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


Wednesday, August 12, 2020

AI Summary. Asian immigrants in Australia are less educationally hyper-selected than those in the United States, where family-based migration yields more skilled immigrants and Australia's skilled migration covers occupations ranging from medical practitioners to trades. Asian immigrants in the US achieve higher labor market outcomes despite greater income inequality.

Van Tran, Fei Guo and Tiffany Huang American Academy Of Political And Social Science
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US family-based system outperforms Australian skills-based model for Asian migrants. US achieves higher immigrant outcomes despite less selective criteria.

Does family-based migration attract more skilled immigrants than skills-based selection?

Core argument: Asian immigrants in Australia are less educationally hyper-selected than those in the United States, even though Australia runs a skills-based migration policy and the US relies largely on family-based migration.

Despite Australia's skills-based migration policy, Asian immigrants are less hyper-selected there compared to the US, where family-based migration yields more skilled immigrants. In Australia, skilled migration includes a broad range of occupations, from highly skilled medical practitioners to trades requiring technical apprenticeships, which dilutes educational hyper-selectivity. Conversely, Asian immigrants in the US achieve higher labor market outcomes despite facing greater income inequality. This suggests that the US system, while not explicitly skills-focused, effectively attracts and utilizes skilled immigrants, leading to better economic integration and success compared to Australia.

Takeaways by Macro Roundup® AI

  1. Asian immigrants in Australia are less educationally hyper-selected than those in the United States, even though Australia runs a skills-based migration policy and the US relies largely on family-based migration.
  2. Australia's skilled migration stream spans occupations from medical practitioners to trades requiring technical apprenticeships, which dilutes the educational hyper-selectivity of its Asian immigrant population.
  3. Asian immigrants in the United States achieve higher labor market outcomes than their counterparts in Australia despite facing greater income inequality.

“…Despite Australia’s official skills-based migration policy,Asian immigrants are less hyper-selected in Australia compared to the United States.On its face, this finding is surprising because it upends conventional wisdom and “grand narratives” about the role of immigration policy in selecting immigrants. However, among immigrants with post-high school educational qualifications, immigrants from Asia are more likely to arrive via humanitarian or family-based mechanisms, compared to immigrants from English speaking countries (Kler 2006). In addition, Australia’s skilled-based migration programs over the years have included a wide range of occupations, from highly skilled cardiologists and other medical practitioners that require lengthy postgraduate training, to cabinetmaker, chef and other skilled workers whose educational qualifications could be fulfilled through a few years of technical apprenticeship. As a result, Australia’s skilled-based immigration policy does not necessarily result in higher levels of hyper-selectivity in education than in the United States. Second, we find mixed evidence for our second hypothesis. While Asian immigrants have fared well in both societies, their level of achievement is significantly higher in the United States with regards to labor market outcomes. Asian immigrants in our study did not achieve better socioeconomic outcomes compared to their U.S. counterparts. Even with considerably high educational attainment, Asian immigrants in Australia are less likely to convert their human capital to advantageous labor market outcomes and economic success. This finding provides useful data for the debate on the effects of multiculturalism policy. Because Australia’s “White Australia” policy was abolished only in the 1970s, its racist legacy may still affect the social and economic outcomes of non-European immigrant groups. Third, we find some evidence for our third hypothesis: the level of income inequality in the host society plays some role in affecting migrants’ socioeconomic outcomes. While Asian immigrants are more hyper-selected in the United States, they report a disadvantage in labor market outcomes, including earnings in comparison to whites, despite their significant educational advantage. This reflects the higher level of inequality in the United States, where the white advantage cuts across multiple domains. In contrast, Asian immigrants are less hyper-selected in Australia, but they report less of a disadvantage in the labor market and earnings than Australiaborn non-Indigenous Europeans, because the gaps among ethnoracial groups are also more compressed there….”

The Integration Paradox: Asian Immigrants in Australia and the United States: Extended Excerpt Image 1


Van Tran, Fei Guo and Tiffany Huang, "The Integration Paradox: Asian Immigrants in Australia and the United States," American Academy Of Political And Social Science, August 4, 2020, https://journals.sagepub.com/doi/abs/10.1177/0002716220926974

Suspect this is driven by the size of American market and innovation clusters.

Counterintuitive but maybe not surprising, new paper finds that to this point the US family based migration system yields more skilled immigrants than Australia's skill based system (would be interesting to see if this holds true for Canada as well) and once here Asian immigrants get better labor market outcomes than they do in AU.

Ed Comment: Interesting. Ok to post. I agree that high paying jobs for smart people are more abundant per capita in America than they are in Australia where no one, for example, is probably conducting large scale research like they are here. I don’t know what “report” in they report a disadvantage in labor market outcomes… means. Asians earn more in the US and probably more relative to the median than elsewhere, so what does “report” disadvantages mean if the facts don’t back it up?

AI Summary. Research productivity is declining at about 5% a year, with the number of researchers needed to achieve a given level of output rising substantially — the researchers required to double computer chip density have increased 18x since the 1970s. This pattern points to diminishing returns on research and development spending.

Tyler Cowen Scientific Progress
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Nick Bloom finds research productivity is falling 5% a year, posing significant challenges for economic growth and innovation.

Are research and development spending facing diminishing returns?

Core argument: Research productivity is declining at roughly 5% annually, with the number of researchers required to achieve a given level of output rising substantially across sectors, according to Nicholas Bloom.

