“…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“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
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
“…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
“…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
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
“…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
“A full-throated defense of economic dynamism.” - The Wall Street Journal
AI Summary.The author estimates Iran earned about $100m a day from crude sales before the war and roughly $175m a day afterward, so a US-enforced blockade would deal its economy a heavy blow. An earlier US maximum-pressure sanctions campaign cut Iranian crude earnings to no more than $10m a day without forcing Iran to yield.
Javier BlasBloomberg
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Before the war, Iran was earning ~$100mm a day from oil exports, which rose to ~$175mm during the war, before the blockade. The US “maximum pressure” campaign of 2018–2021 had reduced Iran’s oil revenue to ~$10mm a day without changing Tehran’s behavior.
Would cutting off oil revenue force Iran to negotiate?
Core argument: Iran's crude sales earned roughly $100 million a day before the war and have risen to about $175 million a day since Feb. 27, by the author's back-of-the-envelope calculations.
According to my back-of-the-envelope calculations, Iran was making about $100 million a day selling its crude before the war. Since Feb. 27, that’s risen to around $175 million a day. If the US enforces the blockade, the Iranian economy will suffer an enormous blow on top of the war destruction. But whether that economic hit translates into a softer negotiation approach remains to be seen. Targeting Iranian oil revenue has been tried before — and it failed. In 2020-2021, when Trump launched a maximum pressure campaign of sanctions, Iranian crude exports dropped to fewer than 250,000 daily barrels for several months just as oil prices were depressed due to the impact of the pandemic. Even allowing for some exports slipping under the radar, Iran was earning no more than $10 million a day selling crude — and it still didn’t buckle.
Takeaways by Macro Roundup® AI
Iran's crude sales earned roughly $100 million a day before the war and have risen to about $175 million a day since Feb. 27, by the author's back-of-the-envelope calculations.
Under Trump's 2020-2021 maximum pressure sanctions campaign, Iranian crude exports fell below 250,000 barrels a day for several months and revenue reached no more than $10 million a day, yet Iran did not buckle.
US enforcement of the Hormuz blockade would deal the Iranian economy an enormous blow on top of war destruction, though whether that translates into a softer negotiating approach remains to be seen.
Related Articles:
Are We Running Out Of Oil— An analysis of country- and product-specific oil markets identifies pockets of potential extreme tightness if the Strait of Hormuz remains effectively closed, with critically low supplies of the petrochemical feedstocks naphtha and liquefied petroleum gas in Asia and cross-product scarcity in multiple Asian countries.
Salem’s Lot: Gulf War Update; The Purge Of Senior US Military Officers; A US Fossil Fuel Reliance Fever Dream— The US is not insulated from market effects of a Strait of Hormuz closure: while US natural gas prices have declined this year, most other hydrocarbon and refined product prices have risen materially, with US crude oil, wholesale gasoline, naphtha, shipping fuel and some petrochemical increases exceeding those in Europe and Asia.
Shattered Assumptions And The Energy Quandary— The author argues that energy, rather than fixed income, now serves as the true hedge to equity positions, pushing investors, companies and countries to review their energy allocations and policies. Chinese government bonds diversified equity risk when no other major bond market did, which the author attributes to China being the only major economy without a meaningful inflation problem.
AI Summary.China's energy security rests on coal rather than imported oil and gas: the country consumes more than half the world's coal, and coal powers its industry and electricity system. Coal consumption has risen since 2022, with roughly 95GW of new coal capacity added in one year, exceeding Vietnam's entire installed electricity capacity.
Damien MaCarnegie Endowment for International Peace
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Due to electrification, China’s energy security is not contingent on Hormuz. China is increasing its absolute coal generation capacity while coal’s share of domestic generation falls overall.
Does China's energy security depend on coal rather than oil imports?
