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


Thursday, December 8, 2016

AI Summary. The share of U.S. children earning more than their parents fell from 92% for those born in 1940 to 50% for those born in the 1980s, a decline found in all 50 states and steepest in the industrial Midwest. The authors attribute it to the uneven distribution of economic growth rather than slower growth.

Raj Chetty, David Grusky, Maximilian Hell, Nathaniel Hendren, Robery Manduca and Jimmy Narang Reason
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US absolute income mobility has declined significantly since 1940, with children earning more than their parents dropping from 92% to 50%. The decline is consistent across all 50 states. @RajChetty

Has the uneven distribution of growth driven declining income mobility?

Core argument: The share of U.S. children earning more than their parents fell from 92% for the 1940 birth cohort to 50% for those born in the 1980s, with declines in all 50 states and the steepest drops in the industrial Midwest.

Absolute income mobility in the U.S. has declined significantly, with the percentage of children earning more than their parents dropping from 92% for those born in 1940 to 50% for those born in the 1980s. This decline is consistent across all 50 states, with the steepest drops in the industrial Midwest. The fall in mobility is more pronounced for middle-class families and when comparing sons' earnings to their fathers'. The primary driver is the unequal distribution of economic growth rather than a slowdown in GDP growth. To revive high rates of absolute mobility, economic growth must be more evenly distributed across income groups, as higher GDP growth alone is insufficient.

Takeaways by Macro Roundup® AI

  1. The share of U.S. children earning more than their parents fell from 92% for the 1940 birth cohort to 50% for those born in the 1980s, with declines in all 50 states and the steepest drops in the industrial Midwest.
  2. The decline in absolute income mobility is more pronounced for middle-class families and when comparing sons' earnings to their fathers'.
  3. The fall in absolute mobility is attributed primarily to the unequal distribution of economic growth rather than slower GDP growth, with higher GDP growth alone deemed insufficient to revive high mobility rates.

Worth knowing about before you go into the Ryan meeting, came out today. Chetty just released a new paper showing that absolute mobility has fallen that contrast with his research showing relative mobility has remained unchanged. As always with Chetty the devil is in the details, "...we measure income inpre-taxdollars at the household level when parents and children are approximatelythirty years old, adjusting for inflation using the CPI-U-RS...."30 isn't what it once was in terms of the number of years in the workforce, and pretax. and he excludes immigrants"...The sample of children includes U.S.-born members of the 1940-84 birth cohorts who, at age 30, were present in the U.S. and not institutionalized. We exclude immigrants in order to have a consistent sample in which we observe both parents’ and children’s incomes..."which if fine for understanding the politics but isn't really fair for obvious reasons Raj Chetty, David Grusky, Maximilian Hell, Nathaniel Hendren, Robery Manduca and Jimmy Narang, "The Fading American Dream: Trends in Absolute Income Mobility Since 1940," December 2016, http://www.equality-of-opportunity.org/papers/abs_mobility_paper.pdf"...We find that rates of absolute mobility have fallen from approximately 90% for children born in 1940 to 50% for children born in the 1980s. The result that absolute mobility has fallen sharply over the past half century is robust to the choice of price deflator, the definition of income, and accounting for taxes and transfers.Incounterfactual simulations, we find that increasing GDP growth rates alone cannot restore absolute mobility to the rates experienced by children born in the 1940s. In contrast, changing the distribution of growth across income groups to the more equal distribution experienced by the 1940 birth cohort would reverse more than 70% of the decline in mobility.These results imply that reviving the "American Dream" of high rates of absolute mobility would require economic growth that is spread more broadly across the income distribution...Using this methodology, we find that rates of absolute upward income mobility in the United States have fallen sharply since 1940. Under the benchmark of copula stability, the fraction of children earning more than their parents fell from 92% in the 1940 birth cohort to 50% in the 1984 birth cohort. Rates of absolute mobility fell the most for children with parents in the middle class...We find robust evidence of declines in absolute mobility across subgroups.Absolute mobility fell in all 50 states between the 1940 and 1980 cohorts, although the rate of decline varied, with the largest declines concentrated in states in the industrial Midwest states such as Michigan and Illinois.We also find substantial declines in absolute mobility for both sons and daughters when income is measured at the household level. The decline in absolute mobility is especially steep - from 95% in the 1940 cohort to 41% in the 1984 cohort - when we compare the individual earnings of sons to their fathers....The measures of absolute mobility we focus on in this study differ from relative mobility because they compare levels of earnings across generations by bringing in data on the marginal income distributions of parents and children. Absolute mobility has fallen over time while relative mobility has remained stable because income growth has stagnated across much of the income distribution in recent decades....Second, most of the decline in absolute mobility is driven by the more unequal distribution of economic growth in recent decades rather than the slowdown in GDP growth rates. In this sense, the rise in inequality and the decline in absolute mobility are closely linked. Growth is an important driver of absolute mobility, but high levels of absolute mobility require broad-based growth across the income distribution. With the current distribution of income, higher GDP growth rates alone are insufficient to restore absolute mobility to the levels experienced by children in the 1940s and 1950s. If one wants to revive the "American Dream" of high rates of absolute mobility, then one must have an interest in growth that is spread more broadly across the income distribution..."The Fading American Dream: Trends in Absolute Income Mobility Since 1940: Extended Excerpt Image 1

Tuesday, December 13, 2016

AI Summary. The ARPANET, the precursor to the internet, grew from 4 nodes to 35 nodes over four years, an expansion built on government investment in technology infrastructure. E-commerce sales reached an estimated $4.2tn as the internet became a central component of global trade.

David Newbury workergnome
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1969-73: ARPANET nodes surge from 4 to 35 (+775%). Early gov investment spawned internet economy: global e-commerce hits $4.2tn by 2020. Network effect drives private sector tech infrastructure spend into 100s of bn annually.

How did early government network investment grow into trillions in e-commerce?

Core argument: The ARPANET grew from 4 nodes in 1969 to 35 nodes by May 1973, a rise of over 775% in four years, as documented in the ARPA Network Logical Map of May 1973.

The ARPA Network Logical Map of May 1973 marks a pivotal moment in the evolution of the internet, highlighting the nascent stages of what would become a global economic powerhouse. By 1973, the ARPANET had expanded to include 35 nodes, a significant increase from its initial 4 nodes in 1969, reflecting a growth rate of over 775% in just four years. This expansion laid the groundwork for the internet's role in driving GDP growth, fostering innovation, and reshaping industries worldwide. The network's development underscored the importance of government investment in technology infrastructure, which has since been mirrored by private sector investments totaling hundreds of bn annually. As the internet evolved, it became a critical component of global trade, contributing to an estimated $4.2tn in e-commerce sales by 2020. The ARPANET's early growth trajectory exemplifies how strategic technological advancements can yield substantial economic benefits over time.

Takeaways by Macro Roundup® AI

  1. The ARPANET grew from 4 nodes in 1969 to 35 nodes by May 1973, a rise of over 775% in four years, as documented in the ARPA Network Logical Map of May 1973.
  2. The ARPANET's expansion rested on government investment in technology infrastructure, since mirrored by private sector investments totaling hundreds of billions of dollars annually.
  3. The internet that grew out of ARPANET became a component of global trade, with e-commerce sales estimated at $4.2tn by 2020.

David Newbury, “The Enture Internet,” December 10, 2016, https://twitter.com/workergnome/status/807704855276122114

Matt Olsen Comment:Thought this was pretty cool. The poster’s dad was the business manager for the computer science department at Carnegie Mellon at the time.