Edward Conard

Top Ten New York Times Bestselling Author

  • “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
  • “…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
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, September 4, 2017

AI Summary. The share of U.S. workers reporting excessive hours rose from 6% in 1973 to 26% in 2016, employer-sponsored health insurance coverage fell from 97% in 1980 to 61% in 2016, and private-sector union membership dropped from 16.8% in 1983 to 6.4% in 2016. Contingent work arrangements, which often lack benefits, grew from 10% to 15.8%.

Lauren Weber Wall Street Journal
Date Posted:
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Full-time employment in the US provides less stability for workers. Excessive hours rose from 6% in 1973 to 26% in 2016. Employer-sponsored health insurance fell from 97% in 1980 to 61% in 2016.

How have U.S. work hours, benefits, and union membership changed over decades?

Core argument: The share of U.S. workers with employer-sponsored health insurance fell from 97% in 1980 to 61% in 2016, and only 12% of those with single coverage pay no premium.

The stability once associated with full-time employment in the U.S. has diminished significantly. In 1973, only 6% of Americans reported working excessive hours, but by 2016, this figure rose to 26%. The share of workers with employer-sponsored health insurance dropped from 97% in 1980 to 61% in 2016, with only 12% of single coverage workers paying no premium. Union membership in the private sector fell from 16.8% in 1983 to 6.4% in 2016, reducing workers' bargaining power. Meanwhile, contingent work arrangements increased from 10% in 1995 to 15.8% in 2015, often lacking benefits. Despite more benefits for work-life balance, the share of economic output going to workers is shrinking as companies prioritize shareholder returns, with investors receiving three times the payout compared to 30 years ago.

Takeaways by Macro Roundup® AI

  1. The share of U.S. workers with employer-sponsored health insurance fell from 97% in 1980 to 61% in 2016, and only 12% of those with single coverage pay no premium.
  2. Americans reporting excessive work hours rose from 6% in 1973 to 26% in 2016, while contingent work arrangements, which often lack benefits, grew from 10% in 1995 to 15.8% in 2015.
  3. Private-sector union membership dropped from 16.8% in 1983 to 6.4% in 2016, reducing workers' bargaining power, while the share of economic output going to workers shrinks and investors receive three times the payout of 30 years ago.

Lauren Weber and Stephanie Stamm, "Then and Now: The Big Shift at Work," Wall Street Journal, September 2, 2017, https://www.wsj.com/graphics/american-workplace-then-and-now/ce

Then and Now: The Big Shift at Work: Extended Excerpt Image 1


A couple generations ago, workers in the U.S. could expect a 9-to-5 schedule, retirement benefits, generous health insurance and a sense that they could spend years, even decades, at a single company. Today, workers have more flexibility over how they do their jobs and more control over what they do. But the safety net that once came with full-time work has frayed.

THE U.S. WORKFORCE

Work Intensity Then

The workday is getting longer. In 1973, 6% of Americans complained of working excessive hours, according to a report based on government data.

In 2016, 26% of workers said they usually worked more than 48 hours a week.

In 1973, 7% said they had difficulty completing their work in the time allotted.

In 2016, halfof U.S. workers said they worked during their free time at least occasionally.

Work is demanding, too. Two-thirds of American workers say their jobs require them to spend at least half of their time working at high speeds or meeting tight deadlines.

In 1980, 97% of full-time workers at large and medium-size companies received health insurance through their employers. Most of them didn’t pay a dime for it.

72% of workers with single coverage paid no premium.

51% of workers with family coverage paid no premium.

In 2016, 61% of all workers, full-time and part-time, at large companies had employer-sponsored health insurance.

Counting small companies, which are less likely to offer insurance, that share drops to 55%.

Few employers paid the full cost of the insurance: 12% of those with single coverage paid no premium in 2016.
3% of those with family coverage paid no premium.

Even though many people report working long hours to handle increased workloads, employers are providing more benefits that aid work-life balance.

In 1979, 56% of full-time workers at medium and large companies received paid days off to treat an illness or injury.

In 2016, 76% of all full-time workers received paid days off to treat an illness or injury.
In 1995, 2% of full-time workers at medium and large companies had access to paid parental leave.
In 2016, 16% of all full-time workers had access to paid parental leave.
Workers also have more say over when and where they work. In 1995, 2% employees were allowed to work remotely.
By 2016, 8% were. The Society for Human Resource Management estimates that number to be much higher.