Core argument: China added roughly 95GW of coal capacity in 2024, a decade high exceeding Vietnam's entire installed electricity capacity, with total coal consumption rising markedly since 2022 after Beijing's pivot to energy security following its domestic energy crisis.
[China's] energy security isn’t really tied to oil or gas, for which the country does depend on imports. It has always been inextricably linked to coal. China consumes more than half of the world’s coal, and it is the main commodity that powers Chinese industry and the electricity system. Total coal consumption has risen markedly since 2022, which aligns with the rebound in commissioned capacity resulting from Beijing’s hard pivot to energy security after the domestic energy crisis noted above. In 2024 alone, China added a staggering decade-high of ~95GW of coal capacity, which is larger than the entire installed electricity capacity of Vietnam. [While Chinese] solar power [has] achieved cost parity with coal, the country has a deep industrial base and a comprehensive electro-tech ecosystem that is intent on manufacturing a new energy landscape, or an “electro-state,” as some have come to call it. Peak coal is not only congruent with but is also a necessary condition for realizing this strategy.
Takeaways by Macro Roundup® AI
China added roughly 95GW of coal capacity in 2024, a decade high exceeding Vietnam's entire installed electricity capacity, with total coal consumption rising markedly since 2022 after Beijing's pivot to energy security following its domestic energy crisis.
China consumes more than half of the world's coal, the main commodity powering its industry and electricity system, and its energy security is linked to coal rather than to imported oil and gas.
Chinese solar power has reached cost parity with coal, and the country's industrial base and electro-tech ecosystem aim to build an "electro-state," a strategy for which peak coal is a necessary condition.
Related Articles:
The Real China Model— China generates more electricity annually than the United States and European Union combined, having added capacity equivalent to the United Kingdom's total supply each year. Electricity makes up nearly 30% of China's energy use, versus 22% in the US and 21% globally, and its share is growing about 6% a year.
Fighting Words: The Energy Transition in 2026— Estimates based on primary energy overstate how much electricity is needed to replace oil in passenger cars, since electric motors convert 80%-90% of electricity into motion versus about 18% for gasoline cars. Measuring useful final energy net of waste heat avoids this "primary energy fallacy": the US consumed 45 exajoules of useful final energy versus 95 exajoules of primary energy.
Power Politics: Energy Self-Sufficiency in a Modern Mercantilist World— China leads in adding power to the grid, with more than 30,000 miles of ultra-high-voltage transmission lines versus zero in the US and lead times for large transformers of 48 weeks against a US average of 143 weeks. This positions China to accommodate new demand sources such as artificial intelligence.
AI Summary.China leads in adding power to the grid, with more than 30,000 miles of ultra-high-voltage transmission lines versus zero in the US and lead times for large transformers of 48 weeks against a US average of 143 weeks. This positions China to accommodate new demand sources such as artificial intelligence.
Karen Karniol-Tambour, Ian Singer, Daniel Hochman and Jeremy NgBridgewater Associates
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China’s annual generation of electrical power is 2.5x that of the US. China is self-sufficient in electricity via coal and renewables, whereas the US is self-sufficient in terms of oil and gas but faces capacity constraints in generating electricity.
Is China better positioned than the US to power AI demand?
Core argument: China operates more than 30,000 miles of ultra-high-voltage transmission lines, which carry higher capacity at greater efficiency than traditional transmission, while the United States has zero.
China is a leader in scaling up and deploying power to the grid. China has invested massively in grid infrastructure to accommodate the increase in renewables generation capacity and is far more efficient on permitting and local regulations. China has more than 30,000 miles of UHV transmission lines that have much higher capacity and efficiency than traditional transmission; the US currently has zero. Large transformers, which are necessary for transmitting power between generation and end users, are available with a lead time of 48 weeks in China, about one-third the US average of 143 weeks. This has allowed China to build out its generation capacity to meet rising power needs, which have grown rapidly over the past few decades as a result of industrialization and electrification. And it has done so far more quickly than other regions like the United States, which puts it in a strong position to accommodate new sources of demand like AI.
