”-mation — Transfer payments made up 18% of all US personal income in 2022, up from 8% in 1970. Social Security/Medicare made up 56% of the increase from 1970 to 2022…

AI Summary. Higher economy-wide productivity growth raises incomes but also accelerates healthcare inflation, so a productivity surge from 1.8% to 2.7% raises GDP per capita from $102,000 to $110,000 by 2035 while pushing healthcare spending from 21% to 21.7% of GDP.

Mark Warshawsky American Enterprise Institute
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Warshawsky argues AI may paradoxically worsen the US fiscal outlook, as the income effect of higher overall growth increases demand for low-productivity-growth healthcare. The rise in healthcare spending may “swamp rising tax revenues.”

Does productivity growth solve or worsen the federal budget crisis?

Core argument: GDP per capita reaches $110,000 by 2035 with 2.7% productivity growth vs. $102,000 at 1.8%, driving +$8,000 higher household welfare.

Currently, GDP per capita is about $87,000. With annual productivity growth of 1.8%, based on historical averages, this welfare measure for the U.S. population will grow to $102,000 by 2035. With productivity rising to 2.7%, per capita income is projected to reach $110,000, a clearly positive result for welfare. Currently, healthcare spending is 18.3% of GDP. With 1.8% productivity growth in the broad economy but not in the healthcare sector, which has been slow to adopt AI, and an aging population, the health spending-to-income ratio is projected to rise to 21% of GDP by 2035, with relative healthcare inflation running at 1.1% annually. When productivity increases to 2.7%, health prices rise more rapidly at 1.8% annually, pushing spending to 21.7% of GDP.

Takeaways by Macro Roundup® AI

  1. GDP per capita reaches $110,000 by 2035 with 2.7% productivity growth vs. $102,000 at 1.8%, driving +$8,000 higher household welfare.
  2. Healthcare spending rises to 21.7% of GDP by 2035 under accelerated productivity, up from 18.3%, as relative healthcare inflation outpaces.

Related Articles:

  • U.S. Treasury Investors Are Long in AI — U.S. government debt acts as a leveraged bet on long-run productivity growth, because tax revenue rises automatically with faster growth while spending commitments stay flat. Each 0.1 percentage point increase in permanent productivity growth raises the fundamental value of government debt by $1.3tn, implying a 71 basis point decline in
  • Has the United States Bent the Health Care Cost Curve? — In 2024, medical spending as a share of GDP was just above its 2010 level and 15% ($977B) below its 2010 forecast; 21% of the gap was due to technology, 24% to…
  • 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…