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Tuesday, January 19, 2021

Private and Social Returns to RD: Drug Development and Demographics

Efraim Benmelech National Bureau of Economic Research

Date Posted:: January 19, 2021
Is Database:: Database

Intangible investment is increasingly focused on consumer products with limited productivity spillovers, particularly in the pharmaceutical sector.

A significant portion of intangible investment is directed toward consumer products with limited productivity spillovers, particularly in the pharmaceutical sector. Despite substantial R&D spending, which reached $83bn in 2020, the private returns from drug development often outweigh social returns due to demographic factors and market exclusivity. The focus on consumer-oriented drugs, driven by aging populations and chronic disease prevalence, results in high private profitability but limited broader economic benefits. This trend underscores the need for policy interventions to enhance the social value of R&D investments, ensuring that innovation translates into widespread productivity gains.

Takeaways by Macro Roundup^® AI

Pharmaceutical R&D spending reached $83bn in 2020, yet private returns from drug development often exceed social returns because of demographic factors and market exclusivity.
A significant share of intangible investment flows to consumer products with limited productivity spillovers, with pharmaceuticals a case of high private profitability and limited broader economic benefit.
Aging populations and chronic disease prevalence steer drug development toward consumer-oriented drugs, which the analysis presents as grounds for policy interventions raising the social value of R&D investment.

Efraim Benmelech, Janice Eberly, Joshua Krieger and Dimitris Papanikolaou, "Private and Social Returns to R&D: Drug Development and Demographics," National Bureau Of Economic Research, January 2021, https://www.nber.org/papers/w28355

Ed Comment:“Nothing more to add!”

Great new NBER using evidence from the pharmaceutical sector (which parallels your story about your friend's biotech firm you invested in that was trying to extend the life of patients receiving advanced chemotherapy) productivity spillovers from pharmaceutical research are limited as the increased life expectancy/quality of life among the elderly increases social welfare but doesn't show up in TFP.

Obviously that relationship likely wouldn’t hold in terms of Covid related investment but they argue this trend is likely true across investment in intangible capital and is contributing to slower productivity growth.

Core argument, “…a significant share of this increased intangible investment is geared towards medical R&D targeting older patients. To the extent that these patients are no longer in the labor force, their improved health and well-being would be welfare-enhancing but not directly productivity-improving…”

They walk you though it here, “….First,we show that pharmaceutical firms account for an increasing share of the total R&D spending in the economy. In the 1970s, U.S. pharmaceutical firms accounted for less than 3% of the overall R&D spending in the economy. Today, that share has risen to approximately 10%, and their share among manufacturing firms has risen from 8% to 35%.Second, we show that much of this increased spending is geared towards developing drug candidates targeting ailments typically afflicting older patients. Using detailed data on firms’ drug development pipelines,we show that a significant share of drug candidates under development are treating diseases that disproportionately affect patients that have exited the labor force (over 65 years old)....We find that the share of expenditures allocated to treating diseases common in the over-65 year group has increased by more than 50% since 2000.Though much of our analysis is focusing on the post-2000 period, many of the trends we document are also present in the pre-2000 sample…Our estimates suggest that about a third of total R&D spending by pharmaceutical firms is geared towards those aged 65 and over. While prolonging life expectancy and improving quality of life, these investments in R&D have little effect on measured productivity and output growth.Male life expectancy at birth in the U.S. increased from 70 years in 1980 to 76.3 years in 2018. However, the effective retirement age for men has been hovering around 66 since 1980 and has risen only slightly to 67.9 by 2018, while the statutory retirement age increased from 65 to 66. Absent a significant change in retirement patterns, it is unlikely that R&D spending targeting seniors will directly enhance the labor force and hence output growth….”

Comment on "The Macroeconomic Consequences Of Infrastructure Investment"

Jason Furman Preliminary Draft

Date Posted:: January 19, 2021
Is Database:: Database

@JasonFurman Despite low levels of public investment in transportation infrastructure, the U.S. has not experienced significantly worse macroeconomic outcomes. Infrastructure spending as a share of GDP has remained stable at 2.4% over the past decade.