Takeaways by Macro Roundup® AI
China operates more than 30,000 miles of ultra-high-voltage transmission lines, which carry higher capacity at greater efficiency than traditional transmission, while the United States has zero.
Large transformers, needed to move power from generation to end users, carry a 48-week lead time in China, about one-third the US average of 143 weeks.
China's grid investment and more efficient permitting and local regulation have let it expand generation capacity to meet demand from industrialization and electrification faster than the United States, putting it in a strong position to accommodate new demand such as AI.
Related Articles:
World Energy Outlook 2025— Global electricity demand is projected to rise roughly 40–50% by 2035, even though electricity currently accounts for only 21% of total final energy consumption worldwide. Electricity use by servers optimized for artificial intelligence is projected to rise fivefold by 2030, yet data centres are projected to account for less than 10% of global electricity demand growth through 2030.
Heliocentrism— An energy use must be electrified before green grid electricity can decarbonize it, and while US grid decarbonization continues at a steady pace, the electricity share of final US energy consumption has grown little. Transmission line growth runs well below Department of Energy targets for 2030 and 2035, and transformer delivery times have stretched from 4–6 weeks to 2–3 years.
Economic Growth Now Depends on Electricity, Not Oil— Average annual electricity load growth reached 3% and is projected to continue at that rate for five years, with utilities raising expected peak demand for 2029 by 12%, or 101 gigawatts, driven by data centers, new factories, electric vehicles, heat pumps, and hydrogen production.
AI Summary.China's DJI accounts for about 70% of commercial drones sold globally, and industry experts estimate its output far exceeds that of any other manufacturer, with capacity in the millions of drones a year. About 500 US companies manufacture drones, producing fewer than 100,000 annually, according to an industry association.
Farah StockmanNew York Times
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China’s DJI can manufacture millions of drones a year; about 500 American drone manufacturers are collectively building fewer than 100,000 drones annually.
Does China outproduce the US in drone manufacturing?
Core argument: DJI accounts for about 70% of all commercial drones sold globally for hobby and industrial uses such as aerial photography, package delivery and weather research, with industry experts estimating its output far exceeds that of any other drone manufacturer.
DJI accounts for about 70% of all commercial drones sold globally for hobby and industrial use, such as aerial photography, package delivery and weather research. The company declined to share market data, but industry experts estimate that DJI’s output far exceeds that of any other drone manufacturer. “No one even comes close,” said Bobby Sakaki, chief executive of UAS NEXUS, a drone industry consultant. “DJI can make millions of drones per year. That is a hundred times more than anybody in the United States can make.” About 500 companies manufacture drones in the United States, producing fewer than 100,000 a year, according to Ryan Carver, communications manager for the Association for Uncrewed Vehicle Systems International, a nonprofit organization of industry professionals.
Takeaways by Macro Roundup® AI
DJI accounts for about 70% of all commercial drones sold globally for hobby and industrial uses such as aerial photography, package delivery and weather research, with industry experts estimating its output far exceeds that of any other drone manufacturer.
About 500 U.S. companies manufacture drones and together produce fewer than 100,000 a year, according to Ryan Carver of the Association for Uncrewed Vehicle Systems International.
Bobby Sakaki, chief executive of drone industry consultant UAS NEXUS, says DJI can make millions of drones per year, a hundred times more than any manufacturer in the United States can make.
Related Articles:
China Made Millions of Drones. Now It Has to Find Uses For Them— China accounts for 70-80% of global commercial drone supply and 79% of approved drone patents globally, according to industry analysts and a patent study. The Civil Aviation Administration of China projects the low-altitude economy, which includes flying cars, will grow fivefold to $490bn by 2035.
