Edward Conard

Top Ten New York Times Bestselling Author

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  • “…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
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  • “…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 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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, January 9, 2019

AI Summary. U.S. exports of manufactured goods to China have declined as a share of both Chinese and U.S. GDP, failing to keep pace with China's economic growth. The pattern suggests China's import substitution strategy is reducing its reliance on American manufactured goods.

Brad Setser Council on Foreign Relations
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U.S. exports of manufactured goods to China have declined as a share of both Chinese and U.S. GDP over the past five years, indicating a shift in trade dynamics. @Brad_Setser

Why have U.S. manufactured exports failed to keep pace with China's growth?

Core argument: U.S. exports of manufactured goods to China have declined as a share of both Chinese GDP and U.S. GDP.

Over the past five years, U.S. exports of manufactured goods to China have declined as a share of both Chinese and U.S. GDP, indicating a significant shift in trade dynamics. This trend suggests that China's import substitution strategy may be effectively reducing its reliance on American manufactured goods. Despite China's robust economic growth, which could have driven increased demand for imports, the share of U.S. manufactured exports in China's GDP has not kept pace. This decline highlights potential challenges for U.S. manufacturers in maintaining their competitive edge in the Chinese market, as well as broader implications for the U.S.-China trade relationship. The data underscores the need for U.S. policymakers and businesses to reassess their strategies in engaging with China's evolving economic landscape.

Takeaways by Macro Roundup® AI

  1. U.S. exports of manufactured goods to China have declined as a share of both Chinese GDP and U.S. GDP.
  2. China's import substitution strategy may be reducing its reliance on American manufactured goods, as the share of U.S. manufactured exports in China's GDP has not kept pace with Chinese economic growth.
  3. The decline in U.S. manufactured exports to China points to challenges for U.S. manufacturers in the Chinese market and implications for the broader U.S.-China trade relationship.

The China Fantasy. Useful factoid for China discussion, according to Brad "... exports of manufactures to China were falling both as a share of Chinese GDP and as a share of U.S. GDP over the last five years..."

Brad Setser, "Why Haven't U.S. Exports of Manufactures Kept Pace with China's Growth?" Council on Foreign Relations, January 7, 2019, https://www.cfr.org/blog/why-havent-us-exports-manufactures-kept-pace-chinas-growth

which perhaps suggests that their import substitution strategy is worked

AI Summary. Between 1980 and 2015, middle-skill jobs fell from 60% to 45% of total US employment while high-skill jobs rose from 25% to 35%, a shift attributed to automation and global trade raising demand for cognitive skills and cutting demand for routine manual tasks. Wage polarization intensified, with high-skill workers gaining 20% wage growth over two decades while low-skill wages stagnated.

David Autor Richard Ely Lecture AEA Meeting
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Automation & globalization reshape job landscapes. Middle-skill jobs fell from 60% to 45% of total employment, while high-skill jobs rose from 25% to 35% from 1980 to 2015 @DavidAutor

How have automation and trade reshaped middle-skill employment and wages?

Core argument: Middle-skill jobs fell from 60% to 45% of total employment between 1980 and 2015, while high-skill jobs rose from 25% to 35%.

The transformation of labor markets is evident as automation and globalization reshape job landscapes. From 1980 to 2015, employment in middle-skill jobs fell from 60% to 45% of total employment, while high-skill jobs rose from 25% to 35%. This shift is driven by technological advancements and global trade, which have increased demand for cognitive skills and reduced demand for routine manual tasks. The implications are significant: wage polarization has intensified, with high-skill workers seeing wage growth of 20% over the past two decades, while low-skill workers experienced stagnation. Policymakers must address these disparities by investing in education and retraining programs to equip the workforce for future demands. As the economy evolves, understanding these trends is crucial for developing strategies that ensure inclusive growth and mitigate the risks of economic inequality.

Takeaways by Macro Roundup® AI

  1. Middle-skill jobs fell from 60% to 45% of total employment between 1980 and 2015, while high-skill jobs rose from 25% to 35%.
  2. Wage polarization intensified as high-skill workers saw 20% wage growth over the past two decades while low-skill workers' wages stagnated.
  3. Technological advancement and global trade increased demand for cognitive skills and reduced demand for routine manual tasks, prompting a call for policymakers to invest in education and retraining programs.

, Autor's slidshow. Will read paper when it's released

David Autor, "Work of the Past, Work of the Future," Richard Ely Lecture AEA Meeting, January 4, 2019, https://economics.mit.edu/files/16560

Thursday, January 10, 2019

AI Summary. U.S. women are more likely to have had children than a decade ago even as they delay childbirth, according to recent data. The pattern is especially evident among women with higher levels of education, who start families later but end up with higher fertility.

Gretchen Livingston Pew Research Center
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US women are more likely to have children than a decade ago, despite delaying childbirth. Women with higher education are waiting longer but ultimately achieving higher fertility rates.

Are women more likely to have children despite delaying childbirth?

Core argument: U.S. women are more likely to have children than a decade ago even as they delay childbirth.

Recent data indicates that U.S. women are increasingly likely to have children compared to a decade ago, despite delaying childbirth. This trend is particularly evident among women with higher educational attainment, who are waiting longer to start families but ultimately achieving higher fertility rates. The shift reflects broader socio-economic changes, including increased participation in the workforce and greater access to education, which have empowered women to balance career and family life more effectively. The implications of this trend are significant for policymakers and economists, as it may influence labor market dynamics, economic growth, and social services demand. Understanding these patterns is crucial for developing strategies that support family planning and economic stability.

Takeaways by Macro Roundup® AI

  1. U.S. women are more likely to have children than a decade ago even as they delay childbirth.
  2. The pattern is particularly evident among women with higher educational attainment, who start families later but reach higher fertility rates.
  3. The shift is attributed to socio-economic changes including increased workforce participation and greater access to education, with potential implications for labor markets, economic growth, and demand for social services.

Good Pew analysis outlying the effects of educational attainment on Fertility from 2018, they do not carve it out race and educational attainment. Working on that.

They're Waiting Longer, but U.S. Women Today More Likely to Have Children Than a Decade Ago: Extended Excerpt Image 1


They're Waiting Longer, but U.S. Women Today More Likely to Have Children Than a Decade Ago: Extended Excerpt Image 2


Gretchen Livingston, "They're Waiting Longer, but U.S. Women Today More Likely to Have Children Than a Decade Ago," Pew Research Center, January 18, 2018, http://www.pewsocialtrends.org/2018/01/18/theyre-waiting-longer-but-u-s-women-today-more-likely-to-have-children-than-a-decade-ago/

AI Summary. Among US women aged 40-44 with a master's degree or higher, childlessness fell from 30% to 22% over two decades, while the average number of children born to women with advanced degrees rose from 1.6 to 1.7, narrowing the fertility gap across education levels.

Gretchen Livingston Pew Research Center
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Highly educated women are increasingly balancing career and family life, with childlessness rates declining and family sizes growing. By 2014, 22% of women aged 40-44 with a master’s degree or higher were childless, down from 30% in 1994.

Is the fertility gap between education levels narrowing?

Core argument: Childlessness among women aged 40–44 holding a master's degree or higher fell from 30% in 1994 to 22% in 2014.

Recent data indicates a shift in fertility trends among highly educated women, with childlessness rates declining and family sizes increasing. In 1994, 30% of women aged 40-44 with a master's degree or higher were childless, but by 2014, this figure had dropped to 22%. Concurrently, the average number of children born to women with advanced degrees rose from 1.6 in 1994 to 1.7 in 2014. This trend suggests that highly educated women are increasingly balancing career and family life, potentially impacting labor markets and economic growth. The narrowing fertility gap between women with different education levels may also influence future demographic and economic policies, as the workforce becomes more diverse and inclusive.

Takeaways by Macro Roundup® AI

  1. Childlessness among women aged 40–44 holding a master's degree or higher fell from 30% in 1994 to 22% in 2014.
  2. The average number of children born to women with advanced degrees rose from 1.6 in 1994 to 1.7 in 2014.

"... The more education a mother has, the fewer children she will have on average in her lifetime. While fertility drops somewhat with each additional level of education, the biggest fertility gap occurs between women who lack a high school diploma and those who have completed high school....."