Despite low levels of public investment in transportation infrastructure, the U.S. has not experienced significantly worse macroeconomic outcomes. Data indicates that infrastructure spending as a share of GDP has remained relatively stable, hovering around 2.4% over the past decade. This stability suggests that while investment levels are low compared to historical standards, they have not yet led to a decline in economic performance. The resilience of the U.S. economy can be attributed to factors such as technological advancements and efficient use of existing infrastructure, which have mitigated potential negative impacts. However, the long-term implications of sustained low investment levels remain uncertain, as future economic growth could be constrained without strategic enhancements in infrastructure.

Takeaways by Macro Roundup^® AI

U.S. infrastructure spending has held near 2.4% of GDP over the past decade, and despite being low by historical standards, it has not coincided with significantly worse macroeconomic outcomes.
U.S. economic resilience under low transportation infrastructure investment is attributed to technological advancements and efficient use of existing infrastructure, which have mitigated potential negative impacts.
The long-term consequences of sustained low U.S. infrastructure investment remain uncertain, with future economic growth potentially constrained absent strategic enhancements to infrastructure.

Comment on "The Macroeconomic Consequences Of Infrastructure Investment": Extended Excerpt Image 1

Jason Furman, "Comment on "The Macroeconomic Consequences Of Infrastructure Investment," Preliminary Draft, June 24, 2020, https://www.nber.org/books-and-chapters/economic-analysis-and-infrastructure-investment/comment-macroeconomic-consequences-infrastructure-investment-furman

Ed Comment:“…I would read this as anti- infrastructure spending in light of the dems PR campaign foreshadowing a push. He shows that US infrastructure is not bad. What I see is lots of construction on projects proponent previously used as anecdotal evidence to claim infrastructure was in poor shape. That indicates they were merely spewing propaganda by pointing to projects near the end of their useful life (the 3 NYC airports and Tapenzee bridge for example). So what you see is poor infrastructure that didn't remain poor for long. I also see beautiful road in the sticks that seem expensive to maintain. And despite all the whining about bridges about to collapse (Although they intentionally say obsolete (design) not dangerous), I see them building bike lanes. That suggests a luxury of funds…”

Short Furman comment on Valerie Ramey's paper we looked at over the summer, some quotes you may find useful once the incoming WH rolls out their infrastructure plan, you'll like his opening, "....“Macroeconomists like infrastructure investment a lot more than the people who know something about it.” --Ed Glaeser at some conference (according to the author’s recollections)..."
He's favorable on Ramey's work, "...Ramey brings much clarity to the aggregate analysis of public investment. She largely confirms that it should not be a major component of short-run stimulus and that it does have major longrun benefits, but the relationship between the overall level and social optimum remains far from clear. Extending her machinery both to examine the heterogenous varieties of public investment and the many distortions and market failures in both public and private investment would be an exciting next step that further increases the ability of the modelling to yield concrete (so to speak) policy recommendations...."

He notes that in the case of the US despite US public investment being relatively low in terms of historical levels our outcomes are more than pretty good, "…The low levels of public investment do not appear to translate into worse outcomes, at least in key measurable aspects of transportation infrastructure....The World Economic Forum rates U.S. transportation infrastructure as better than the G7 average across multiple measures, except for railroad density, and ranks U.S. road, air and liner shipping connectivity as the best in the world, as shown in Table 1...."

Furman reading of evidence suggests comp of spend matters more than level but we should still spend more on r&d, ".... the composition of transportation investment matters much more than the level,including more user funding, shifting from rural to urban, more transit and less highway, and possibly more maintenance and less new construction. (2) If the composition can be improved then a higher level is justified. (3)The United States is underinvesting dramatically in research and development....."

The case for more state spending on RD

Economist Staff The Economist

Date Posted:: January 19, 2021
Is Database:: Database

Government R&D spending has historically coincided with productivity & GDP growth, but direct impact on economic growth remains unclear.

While increased government R&D spending has historically coincided with productivity and GDP growth, the direct impact on economic growth remains unclear. Rich-world governments currently allocate over 0.5% of GDP to R&D, and even a slight increase could be significant. However, the link between scientific research and economic improvements is weakening, as more resources are needed to achieve the same output gains. Strategic government programs, like those in aerospace and electronics during the Cold War, have made winners but don't always require groundbreaking R&D. The focus should be on technologies that improve everyday life and generate economic activity, rather than solely on cutting-edge innovations. In a globalized world, domestic R&D investments benefit other countries too, complicating the capture of economic returns. Despite these challenges, boosting innovation through government spending is crucial, though it may not always lead to the most significant economic growth.