Ukraine Drone Strikes Hit Nuclear Bombers Deep Inside Russia— Ukraine used drones smuggled into Russia aboard trucks and released remotely from mobile wooden structures to strike strategic airfields as distant as eastern Siberia. An official in Ukraine's Security Service said more than 40 Russian aircraft, including Tu-95 and Tu-22 M3 long-range bombers and A-50 surveillance planes, were damaged, with losses assessed at at least $2bn.
A US Drone Maker Tries to Take Back the Country’s Skies— US drone maker Skydio has produced 45,000 drones in total, while Chinese rival DJI likely makes that many every few weeks — a scale gap that matters because production costs fall predictably with cumulative output. The Pentagon's Defense Innovation Unit says that at attrition rates observed in Ukraine, the US military would exhaust its entire drone supply in five days.
AI Summary.NATO's collective defense spending averaged 1.72% of GDP over roughly two and a half decades, below the alliance's agreed 2% threshold, leaving a cumulative shortfall the authors estimate at over $2tn that was not invested in force structure, modernization, and readiness. The authors argue closing the gap requires years of sustained investment beyond current commitments.
Mackenzie Eaglen and Cole SpillerAmerican Enterprise Institute
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Between 2000 and 2024, NATO’s defense spending averaged 1.72% of GDP, a cumulative $2T short of the 2% target, “funds that should have been invested…in force structure, modernization, and readiness but were instead deferred or cut.” @MEaglen
How large is NATO's cumulative defense spending shortfall?
Core argument: NATO's collective defense spending averaged 1.72% of GDP from 2000 to 2024, below the agreed 2% threshold, producing a cumulative alliance-wide defense spending deficit of more than $2 trillion.
From 2000 to 2024, NATO’s collective defense spending averaged just 1.72% of GDP, well below the agreed-upon 2% threshold. The result is a defense spending deficit totaling over $2 trillion across the alliance—funds that should have been invested under the 2% of GDP framework in force structure, modernization, and readiness but were instead deferred or cut. This deficit peaked in 2014, coinciding with Russia’s illegal annexation of Crimea, which prompted a renewed focus on defense investment. Closing this gap will take years of sustained investment beyond current commitments. As illustrated on the battlefield in Ukraine, modern warfare demands consistent investment in large-scale force generation, munitions stockpiles, and industrial capacity—all of which require a funding framework beyond a static percentage of GDP.
Takeaways by Macro Roundup® AI
NATO's collective defense spending averaged 1.72% of GDP from 2000 to 2024, below the agreed 2% threshold, producing a cumulative alliance-wide defense spending deficit of more than $2 trillion.
The NATO defense spending deficit peaked in 2014, coinciding with Russia's illegal annexation of Crimea, which prompted renewed focus on defense investment.
Closing NATO's spending gap will require years of sustained investment beyond current commitments, and the war in Ukraine illustrates that large-scale force generation, munitions stockpiles, and industrial capacity need a funding framework beyond a static share of GDP.
Related Articles:
Germany’s Parliament Approves Friedrich Merz’s €1tn Spending Plan— Germany's parliament approved constitutional changes allowing up to €1tn for military and infrastructure spending, including unlimited borrowing for defense and a €500bn, 12-year fund to modernize hospitals, schools, roads and energy networks. The plan could revive Europe's largest economy and boost EU rearmament efforts.
German Army Struggles to Get Gen Z Recruits ‘Ready for War’— Germany's armed forces commissioner warned the country is not moving closer to its target of 203,000 active troops by 2031, as the military slightly shrank amid high dropout rates, with a quarter of new recruits leaving within six months. Conscientious objector applications reached 2,998, up from 200 in 2021.
The Intellectual Spoils of War? Defense RD, Productivity and International Spillovers— The authors estimate that a 10% increase in government-financed R&D, largely defense, is associated with a 4.3% rise in privately funded R&D across OECD countries, indicating "crowding in" rather than "crowding out." They also find international spillovers raise private R&D abroad, though the overall effect on US productivity growth is modest.
