Edward Conard

Top Ten New York Times Bestselling Author

  • “…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
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, July 12, 2017

AI Summary. Foreign direct investors' expenditures to acquire or establish U.S. businesses totaled $373.4bn in 2016, down 0.15% from 2015, with acquisitions of existing businesses accounting for the bulk of the spending. The U.S. goods and services deficit was $502.3bn in 2016.

BEA Staff Bureau of Economic Analysis
Date Posted:
Is Database:
Database

Foreign Direct Investment By Type 2014 – 2016. Expenditures reached $373.4bn in 2016, a slight decrease of 0.15% from 2015. Predominantly characterized by acquisitions rather than new investments.

How much do foreign investors spend on U.S. businesses?

Core argument: Expenditures by foreign direct investors for new investment in the United States totaled $373.4bn in 2016, down 0.15% from 2015.

From 2014 to 2016, foreign direct investment (FDI) in the U.S. saw significant fluctuations, with expenditures reaching $373.4bn in 2016, a slight decrease of 0.15% from 2015. This period was characterized predominantly by acquisitions rather than new investments. The data highlights a broader economic context where the U.S. goods and services deficit stood at $502.3bn in 2016. These figures underscore the dynamic nature of FDI flows and their implications for the U.S. economy, reflecting both global economic conditions and domestic investment attractiveness. The trend of acquisitions suggests a strategic focus by foreign investors on existing U.S. assets, potentially impacting domestic market competition and innovation. Understanding these investment patterns is crucial for policymakers aiming to enhance the U.S.'s appeal as a destination for new foreign investments.

Takeaways by Macro Roundup® AI

  1. Expenditures by foreign direct investors for new investment in the United States totaled $373.4bn in 2016, down 0.15% from 2015.
  2. Acquisitions of existing U.S. businesses, rather than establishment of new ones, accounted for the predominant share of foreign direct investment expenditures from 2014 to 2016.
  3. The U.S. goods and services deficit stood at $502.3bn in 2016, the same year foreign direct investors spent $373.4bn on new investment in the United States.

new BEA numbers, incoming FDI was 373.4b for 2016 (down.15) from 2015 more or less all acquisitions, For context BEA has the good and services deficit at502.3bfor 2016

Expenditures by Foreign Direct Investors for New Investment in the United States, 2014 - 2016: Extended Excerpt Image 1

BEA, "Expenditures by Foreign Direct Investors for New Investment in the United States, 2014 - 2016," Bureau of Economic Analysis, July 12, 2017, https://www.bea.gov/newsreleases/international/fdi/fdinewsrelease.htm

Tuesday, August 15, 2017

AI Summary. A study of US Current Population Survey data from 1980–2015 finds that minimum wage increases are associated with a decline in the share of automatable jobs held by low-skilled workers, with the sharpest declines among older workers. The authors argue higher wage floors give firms an incentive to adopt labor-replacing technologies.

James Pethokoukis American Enterprise Institute
Date Posted:
Is Database:
Database

A study by @JamesPethokoukis finds that minimum wage hikes accelerate automation, displacing low-skilled workers, particularly older employees. The trend is likely to continue with future wage increases, highlighting the need for policies addressing adverse effects.

Do minimum wage increases push firms to automate low-skilled jobs?

Core argument: A study using Current Population Survey data from 1980–2015 finds that minimum wage increases reduce the share of automatable employment held by low-skilled workers, with older workers showing the sharpest decline.

Minimum wage hikes significantly impact the labor market by accelerating automation, as evidenced by a study analyzing CPS [Current Population Survey] data from 1980-2015. The study found that increasing the minimum wage decreases the share of automatable employment held by low-skilled workers, with older workers experiencing the sharpest decline. This shift suggests that firms are incentivized to adopt technologies that replace human labor, creating employment challenges for low-skilled workers who lack the skills for new tasks. While automation can lead to higher productivity and economic growth, it also displaces workers, particularly in industries where older employees are major income contributors. The study highlights the need for policies that address these adverse effects, as the trend towards automation is likely to continue with future minimum wage increases.

Takeaways by Macro Roundup® AI

  1. A study using Current Population Survey data from 1980–2015 finds that minimum wage increases reduce the share of automatable employment held by low-skilled workers, with older workers showing the sharpest decline.
  2. The study's authors argue that minimum wage hikes incentivize firms to adopt labor-replacing technologies, creating employment challenges for low-skilled workers who lack the skills required for new tasks.
  3. The study notes that automation can raise productivity and economic growth while displacing workers, particularly in industries where older employees are major income contributors, and calls for policies addressing these adverse effects.

James Pethokoukis, "New study finds that minimum wage hikes are great news for robot workers," American Enterprise Institute, August 14, 2017, https://www.aei.org/economics/new-study-finds-that-minimum-wage-hikes-are-great-news-for-robot-workers/

New study finds that minimum wage hikes are great news for robot workers

Back in 2014, I wrote a post that asked, “Why are minimum wage proponents dismissing automation risk?” I just wasn’t getting a sense from the “Fight for 15” crowd that it had thought much about the possibility that dramatically raising the minimum wage might worsen the competitive position of low-skill humans versus machines.

Or maybe it had, but the politics were so tantalizing that they took precedence over sound policy. My conclusion back then: “Pushing for an unprecedented boost in the minimum wage given both the weak economy and automation risk seems like foolhardy public policy.” That, especially given the low-risk alternative of raising and expanding the Earned Income Tax Credit.

Now comes the new NBER working paper, “People Versus Machines: The Impact of Minimum Wages on Automatable Jobs” by Grace Lordan and David Neumark (bold is mine):

Based on CPS data from 1980-2015, we find that increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers. The average effects mask significant heterogeneity by industry and demographic group. For example, one striking result is that the share in automatable employment declines most sharply for older workers. An analysis of individual transitions from employment to unemployment (or to employment in a different occupation) leads to similar overall conclusions, and also some evidence of adverse effects for older workers in particular industries. … Our work suggests that sharp minimum wage increases in the United States in coming years will shape the types of jobs held by low-skilled workers, and create employment challenges for some of them. … Therefore, it is important to acknowledge that increases in minimum wage will give incentives for firm to adopt new technologies that replace workers earlier. While these adoptions undoubtedly lead to some new jobs, there are workers who will be displaced that do not have the skills to do the new tasks. Our paper has identified workers whose vulnerability to being replaced by machines has been amplified by minimum wage increases. Such effects may spread to more workers in the future.

Three things: First this study is a great companion piece to a recent one by Daron Acemoğlu and Pascual Restrepo analyzing the effect of increased industrial robot usage between 1990 and 2007 on US local labor markets: “According to our estimates, one more robot per thousand workers reduces the employment to population ratio by about 0.18-0.34 percentage points and wages by 0.25-0.5 percent.”

Second, Lordan and Neumark note that minimum wage literature often, in effect, ends up focusing on teenager employment as it presents aggregate results. But that approach “masks” bigger adverse impacts on some subgroups like older workers who are “more likely to be major contributors to their families’ incomes.” This seems like an important point.

Third, some policy folks argue that it’s a feature not a bug that a higher minimum wage will nudge firms to adopt labor-saving automation. (Thought not those arguing for robot taxes.) The result would be higher productivity and economic growth. But perhaps we are “getting too much of the wrong kind of innovation.”