Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…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 is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…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 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


Friday, March 3, 2023

AI Summary. Wage growth running near a 5% annual rate is historically associated with about 4% inflation, and sustaining it alongside 2% inflation would require a large rise in productivity growth or continually falling profit margins. Because monetary policy works with long and variable lags, the Federal Reserve should tighten faster and further rather than wait.

Jason Furman Wall Street Journal
Date Posted:

.@jasonfurman argues that January’s inflation data suggests the Fed should raise rates by 50bps at the next meeting and “shift expectations toward a terminal rate of around 6%.”

.@jasonfurman argues that January’s inflation data suggests the Fed should raise rates by 50bps at the next meeting...

Should the Fed tighten faster and further to bring down inflation?

Core argument: Wage growth running at about 5% annually is historically associated with roughly 4% inflation, and the author argues that pace will persist unless the unemployment rate rises.

Wage growth is currently running at an annual rate of about 5%. Sustaining such wage growth with 2% inflation would require a large increase in productivity growth or continually falling profit margins. I’d root for either outcome, but I wouldn’t bet on them. Falling wage growth could bring down inflation, but in an economy with nearly two job openings for every person looking for work, don’t expect it to happen. Instead, the most probable outcome is that if the unemployment rate doesn’t rise, wages will continue to grow at that pace, which historically is associated with about 4% inflation. Monetary policy operates with long and variable lags. Given that most of the tightening in financial conditions was already in place 10 months ago and, if anything, the real economy and demand have strengthened in recent months, it would be foolish to sit and wait for the medicine to work. In fact, lags are precisely why the Fed should do more now —considering it will take months for whatever the central bank does next to have a meaningful effect on inflation.

Takeaways by Macro Roundup® AI

  1. Wage growth running at about 5% annually is historically associated with roughly 4% inflation, and the author argues that pace will persist unless the unemployment rate rises.
  2. Sustaining 5% wage growth alongside 2% inflation would require a large increase in productivity growth or continually falling profit margins, outcomes the author would root for but not bet on.
  3. Because monetary policy operates with long and variable lags, most tightening in financial conditions was in place 10 months ago, and the real economy and demand have strengthened, the author argues the Fed should do more now.

AI Summary. An analysis estimates that China ceded roughly $150bn of global market share in labor-intensive goods over the decade following the global financial crisis, with India capturing no more than 10% of it while manufacturing's share of India's economy declined. Despite a professed export-oriented policy, India remains too resistant to two-way trade to exploit the opening.

Alan Beattie Financial Times
Date Posted:

.@alanbeattie writes that Indian trade policy drifts towards “protectionism and import substitution,” and therefore India is poorly positioned to take advantage of decoupling from China. Manufacturing value added as a % of Indian GDP has been declining.

Can India capture the export market share China is ceding?

Core argument: Arvind Subramanian of Brown University, formerly chief economic adviser to India's government, calculates that China ceded about $150bn of global market share in labor-intensive goods in the decade or so after the global financial crisis, with India capturing no more than 10% of it.

Arvind Subramanian, an academic at Brown University in the US and former chief economic adviser to the Indian government calculates that in the decade or so since the global financial crisis, China gave up about $150bn of global market share in labor-intensive goods, of which India attracted no more than 10 per cent. The share of manufacturing in the Indian economy actually declined over that period. Calling yourself a globalizer doesn’t make you one. Modi sounds a lot more ambitious about competing in the world economy than many of his predecessors. But despite his government’s professed outward-looking export policy, it’s still too allergic to two-way trade to take full advantage of the huge space in global supply networks that is being opened up as China moves on.

Takeaways by Macro Roundup® AI

  1. Arvind Subramanian of Brown University, formerly chief economic adviser to India's government, calculates that China ceded about $150bn of global market share in labor-intensive goods in the decade or so after the global financial crisis, with India capturing no more than 10% of it.
  2. The share of manufacturing in India's economy declined over the same period in which China was giving up global market share in labor-intensive goods.
  3. Narendra Modi sounds more ambitious about competing in the world economy than many predecessors, but his government remains too averse to two-way trade to fully exploit the space opening in global supply networks as China moves on.