Childlessness Falls, Family Size Growths Among Highly Educated Women: Extended Excerpt Image 1

Childlessness Falls, Family Size Growths Among Highly Educated Women: Extended Excerpt Image 2


Childlessness Falls, Family Size Growths Among Highly Educated Women: Extended Excerpt Image 3


Childlessness Falls, Family Size Growths Among Highly Educated Women: Extended Excerpt Image 4


Gretchen Livingston, "Childlessness Falls, Family Size Growths Among Highly Educated Women," Pew Research Center, May 7, 2015, http://www.pewresearch.org/wp-content/uploads/sites/3/2015/05/2015-05-07_children-ever-born_FINAL.pdf

AI Summary. The market capitalization of listed domestic companies rose from about 91% to 166% of GDP in the US over roughly two decades, from 31% to 106% in France, and from 22% to 62% in Germany.

World Bank The World Bank
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US market capitalization of listed domestic firms rose from 90.709% of GDP in 1995 to 165.651% by 2017, according to @WorldBank. France & Germany saw similar growth, underscoring the growing importance of stock markets in national economies.

Has stock market capitalization grown faster than GDP in advanced economies?

Core argument: US market capitalization of listed domestic companies rose from 90.709% of GDP in 1995 to 165.651% in 2017.

In 1995, the US market capitalization of listed domestic firms was 90.709% of GDP, rising significantly to 165.651% by 2017, indicating robust growth in equity markets relative to the economy. Similarly, France saw its market capitalization increase from 31.225% to 106.459% of GDP over the same period, while Germany's market capitalization grew from 22.278% to 61.516%. These trends reflect a substantial expansion in the financial markets of these countries, suggesting increased investor confidence and a greater role of equity markets in economic activities. The data underscores the growing importance of stock markets in national economies, potentially influencing policy decisions related to financial regulation and economic growth strategies. This expansion may also impact global investment flows and economic integration, as higher market capitalizations can attract more foreign investment, further intertwining domestic economies with global financial systems.

Takeaways by Macro Roundup® AI

  1. US market capitalization of listed domestic companies rose from 90.709% of GDP in 1995 to 165.651% in 2017.
  2. France's market capitalization of listed domestic firms increased from 31.225% of GDP in 1995 to 106.459% in 2017.
  3. Germany's market capitalization of listed domestic firms grew from 22.278% of GDP in 1995 to 61.516% in 2017, remaining below the US and French levels.

Ed, According to the World Bank (their numbers are slightly different then FRED's) In 1995 the US Market capitalization of domestic firms (% of GDP) was 90.709%, in 2017 that had climbed to 165.651%. French market capitalization of domestic firms (% of GDP) was 31.225%, in 2017 that had climbed to 106.459%. German market capitalization of domestic firms (% of GDP) was 22.278%, in 2017 that had climbed to 61.516%. When you calculated the numbers in the op-ed what series did you use for market capitalization?

Market capitalization of listed domestic companies (% of GDP): Extended Excerpt Image 1


World Bank, "Market capitalization of listed domestic companies (% of GDP)," The World Bank, Accessed January 10, 2019, https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS

AI Summary. After government spending reached 70% of GDP and public debt 80% of GDP, Sweden adopted market-oriented reforms including privatized healthcare services, for-profit schools, reduced welfare benefits, deregulation of electricity and transportation, and a corporate tax cut from 28% to 22%. Public debt has since fallen to 41% of GDP, with growth outpacing European Union peers by roughly 1 point annually.

Jesús Fernández-Villaverde Wall Street Journal
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Sweden’s market reforms: Govt spend cut 70% to <50% GDP, debt 80% to 41%, corp tax -6pts to 22%. Results: Growth +1pt vs EU since 1995, GDP/capita now at 85% of US. Ranks 15th in economic freedom.

Did market-oriented reforms lower public debt and raise growth?

Core argument: Sweden's government spending reached 70% of GDP and public debt 80% of GDP by the early 1990s, a period of economic stagnation that prompted a market-oriented government to enact reforms.

Sweden's economic transformation from socialism to a market-based system highlights the impact of strategic reforms. By the early 1990s, Sweden's government spending had surged to 70% of GDP, and public debt reached 80% of GDP, leading to economic stagnation. In response, a market-oriented government implemented reforms, including privatizing parts of the healthcare system, introducing for-profit schools, and reducing welfare benefits. These changes, along with deregulation in industries like electricity and transportation, and a reduction in corporate tax rates from 28% in 2009 to 22%, have revitalized the economy. Public debt has since declined to 41% of GDP. As a result, since 1995, Sweden's economic growth has outpaced its EU peers by about 1 point annually, positioning it as the 15th freest economy globally. Sweden's per capita GDP is now within 15% of the U.S., demonstrating the effectiveness of these market-based reforms in enhancing economic prosperity.

Takeaways by Macro Roundup® AI

  1. Sweden's government spending reached 70% of GDP and public debt 80% of GDP by the early 1990s, a period of economic stagnation that prompted a market-oriented government to enact reforms.
  2. Sweden's reforms included privatizing parts of healthcare, introducing for-profit schools, cutting welfare benefits, deregulating electricity and transportation, and lowering the corporate tax rate from 28% in 2009 to 22%.
  3. Since 1995, Sweden's economic growth has outpaced its EU peers by about 1 point annually, its public debt has fallen to 41% of GDP, and its per capita GDP is within 15% of the U.S.

Jesús Fernández-Villaverde and Lee E. Ohanian, "How Sweden Overcame Socialism,"Wall Street Journal, January 9, 2019, https://www.wsj.com/articles/how-sweden-overcame-socialism-11547078767

How Sweden Overcame Socialism

Nearly half of millennials say they prefer socialism to capitalism, but what do they mean? “My policies most closely resemble what we see in the U.K., in Norway, in Finland, in Sweden,” Rep. Alexandria Ocasio-Cortez told “60 Minutes.” Yet Sweden’s experiment with socialist policies was disastrous, and its economic success in recent decades is a result of market-based reforms.

Until the mid-20th century, Sweden pursued highly competitive market-based policies. By 1970 Sweden achieved the world’s fourth-highest per capita income. Then increasingly radical Social Democratic governments raised taxes, spending and regulation much more than any other Western European country. Economic performance sputtered. By the early 1990s, Sweden’s per capita income ranking had dropped to 14th. Economic growth from 1970 to the early 1990s was roughly 1 percentage point lower than in Europe and 2 points lower than in the U.S.

Before its socialist experiment, Sweden had a smaller government sector than the U.S. By the early 1990s, government spending and transfer payments ballooned to 70% of gross domestic product, and debt had increased to 80% of GDP. Between 1966 and 1974, Sweden lost some 400,000 private jobs—proportionate to 16.7 million in today’s U.S.

In 1991 a market-oriented government came to power and undertook far-reaching reforms. Policy makers have privatized parts of the health-care system, introduced for-profit schools along with school vouchers, and reduced welfare benefits. Since 1997, government ministries that propose new spending plans have been required to find offsetting cuts in their budgets. As a result, public debt has declined from 80% of GDP in the early 1990s to 41%.

To increase incentives to work, Sweden reduced unemployment benefits and introduced an earned-income tax credit in 2007. The electricity and transportation industries were deregulated in the 1990s, and even the Swedish postal system was opened up to competition in 1993. The corporate tax rate was cut from its 2009 level of 28% to 22% today, and is scheduled to decline to 20.4% in 2021.

This policy mix has earned Sweden a Heritage Foundation ranking as the 15th freest economy in the world. The U.S. is 18th. And it’s paid off. Since 1995, Swedish economic growth has exceeded that of its European Union peers by about 1 point a year. Sweden is now richer than all of the major EU countries and is within 15% of U.S. per capita GDP. While Sweden still has a larger government than the U.S., its tax code is flatter. The progressivity of the U.S. tax code distorts incentives. These distortions would become even larger under the tax-increase proposals of democratic socialists like Ms. Ocasio-Cortez.

There is an example for the U.S. here, but the lesson isn’t what Ms. Ocasio-Cortez thinks. Command-and-control economic policies undermined Sweden’s prosperity, and they would do the same to America’s.

Mr. Fernández-Villaverde is a professor of economics at the University of Pennsylvania. Mr. Ohanian is a senior fellow at the Hoover Institution and professor of economics at UCLA.

I've read a bunch of stuff on this, Richard Freeman (Harvard Labor Economist) did an NBER chapter that does a good job capturing the Swedish experience with structural reforms, I don't think the WSJ piece mischaracterizes their liberalizations. FYI Fernández-Villaverde is the Penn professor you've traded emails with "Just your opinion man"

Ed Comment:I frequently read articles like this and are concerned that they contain propaganda and therefore are unusable. please synthesis serious views on this for me.