Takeaways by Macro Roundup^® AI

Rich-world governments allocate over 0.5% of GDP to R&D, and even a slight increase in that share could be significant, though the direct impact of government R&D spending on economic growth remains unclear.
The link between scientific research and economic improvements is weakening, with more resources required to achieve the same gains in output.
Cold War-era strategic programmes in aerospace and electronics made winners without always requiring groundbreaking R&D, while in a globalised world domestic R&D investment also benefits other countries, complicating the capture of economic returns.

Economist Staff, "The case for more state spending on R&D,"The Economist, January 16, 2021, https://www.economist.com/briefing/2021/01/16/the-case-for-more-state-spending-on-r-and-d
The case for more state spending on R&D

There is nothing new about economists arguing for more government spending on research and development (r&d). Theoretical work done by Kenneth Arrow in the 1960s convinced his colleagues that the private sector would not on its own provide the amount of innovation that economies need to maximise their growth. Empirically the coincidence, in the 1950s, of increased government r&d spending and excellent rates of productivity and gdp growth strengthened the case further.

It is true that the hard evidence for a positive impact of such r&d spending on overall growth is both fairly weak and suggests that it lags the outlay by quite a while. But few doubt that the return is, in practice, significant. Rich-world governments currently spend, on average, a bit over 0.5% of gdp on r&d a couple more tenths of a percentage point could make a big difference.

The economists have the advantage, here, of pushing at a door that others are in the process of pulling open. Government r&d spending as a fraction of gdp has spent most of the past 40 years shrinking (see chart 1). In 2018, though, the most recent year for which data are available, figures from 24 oecd countries showed government spending on r&d rising by a healthy 3% in real terms following a particularly lean period after the financial crisis. In 2020 the French government promised to increase its research budget by 30% over ten years as part of a Research strategy. The Japanese government has also been increasing funding, and setting up a new provision for “moonshots”. In America, having resisted Donald Trump’s attempts to cut research budgets, Congress may well look favourably on President-elect Joe Biden’s promise to pump them up.

This enthusiasm is not simply driven by a belief that such spending will increase growth. It is also about a fear of China. A research backwater when its economy took off in the 1980s, China has since spent heavily on r&d to obvious effect. A study published by Elsevier, a scientific publisher, and Nikkei, a news business, in 2019 found that China published more high-impact research papers than America did in 23 out of 30 “hot” research fields. Many in Europe and America think that competing with, or outcompeting, China means following its lead. The incoming Biden administration promises “breakthrough technology r&d programmes” which will “direct investments to key technologies in support of us competitiveness”.

The case for more state spending on RD: Extended Excerpt Image 1

And a third factor unites governments inside and outside China: they have strategic goals they can only meet through the development of new technologies and the deployment of existing ones. The government support for vaccines against sars-cov-2 is a case in point. The increasing need for deep decarbonisation is another.

Rise and fall and rise?

There are voices which would temper this enthusiasm. In “The Rise and Fall of American Growth”, a highly influential book published in 2016, Robert Gordon of Northwestern University argued that, although the century of exceptional American productivity growth from 1870 to 1970 was caused by technological change, such change will not come again (see chart 2). There is no future equivalent to the “great inventions”—internal-combustion engines, electrification, plumbing and the like—which allowed a one-off shift from an agrarian society to an industrialised consumer one over that singular period; they catered to the needs of the human condition in a primary and unrepeatable way. Moving from the internal-combustion engine to electric motors in order to move vehicles is both impressive and necessary, but it is not in the same league as moving from the horse to the car.

The case for more state spending on RD: Extended Excerpt Image 2

Another concern is that emphasising government r&d oversimplifies innovation. What matters to the economy are not scientific discoveries or the innovations at technology’s cutting edge, but the technology people and firms make widespread use of—not papers in peer-reviewed journals or even cool lab creations, but things which pervasively improve the everyday and generate economic activity in doing so. And there is no simple production line which, fed with new scientific understandings, produces such technological change.