AI Summary. Foxconn, Apple's main manufacturer, plans to expand iPhone production in India as it diversifies beyond China, aiming for roughly 20m units annually at its Chennai-area plant and up to 100,000 workers. It is also considering a new site in Hyderabad and semiconductor facilities in India.

Rajesh Roy, Yoko Kubota and Philip Wen Wall Street Journal
Date Posted:

Apple’s primary manufacturer Foxconn is considering a major expansion in India, potentially assembling 20M units in 2024. Apple shipped 225M iPhones globally in 2022. @WSJ

Apple’s primary manufacturer Foxconn is considering a major expansion in India, potentially assembling 20M units in...

Is iPhone manufacturing shifting from China to India?

Core argument: Foxconn aims to raise iPhone production at its plant near Chennai, in Tamil Nadu, to roughly 20 million units annually by 2024, according to people familiar with the matter.

Apple’ main manufacturer, Foxconn is considering a major expansion in India, including possibly assembling millions more iPhones and setting up new production sites as it seeks to further diversify beyond China. Foxconn is set to expand production of iPhones at its existing plant near Chennai, in the southern Indian state of Tamil Nadu, people familiar with the matter said. It aims to boost iPhone production to around 20 million units annually by 2024, and roughly triple the number of workers to as many as 100,000, said the people, including a senior Indian government official. In addition, Foxconn is considering building a new production site in the southern city of Hyderabad as well as a silicon carbide fabrication plant and packaging facility in India for its semiconductor business, some of the people said.

Takeaways by Macro Roundup® AI

  1. Foxconn aims to raise iPhone production at its plant near Chennai, in Tamil Nadu, to roughly 20 million units annually by 2024, according to people familiar with the matter.
  2. Foxconn aims to roughly triple the workforce at its Chennai-area plant to as many as 100,000 workers, said people familiar with the matter, including a senior Indian government official.
  3. Foxconn is considering a new production site in Hyderabad as well as a silicon carbide fabrication plant and packaging facility in India for its semiconductor business, some of the people said.

AI Summary. The number of US public companies has fallen by about a third over 25 years, leaving a pool dominated by a handful of large technology firms that carry outsized weight in the indexes and making diversification in public markets harder. Private market returns are outpacing public returns over every time horizon.

Hugh MacArthur, Rebecca Burack, et al Bain & Company
Date Posted:

Between 2012 and Q2 2022 the private equity sector has grown by ~ 15% a year to $12.8T total assets under management. @BainAlerts

Are shrinking public markets pushing investors toward private assets?

Core argument: The number of US public companies has fallen by about a third over the past 25 years, leaving a pool dominated by a handful of large tech firms that exert disproportionate sway over the indexes.

The number of US public companies has declined by about a third over the last 25 years, and the remaining pool is dominated by a handful of large tech firms that hold disproportionate sway over the indexes. That makes it increasingly difficult to find adequate diversification in the public markets. Private market returns, meanwhile, are outpacing public returns over every time horizon, while alternative funds provide access to the broad global economy and the fullest range of asset classes. These advantages explain why private markets continue to grow relative to the public markets.

Takeaways by Macro Roundup® AI

  1. The number of US public companies has fallen by about a third over the past 25 years, leaving a pool dominated by a handful of large tech firms that exert disproportionate sway over the indexes.
  2. Private market returns are outpacing public market returns over every time horizon, while alternative funds offer access to the broad global economy and the fullest range of asset classes.
  3. The difficulty of finding adequate diversification in public markets, combined with the return advantage of private markets, explains why private markets continue to grow relative to public markets.

AI Summary. Inflation-adjusted US house prices stand 3.9% below their peak, and an affordability index built from median income, a 15% down payment, and a 2% allowance for property taxes, insurance and maintenance shows homes recently at their least affordable since 1982, when 30-year mortgage rates topped 14%.