Research productivity is declining at a rate of 5% annually, posing significant challenges for economic growth and innovation. This trend is evident across various sectors, with the number of researchers required to achieve a given level of output increasing substantially. For instance, the number of researchers needed to double computer chip density has risen by a factor of 18 since the 1970s. This decline in productivity growth is concerning as it suggests diminishing returns on investment in research and development (R&D), which could impact GDP growth and technological advancement. The implications are profound for policymakers and business leaders who must adapt strategies to counteract these trends and sustain economic progress. Addressing this issue may require rethinking management practices, increasing collaboration, and leveraging new technologies to enhance efficiency and output in research activities.

Takeaways by Macro Roundup® AI

  1. Research productivity is declining at roughly 5% annually, with the number of researchers required to achieve a given level of output rising substantially across sectors, according to Nicholas Bloom.
  2. The number of researchers needed to double computer chip density has risen by a factor of 18 since the 1970s.
  3. Declining research productivity suggests diminishing returns on R&D investment that could affect GDP growth and technological advancement, and addressing it may require rethinking management practices, increasing collaboration, and leveraging new technologies.

Tyler Cowen, "Nicholas Bloom on Management, Productivity, and Scientific Progress," Mercatus Center, August 12, 2020, https://medium.com/conversations-with-tyler/nicholas-bloom-tyler-cowen-productivity-economics-b5714b05fc2b

Ed Comment:Ok to file for the factoid that research productivity is falling 5% a year. I’d like to see the calculation behind that. Beyond that, I don’t see much insight. For starters, I think an enormous and increasing share of workers are working in services. Much of the R&D may not be aimed at increasing the productivity and product offerings of services. Perhaps Slack is, or radical transparency, but not research into the number of planets in the universe. From my perspective at luxury vanity that is unlikely to help anyone in any relevant time frame. It’s a shame we fund it. I also worry that the great expansion of research is diverting talent from serving customers, which slows productivity, especially if the research doesn’t find something that increases productivity. I’m especially concerned about cancer research that will save a few productive people, but largely allows highly unproductivity old people (negative contributors) to live a few years longer on average.

COWEN: How much of the measured productivity edge of American multinationals is just tax arbitrage and where profits get assigned to?

BLOOM: I never really thought a huge amount of it was that. My personal view — I guess this is, again, biased by my research — is American firms are particularly just fantastically well managed.I’ve done a lot of work for many years, looking at management practices, trying to collect data in cross-country surveys.To explain what I mean, management practices — the basics are, do you collect information and use it to improve yourself? Think of lean, collecting information all the time, and having improvement processes. Secondly, do you train and promote employees, try to promote the best people, trying to avoid things like promoting family, friends, or long-serving employees? So meritocratic HR systems.I’m not going to say American firms are perfect. They’re definitely not perfect. There are many management scandals. But on average, American firms are much better managed, and they take that with them abroad. There’s this whole literature that has been sometimes called dark matter, or explaining why we seem to have this endless negative balance of trade but positive balance on our investments abroad. American companies seem to make huge profits abroad.One big explanation is they’re just exploiting lots of this intangible capital, which we think of as good management. American multinationals around the world are well managed, and they make a lot of profits where they’re located in the UK and France, in Ghana, in Thailand — wherever they are. That’s helping keep the US economy afloat, that return profits. I don’t see that as being related — transfer pricing and offshore tax manipulation. That is a factor, but I think American firms are primarily driven, actually, by better innovation and better management.

COWEN: But if you assign the blame to government, ideas are a global public good. Isn’t it true that global governmental expenditure on R&D in absolute terms is up, even if it may be down as a percentage of budgets for total R&D? Thus, scientific progress in the United States, which can draw upon governmental support in China, Japan, India, UK, Switzerland, should still be going up. It has to be within private scientific progress that there’s a diversion of effort away from public goods and toward more private goods. Or no?

BLOOM: No, it’s a good question. It’s certainly true, our paper only focused on the US. The puzzle gets much harder if you include global R&D. You see that productivity per researcher or research dollar is falling, in the sense of the rate of progress per dollar we’re spending….The puzzle gets even more extreme if you look globally. Sure, it’s tricky because Europe has become slightly less of a powerhouse, but obviously Asia has completely taken off in the amount of R&D being spent in, say, India, and China has exploded. Has that offset the reduction in US publicly funded R&D, certainly as a share of GDP? It’s not obvious. One reason is, there’s plenty of evidence on knowledge spillovers being localized. There’s a lot of evidence, for example, that you’re more likely to coauthor with your colleagues in your own university or the same firm. I guess the same firm is more obvious, but if that was true, you may think the transmission of ideas from China to the US is less effective than within the US. I also don’t know if the increase in Chinese and Indian R&D by their government sectors is enough to offset the reduction by the US, and whether it’s in the right areas. It may be that a lot of developing countries’ R&D is more, say, defense and national security focused, which I suspect has lower tradeoffs. The nice thing about the US and things like the National Science Foundation and the National Institute for Health is they would put huge amounts of funding on very basic research that had broad value. An MIT researcher goes to the NSF, gets funding for research. They tend to be focused on very basic things that are of interest to broad science, and that has, I suspect, the largest value in.

BLOOM: The big picture — just to make sure everyone’s on the same page — is, if you look in the US, productivity growth... In fact, I could go back a lot further. It’s interesting — you go much further, and you think of European and North American history. In the UK that has better data, there was very, very little productivity growth until the Industrial Revolution. Literally, from the time the Romans left in whatever, roughly 100 AD, until 1750, technological progress was very slow. Sure, the British were more advanced at that point, but not dramatically. The estimates were like 0.1 percent a year, so very low. Then the Industrial Revolution starts, and it starts to speed up and speed up and speed up. And technological progress, in terms of productivity growth, peaks in the 1950s at something like 3 to 4 percent a year, and then it’s been falling ever since. Then you ask that rate of fall — it’s 5 percent, roughly. It would have fallen if we held inputs constant. The one thing that’s been offsetting that fall in the rate of progress is we’ve put more and more resources into it. Again, if you think of the US, the number of research universities has exploded, the number of firms having research labs. Thomas Edison, for example, was the first lab about 100 years ago, but post-World War II, most large American companies have been pushing huge amounts of cash into R&D. But despite all of that increase in inputs, actually, productivity growth has been slowing over the last 50 years. That’s the sense in which it’s harder and harder to find new ideas. We’re putting more inputs into labs, but actually productivity growth is falling.

COWEN: Let’s say paperwork for researchers is increasing, bureaucratization is increasing. How do we get that to be negative 5 percent a year as an effect? Is it that we’re throwing kryptonite at our top people? Your productivity is not declining 5 percent a year, or is it? COVID aside.

BLOOM: COVID aside. Yeah, it’s hard to tell your own productivity. Oddly enough, I always feel like, “Ah, you know, the stuff that I did before was better research ideas.” And then something comes along. I’d say personally, it’s very stochastic. I find it very hard to predict it. Increasingly, it comes from working with basically great, and often younger, coauthors. Why is it happening at the aggregate level? I think there are three reasons going on. One is actually come back to Ben Jones, who had an important paper, which is called, I believe, “ Renaissance Man.” This came out 15 years ago or something. The idea was,it takes longer and longer for us to train. Just in economics — when I first started in economics, it was standard to do a four-year PhD. It’s now a six-year PhD, plus many of the PhD students have done a pre-doc, so they’ve done an extra two years. We’re taking three or four years longer just to get to the research frontier. There’s so much more knowledge before us, it just takes longer to train up. That’s one story. A second story I’ve heard is, research is getting more complicated. I remember I sat down with a former CEO of SRI, Stanford Research Institute, which is a big research lab out here that’s done many things. For example, Siri came out of SRI. He said, “Increasingly it’s interdisciplinary teams now.” It used to be you’d have one or two scientists could come up with great ideas. Now, you’re having to combine a couple. I can’t remember if he said for Siri, but he said there are three or four different research groups in SRI that were being pulled together to do that. That of course makes it more expensive. And when you think of biogenetics, combining biology and genetics, or bioengineering, there’s many more cross-field areas. Then finally, as you say, I suspect regulation costs, various other factors are making it harder to undertake research. A lot of that’s probably good. I’d have to look at individual regulations. Health and safety, for example, is probably a good idea, but in the same way, that is almost certainly making it more expensive to run labs. In fact, COVID is a huge pushback. I was talking just before the shutdown to a good friend of mine, and she said she has a big lab that has a number of animals and longer-running experiments going on. In fact, the shutdown has been extremely expensive. When we reopen with social distancing, of course, the costs are going to go up again. These are all factors pushing on your point of regulation. It’s just expensive running research.

COWEN: If I understand your estimates correctly, efficacy per researcher, as you measure it, is falling by about 5 percent a year. That seems phenomenally high. What’s the mechanism that could account for such a rapid decline?

Phenomenon Tyler Cowen interview with Nick Bloom

Steve Comment: Note Bloom’s calculation for research productivity is“…Research productivity is the ratio of idea output, measured as TFP growth, to the effective number of researchers.See Notes to Figure 1 and the online Appendix. Both research productivity and research effort are normalized to the value of 1 in the 1930s….”See attached paper

Thursday, August 13, 2020

AI Summary. Black Americans made up 13.4% of the U.S. population but 54.9% of homicide offenders, making them 7.9x more likely than non-blacks to be homicide offenders. That ratio exceeds the gender disparity in homicide offending, where males are 7.1x more likely than females.

Steve Sailer Taki's Magazine
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Blacks Are 7.9x More Likely To Be Homicide Offenders Than Nonblacks According To FBI.

How large are racial disparities in homicide offending rates?

Core argument: In 2018, blacks were 7.9 times more likely than nonblacks to be homicide offenders, accounting for 54.9% of murderers while comprising 13.4% of the population.

In 2018, blacks were 7.9 times more likely to be homicide offenders than nonblacks, despite comprising only 13.4% of the population. This disparity highlights significant socio-economic challenges and potential systemic issues within communities. The formula used to derive this statistic is (54.9% of murderers are black / 13.4% of population is black) / ((100% - 54.9%) / (100% - 13.4%)). This ratio surpasses even the gender disparity in homicide rates, where males are 7.1 times more likely than females to be offenders. Such data underscores the need for targeted policy interventions and resource allocation to address underlying causes, which may include economic inequality, access to education, and community support systems. Understanding these dynamics is crucial for policymakers and economists aiming to develop effective strategies to reduce crime and improve socio-economic conditions across diverse populations.

Takeaways by Macro Roundup® AI

  1. In 2018, blacks were 7.9 times more likely than nonblacks to be homicide offenders, accounting for 54.9% of murderers while comprising 13.4% of the population.
  2. The 7.9-to-1 black–nonblack homicide offending ratio exceeds the gender disparity in homicide offending, in which males are 7.1 times more likely than females to be offenders.
  3. The ratio is derived by dividing the black share of murderers by the black population share, then dividing that by the same ratio computed for nonblacks.

Steve Sailer, “….So, the simplest work-around is simply to compare blacks to all nonblacks. If blacks make up 13.4 percent of the population at present, then they were 7.9 times more likely to be homicide offenders than nonblacks on a per capita basis in 2018 and 7.4 times more in the decade of 2009-2018. Here’s the formula for 2018: (54.9% of murderers are black / 13.4% of population is black) / ((100% - 54.9%) / (100% - 13.4%)) = 7.9Incredibly, among known killers in 2018, the ratio of blacks to nonblacks (7.9 times greater) was bigger than the ratio of males to females (7.1 times)….”

Steve Sailer, "Crime Roaring Twenties,"Taki's Magazine, August 12, 2020, https://www.takimag.com/article/crime-roaring-twenties/

AI Summary. Compensation makes up over 50% of police operating budgets before benefits and pensions, and multiyear labor contracts and pension obligations make cuts difficult, leaving many reductions superficial or temporary. Local policing spending rose 176% from 1977 to 2017, outpacing the 137% rise in general expenses.

Andrea Fuller Wall Street Journal
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Compensation alone constitutes over 50% of police operating budgets, excluding benefits and pension costs, making it hard for cities to cut police budgets @AndreaFuller @WSJ.

Why is cutting police budgets so difficult for cities?

Core argument: Compensation alone accounts for over 50% of police operating budgets, excluding benefits and pension costs.

Cities are grappling with the challenge of cutting police budgets, as compensation alone constitutes over 50% of police operating budgets, excluding benefits and pension costs. Despite public pressure to defund, many cuts are superficial or temporary, with some cities like San Diego even increasing police budgets. From 1977 to 2017, local spending on policing surged 176%, outpacing the 137% rise in general expenses, driven by multiyear labor contracts and pension obligations. Pension costs have tripled in major cities over 18 years, and police misconduct settlements exceeded $1bn from 2010-2014. Efforts to redirect funds to social services face resistance due to entrenched financial commitments and public safety concerns amid rising violent crime rates.

Takeaways by Macro Roundup® AI

  1. Compensation alone accounts for over 50% of police operating budgets, excluding benefits and pension costs.
  2. Local spending on policing rose 176% from 1977 to 2017, outpacing the 137% increase in general local expenses, driven by multiyear labor contracts and pension obligations.
  3. Pension costs tripled in major cities over 18 years and police misconduct settlements exceeded $1bn from 2010 to 2014, while cities such as San Diego increased police budgets despite public pressure to defund.

Heather Gillers and Andrea Fuller, "Cities Weigh Cutting Police Budgets and Discover How Hard That Is,"Wall Street Journal, August 12, 2020, https://www.wsj.com/articles/cities-weigh-cutting-police-budgets-and-discover-how-hard-that-is-11597261079

Cities Weigh Cutting Police Budgets and Discover How Hard That Is

Cities across America are weighing whether to reduce or redirect spending on police. Some, with backing from mayors and city councils, are already undertaking efforts to do so, as protesters in their streets call for “defunding.”

They’re quickly learning that police budgets, built up over generations with broad public support, are difficult to dismantle.

Elected officials in New York, Seattle, Los Angeles and Minneapolis, among other places, have approved plans to reduce police budgets in response to the nationwide protests following the killing of George Floyd in police custody in Minneapolis.

But many of the cuts are cosmetic, temporary or represent a relatively small part of budgets. In the case of Minneapolis, they may not stick. A Minnesota state commission has delayed a city council plan to put a proposal to disband the police department on the November ballot.

On Monday, Seattle’s city council approved about a $3 million cut to police spending for the remaining budget year, around 1% of the annual police budget but far less than the 50% target some on the city council have proposed. Police Chief Carmen Best, the first Black woman to hold the post and who opposed sharp spending cuts, announced her retirement in the wake of the decision and decried a “lack of respect” for officers.

Cities Weigh Cutting Police Budgets and Discover How Hard That Is: Extended Excerpt Image 1


Other cities are trying to avoid cutting police funding despite hits to tax revenue from the economic slowdown. A few, such as San Diego, have even voted to increase police budgets recently.

The calls for cutting come amid a rise in violent crime in several large U.S. cities this year, including a murder increase in most large ones. Chicago on Sunday night saw heavy looting of its Magnificent Mile and other upscale shopping districts following a police shooting that wounded a man in another area. Officers said he had fired on them first.

Chicago recorded 94 homicides in the 28 days ended Aug. 2. Speaking before Sunday’s looting, Alderman Matt O’Shea, a Democrat, said, “We just had the most violent month in 28 years. Is now really the time to talk about defunding, whatever that is?”

Even activists differ on what defunding the police means. Some want to outright end or deeply cut police departments. Others say the term means redirecting a portion of police money to things such as social workers, education, and job programs, or moving functions to other departments.

Recent polling suggests Americans support changes in policing, but also broadly support police. In a mid-June poll by Pew Research Center, following the first of the protests after the George Floyd killing, about 42% of Black adults surveyed favored reductions in spending on policing in their areas, and 21% of white adults did.

Gallup polling released more recently found that 47% of all respondents and 70% of Black respondents supported shifting some police spending to social programs. Still, 67% overall and 61% of Black Americans wanted to see the police presence in their neighborhoods remain the same, and about one-fifth of both groups wanted to see it increase.

The polling showed 58% of Americans support major changes to policing, but just 15% support abolishing the police.

“What I know from being in city council and now as mayor is that people don’t necessarily take exception to the presence of police in their communities,” said Atlanta Mayor Keisha Lance Bottoms. “They take exception to bad police in their communities.”

Support from voters and politicians is a reason that local spending on police—now around $100 billion a year—has outpaced the overall growth of city and county budgets over roughly four decades, rising faster than K-12 education, sanitation and parks and recreation, according to a Wall Street Journal analysis of Census data compiled by the Urban Institute think tank. Between 1977 and 2017, local spending on policing rose 176%, versus a 137% rise in general expenses, accounting for inflation.

“In Atlanta when I look at our police budget, I see capital costs, I see salaries, I see pension costs, I see workers’ compensation,” said Ms. Bottoms, a Democrat. One of her first moves as mayor in 2018 was to increase police salaries.

She has also invested city resources in community programs and is pushing to overhaul use-of-force practices. In June, the Atlanta city council narrowly voted down police budget cuts called for by some activists.

“Re-imagining our police department is a conversation that I’m very much interested in having,” Ms. Bottoms said. “Eliminating the police department is a nonstarter of a conversation.”

Some defunding proponents acknowledge that police budgets can’t be quickly or easily dismantled. But they say it is the only way to end law-enforcement tactics they say disproportionately impact minority communities.

Reducing police funding “is going to be a process over time,” said Andrea Ritchie, a researcher at the Barnard Center for Research on Women. She has publicly advocated deep cuts in police spending, saying the money could be better spent addressing the root causes of violence.

Police budgets are set by elected officials at local and state levels, with spending often enshrined in multiyear labor contracts negotiated with unions, and with pension obligations that last for decades. Some police spending is obligated by court settlements over use of force.

Compensation makes up more than half of police department operating budgets, without counting benefit and pension costs, according to a Journal analysis of data from the Census Bureau and a Justice Department unit called the Bureau of Justice Statistics. Cities that pay below-market salaries risk losing officers to neighboring towns.

Agreements with police unions establish work conditions—typically pay, hours and benefits—in 71% of departments that serve a million or more people and in 53% of police departments serving 500,000 to a million people, according to a Bureau of Justice Statistics report from 2013, the most recent. Sometimes, union rules mandate the number of officers on a shift or assignment.

Cities Weigh Cutting Police Budgets and Discover How Hard That Is: Extended Excerpt Image 2


Police pension-plan costs for 12 major cities and counties tracked by the Boston College Center for Retirement Research average more than three times what they did 18 years ago, adjusted for inflation. Pension obligations, which often kick in when officers are middle-aged and set up many years of payouts, can be decades long.

New York City’s spending on police department pensions has risen 94%, accounting for inflation, since 2005 to $2.8 billion in 2020, according to data collected by the Citizens Budget Commission, a watchdog group. The pension rise was steeper than any other major budget item relating to the police.

Police misconduct creates another set of spending obligations, as departments have faced persistent problems with the use of force. The 10 U.S. cities with the largest police departments paid out more than $1 billion in settlements and judgments from 2010 through 2014, an investigation by the Journal found. Justice Department probes have led to expensive changes such as adding body cameras and capping the numbers of officers per supervisor.

“All of this stuff is really hard to dislodge,” said Michael Leo Owens, an associate professor of political science at Emory University in Atlanta. “If you look at the reforms are mentioning, they’re not talking about serious money.”

Since the killing of Mr. Floyd on May 25, some local elected officials have been more receptive to shifting some police money or finding ways to raise spending on other services. They are pledging more for mental-health counselors in Austin, Texas, and social services in Los Angeles.

Cities Weigh Cutting Police Budgets and Discover How Hard That Is: Extended Excerpt Image 3


New York Mayor Bill de Blasio in late June announced roughly $1 billion in cuts to the $5.6 billion police operating budget for the fiscal year ending in June 2021. Much of the cutting will come from moving functions such as school crossing guards to other departments.

The remaining $439 million is from canceling a police-academy class and, especially, from a planned decrease in overtime. The Democratic mayor said this year’s lack of parades and sports will cut overtime needs. Budget projections show overtime bouncing back in future years.

In Los Angeles, city council members approved $150 million in cuts to the nearly $1.9 billion police budget. The city, which is already contractually obligated by an agreement last year to raise police salaries, expects to achieve the cuts by significantly reducing overtime and reducing the force through attrition, according to people familiar with the city’s affairs.

In Seattle, where protesters took over several blocks for three weeks in June, a spokeswoman for the mayor’s office said about half of the roughly $3 million police spending cut approved by the city council is to come from layoffs that must be bargained with the police union.

Cities Weigh Cutting Police Budgets and Discover How Hard That Is: Extended Excerpt Image 4


Albuquerque, N.M., is planning to shift some police functions to a new “community safety” department, which could respond to 911 calls by sending social workers, homelessness specialists and violence-prevention experts. Little of its funding will come from the roughly $210 million police budget, about 80% of which goes to labor costs, including retirement and increased salaries to combat an officer shortage.

Facing a violent-crime rate three times the national average, Albuquerque’s city council in 2018 raised sales taxes, mostly to increase the police and fire budgets. The city also has had to increase spending on police equipment and cap the number of officers per supervisor because of a federal settlement of allegations of use of excessive force.

For the community safety department’s $10 million or so budget, Albuquerque expects to be able to shift about $1 million from the police department—about half of one percent of the police budget.

U.S. public support for police increased after mass shootings in 2016, including the Orlando, Fla., Pulse nightclub attack and the targeted killing of five Dallas police officers. A Gallup poll later that year showed Americans’ respect for local police at its highest levels since 1967. A Pew poll the same year found a majority of respondents thought the police presence in their communities was the right size; more than a third wanted to see more police, and only 8% wanted fewer.

Support dropped following Mr. Floyd’s killing and the nationwide protests. In the Pew poll in June, just 34% of respondents said police did a good or excellent job of treating racial and ethnic groups equally, down from 47% in a Pew poll conducted in 2016.

Also lower was the share who said police do a good or excellent job of using the right amount of force; 35% said so, compared with 45% in 2016.

The roots of today’s U.S. police budgets trace to a surge late last century in the rate of violent crime. It rose from lows in the 1960s to a peak in the early 1990s of about 758 violent crimes per 100,000 people, according to Federal Bureau of Investigation statistics. A Wall Street Journal/NBC Poll in the early ’90s found 93% of respondents regarded dealing with crime as an absolute priority.

Cities Weigh Cutting Police Budgets and Discover How Hard That Is: Extended Excerpt Image 5


Starting in 1994, a federal initiative under President Clinton sent billions of dollars to small towns for police hiring. It prompted more than 300 towns to create brand-new police departments. Big cities made hiring police a priority. New York added 35% more officers per capita between 1993 and 1997, according to Bureau of Justice Statistics data.

Violent crimes fell by half from 1993 through 2018, to 369 per 100,000 Americans, according to FBI data. Arrest rates in the mid-2010s dropped to the lowest in decades.

Meanwhile, police mandates expanded. By 2016, more than 40% of departments serving 100,000 or more people had task forces on terrorism and cybercrimes. Police became the first government contact for people with troubles such as addiction, mental illness and homelessness. Officers increasingly were stationed in schools to protect and monitor students.

The officer facing murder charges for killing Rayshard Brooks in Atlanta wasn’t responding to a call about crime but about a man asleep in his car in a Wendy’s drive-through line.

“The job description has changed. It goes from just doing police work to states disinvesting in mental health, where now we have more and more crisis intervention,” said Calvin Williams, chief of Cleveland’s division of police.

Cleveland added body cameras and training aimed at reducing the use of force following a Justice Department investigation and a high-profile 2014 case in which a white officer shot and killed Tamir Rice, a Black 12-year-old boy who was carrying a plastic pellet gun. The city agreed to pay $6 million to the child’s family.

The cameras and the cost of paying other officers to fill in for those undergoing days of training were very expensive, said Cleveland’s Democratic mayor, Frank Jackson. “Racism is still here,” Mr. Jackson said. “And how do you keep it in check? Sometimes it costs money to do that.”

Some of what budget setters wrestle with can be seen in Santa Ana, Calif., population about 332,000, where the city council last year approved $25.6 million in salary and benefit increases for the police over three years, in a package negotiated with a police union.

Should the level of spending on police departments be changed? Join the conversation below.

Jose Solorio, a council member who voted for the increases, said he was concerned about crime. For every 100,000 people in 2018, Santa Ana logged 468 violent crimes, vs. the national average of 369.

“It was necessary to compete in hiring officers in a competitive environment,” Mr. Solorio said.

Santa Ana police officers are paid $88,692 to start, rising to $102,684 after 2.5 years, plus benefits. Sergeants and lieutenants earn more. Officers volunteered to delay a raise from the current level for six months to ease the pandemic’s effect on the budget.

Cecilia Iglesias was one of two council members who voted against the raises. “The additional money, the $25 million, that could have gone to a lot of services,” she said, such as programs for youth and seniors.

Ms. Iglesias lost her council seat in May. The Santa Ana Police Officers Association spent a total of about $300,000 seeking a recall election and then supporting her ouster after a recall vote was set, election filings show.

Association President Gerry Serrano said the union’s support for her recall wasn’t related to her vote. He said she “villainizes” those who work to provide public safety.

Ms. Iglesias said, “I support law enforcement and law and order.” She said it’s the police union she disagrees with.

Ed Comment:Good data on policing. Also Note, "The polling showed 58% of Americans support major changes to policing, but just 15% support abolishing the police." If half of Americans are dems then about a third of steve's newly supported party want to abolish the police. That's a party full of morons. MAGA.

“…Compensation makes up more than half of police department operating budgets, without counting benefit and pension costs, according to a Journal analysis of data from the Census Bureau and a Justice Department unit called the Bureau of Justice Statistics. Cities that pay below-market salaries risk losing officers to neighboring towns….”

AI Summary. Dollar reserve holdings tend to rise when the dollar depreciates, a pattern attributed to export-led economies with large external surpluses that let their currencies fall against the dollar but resist appreciation when the dollar strengthens. Foreign demand for US Treasuries also increases as the dollar weakens.

Brad Setser Council on Foreign Relations
Date Posted:
Is Database:
Database

Dollar reserve holdings tend to increase when the dollar declines, driven by export-based economies with large external surpluses. @Brad_Setser

Does a weaker dollar increase foreign dollar reserve accumulation?

Core argument: Dollar reserve holdings rise when the dollar's value declines, a consistent pattern driven by export-based economies with large external surpluses.

A consistent pattern in the global economy is the increase in dollar reserve holdings when the dollar's value declines. This counterintuitive trend is driven by export-based economies with large external surpluses, which often allow their currencies to depreciate against the dollar but resist appreciation when the dollar strengthens. Consequently, the accumulation of dollar reserves predominantly occurs during periods of dollar depreciation. This phenomenon is further supported by increased foreign demand for US Treasuries as the dollar weakens, highlighting a predictable yet complex relationship between currency valuation and reserve accumulation. The supply of US safe assets relative to demand, measured as a share of American GDP, also plays a crucial role in this dynamic.

Takeaways by Macro Roundup® AI

  1. Dollar reserve holdings rise when the dollar's value declines, a consistent pattern driven by export-based economies with large external surpluses.
  2. Export-led surplus economies tolerate depreciation of their currencies against the dollar but resist appreciation when the dollar strengthens, so dollar reserve accumulation occurs predominantly during periods of dollar depreciation.
  3. Foreign demand for US Treasuries increases as the dollar weakens, with the supply of US safe assets relative to demand, measured as a share of American GDP, also shaping the dynamic.

Good Brad post, as dollar's value declines dollar reserves go up, as dollar goes down, foreign demand for Treasuries also goes up... not intuitive but from his charts very predictable

".... And one of the most regular patterns in the global economy is that dollar reserve holdings tend to go up when the dollar goes down.
…Many export-based economies with large external surpluses are willing to let their currency fall against the dollar, but they remain reluctant to let their currency appreciate against the dollar when the tide turns. And thus the bulk of the world’s accumulation of dollar reserves has tended to come when the market is pushing the dollar down not up...."

Weaker Dollars Means More Dollar Reserves: Extended Excerpt Image 1


Brad Setser, "Weaker Dollars Means More Dollar Reserves," Council On Foreign Relations, August 12, 2020, https://www.cfr.org/blog/weaker-dollar-means-more-dollar-reserves

This is also a great chart of the supply of US safe assets versus relative demand (as a share of American GDP)

AI Summary. A proposed federal budget calls for nearly $8tn in new spending over a decade, including $2tn for health care, $1.7tn for infrastructure and green energy, and $0.8tn each for education, student loans, and manufacturing. It would raise $3–4tn in taxes, lifting the corporate rate to 28% and taxing capital gains as ordinary income.

James C. Capretta Real Clear Policy
Date Posted:
Is Database:
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Biden’s proposed fiscal policy outlines nearly $8tn in new federal spending over the decade, with $2tn for health care reforms & $1.7tn for infrastructure & green energy initiatives. @JamesCCapretta

How much new spending and taxes does the proposed federal budget contain?

Core argument: Biden's proposed fiscal policy outlines nearly $8tn in new federal spending over the next decade, including $2tn for health care reforms such as increased ACA subsidies and a public option.

Biden's proposed fiscal policy outlines nearly $8tn in new federal spending over the next decade, with $2tn allocated to health care reforms, including increased ACA subsidies and a public option. Infrastructure and green energy initiatives are set to receive $1.7tn, while education, student loans, and manufacturing support each account for $0.8tn. To fund these initiatives, Biden plans to raise $3-4tn in taxes, targeting higher-income households by increasing the corporate tax rate to 28%, applying a 12.4% Social Security payroll tax on earnings above $400,000, and taxing capital gains as ordinary income. This ambitious agenda reflects a shift towards a more expansive federal role in response to economic challenges exacerbated by the COVID-19 pandemic.

Takeaways by Macro Roundup® AI

  1. Biden's proposed fiscal policy outlines nearly $8tn in new federal spending over the next decade, including $2tn for health care reforms such as increased ACA subsidies and a public option.
  2. Biden's plan allocates $1.7tn to infrastructure and green energy, with education, student loans, and manufacturing support each accounting for $0.8tn.
  3. To fund the agenda, Biden plans to raise $3–4tn in taxes on higher-income households, raising the corporate rate to 28%, applying a 12.4% Social Security payroll tax above $400,000, and taxing capital gains as ordinary income.

James C. Capretta, "Biden's Budget," Real Clear Policy, August 11, 2020, https://www.realclearpolicy.com/articles/2020/08/11/bidens_budget_501552.html

Biden's Budget

Joe Biden won the Democratic nomination by emphasizing his relative moderation, but he is preparing to govern as an activist. His campaign has outlined plans for nearly $8 trillion in new federal spending over the coming decade, and $3 trillion or more in new taxes. Think LBJ (or maybe Hubert Humphrey, if he had won in 1968), not Bill Clinton.

Earlier this year, Biden’s mission was to dispatch competitors from the activist wing of the party, most especially Senators Bernie Sanders and Elizabeth Warren. He did so by hammering the $30 trillion price tag of Medicare for All, the middle-class tax hikes it would necessitate, and the elimination of private insurance it would require. When his opponents offered unpersuasive rejoinders, Biden’s eventual victory was assured. A pivot to a more expansive platform was inevitable after the primaries to sharpen the contrast with President Trump. Two factors are pushing Biden to make new federal programs and spending an even more prominent focus in the general election.

First, the Sanders-Warren wing of the party is a force independent of its preferred candidates. It may not be able to decide primary contests, but it can influence voters in November by signaling enthusiasm or apathy for the party’s nominee. The Biden campaign wants to avoid intraparty sniping, and, toward that end, worked for months to produce a “unity” agenda with the Sanders camp. On health care and student loans, Biden embraced expensive ideas promoted by his former rival.

Second, the COVID-19 pandemic has dramatically altered the landscape. The economy has suffered a severe blow, and millions of Americans have lost their jobs and seen dramatic falls in their earned incomes. Many Democrats believe the rapidly shifting political environment has opened up new possibilities for expanding social welfare programs to address voters’ rising insecurity.

The dramatic widening of legislative possibilities is evident in the flurry of bills passed by Congress since February, with a combined ten-year cost of $3.7 trillion and another $1.5 to $2 trillion waiting in the wings. The Biden campaign, and Democrats generally, expect the current, spending-friendly environment to carry into 2021 no matter who is president.