A recent paper by Ashish Arora of Duke University and colleagues, which focuses on the large corporate lab of post-war America, shows how important that distinction can be. The post-second-world-war years were not only marked by a growth in government r&d spending, but also by the scientific excellence of in-house laboratories at companies such as at&t and ibm. In the 1960s researchers at DuPont published more articles in the Journal of the American Chemical Society, the field’s leading journal, than mit and Caltech combined. The production of scientific knowledge and the desire to solve real-world commercial problems were closely entwined. Science was being pulled into the economy, not just pushed; this was the environment in which, in the 1960s, the term r&d was invented.

What is more, the link between scientific publication—whether publicly or privately funded—and economic improvements is weakening. “Ideas are getting harder to find,” according to a paper published in the American Economic Review in 2020. Applying econometric tools to technologies-in-use such as chipmaking and crop improvements, Nick Bloom of Stanford University and his colleagues found that, over time, more inputs—more researcher time, more money—have been needed to get the same improvement in outputs as before (see chart 3).

The case for more state spending on RD: Extended Excerpt Image 3

This may explain why, as a fraction of gdp, corporate-sector r&d has grown by more than enough to offset the reduction in government research spending. Indeed, some firms are doing staggering amounts of r&d, though their definitions may be elastic. Amazon claimed to spend $36bn on “technology and content” last year, more than the science budgets of Britain and France combined. Nevertheless Dr Arora argues that corporate science has gone into decline, with big firms increasingly choosing to license research from universities rather than do it themselves. Further removed from production, the universities which serve as the primary research focus in many countries are not so focused on useful invention. If the current innovation system is simply less good at creating growth-boosting innovations than it was, then spending more on r&d will not raise incomes as much as it might. It may simply produce more research papers.

A final concern about boosting government spending is cui bono. In the clubby, closed world of the 1950s and 1960s it made sense for governments to invest in r&d because one of their domestic firms—and, through its good offices, the nation’s consumers—would reap the benefits. What is more, big companies on the cutting edge were not that worried about technological competition. In 1995 a researcher at Bell Labs, the r&d titan which in its pomp earned at&t Nobel prizes, noted that “xerography was invented...in 1937, but it was only commercialised by Xerox in 1950”, and “hen the transistor was invented...at Bell Labs in 1948, several years elapsed before other laboratories acquired enough expertise in the semiconductor area to make significant contribution.”

All that has changed, thanks to greater travel, better communications and, perhaps most straightforwardly, a much greater number of researchers and research centres. As a recent paper from the imf puts it, “globalisation has intensified the diffusion of knowledge and technology across borders”. It has been doing so for some time; the Bell Labs anecdotist pointed out that following the “discovery of high-temperature superconductivity at the ibm Zurich lab in 1987, it took only a few weeks for groups at University of Houston, University of Alabama, Bell Labs and other places to make important further discoveries.”

David Edgerton of King’s College London, Britain’s foremost historian of technology, argues that “Only in techno-nationalist fantasies…does national invention drive national economic growth. In the real world, global innovation leads to national growth, and national innovation leads to global growth.” At most times and places, most of the technology which creates growth is imported from elsewhere, not made at home. In a globalised world, investing in domestic r&d will never be purely to a country’s own advantage; it will help others too, willy-nilly.

Hot-wired progress

To the extent that these concerns hold water, the worst they do is suggest that the returns to be expected from increased government r&d expenditure may be lower than some claim, and less easily captured by the nations that make them. And their ability to hold water is open to question. Dr Gordon’s thesis, like much historical argument, is limited by a sample size of one. It is also, in its overall form, familiar; the idea that the best lies in the past has a long history, and it has spent most of that history being wrong.

What is more, such declinism can be used to argue that government r&d spending, far from being futile, is vital. In the 1930s Alvin Hansen, a noted American economist, put a Gordon-like emphasis on the special qualities of certain “great inventions” when he argued that although railroads, electricity and the car had propelled growth in the past, America could not “take for granted the rapid emergence of new industries as rich in investment opportunities.” The people who argued for the government’s wartime r&d effort to persist, in a modified form, after 1945 appreciated Hansen’s argument enough to be doing something about it. Rather than taking the formation of new industries for granted, they were creating a way for government to bring them into being, thus making good any failures of private investment.

Today plenty of people reckon that the government can help unlock further inventions. In their book “Jump-starting America”, Jonathan Gruber and Simon Johnson, two mit economists, single out synthetic biology, hydrogen and deep-sea mining. Of the three it is synthetic biology, which offers new approaches to everything from petrochemicals and agriculture to medicine and computer memories, that is best placed for the “great invention” status that comes from improving the material conditions of billions of lives.

