Edward Conard

Top Ten New York Times Bestselling Author

  • “…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 fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…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

Macro Roundup


Sunday, November 16, 2014

AI Summary. The Supplemental Poverty Measure counts tax payments, work expenses, regional cost differences, and non-cash benefits such as food stamps and housing subsidies, unlike the official measure based solely on pre-tax cash income. It showed a poverty rate of 11.7% versus the official 10.5%.

Kevin Lang Princeton University Press
Date Posted:
Is Database:
Database

New Supplemental Poverty Measure (SPM) in the US includes non-cash benefits & regional cost variations, indicating a 2019 poverty rate of 11.7% vs 10.5% official rate.

How does a broader poverty measure change the measured poverty rate?

Core argument: The Supplemental Poverty Measure put the 2019 U.S. poverty rate at 11.7%, above the official measure's 10.5%, reflecting the additional factors the SPM incorporates.

The development of a Supplemental Poverty Measure (SPM) aims to provide a more comprehensive understanding of poverty in America by incorporating additional factors such as tax payments, work expenses, and regional cost variations. Unlike the official poverty measure, which is based solely on pre-tax cash income, the SPM includes non-cash benefits like food stamps and housing subsidies, offering a broader perspective on economic hardship. In 2019, the SPM indicated a poverty rate of 11.7%, compared to the official rate of 10.5%, highlighting the impact of these additional factors. This measure is crucial for policymakers as it reflects the effectiveness of social safety nets and guides resource allocation to address poverty more effectively. By capturing a more nuanced picture of economic deprivation, the SPM helps in crafting targeted interventions to alleviate poverty across diverse demographic groups.

Takeaways by Macro Roundup® AI

  1. The Supplemental Poverty Measure put the 2019 U.S. poverty rate at 11.7%, above the official measure's 10.5%, reflecting the additional factors the SPM incorporates.
  2. The Supplemental Poverty Measure adjusts for tax payments, work expenses, and regional cost variation, and counts non-cash benefits such as food stamps and housing subsidies, unlike the official measure based solely on pre-tax cash income.
  3. The Supplemental Poverty Measure reflects the effectiveness of social safety nets and guides resource allocation, helping policymakers craft targeted interventions across demographic groups.

Kevin Lang, “Poverty And Discrimination,” Princeton University Press, 2007, https://press.princeton.edu/books/hardcover/9780691119540/poverty-and-discrimination

John Iceland, “Poverty In America: A Handbook,” University Of California Press, August 2013

https://www.ucpress.edu/book.phpAshley Edwards, “Developing A Supplemental Poverty Measure,” United States Census, March 2011

https://www.census.gov/library/working-papers/2011/demo/edwards-01.html“How The Census Bureau Measures Poverty,” United States Census, Accessed June 12, 2020

https://www.census.gov/topics/income-poverty/poverty/guidance/poverty-measures.html

Tuesday, November 18, 2014

AI Summary. Japan's total debt burden has risen less than in most other developed economies, with the productive sector cutting its debt by about 40 percentage points of GDP since the 1980s even as nominal incomes stayed flat. Real household consumption fell 3.5% over a year following a sales tax increase from 5% to 8%.

Matthew Klein FT Alphaville
Date Posted:
Is Database:
Database

Japan’s debt issue is often misunderstood, as the country’s total debt burden has increased less than in most other developed nations.

Is Japan's debt burden smaller than commonly believed?

Core argument: Japan's productive sector cut its debt by about 40 percentage points of GDP since the 1980s despite flat nominal incomes, while Japan's total debt burden rose less than in most other developed nations.

Japan's debt issue is often misunderstood, as the country's total debt burden has increased less than in most other developed nations. While government indebtedness (net of assets) rose significantly during deleveraging, the productive sector reduced its debt by about 40 percentage points of GDP since the 1980s, despite flat nominal incomes. The government's strategy focuses on boosting domestic spending through a cycle of higher consumption, private investment, and wage growth, rather than regressive tax hikes. However, real household consumption fell 3.5% over the past year, partly due to a sales tax increase from 5% to 8%, which contributed to a GDP decline. This highlights the challenge of balancing fiscal credibility with economic growth, as further tax hikes could risk economic contraction.

Takeaways by Macro Roundup® AI

  1. Japan's productive sector cut its debt by about 40 percentage points of GDP since the 1980s despite flat nominal incomes, while Japan's total debt burden rose less than in most other developed nations.
  2. Real household consumption in Japan fell 3.5% over the past year, partly due to a sales tax increase from 5% to 8% that contributed to a decline in GDP.
  3. Japan's government strategy centers on raising domestic spending through a cycle of higher consumption, private investment, and wage growth rather than regressive tax hikes.

the last chart "Total Debt" is really interesting

http://ftalphaville.ft.com/2014/11/17/2045622/japans-debt-problem-in-perspective/

Japanese government officials have repeatedly said (including to us) that their goal is to reinvigorate domestic spending by encouraging a virtuous cycle of higher consumption => more private investment => faster wage growth => higher consumption, and so forth. That also happens to be a better way to reduce the country’s indebtedness than regressive tax hikes that take money out of the pockets of people who are already having a tough time dealing with falling real incomes.

But those who focus exclusively on government indebtedness miss the fact that Japan’stotaldebt burdenhas increasedlessthan in most other rich countries:

To be sure, government indebtedness(net of assets) rose a lot during this period of deleveraging:

The chart only shows total *private* credit, but the clear story is that the productive sector has managed to heroically reduce its debt burden by about 40 percentage points of GDP following the excesses of the 1980s. The achievement has been all the more remarkable considering that nominal incomes have been essentially flat over that period.

But suppose that the level of Japanese debt were a constraint on policymakers. Whichdebt actually matters? A chart from a recentspeechby Takehiro Sato of the Bank of Japan — one of thedissenterson the Halloween decision to increase the pace of asset purchases — helps put things in perspective:

Why this hasn’t already happened over the past two decades of rising government indebtedness, the result of economic stagnation and a shrinking workforce, is generally left unexplained. And besides, the country’s existing “credibility” has beenunhelpfulat achieving the goal of faster inflation, so we really don’t understand why the government would be willing to tank the economy for the sake of maintaining it.

Despite the signs that the government would be unwise to continue to raise taxes, several people, notably Adam Posen, have made the case that doing so is necessary to maintain the country’s fiscal “credibility” and prevent a crisis wheresoaring real interest ratescause the economy to collapse.

And while the level of real business investment is still about 3 per cent higher than it was a year ago, government ministers would be right to be worried that capital expenditures have continued to fall:

What the government didn’t expect, and what is encouraging Prime Minister Abe todelay(if not renege on) the plan to raise the tax rate to 10 per cent, was the economy’s failure to snap back. For example, the latest data show that real household consumption, excluding imputed rent, plunged by3.5 per centover the past 12 months to its lowest level since the Tohoku earthquake hit in 2011:

The best way to get less of something is to tax it, so nobody should have been surprised when Japanese GDP cratered after the sales tax was raised from 5 per cent to 8 per cent in April.