Bill McBride Calculated Risk
Date Posted:

.@calculatedrisk reports affordability is at it’s lowest point since 1982 when 30-year mortgage rates were over 14%. On his chart, lower is more affordable.

How affordable are US homes relative to inflation-adjusted price peaks?

Core argument: Inflation-adjusted U.S. house prices stand 3.9% below their peak.

I’ve put together my own affordability index using median income from the Census Bureau (estimated 2021 and 2022), assuming a 15% down payment, and used a 2% estimate for property taxes, insurance and maintenance. This is probably low for high property tax states like New Jersey and Texas, and too high for lower property tax states. For house prices, I used the Case-Shiller National Index, Seasonally Adjusted (SA). Here is what the index looks like (lower is more affordable like the FirstAm index): Affordability improved slightly in December as both mortgage rates and house prices declined. In October, houses were the least “affordable” since 1982 when 30-year mortgage rates were over 14%. Note that by this index, during the early ‘80s, homes were very unaffordable due to the very high mortgage rates. During the housing bubble, houses were at about the same level of unaffordability using 30-year mortgage rates, however, during the bubble, there were many “affordability products” that allowed borrowers to be qualified at the teaser rate (usually around 1%) that made houses seem more affordable.

Takeaways by Macro Roundup® AI

  1. Inflation-adjusted U.S. house prices stand 3.9% below their peak.
  2. The author's affordability index, built from Census Bureau median income, a 15% down payment, a 2% allowance for property taxes, insurance and maintenance, and the seasonally adjusted Case-Shiller National Index, improved slightly in December as mortgage rates and house prices declined.
  3. Houses were the least affordable on this index in October since 1982, when 30-year mortgage rates topped 14%, while during the housing bubble "affordability products" qualifying borrowers at teaser rates near 1% made homes seem more affordable.

Monday, March 6, 2023

AI Summary. The authors estimate that post-pandemic labor market tightness compressed the US wage distribution, reducing the college wage premium and offsetting roughly one-quarter of the four-decade rise in 90-10 wage inequality. They attribute this in part to greater labor supply elasticity facing firms in low-wage markets, which reduced employer market power as young non-college workers moved to higher-paying jobs.

David Autor, Arindrajit Dube and Annie McGrew National Bureau of Economic Research
Date Posted:
Is Database:
Database

In the aftermath of the pandemic, real hourly wage gains for non-college workers have reversed a quarter of the rise in wage inequality since 1980. @davidautor @nberpubs

Does a tight labor market reduce wage inequality by weakening employer power?

Core argument: Rapid relative wage growth at the bottom of the US wage distribution after the height of the Covid-19 pandemic counteracted roughly one-quarter of the four-decade increase in aggregate 90-10 log wage inequality and reduced the college wage premium.

Labor market tightness following the height of the Covid-19 pandemic led to an unexpected compression in the US wage distribution that reflects, in part, an increase in labor market competition. Rapid relative wage growth at the bottom of the distribution reduced the college wage premium and counteracted approximately one-quarter of the four-decade increase in aggregate 90-10 log wage inequality. Wage compression was accompanied by rapid nominal wage growth and rising job-to-job separations—especially among young non-college (high school or less) workers. Seen through the lens of a canonical job ladder model, the pandemic increased the elasticity of labor supply to firms in the low-wage labor market, reducing employer market power and spurring rapid relative wage growth among young non-college workers who disproportionately moved from lower-paying to higher-paying and potentially more-productive jobs.

Takeaways by Macro Roundup® AI

  1. Rapid relative wage growth at the bottom of the US wage distribution after the height of the Covid-19 pandemic counteracted roughly one-quarter of the four-decade increase in aggregate 90-10 log wage inequality and reduced the college wage premium.
  2. Wage compression was accompanied by rapid nominal wage growth and rising job-to-job separations, especially among young workers with a high school education or less.
  3. Interpreted through a canonical job ladder model, the pandemic raised the elasticity of labor supply to firms in the low-wage labor market, reducing employer market power as young non-college workers disproportionately moved from lower-paying to higher-paying, potentially more-productive jobs.

AI Summary. Most measures indicate underlying inflation has come down, though it remains significantly above the Federal Reserve's 2% target, with the economy still running hot despite a series of interest rate increases. There is no evidence inflation is becoming entrenched, but the argument is that rate increases must continue until inflation is clearly under control.

Paul Krugman New York Times
Date Posted:

.@paulkrugman weighs the evidence of the direction of inflation in light of recent revisions (red line on chart) concluding underlying inflation “probably” has come down since early 2022 but “we don’t know how much it has come down.”

Should rate increases continue until inflation is clearly under control?

Core argument: Underlying inflation has probably declined since early 2022, with few measures suggesting otherwise, though the magnitude of that decline remains unknown and inflation is still running significantly above the Fed's 2 percent target.

Underlying inflation probably has come down since early 2022 — you really have to work hard to find measures that don’t say that. But we don’t know how much it has come down. Inflation is still, however, running significantly above the Fed’s 2 percent target. Elevated inflation isn’t a mystery: The economy still seems to be running hot, despite a series of interest rate hikes from the Fed. So far there is no evidence that inflation is becoming entrenched, such that we would have to go through an extended period of high unemployment to get it back down. I’m not saying that it can’t happen, but as far as I can tell, there is no evidence supporting fears of ’70s-style stagflation. Given this picture, I don’t see how the Fed can avoid continuing to raise interest rates until it’s more or less unmistakable that inflation is coming under control.

Takeaways by Macro Roundup® AI

  1. Underlying inflation has probably declined since early 2022, with few measures suggesting otherwise, though the magnitude of that decline remains unknown and inflation is still running significantly above the Fed's 2 percent target.
  2. Elevated inflation reflects an economy that still seems to be running hot despite a series of Fed interest rate hikes.

AI Summary. US commercial bank deposits fell for the first time since 1948, with net withdrawals of $278bn, as depositors shifted toward higher-yielding Treasury bills and money market funds amid Federal Reserve rate increases. The average one-year certificate of deposit rate is roughly 1.5%, up from 0.25% but below inflation.

Alex Harris, David Caleb Mutua and Paige Smith Bloomberg
Date Posted:

American commercial bank deposits fell in 2022 for the first time since 1948 as depositors seek yield. CD rates are starting to rise in response. @markets

Are banks raising deposit rates as savers shift to higher-yielding alternatives?

Core argument: Commercial bank deposits fell last year for the first time since 1948, with net withdrawals reaching $278 billion as depositors shifted toward higher-yielding options like Treasury bills and money market funds.

After years of earning next to nothing, depositors are discovering a trove of higher-yielding options like Treasury bills and money market funds as the Federal Reserve ratchets up benchmark interest rates. The shift has been so pronounced that commercial bank deposits fell last year for the first time since 1948 as net withdrawals hit $278 billion. The very biggest banks can afford to slow-walk their rate increases, simply because they still have relatively high deposit levels. Overall, the average rate on a one-year CD is roughly 1.5%. That’s up from 0.25% a week before the Fed began raising rates a year ago, but still well below inflation.

Takeaways by Macro Roundup® AI

  1. Commercial bank deposits fell last year for the first time since 1948, with net withdrawals reaching $278 billion as depositors shifted toward higher-yielding options like Treasury bills and money market funds.
  2. The average rate on a one-year certificate of deposit is roughly 1.5%, up from 0.25% a week before the Federal Reserve began raising rates a year ago, but still well below inflation.
  3. The largest US banks can slow-walk their deposit rate increases because they still hold relatively high deposit levels.

AI Summary. Using data on 18 advanced economies since 1870, the authors estimate that a loose monetary policy stance causally raises the risk of financial crises over the medium term, against an unconditional 10.5% probability of a crisis in a 3-year window. Lower rates raise asset valuations, opening the door to collateral-driven credit booms.

Maximilian Grimm, Oscar Jorda, et al Federal Reserve Bank of San Francisco
Date Posted:
Is Database:
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Persistently loose monetary policies are associated with financial crises. A 1pp lower mean in a five-year window increases the probability of a financial crisis in the next 5 to 7 years by 5.5pp and by 15.5 in the following 7-9 years. @MSchularick @sffed

Does loose monetary policy raise the risk of financial crises?

Core argument: The authors report the first causal evidence that a loose monetary policy stance has strong implications for medium-term financial instability, calling the effects big against an unconditional 10.5% probability of a crisis in a 3-year window.

We are the first to show that, as a causal matter, a loose stance has strong implications for medium-term financial instability. The sample consists of 18 advanced economies over the period from 1870 until 2020. Since the unconditional probability of experiencing a crisis in a 3-year window is 10.5%, these effects are big. Moreover, these results are robust to alternative measures of stance and alternative definitions of financial stability. Lower interest rates in general and loose monetary policy in particular imply, ceteris paribus, higher asset valuations. This opens the door for collateral-driven credit booms. Such credit and asset price booms, in turn, have been identified by the literature as harbingers of financial turmoil.

Takeaways by Macro Roundup® AI

  1. The authors report the first causal evidence that a loose monetary policy stance has strong implications for medium-term financial instability, calling the effects big against an unconditional 10.5% probability of a crisis in a 3-year window.
  2. The study draws on 18 advanced economies from 1870 to 2020, and the authors find the results robust to alternative measures of monetary stance and alternative definitions of financial stability.
  3. The authors argue that lower interest rates and loose monetary policy imply, ceteris paribus, higher asset valuations, opening the door to collateral-driven credit booms that the literature identifies as harbingers of financial turmoil.

AI Summary. Russia lost an estimated 1.9m–2.8m people beyond its normal demographic decline over a roughly three-year span, combining pandemic deaths, war casualties and emigration. Life expectancy for Russian males aged 15 fell by nearly five years, and women now outnumber men by at least 10m.

Economist Staff The Economist
Date Posted:
Is Database:
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.@TheEconomist estimates that between the pandemic, war and emigration Russia has lost more than 2m people relative to the pre-2020 baseline with the life expectancy of Russian males aged 15 falling by almost five years to the same level as Haiti.

How much population has Russia lost beyond its normal decline?

Core argument: Russia lost between 1.9m and 2.8m people in 2020–23 on top of its normal demographic deterioration, counting pandemic mortality, war casualties and flight from mobilization.

Over the past three years Russia has lost around 2m more people than it would ordinarily have done, as a result of war, disease and exodus. The life expectancy of Russian males aged 15 fell by almost five years, to the same level as in Haiti. The number of Russians born in April 2022 was no higher than it had been in the months of Hitler’s occupation. And because so many men of fighting age are dead or in exile, women outnumber men by at least 10m. According to Western estimates, 175,000-200,000 Russian soldiers have been killed or wounded over the past year. Somewhere between 500,000 and 1m mostly young, educated people have evaded the meat grinder by fleeing abroad. If you add pandemic mortality to the casualties of war and the flight from mobilization, Russia lost between 1.9m and 2.8m people in 2020-23 on top of its normal demographic deterioration.

Takeaways by Macro Roundup® AI

  1. Russia lost between 1.9m and 2.8m people in 2020–23 on top of its normal demographic deterioration, counting pandemic mortality, war casualties and flight from mobilization.
  2. The life expectancy of Russian males aged 15 fell by almost five years, to the same level as in Haiti, and births in April 2022 were no higher than during Hitler's occupation.
  3. Western estimates put Russian soldiers killed or wounded in a year at 175,000-200,000, and 500,000 to 1m mostly young, educated people have fled abroad; with so many men of fighting age dead or in exile, women outnumber men by at least 10m.

The Economist estimates that between the pandemic, war and emigration Russia has lost more than 2m people relative to the pre-2020 baseline with the life expectancy of Russian males aged 15 falling by almost five years to the same level as Haiti. “..Over the past three years Russia has lost around 2m more people than it would ordinarily have done, as a result of war, disease and exodus. The life expectancy of Russian males aged 15 fell by almost five years, to the same level as in Haiti. The number of Russians born in April 2022 was no higher than it had been in the months of Hitler’s occupation. And because so many men of fighting age are dead or in exile, women outnumber men by at least 10m. According to Western estimates, 175,000-200,000 Russian soldiers have been killed or wounded over the past year. Somewhere between 500,000 and 1m mostly young, educated people have evaded the meat grinder by fleeing abroad. If you add pandemic mortality to the casualties of war and the flight from mobilization, Russia lost between 1.9m and 2.8m people in 2020-23 on top of its normal demographic deterioration….”

Description automatically generated Economist Staff, “Russia’s population nightmare is going to get even worse,” The Economist, March 4, 2023, https://www.economist.com/europe/2023/03/04/russias-population-nightmare-is-going-to-get-even-worse

Russia’s population nightmare is going to get even worse

A demographic tragedy is unfolding in Russia. Over the past three years the country has lost around 2m more people than it would ordinarily have done, as a result of war, disease and exodus. The life expectancy of Russian males aged 15 fell by almost five years, to the same level as in Haiti. The number of Russians born in April 2022 was no higher than it had been in the months of Hitler’s occupation. And because so many men of fighting age are dead or in exile, women outnumber men by at least 10m.

War is not the sole—or even the main—cause of these troubles but it has made them all worse. According to Western estimates, 175,000-200,000 Russian soldiers have been killed or wounded over the past year (Russia’s own figures are lower). Somewhere between 500,000 and 1m mostly young, educated people have evaded the meat grinder by fleeing abroad. Even if Russia had no other demographic problems, losing so many in such a short time would be painful. As it is, the losses of war are placing more burdens on a shrinking, ailing population. Russia may be entering a doom loop of demographic decline.

The roots of Russia’s crisis go back 30 years. The country reached peak population in 1994, with 149m people. The total has zig-zagged downwards since. It was 145m in 2021 (that figure, from the un, excludes the 2.4m people of Crimea, which Russia seized in 2014 and incorporated into its national accounts). According to un projections, the total could be just 120m in 50 years if current patterns persist. That would make Russia the 15th-largest country in the world, down from sixth in 1995. According to Alexei Raksha, an independent demographer who used to work for the state statistics service, if you look just at peacetime years, the number of births registered in April 2022 was the lowest since the 18th century. April was a particularly cruel month but it was a revealing glimpse of a chronic problem.

Population decline is not unique to Russia: most post-communist states have seen downturns, though not like this. Their declines have been slow, manageable diminutions. Russia’s population in recent decades has seen a precipitous slump, then a partial recovery (thanks to a period of high immigration and more generous child allowances after 2007), followed by a renewed slump.

According to the state statistics agency, in 2020 and 2021 combined the country’s population declined by 1.3m and deaths outstripped births by 1.7m. (The un also shows a fall but it is shallower). The decline was largest among ethnic Russians whose number, the census of 2021 said, fell by 5.4m in 2010-21. Their share of the population fell from 78% to 72%. So much for Mr Putin’s boast to be expanding the Russki mir (Russian world).

All this began before the war and reflects Russia’s appalling covid pandemic. The official death toll from the disease was 388,091, which would be relatively low; but The Economist estimates total excess deaths in 2020-23 at between 1.2m and 1.6m. That would be comparable to the number in China and the United States, which have much larger populations. Russia may have had the largest covid death toll in the world after India and the highest mortality rate of all, with 850-1,100 deaths per 100,000 people.

If you add pandemic mortality to the casualties of war and the flight from mobilisation, Russia lost between 1.9m and 2.8m people in 2020-23 on top of its normal demographic deterioration. That would be even worse than during the disastrous early 2000s when the population was falling by roughly half a million a year.

https://www.staging4.edwardconard.com/wp-content/uploads/2024/03/image003-21.png

What might that mean for Russia’s future? It is worth remembering that demography is not always destiny and that Russia did begin to reverse its decline in the mid-2010s. The impact of population change is often complex, as Russia’s military mobilisation shows. The decline in the number of ethnic Russians of call-up age (which is being raised from 18-27 to 21-30) will make it harder for the military to carry out the regular spring draft, which begins in April. It will put an even greater burden on young men in non-Russian regions such as Dagestan, where protests have already broken out. It is also likely to hamper plans to increase the size of the armed forces by 350,000 over the next three years. On the other hand, there is little sign that Russia is running out of young men to sacrifice in the bloodlands. In October the government claimed it had reached its target of drafting 300,000 extra troops to bolster the occupation.

Such complications notwithstanding, the overall effect of demographic decline will be to change Russia profoundly and for the worse. Most countries which have suffered population falls have managed to avoid big social upheavals. Russia may be different. Its population is falling unusually fast and may drop to 130m people by mid-century. The decline is associated with increased misery: the life expectancy at birth of Russian males plummeted from 68.8 in 2019 to 64.2 in 2021, partly because of covid, partly from alcohol-related disease. Russian men now die six years earlier than men in Bangladesh and 18 years earlier than men in Japan.

And Russia may not achieve what enables other countries to be rich and ageing: high and rising levels of education. Nicholas Eberstadt, a demographer at the American Enterprise Institute in Washington, dc, argues that the country presents a peculiar combination of third-word mortality and first-world education. It has some of the highest rates of educational attainment among over-25s in the world. But the exodus of well-educated young families is eroding this advantage. According to the communications ministry, 10% of it workers left the country in 2022. Many were young men. Their flight is further skewing Russia’s unbalanced sex ratio which in 2021 meant there were 121 females older than 18 for every 100 males.

The demographic doom loop has not diminished Mr Putin’s craving for conquest. But it is making Russia a smaller, worse-educated and poorer country, from which young people flee and where men die in their 60s. The invasion has been a human catastrophe and not only for Ukrainians.

AI Summary. India's average applied "most favored nation" tariff, among the highest of major economies, reached 18.3% in 2021, up from 2014 as the government pushed companies to manufacture domestically. Indian officials say the tariffs target low-priced, substandard imports from China while seeking more open trade with developed economies.

Greg Ip Wall Street Journal
Date Posted:

.@greg_ip argues that Indian policy is pivoting towards the United States and is seeking to reduce trade friction with Europe, America, Canada, Japan, and Korea.

Is India raising tariffs against China while opening trade with developed economies?

Core argument: India's average most-favored-nation applied tariff stood at 18.3% in 2021, one of the highest among major economies, and higher than in 2014 following Prime Minister Narendra Modi's push to get domestic and foreign companies to manufacture more in India.

India’s trade barriers have long been among the highest of major economies. Its average “most favored nation” [MFN] applied tariff in 2021 stood at 18.3%, one of the highest among major economies. That’s actually up from 2014, a result of Mr. Modi’s efforts to encourage domestic and foreign companies to manufacture more in India. The high MFN tariff is aimed at “nontransparent economies who are dumping really low-quality, substandard goods at really low prices, which is hurting the Indian economy and Indian manufacturing,” Piyush Goyal, India’s minister of commerce and industry, said in an interview, in a reference to China. “The tariffs are not meant to be a detriment, ideally, to…Europe or America or Canada or Japan or Korea. We are looking at having more trading relationships, bilaterally or collectively, with the developed world with whom we want more and more open borders.” India wants more protection from China, and freer trade with everyone else.

Takeaways by Macro Roundup® AI

  1. India's average most-favored-nation applied tariff stood at 18.3% in 2021, one of the highest among major economies, and higher than in 2014 following Prime Minister Narendra Modi's push to get domestic and foreign companies to manufacture more in India.
  2. India's minister of commerce and industry, Piyush Goyal, said the high most-favored-nation tariff targets "nontransparent economies" dumping low-quality, low-priced goods that hurt the Indian economy and Indian manufacturing, in a reference to China.
  3. Piyush Goyal said the tariffs are not ideally meant to hinder Europe, America, Canada, Japan or Korea, and that India seeks more bilateral or collective trading relationships with the developed world and "more and more open borders.".

AI Summary. The author argues that China's economic growth will slow further, settling closer to US rates rather than returning to mid-single-digit levels, with successes in some technologies unable to offset broad deceleration. Fear of abrupt state interventions is dampening enthusiasm among businesspeople and young people, producing more foot-dragging and less initiative in response to centralized campaigns.

Dan Wang DanWang.co
Date Posted:

In his annual letter @danwwang notes a change in animal spirits in China in the aftermath of 2022’s Covid policy and regulatory attacks on business “I perceive a fading sense of enthusiasm among businesspeople and youths.”

In his annual letter @danwwang notes a change in animal spirits in China in the aftermath of 2022’s Covid policy and...

Will China's growth slow toward US rates despite technological successes?

Core argument: The author expects China's growth to slow further, not returning to 2019's mid-single-digit pace but converging toward US levels of growth.

What I did not sufficiently appreciate is that a state that would so casually decapitate a sector like online tutoring would also have the will to visit catastrophe upon whole cities. And fear of those moves is wearing on people. I perceive a fading sense of enthusiasm among businesspeople and youths. The residue of resentment won’t wear on their faces; and I expect that the state will keep a lid on wide-scale protests. But there will be more foot-dragging and less self-initiative in response to Beijing’s centralized campaigns of inspiration. The picture I see for the next few years however is that growth will slow further. The economy won’t return to the 2019 mid-single digit levels of growth, but something closer to US levels. I believe that China is likely to succeed on many technological endeavors, but these bright spots can’t compensate for broad deceleration. The major source of risk is that the political system is more likely to squash growth in the longer run.

Takeaways by Macro Roundup® AI

  1. The author expects China's growth to slow further, not returning to 2019's mid-single-digit pace but converging toward US levels of growth.
  2. The author argues that a state willing to casually decapitate the online tutoring sector also had the will to visit catastrophe upon whole cities, and that fear of such moves is wearing on businesspeople and youths.
  3. The author expects fewer wide-scale protests under state control but more foot-dragging and less self-initiative in response to Beijing's centralized campaigns, with the political system the major source of risk to longer-run growth.

AI Summary. China's planned defense spending increase of 7.2% outpaces the 5.7% rise in general public expenditure and exceeds the government's 5% economic growth target, reflecting Beijing's reweighting toward security over development.

Kathrin Hille Financial Times
Date Posted:

China is increasing military spending by 7.2% in 2023, 2.2 percentage points above the government’s 5% growth target. @FT

China is increasing military spending by 7.2% in 2023, 2.2 percentage points above the government’s 5% growth target....

Is China prioritizing military spending over economic development?

Core argument: China's defense expenditure will rise 7.2 per cent in 2023, its fastest pace in four years, according to a draft budget presented to the National People's Congress.

China’s military spending will grow at its fastest pace in four years in 2023 and outpace other categories of expenditure, underscoring Beijing’s reweighting towards security over development. Defense expenditure will increase by 7.2 per cent in 2023, well ahead of the 5.7 per cent increase in general public expenditure, according to a draft budget presented to the National People’s Congress, the country’s rubber-stamp legislature. China’s proposed rise in 2023 defense expenditure is 2.2 percentage points above the government’s 5 per cent economic growth target.

Takeaways by Macro Roundup® AI

  1. China's defense expenditure will rise 7.2 per cent in 2023, its fastest pace in four years, according to a draft budget presented to the National People's Congress.
  2. China's proposed 2023 defense increase of 7.2 per cent exceeds the 5.7 per cent rise in general public expenditure and sits 2.2 percentage points above the government's 5 per cent economic growth target.
  3. China's military spending will outpace other categories of expenditure in 2023, underscoring Beijing's reweighting towards security over development.