Before the 1980s, pensions were the most common form of employer-sponsored retirement plan. In 1979, 38% of all private-sector workers participated in a pension plan, with their employers guaranteeing a preset monthly payout to retirees.

Just 13% of private-sector workers had pension plans in 2014.
In 1979, 17% of workers had 401(k) accounts.
That rose to 45% with 401(k) plans in 2014.
Today, more private-sector workers have access to an employer-sponsored plan of some kind: 66% in 2017...
...compared with 57% in 2003.

The changes in the workplace have coincided with a shifting relationship between employers and their workers.

The share of Americans represented by unions has shrunk, meaning workers have less bargaining power to maintain generous benefits and job security.

In 1983, 16.8% of private-sector workers belonged to unions.
In 2016, 6.4% of private-sector workers belonged to unions.
The proportion of Americans working as temps or independent contractors, meanwhile, is on the rise. These roles often come without retirement or health benefits. In 1995, 10% of U.S. workers were in these “contingent” arrangements.
By 2015, 15.8% were.

Workers now get a smaller piece of the economic pie in the form of wages and benefits than they once did

Economists and management experts say CEOs and boards today put shareholders’ concerns ahead of employee needs. Driving up the stock price - often by cutting costs - and distributing earnings through dividends and share buybacks keeps investors happy.

The biggest share of companies’ output still goes to workers, but that share is shrinking as companies spend less on both employee compensation and capital investment. Meanwhile, investors are getting three times the payout they did 30 years ago.

Then and Now: The Big Shift at Work: Extended Excerpt Image 2


As automation replaces or transforms many jobs, employers and workers may come to depend on each other even less. Estimates vary, but some experts say that 50% of the tasks workers do in today’s global economy could be automated using technology that already exists.

Sources:

Bureau of Labor Statisics (health insurance, work-life balance, retirement, unions; data is for private-sector workers); Rand Corp., University of Michigan and University of Massachusetts (work intensity); Kaiser Family Foundation (health insurance; data includes a small share of nonfederal public employers); Employee Benefit Research Institute (retirement); Lawrence Katz and Alan Krueger (work relationship); Simcha Barkai (shareholder capitalism); McKinsey Global Institute (future of work)Network

Sunday, September 17, 2017

AI Summary. An academic survey finds that over 80% of Chinese elites — defined as those earning at least 12x the average income in their area — are descendants of pre-1949 elites. The author argues this supports the view that equalizing incomes would not prevent previously advantaged families from regaining their position.

Scott Sumner The Money Illusion
Date Posted:
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@ScottSumner The case of New Hampshire, with a low poverty rate of 6.9%, further demonstrates that poverty alone does not drive social issues, as the state boasts high median income and education levels.

Do previously advantaged families regain elite status after incomes are equalized?

Core argument: An academic survey finds that over 80% of Chinese elites — those earning at least 12 times their area's average income — are descendants of pre-1949 elites, despite Mao-era equalization efforts.

An academic survey reveals that over 80% of Chinese elites, defined as those earning at least 12 times the average income in their area, are descendants of pre-1949 elites, illustrating that social mobility is influenced by factors beyond poverty. This supports the conservative view that even if income were made 100% equal, the rich would regain their position, as evidenced by Mao's China, where the cream rose to the top despite initial equalization efforts. The case of New Hampshire, with a low poverty rate of 6.9% compared to the national average of 13.7%, further demonstrates that poverty alone does not drive social issues, as the state boasts high median income and education levels. These examples underscore that individual attributes and historical advantages play significant roles in economic outcomes, challenging the notion that poverty is the root cause of social problems.

Takeaways by Macro Roundup® AI

  1. An academic survey finds that over 80% of Chinese elites — those earning at least 12 times their area's average income — are descendants of pre-1949 elites, despite Mao-era equalization efforts.
  2. New Hampshire's poverty rate of 6.9%, against a national average of 13.7%, alongside its high median income and education levels, is offered as evidence that poverty alone does not drive social problems.
  3. The argument holds that individual attributes and historical advantages shape economic outcomes, so even fully equalized incomes would see the rich regain their position.

Scott Sumner, "Poverty does not cause social problems (and the cream rises to the top),"The Money Illusion, September 17, 2017, http://www.themoneyillusion.com/

"... One academic survey found more than 80 per cent of Chinese “elites” (those with income at least 12 times higher than the average in their area) are descended from the pre-1949 elite.....Liberals claim that people like Bill Gates become rich because they come from upper class families, with all sorts of advantages. Conservatives claim that even if income were made 100% equal, within a few years the rich would regain their position and the poor would fall back. Mao’s China provided a near perfect test of this theory, and we now know that the conservatives are right about this issue. The cream does rise to the top...."

Poverty does not cause social problems (and the cream rises to the top)

Pity poorNew Hampshire:

Manchester is at the heart ofNew Hampshire‘s opioid epidemic, which has first responders, lawmakers and health care administrators scrambling for solutions before the situation spirals further out of control.

Though other New England states such asVermontandMainehave seen spikes in opioid-related deaths, the granite state ranksNo. 2 in the nation, behind West Virginia, for the number of opioid-related deaths relative to its population. It ranks No. 1, though, forfentanyl-related deathsper capita.

PS. RIP Cassini.This is my all-time favorite NYT article, and it contains almost nothing but pictures and a video. In my view, Saturn (and her moons) is the most beautiful object in the Solar System.This is also worth examining.

Of course this is not true in every single case. Sometimes highly talented people have bad luck and end up homeless. Occasionally an idiot will win $100 million in a lottery, or maybe even get elected President. But on average the more talented, more ambitious and harder working people will tend to succeed. Being born white in America does give a person some advantages, but that doesn’t really explain very much. Certainly not income gaps between American whites and Asians, or between Christians and Jews, or between immigrant blacks and American born blacks, or between Korean-Americans and Laotian-Americans, etc., etc.

You often hear a debate about what would happen if everyone suddenly lost everything, and the entire population was equally poor. Liberals claim that people like Bill Gates become rich because they come from upper class families, with all sorts of advantages. Conservatives claim that even if income were made 100% equal, within a few years the rich would regain their position and the poor would fall back. Mao’s China provided a near perfect test of this theory, and we now know that the conservatives are right about this issue. The cream does rise to the top.

“My parents and grandparents taught us a lot — not Chinese or maths but a sense of values, of how you should be and how you should treat others,” he says. They also drilled into him the knowledge they had once been very rich but everything had been taken away — a lesson all too relevant even now.

Virtually every Chinese millionaire or billionaire is self-made because capitalist reforms to the centrally planned communist economy only began in the early 1980s and did not really take off until the 1990s. But the modern super-wealthy often turn out to be descended from an earlier capitalist class. Richard is no exception. Before the 1949 revolution his family were wealthy shipowners who transported goods along the Yangtze river and the ancient imperial canal from Beijing in the north to Hangzhou in the south. They lost everything when the communists took over and were forcibly resettled at least twice. One academic survey found more than 80 per cent of Chinese “elites” (those with income at least 12 times higher than the average in their area) are descended from the pre-1949 elite. Richard puts this down to “family culture”.

Yes, that’s anecdotal, but consider this:

Now he is 43 and worth nearly $11bn.

Again, like so many of China’s new titans, Liu’s family was so poor that until he went to university aged 18 he only tasted meat once or twice a year. His family, peasant farmers in arid coal country, 700km south of Beijing, had a few rice fields but they also had to hand over the crop to the government; these were the dire days after the Cultural Revolution. “From June until September we were able to eat corn — cornmeal porridge for breakfast, corn pancakes for lunch and dry cornbread for dinner; cornbread so tough it made your throat bleed,” he tells me. “The other eight months we ate boiled sweet potato for breakfast, sweet potato pancake for lunch and dried sweet potato for dinner.”

Liu Qiangdong is making up for lost time — and with vertiginous speed.

Liu Qiangdong is one example of a Chinese poor person who did not become a heroin addict:

Of course it’s silly to argue that affluence causes addiction—correlation doesn’t prove causation. But it’s equally silly to suggest that people in West Virginia become drug addicts because they are poor. There are a billion poor people (by American standards) in China, and very few are heroin addicts.

New Hampshire also has a very low level of inequality.

New Hampshire’s workforce is also among the best-educated in the country, according to previously released census data. Better-educated workers tend to make more money.

One of the chief drivers of New Hampshire’s high median income is its poverty rate, which is the lowest in the nation. Only 6.9 percent of the state’s residents live below the poverty line, compared with a national average of 13.7 percent (in Mississippi nearly 21 percent of people live in poverty).

The Granite State’s median household income last year was a whopping $76,260, nearly 30 percent higher than the national median of $59,039, according to the Census....

New Hampshire.

Which U.S. state had the highest median income in 2016?...

Pop quiz:

So what makes New Hampshire so special? Why so many deaths of despair? Perhaps because it has arguably themost successful economy in the entire world, with extremely high income, high education and extremely low rates of poverty: