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
  • “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 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 represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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
  • “…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 should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, February 12, 2019

AI Summary. CB Insights identifies 50 start-ups on a potential path to a $1bn valuation, based on factors including financial health and market size. There are 315 such "unicorn" companies, up from 131 in 2015, with funding rounds of $100m or more becoming common.

Erin Griffith New York Times
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CB Insights says 50 start-ups are on path to $1bn valuation, driven by financial health & market size. 315 unicorns now, up from 131 in 2015.

Is the number of billion-dollar start-ups growing rapidly?

Core argument: CB Insights identifies 50 start-ups on a potential path to a $1bn valuation, citing factors including financial health and market size.

According to CB Insights, 50 start-ups are on a potential path to achieving a $1bn valuation, driven by factors like financial health and market size. The rapid growth of software start-ups, particularly in sectors like agriculture adapting to the tech era, highlights this trend. The pace of unicorn creation has accelerated, with funding rounds of $100m or more becoming common. As of now, there are 315 unicorns, a significant increase from 131 in 2015. This surge reflects a broader trend where industries increasingly rely on software tools, underscoring the evolving landscape of venture capital and start-up growth.

Takeaways by Macro Roundup® AI

  1. CB Insights identifies 50 start-ups on a potential path to a $1bn valuation, citing factors including financial health and market size.
  2. The number of unicorns stands at 315, up from 131 in 2015, with funding rounds of $100m or more becoming common as the pace of unicorn creation accelerates.
  3. Software start-ups are growing rapidly across industries that increasingly rely on software tools, including agriculture adapting to the tech era.

note these use the same data source (CB Insights) that's we've been tracking for unicorn data.

"...That’s according to an analysis for The New York Times by CB Insights, a firm that tracks venture capital and start-ups. CB Insights used a variety of data — including financial health and the strength and size of the market a company serves — to identify 50 start-ups that may be on a path to achieving a $1 billion valuation (though there is no guarantee they will get there)....Software start-ups may seem boring. But many of them are growing fast because industries like agriculture require more software tools as they adapt to the tech era, said Jason Green, an investor at Emergence, a venture capital firm that invests in cloud software companies....Some of these companies may reach the $1 billion threshold quickly, as unicorn start-ups are created more quickly than ever, said Anand Sanwal, chief executive of CB Insights. Funding rounds of $100 million or more — a once eye-popping sum of capital — have become common. Today, there are 315 unicorns, compared with 131 in 2015...."

Erin Griffith, "The Next Wave of ‘Unicorn’ Start-Ups,"New York Times, February 10, 2019, https://www.nytimes.com/2019/02/10/technology/new-wave-unicorn-start-ups.html

Wednesday, February 13, 2019

AI Summary. Debt sustainability depends on the gap between interest rates and economic growth: when the interest rate exceeds the growth rate, the debt-to-GDP ratio can accelerate, requiring large primary budget surpluses to stabilize. With debt at 300% of GDP and a 1.5-point gap, stabilization would require a surplus of 4.5% of GDP.

Paul Krugman New York Times
Date Posted:
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Debt can’t go to infinity – it can’t exceed total wealth.

Does the gap between interest rates and growth determine debt sustainability?

Core argument: With debt at 300% of GDP and an interest rate–growth differential of 1.5%, a primary surplus of 4.5% of GDP is required to stabilize the debt ratio.

The sustainability of debt hinges on the relationship between interest rates and economic growth. If the interest rate (r) exceeds the growth rate (g), debt can snowball, with the debt-to-GDP ratio accelerating. Debt cannot surpass total wealth, and as it rises, investors demand higher returns, necessitating large primary surpluses to curb debt growth. For instance, with debt at 300% of GDP and r-g at 1.5%, a primary surplus of 4.5% of GDP is needed to stabilize debt levels. Historical precedents exist, but achieving such surpluses today poses significant political challenges, potentially leading to financial repression or restructuring.

Takeaways by Macro Roundup® AI

  1. With debt at 300% of GDP and an interest rate–growth differential of 1.5%, a primary surplus of 4.5% of GDP is required to stabilize the debt ratio.
  2. Debt sustainability hinges on whether the interest rate exceeds the growth rate, since an interest rate above the growth rate can make debt snowball, with the debt-to-GDP ratio accelerating.
  3. Debt cannot surpass total wealth, and as it rises investors demand higher returns, requiring large primary surpluses that, though historically precedented, pose political difficulty and may give way to financial repression or restructuring.

Potential useful Krugman quote on incentives and debt growth

"...What about debt? A lot depends on whether the interest rate is higher or lower than the economy’s sustainable growth rate. If rg you do have the possibility of a debt snowball: the higher the ratio of debt to GDP the faster, other things equal, that ratio will grow. And debt can’t go to infinity - it can’t exceed total wealth, and in fact as debt gets ever higher people will demand ever-increasing returns to hold it. So at some point the government would be forced to run large enough primary (non-interest) surpluses to limit debt growth.........assumes that the government always can and will run these surpluses as needed. He dismisses any concern about the incentive effects of high tax rates; certainly Very Serious People grossly exaggerate these effects, but they’re not completely imaginary.And he says nothing at all about the political difficulty of achieving the required surpluses, yet such difficulties seem likely to be central if debt gets to very high levels. A numerical example may help make the point. Imagine that one way or another we get up to debt equal to 300 percent of GDP, and that r-g =.015 - the interest rate is 1.5 percentage points above the growth rate. Then stabilizing the ratio of debt to GDP would require a primary surplus equal to 4.5 percent of GDP. That’s not impossible: Britain ran surpluses that big for several decades after Waterloo. But it’s a lot to ask of a modern polity. Are we going to slash Medicare and Social Security? Are we going to impose a value-added tax, not to finance new programs, but simply to service the debt? It’s possible, but you do have to wonder whether the temptation to engage in some form of financial repression/debt restructuring/inflation would prevail. And more to the point, investors would wonder about that, pushing r-g even higher...."

Paul Krugman, "What’s Wrong With Functional Finance? (Wonkish),"New York Times, February 12, 2019, https://www.nytimes.com/2019/02/12/opinion/whats-wrong-with-functional-finance-wonkish.html