The shape of things to come

The other contender for such laurels is ai. After spending some time being visible “everywhere but the productivity statistics”, in a famous quip of Robert Solow’s, computers finally provided a measurable boost in the mid-1990s. With ever more information to learn from, information appliances which can whisper into every ear, robots at its command and applicability to any number of problems computers that use ai might yet do more than that. The fact that an ai program recently showed unmatched prowess in the prediction of protein structures that synthetic biologists might like to change underlines that innovation can and will often come about most surprisingly where two fields collide.

There are also arguments against the idea that the link between scientific research and technology-in-use has become weaker. It may well have done so in some ways; but in other ways things have speeded up. This is particularly true of the process that puts today’s innovation into the hands of millions tomorrow. Electric appliances had been around for decades before they made a definitive difference to rich-country homes. Information appliances—specifically, smartphones—have spread far further far faster. The sars-cov-2 genome sequence was shared between China and the rest of the world before there were any confirmed cases of covid-19 outside Wuhan. The vaccines enabled by that sequence may turn out to be the technology-in-use with the greatest economic impact over a single year ever seen.

As for the difficulty of capturing the benefits of national r&d spending in a global world, making use of cutting-edge technologies developed elsewhere is not possible without a lot of very highly trained locals, and such cadres are hard to produce and maintain without r&d spending. China’s immense investment in r&d (see chart 4) has produced an immense number of people with skills, know-how and curiosity, as well as institutions with the equipment they need. These researchers and engineers have developed many innovations of their own, but to date their most crucial role has been in exploiting knowledge brought in from elsewhere by fair means or foul. It is notable that, now it is in the r&d front rank, China too is grappling with a slowdown in productivity growth.

The case for more state spending on RD: Extended Excerpt Image 4

If Dr Bloom and his colleagues are correct in arguing that ideas are getting harder to find, more money may be required, in China and elsewhere, just to stand still. But raising government r&d spending in the g7 nations as far above its 1970 level, relative to gdp, as it is currently below that level would cost about $400bn a year overall: considering that the g7’s gdp is $36trn, this appears easily doable. Still, it would be worth finding ways to produce new ideas more efficiently. In much of the oecd the mechanisms and institutions through which governments support r&d are more or less the same as they were 50 years ago. There is a degree of ossification.

A new paper by Mikko Packalen of the University of Waterloo and Jay Bhattacharya of Stanford University shows some evidence of this at America’s National Institutes of Health (nih), where they find that funding for papers that build on the most recent advances has declined. Conservative funders get conservative researchers. Even darpa, an agency of America’s Department of Defence famous for funding out-there projects, is accused of taking fewer risks than it used to.

New organisations can be more innovative. Tyler Cowen of George Mason University has explored one possibility: Fast Grants, a project he launched in April with Patrick Collison of Stripe, a payments firm, dispenses grants for promising covid-19 research very quickly, usually within days. But the budget is tiny relative to what is required. Mr Biden promises to create new organisations for research on health and climate, while the British government says it plans to “experiment...with new funding models across long-term time horizons”. But the ideas are little more than sketches.

Another way to instil urgency is through a sense of mission. Dr Gordon’s point that “some inventions are more important than others” is very pertinent for governments. Technologies which let them achieve strategic goals become important, and they are willing to spend a lot on them. This can end badly. But when it works governments do not so much pick winners as make them. In the 1950s and 1960s, its strategic focus on the cold war, the American government made winners out of aerospace and electronics. In the 1970s France, always nervous about depending on others for electricity, made a winner of its nuclear industry.

Strategic programmes of this sort do not always require groundbreaking r&d. France’s reactors were based on American designs. They may need hardly any r&d at all. Germany made a winner of solar panels simply by providing massive subsidies for them, driving up demand and allowing manufacturers in China to make hay. And there is no clear evidence that the technologies governments decide that they need for strategic reasons will be those that most improve economic growth.

But such projects do typically lead to both a sense of mission among those involved and researchers from government and academia working alongside those from industry. If they do so in multidisciplinary environments—which missions often require, whether in the public or private sectors—then growth-boosting technologies may be more likely to emerge.

It will take time for new ideas to have big effects. And in a world of 24-hour media, it will be hard to sweep unavoidable stories of wasted money and failed projects under the carpet—however inevitable, even welcome, some sorts of failure may be. But at a time when the need to boost innovation has never been greater, politicians may conclude that rebooting the innovation system is worth the risk.

They also mention Tyler Cowen’s fast grants program, “….Tyler Cowen of George Mason University has explored one possibility: Fast Grants, a project he launched in April with Patrick Collison of Stripe, a payments firm, dispenses grants for promising covid-19 research very quickly, usually within days. But the budget is tiny relative to what is required…”

Good factoid, “…Amazon claimed to spend $36bn on “technology and content” last year, more than the science budgets of Britain and France combined….”

Note they also mention the Arora paper we looked at when it was released (they link it to Bloom’sGetting Harder To Find, “…A recent paper by Ashish Arora of Duke University and colleagues, which focuses on the large corporate lab of post-war America, shows how important that distinction can be. The post-second-world-war years were not only marked by a growth in government r&d spending, but also by the scientific excellence of in-house laboratories at companies such as at&t and ibm. In the 1960s researchers at DuPont published more articles in the Journal of the American Chemical Society, the field’s leading journal, than mit and Caltech combined. The production of scientific knowledge and the desire to solve real-world commercial problems were closely entwined. Science was being pulled into the economy, not just pushed; this was the environment in which, in the 1960s, the term r&d was invented. What is more, the link between scientific publication—whether publicly or privately funded—and economic improvements is weakening. “Ideas are getting harder to find,” according to a paper published in the American Economic Review in 2020. Applying econometric tools to technologies-in-use such as chipmaking and crop improvements, Nick Bloom of Stanford University and his colleagues found that, over time, more inputs—more researcher time, more money—have been needed to get the same improvement in outputs as before (see chart 3)…..”

The Economist cites Gordon as caution about the impact of state lead R&D on growth, “…there is no clear evidence that the technologies governments decide that they need for strategic reasons will be those that most improve economic growth…”“…Another way to instil urgency is through a sense of mission. Dr Gordon’s point that “some inventions are more important than others” is very pertinent for governments. Technologies which let them achieve strategic goals become important, and they are willing to spend a lot on them. This can end badly. But when it works governments do not so much pick winners as make them. In the 1950s and 1960s, its strategic focus on the cold war, the American government made winners out of aerospace and electronics. In the 1970s France, always nervous about depending on others for electricity, made a winner of its nuclear industry. Strategic programmes of this sort do not always require groundbreaking r&d. France’s reactors were based on American designs. They may need hardly any r&d at all.Germany made a winner of solar panels simply by providing massive subsidies for them, driving up demand and allowing manufacturers in China to make hay. And there is no clear evidence that the technologies governments decide that they need for strategic reasons will be those that most improve economic growth…. Another concern is that emphasising government r&d oversimplifies innovation. What matters to the economy are not scientific discoveries or the innovations at technology’s cutting edge,but the technology people and firms make widespread use of—not papers in peer-reviewed journals or even cool lab creations, but things which pervasively improve the everyday and generate economic activity in doing so. And there is no simple production line which, fed with new scientific understandings, produces such technological change….”

Ed Comment:“…But they don’t seem to have a clue about what makes for good and bad government sponsored R&D (at least in your summary of their conclusions). Perhaps their only conclusion is “more.” Here’s my problem with that. 1) If properly trained talent is the constraint, then more of A means less of B. And we saw, from a prior paper, that more PhDs means lower quality PhDs. So talent is a constraint. 2) Properly trained talent takes time to produce. We were a manufacturing-based economy with lots of engineers. Now we are a info-based economy with lots of programmers. The 50 year old engineers didn’t become programmers. It was the talented 20 year olds who became programmers who gradually pushed the talent out of manufacturing. So you don’t just instantaneously get the expertise you want. 3) I don’t think you can generalize from the past when government was a large share of R&D to today when it’s not and corporate R&D has grown hugely and is surely more productive. More than ever, more government directed R&D means less talent devoted to privately directly R&D. that doesn’t seem like a wise tradeoff. 4) I do believe that, on average, military R&D is inherently more productive than other government funded R&D. (Look at medical R&D, which is increasing life expectancy from 85 years. From a productivity standpoint, that’s a big waste/drain. Military R&D seems a) more likely to solve general purpose problems like information processing, signal recognition, management control, etc. And b) it’s managed by generals/managers who get fired/not promoted if they don’t produce tangible results. That doesn’t happened with most gov funded R&D…”