The most expensive item on the emerging Biden agenda is health care, just as it was for President Obama a dozen years ago. Biden wants to increase Affordable Care Act (ACA) subsidies, boost enrollment in Medicaid, create a new public option for working-age Americans and their families, and, at Sanders’ urging, expand Medicare to persons age 60 to 64. All totaled, Cornerstone Macro (a financial research and advisory firm) expects these provisions to cost $2.0 trillion over a decade. New price controls on prescription drugs might provide $0.4 trillion in offsetting savings.

The next most expensive item — at $1.7 trillion — is for federally-financed infrastructure, green energy, and carbon reduction programs. There will be new subsidies for the auto industry, railroads, highways, city transit systems, electric vehicles, and much else. It is not the $10 trillion-plus program that some in the party have advocated, but it is a sizeable step in same direction.

The campaign has also released plans for: primary and secondary education ($0.8 trillion); student loan relief and higher education support ($0.8 trillion); manufacturing and industrial sector support ($0.8 trillion); housing subsidization ($0.6 trillion); paid leave for sicknesses and family reasons ($0.5 trillion); expanded Social Security benefits ($0.5 trillion); financial support for caregivers of children and the elderly ($0.5 trillion); and funding for the opioid crisis, narrowing economic disparities for minority populations, and much else.

To cover this new spending, Biden has specified $3 to $4 trillion in new taxes, almost all of which would fall on higher-income households. He would: push the corporate tax rate up from 21 to 28 percent; apply the combined employer-employee Social Security payroll tax rate of 12.4 percent to all earnings above $400,000 annually; increase the top income tax rate to 39.6 percent immediately, up from 37.0 percent today; tax capital gains as ordinary income; phase out passthrough business income deductions for households with total incomes over $400,000 annually; impose new taxes on pharmaceutical manufacturers, banks, and real estate companies; and impose many other smaller tax hike provisions.

Campaign plans can be both over and under-hyped. They are not dispositive of what will happen after the election. Some ideas pushed during a campaign are unworkable, or not of sufficient priority to put on the agenda in the early months of a presidency. But voters do expect winning candidates to be faithful to what was promised, at least in general terms.

If Biden were to win in November, it is certain that health care, education, green energy, manufacturing jobs, and tax hikes would be front and center on the congressional agenda, along with continued pandemic relief measures. And if the Democrats were to take control of the Senate, much of this agenda could be enacted through the budget reconciliation process, which allows budget-related items to pass with a simple majority instead of 60 votes. There is also talk among some Democrats of eliminating the legislative filibuster, which would open up even more possibilities.

Still, it is rare for presidents to get their entire agendas through Congress even when their parties are fully in control of it. So, if Biden were to win, some items wouldn’t make the cut. For instance, an expansion of Medicare to those age 60 and older may fail because of the program’s already substantial financial challenges.

The former vice president was a pragmatic dealmaker during his long Senate career, and that profile is still evident during the current campaign. But 2020 has upended American life, and the nation’s politics. All signals are that he is now prepared to champion the much-expanded federal role in American life that many in his party favor, even if that isn’t the mission he envisioned when he decided to run.

“…Biden wants to increase Affordable Care Act (ACA) subsidies, boost enrollment in Medicaid, create a new public option for working-age Americans and their families, and, at Sanders’ urging, expand Medicare to persons age 60 to 64. All totaled, Cornerstone Macro (a financial research and advisory firm) expects these provisions to cost $2.0 trillion over a decade. New price controls on prescription drugs might provide $0.4 trillion in offsetting savings. The next most expensive item — at $1.7 trillion — is for federally-financed infrastructure, green energy, and carbon reduction programs. There will be new subsidies for the auto industry, railroads, highways, city transit systems, electric vehicles, and much else. It is not the $10 trillion-plus program that some in the party have advocated, but it is a sizeable step in same direction. The campaign has also released plans for: primary and secondary education ($0.8 trillion); student loan relief and higher education support ($0.8 trillion); manufacturing and industrial sector support ($0.8 trillion); housing subsidization ($0.6 trillion); paid leave for sicknesses and family reasons ($0.5 trillion); expanded Social Security benefits ($0.5 trillion); financial support for caregivers of children and the elderly ($0.5 trillion); and funding for the opioid crisis, narrowing economic disparities for minority populations, and much else. To cover this new spending, Biden has specified $3 to $4 trillion in new taxes, almost all of which would fall on higher-income households. He would: push the corporate tax rate up from 21 to 28 percent; apply the combined employer-employee Social Security payroll tax rate of 12.4 percent to all earnings above $400,000 annually; increase the top income tax rate to 39.6 percent immediately, up from 37.0 percent today; tax capital gains as ordinary income; phase out passthrough business income deductions for households with total incomes over $400,000 annually; impose new taxes on pharmaceutical manufacturers, banks, and real estate companies; and impose many other smaller tax hike provisions….”

Ed Comment:So either Biden is a liar, or a train wreck. Probably the latter since he is not moving to the center in the general. Either way, this what Steve now supports. Perhaps never-trumpets, like Steve, think that a big lose for Trump is going to purge Republicans of Trumpism. Wishful thinking springs eternal. My guess is that if Trump loses, he will run again. Surly different versions of him will. A weakened trump is one of the things that has emboldened democrats. His loss, especially a big loss, will only emboldened them more. Only a Dem loss will reign them in. Forest for the trees.