Thursday, January 21, 2021

15 Minimum Wage Subverts Biden Recovery Plan

Michael Strain Bloomberg

Date Posted:: January 21, 2021
Is Database:: Database

@MichaelStrain $15 an hour is a high wage floor, nationwide, as 47 states have at least 25% of workers earning less than $15/hour, and 30 states have a median hourly wage below $19.

The proposal to raise the federal minimum wage to $15 an hour presents a significant challenge to the economic recovery plan. Data from the Bureau of Labor Statistics (BLS) indicates that in 47 states, at least 25% of workers earn less than $15 per hour, highlighting the high wage floor this policy would establish. In 20 states, half of all workers earn less than $18 per hour, and in 30 states, the median hourly wage is below $19. The Congressional Budget Office (CBO) estimates that such a wage increase could lead to a rise in joblessness by 1.3m, reduce business income, elevate consumer prices, and decrease GDP. This suggests that while the intention is to improve worker earnings, the broader economic implications could hinder job opportunities and economic growth, particularly for low-skilled workers.

Takeaways by Macro Roundup^® AI

The Congressional Budget Office estimates that raising the federal minimum wage to $15 an hour could increase joblessness by 1.3m, reduce business income, raise consumer prices, and lower GDP.
Bureau of Labor Statistics data show that in 47 states at least 25% of workers earn less than $15 an hour, indicating the height of the wage floor a $15 federal minimum would set.
In 20 states half of all workers earn less than $18 an hour, and in 30 states the median hourly wage is below $19, according to Bureau of Labor Statistics data.

Note Strain’ analysis is pre-pandemic, surely given the steps required to mitigate biological risks (testing,ppP) the costs of employing low wage workers has surely risen and made automation more attractive

Strain"...It’s a slam-dunk case that doubling the federal minimum wage — it’s been $7.25 since 2009 — would lead to significant declines in employment opportunities for workers with few skills or little experience.According to data from the Bureau of Labor Statistics for 2019 (before the pandemic), in 47 states, at least one-quarter of all workers earn less than $15 per hour. In 20 states, half of all workers earn less than $18 per hour, and in 30 states, the median hourly wage is less than $19. These statistics show that $15 is a very high wage floor. For employers to keep all their workers would require raising the wages of a huge share of the national workforce. But the number of workers affected would be so large that this wouldn’t happen. Instead, the number of jobs in the low-wage workforce would shrink. The nonpartisan Congressional Budget Office confirms this basic intuition, estimating that joblessness would increase by 1.3 million if the national hourly wage floor were hiked to $15. The CBO also concluded that this policy would reduce business income, raise consumer prices and reduce gross domestic product..."

BLS Staff "May 2019 National Occupational Employment and Wage Estimates United States," U.S. Bureau of Labor Statistics, Accessed January 2021, https://www.bls.gov/oes/current/oes_nat.htm

Michael Strain, "$15 Minimum Wage Subverts Biden Recovery Plan," Bloomberg, January 20, 2021, https://www.bloomberg.com/opinion/articles/2021-01-20/-15-minimum-wage-subverts-biden-covid-19-recovery-plan

Steve Comment, “First colume understood it as a median as it’s a counterpart to the“Hourly median wage (or the 50th percentile)” (next two columes)

20.02

13.79

Wyoming

18.79

13.11

Wisconsin

16.31

11.20

West Virginia

23.15

16.02

Washington

20.30

12.90

Virginia

19.68

14.53

Vermont

18.23

12.75

Utah

18.28

11.99

Texas

17.26

11.81

Tennessee

16.71

12.29

South Dakota

16.68

11.39

South Carolina

21.24

14.09

Rhode Island

18.99

12.83

Pennsylvania

19.83

14.19

Oregon

17.18

11.56

Oklahoma

18.54

12.43

Ohio

20.44

14.62

North Dakota

17.75

11.91

North Carolina

22.44

14.59

New York

17.03

11.47

New Mexico

21.64

13.54

New Jersey

19.95

13.70

New Hampshire

17.51

12.11

Nevada

18.46

13.07

Nebraska

17.51

12.22

Montana

17.88

12.08

Missouri

15.00

10.36

Mississippi

21.21

14.48

Minnesota

18.60

12.65

Michigan

24.14

15.51

Massachusetts

22.10

13.80

Maryland

18.45

13.35

Maine

16.66

10.72

Louisiana

17.09

11.73

Kentucky

17.79

12.13

Kansas

18.41

12.90

Iowa

17.77

12.32

Indiana

19.74

13.06

Illinois

17.00

11.85

Idaho

21.35

14.71

Hawaii

17.75

11.67

Georgia

17.23

11.87

Florida

19.66

12.95

Delaware

23.33

14.71

Connecticut

21.28

14.31

Colorado

21.24

14.17

California

15.84

11.18

Arkansas

18.46

12.99

Arizona

23.34

15.57

Alaska

16.73

11.06

Alabama

# States

Median < 19

Median < 18

Bottom Quartile < 15

State

Strain's factoids come from BLS's Occupational Employment Statistics (May 2019); it's a dataset not a report. The supporting data for his three claims is in the attached table. “...According to data from the Bureau of Labor Statistics for 2019 (before the pandemic),in 47 states, at least one-quarter of all workers earn less than $15 per hour. In 20 states, half of all workers earn less than $18 per hour, andin 30 states, the median hourly wage is less than $19...."

GOP voters choose Trump again

Margaret Talev Axios

Date Posted:: January 21, 2021
Is Database:: Database

@MargaretTalev 56% of GOP voters identify as ‘traditional Republicans’; 41% support Trump ’24. 36% as ‘Trump Republicans’; 92% support Trump ’24.

In the current political landscape, 56% of GOP [Republican] voters identify as "Traditional Republicans," with 41% supporting Trump for the 2024 election. Meanwhile, 36% of GOP voters consider themselves "Trump Republicans," with a significant 92% backing Trump for 2024. This data highlights a strong division within the party, with a substantial portion of the base remaining loyal to Trump despite his controversial tenure. The economic implications of this support could influence policy directions, particularly in areas like tax reform, trade policies, and regulatory changes, as Trump's economic agenda has historically focused on these areas. The continued backing of Trump by a large segment of the GOP may also impact investor sentiment and market stability, given the potential for policy shifts that align with Trump's previous administration.

Takeaways by Macro Roundup^® AI

Among Republican voters, the 36% who identify as "Trump Republicans" back Trump for the 2024 election at 92%, compared with 41% support among the 56% who call themselves "Traditional Republicans.".
"Traditional Republicans" make up 56% of GOP voters and "Trump Republicans" 36%, a division within the party base over support for Trump in 2024.

Snapshot of Trump support prior to leaving office, post Capital Hill attack

Margaret Talev and David Nather, "GOP voters choose Trump — again,"Axios, January 14, 2021, https://www.axios.com/trump-mcconnell-republican-voters-69b27794-5557-44fe-80a6-d481adf15adf.html

Intangible investment is increasingly focused on consumer products with limited productivity spillovers, particularly in the pharmaceutical sector.

Do private returns to drug research exceed their social returns?

Takeaways by Macro Roundup® AI

@JasonFurman Despite low levels of public investment in transportation infrastructure, the U.S. has not experienced significantly worse macroeconomic outcomes. Infrastructure spending as a share of GDP has remained stable at 2.4% over the past decade.

Has low U.S. infrastructure investment worsened macroeconomic outcomes?

Takeaways by Macro Roundup® AI

Government R&D spending has historically coincided with productivity & GDP growth, but direct impact on economic growth remains unclear.

Does government spending on research and development boost economic growth?

Takeaways by Macro Roundup® AI

@MichaelStrain $15 an hour is a high wage floor, nationwide, as 47 states have at least 25% of workers earning less than $15/hour, and 30 states have a median hourly wage below $19.

Would a $15 federal minimum wage raise joblessness and lower GDP?

Takeaways by Macro Roundup® AI

@MargaretTalev 56% of GOP voters identify as ‘traditional Republicans’; 41% support Trump ’24. 36% as ‘Trump Republicans’; 92% support Trump ’24.

Do most Republican voters still back the party's former standard-bearer?

Takeaways by Macro Roundup® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI