Edward Conard

Top Ten New York Times Bestselling Author

  • “…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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…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
  • “…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 fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, June 9, 2023

AI Summary. Bidenomics rests on the claims that growth's quality matters more than its quantity, that industrial policy should replace laissez-faire, and that trade policy should favor workers over consumers. Defining market failure that broadly—covering regional, racial and gender inequities, rural internet access and child care costs—leaves no limiting principle on government intervention.

Greg Ip Wall Street Journal
Date Posted:

.@greg_ip notes that markets are more efficient than governments in allocating scarce resources, but “Bidenomics sees market failure all around” and thus has “no limiting principle on government intervention.”

.@greg_ip notes that markets are more efficient than governments in allocating scarce resources, but “Bidenomics sees...

Does a broad market failure definition limit government intervention at all?

Core argument: Bidenomics rests on three premises, according to the author: that the quality of economic growth matters more than its quantity, that industrial policy should replace laissez-faire, and that trade policy should prioritize American workers over consumers.

First, the quality of economic growth matters more than the quantity. Second, laissez-faire is out, industrial policy is in. Third, trade policy should give priority to American workers, not consumers. Basic economics tells us that capital and labor are finite, so they need to be allocated in a way that maximizes productivity and growth. Experience has shown, painfully, that governments are much worse at this than markets. Market failures exist, of course, such as pollution or military vulnerability, but they are exceptions. Bidenomics accepts the value of markets but sees market failure all around, in everything from regional, racial and gender inequities to the lack of rural high-speed internet and affordable child care. When market failure is so broadly defined, there is effectively no limiting principle on government intervention.

Takeaways by Macro Roundup® AI

  1. Bidenomics rests on three premises, according to the author: that the quality of economic growth matters more than its quantity, that industrial policy should replace laissez-faire, and that trade policy should prioritize American workers over consumers.
  2. The author argues that because capital and labor are finite, they must be allocated to maximize productivity and growth, and that experience has shown governments are much worse at this allocation than markets.
  3. Bidenomics accepts the value of markets but sees market failure in regional, racial and gender inequities and in the lack of rural high-speed internet and affordable child care, a definition so broad that the author finds no limiting principle on government intervention.

AI Summary. The authors estimate that China-born researchers working in the US contributed to 27% of US-addressed scientific papers, while China-born researchers with US experience who returned home contributed to 38% of China-addressed papers. Papers with these authors averaged more citations and appeared more often in high-impact journals than other papers.

Qingnan Xie and Richard Freeman National Bureau of Economic Research
Date Posted:

In 2018 Chinese born researchers contributed to 27% of American research papers, Chinese born researchers who had returned to China from the US contributed to 38% of Chinese research papers. @NBERpubs

How much do China-born researchers contribute to US and Chinese science?

Core argument: The authors estimate that China-born "diaspora" researchers working in the US contributed to 27% of US-addressed papers, while "returnee" researchers who gained US research experience and returned to China contributed to 38% of China-addressed papers.

The close connection between US and China in scientific research and education in the 2000s produced a large group of China-born researchers who work in the US (“diaspora”) and a larger group of China-born researchers who gained US-research experience and returned to do their research in China (“returnee”). We estimate that diaspora researchers contributed to 27% of US addressed papers, and that returnee researchers contributed to 38% of China addressed papers. In terms of quality or impact, papers with diaspora or returnee authors averaged more citations and had higher proportions of publication in high CiteScore journals than other US-addressed or China-addressed papers. The link between the countries’ research began to fray from 2018 through the early 2020s, with potential deleterious effects on each country’s future research output and on global science to which US and China are the two biggest contributors.

Takeaways by Macro Roundup® AI

  1. The authors estimate that China-born "diaspora" researchers working in the US contributed to 27% of US-addressed papers, while "returnee" researchers who gained US research experience and returned to China contributed to 38% of China-addressed papers.
  2. Papers with diaspora or returnee authors averaged more citations and were published in high-CiteScore journals at higher rates than other US-addressed or China-addressed papers.
  3. The US–China research link began to fray from 2018 through the early 2020s, with potential deleterious effects on each country's future research output and on global science, to which the US and China are the two biggest contributors.

AI Summary. Venture firms' annual internal rate of return turned negative at -7%, the lowest since 2009, according to PitchBook Data, while U.S. startup funding fell 55% year over year to $37bn in a quarter. A prolonged depressed venture market pushes more startups toward shutting down.

Yuliya Chernova Wall Street Journal
Date Posted:

According to @pitchbook, the annual internal rate of return for venture capital firms was -7% in Q3 2022, the lowest return since 2009. @wsj

Are falling venture returns and funding forcing more startups to shut down?

Core argument: Venture firms' yearly internal rate of return was negative 7% in the third quarter of 2022, the lowest value since 2009, according to PitchBook Data.

The yearly internal rate of return for venture firms was negative 7% in the third quarter of 2022, the lowest value since 2009, according to PitchBook Data. The venture market, meanwhile, has been declining. Startups in the U.S. raised $37 billion in the first quarter of this year, down 55% from the first three months of last year. The longer the venture market stays depressed, the closer many startups get to the moment of truth.

Takeaways by Macro Roundup® AI

  1. Venture firms' yearly internal rate of return was negative 7% in the third quarter of 2022, the lowest value since 2009, according to PitchBook Data.
  2. U.S. startups raised $37 billion in the first quarter, down 55% from the first three months of the prior year.

AI Summary. Local government data show killings down 12% overall across nine of the 10 most populous U.S. cities versus the comparable period a year earlier, with declines in six, including 27% in Los Angeles, 22% in Houston, and 16% in Philadelphia. Dallas, San Antonio, and Austin reported slight increases.

Zusha Elinson Wall Street Journal
Date Posted:

Homicides in major American cities are down 12% year-over-year. @wsj

Are homicides declining across the largest U.S. cities?

Core argument: Killings are down 12% across nine of the 10 most populous U.S. cities compared with the same time frame last year, according to local government data.

Killings are down 12% overall in nine of the 10 most populous cities compared with the same time frame last year, according to local government data. Homicides are down in six of those cities, including 27% in Los Angeles, 22% in Houston, and 16% in Philadelphia. In Texas, the cities of Dallas, San Antonio and Austin reported slight upticks. San Diego didn’t provide data. The 2023 data available from the cities had different end dates, ranging from April to this week.

Takeaways by Macro Roundup® AI

  1. Killings are down 12% across nine of the 10 most populous U.S. cities compared with the same time frame last year, according to local government data.
  2. Homicides fell in six of those cities, including 27% in Los Angeles, 22% in Houston, and 16% in Philadelphia.
  3. Dallas, San Antonio and Austin reported slight upticks in homicides, San Diego did not provide data, and the 2023 city figures carried end dates ranging from April onward.

Monday, June 12, 2023

AI Summary. Public attention to inflation recedes as grocery price increases ease, and 3% inflation is likely low enough for the public to lose interest even if 4% is not. That raises the question of whether policymakers should pay a high price to push inflation from 3% down to 2%.

Paul Krugman Krugman Wonks Out
Date Posted:

.@paulkrugman argues the cost associated with getting inflation from 3% to 2% outweighs the benefits citing the public’s declining interest in inflation among consumers, noting declining searches for “inflation.”

Is 3% inflation low enough for the public to stop caring?

Core argument: Public attention to inflation has declined and will likely recede further toward normal as grocery prices decrease, according to the author.

So people are thinking about inflation a lot less, and their interest will probably recede even further toward normal as grocery prices decrease. The question is, how low does the inflation target have to be for the public to lose interest? I now worry that 4 percent may be a bit too high. But 3 percent almost surely isn’t. In which case, should we be willing to pay a high price to get inflation down from 3 to 2? This isn’t a hypothetical question about a remote possibility. It may very well be exactly the question policymakers face a few months from now.

Takeaways by Macro Roundup® AI

  1. Public attention to inflation has declined and will likely recede further toward normal as grocery prices decrease, according to the author.
  2. The author worries 4 percent inflation may be a bit too high for the public to lose interest, while 3 percent almost surely is not.
  3. The author frames whether to pay a high price to cut inflation from 3 percent to 2 percent as a question policymakers may face a few months from now, not a remote possibility.

AI Summary. The increase in nominal pretax U.S. business income since late 2019 equals about 17% of the increase in consumer spending excluding imputed rent over the same period, below the roughly 21% share of such spending that quarterly pretax business income has historically represented. On this measure, profit growth has been slightly low relative to a naive expectation.

Matt Klein The Overshoot
Date Posted:
Is Database:
Database

.@M_C_Klein notes the increase in nominal pretax business income is just 17% of the increase in consumer spending, suggesting that “excess” profits were not a primary driver of inflation post-pandemic.

Have profits grown faster than consumer spending since the pandemic?

Core argument: The increase in U.S. nominal pretax business income since 2019 Q4 equals just 17% of the increase in consumer spending excluding imputed rent over the same period.

Put another way, the increase in nominal pretax business income since 2019 Q4 is equivalent to just 17% of the increase in consumer spending excluding imputed rent since the eve of the pandemic. For perspective, the total amount of nominal pretax business income generated in the U.S. in any given quarter has historically been worth about 21% of PCE ex-imputed rents, which means that the growth in profits has been a little low relative to what one might have naively expected.

Takeaways by Macro Roundup® AI

  1. The increase in U.S. nominal pretax business income since 2019 Q4 equals just 17% of the increase in consumer spending excluding imputed rent over the same period.
  2. Nominal pretax business income in the U.S. has historically been worth about 21% of personal consumption expenditures excluding imputed rents in any given quarter, above the 17% share recorded since the eve of the pandemic.
  3. Profit growth since 2019 Q4 has been a little low relative to what the historical 21% ratio of business income to consumer spending excluding imputed rents would naively imply.

AI Summary. A study led by Lawrence Berkeley National Laboratory found nearly 2,000GW of solar, wind and storage projects waiting in queues to connect to US long-distance transmission grids, more than the installed capacity of the entire US power plant fleet. The authors find only about a fifth of such requested projects are typically built.

Attracta Mooney Financial Times
Date Posted:

According to research by the Lawrence Berkeley National Laboratory 2,000GW of solar, wind and storage projects are in the planning stage, and 20% are likely to be built based on historical completion rates, vs. 1,300 GW installed capacity in 2022.

Are transmission grid connection queues holding back renewable energy buildout?

Core argument: US grid connection requests grew 40% in 2022, according to a study led by Lawrence Berkeley National Laboratory, with nearly 2,000GW of solar, wind and storage projects queued to connect to transmission grids.

In the US, grid connection requests grew by 40 per cent in 2022, a study led by Lawrence Berkeley National Laboratory found. The researchers discovered that nearly 2,000GW of solar, wind and storage projects were in queues to connect to transmission grids — the long-distance, high-voltage electricity network — far more than the installed capacity of the entire US power plant fleet. Many of these projects will never be built. Developers often submit speculative applications, says lead author Joseph Rand. His research looking at connection requests submitted between 2000 and 2017 found that typically only a fifth of projects were built.

Takeaways by Macro Roundup® AI

  1. US grid connection requests grew 40% in 2022, according to a study led by Lawrence Berkeley National Laboratory, with nearly 2,000GW of solar, wind and storage projects queued to connect to transmission grids.
  2. The nearly 2,000GW of US projects awaiting transmission interconnection far exceeds the installed capacity of the entire US power plant fleet, and many of these projects will never be built.
  3. Lead author Joseph Rand, examining US connection requests submitted between 2000 and 2017, found that typically only a fifth of projects were built, and says developers often submit speculative applications.

AI Summary. Of 243,700 US manufacturing firms, only 1,700 have majority-owned foreign establishments, and 1,200 of those operate both US and foreign plants, making them the most prevalent type of US multinational manufacturer. Firms manufacturing exclusively abroad employ under 1m workers worldwide, 2.5% of US manufacturing firms' global employment.

Teresa Fort National Bureau of Economic Research
Date Posted:

Detailed analysis by @Tfpiasecki shows that American manufacturing firms have not fully substituted foreign for domestic production, but rather supplement their domestic efforts with foreign production.

How many US manufacturers actually produce only in foreign plants?

Core argument: Of the 243,700 US manufacturing firms in 2007, only 1,700 had majority-owned foreign establishments, and 1,200 of those owned both US and foreign manufacturing plants, the most prevalent type of US multinational manufacturing enterprise.

The first row of Table 1 presents the number of US firms that manufacture in-house in 2007 across these four categories. Of the 243,700 US manufacturing firms, only 1,700 have majority-owned foreign establishments (columns 2 to 4). Among these multinationals, 1,200 firms own US and foreign manufacturing plants, versus 350 firms with just domestic plants, and only 150 firms with exclusively foreign in-house manufacturing. Firms with both domestic and foreign manufacturing plants are thus the most prevalent type of US multinational manufacturing enterprise. Panel A of Table 1 presents total sales for these firms. Panel B shows that transnational manufacturers - those that perform in-house physical transformation activities in the United States and abroad - employ more workers than all other firm types, with just over half of these workers employed at their US plants. Firms that manufacture exclusively in foreign plants employ less than one million workers worldwide and account for just 2.5 percent of all US manufacturing firms ' global employment.

Takeaways by Macro Roundup® AI

  1. Of the 243,700 US manufacturing firms in 2007, only 1,700 had majority-owned foreign establishments, and 1,200 of those owned both US and foreign manufacturing plants, the most prevalent type of US multinational manufacturing enterprise.
  2. Transnational manufacturers, which perform in-house physical transformation in both the United States and abroad, employ more workers than all other firm types, with just over half of those workers at their US plants.
  3. The 150 US firms that manufacture exclusively in foreign plants employ fewer than one million workers worldwide and account for 2.5 percent of all US manufacturing firms' global employment.

AI Summary. A joint Princeton, Harvard and MIT study found more than 1,400 US-based ethnic Chinese scientists switched their academic affiliation from American to Chinese institutions in a single year, a 22% increase over the prior year. OECD data show the US lost 896 scientific authors that year while China gained 3,108, reversing an earlier pattern.

Echo Xie South China Morning Post
Date Posted:

According to the OECD, the US lost 896 scientific authors in 2021, while China picked up 3,108. In 2015, the US gained 2,920 scientists while China lost 366. @SCMPNews

According to the OECD, the US lost 896 scientific authors in 2021, while China picked up 3,108. In 2015, the US gained 2,920...

Are Chinese scientists leaving US institutions for China in growing numbers?

Core argument: A joint Princeton, Harvard and MIT study found more than 1,400 US-based ethnic Chinese scientists changed their academic affiliation from American to Chinese institutions in 2021, a 22 per cent increase on the previous year.

A joint study last year by Princeton, Harvard and the Massachusetts Institute of Technology found more than 1,400 US-based ethnic Chinese scientists changed their academic affiliation from American to Chinese institutions in 2021 – a 22 per cent increase on the previous year. According to data published in April by the Organisation for Economic Cooperation and Development, the US lost 896 scientific authors in 2021, while China picked up 3,108. The findings are in stark contrast to 2015, when traffic was reversed, with a gain of 2,920 scientists for the US and a loss of 336 to China.

Takeaways by Macro Roundup® AI

  1. A joint Princeton, Harvard and MIT study found more than 1,400 US-based ethnic Chinese scientists changed their academic affiliation from American to Chinese institutions in 2021, a 22 per cent increase on the previous year.
  2. OECD data published in April show the US lost 896 scientific authors in 2021 while China gained 3,108, contrasting with 2015, when the US gained 2,920 scientists and China lost 336.
  3. Xie Xiaoliang is the latest Chinese scientist to give up US citizenship.

Related Articles:

  • Creating and Connecting US and China Science: Chinese Diaspora and Returnee Researchers — The authors estimate that China-born researchers working in the US contributed to 27% of US-addressed scientific papers, while China-born researchers with US experience who returned home contributed to 38% of China-addressed papers. Papers with these authors averaged more citations and appeared more often in high-impact journals than other papers.

AI Summary. About 6.8m couples registered marriages in China, an 11% decline and the lowest level since 1985, when available government data begins, with unions peaking in 2013 and falling since. United Nations data show more than 10m more men than women aged 20-34, a gender imbalance that could make marriage harder.

Bloomberg Staff Bloomberg
Date Posted:

There were 6.8M marriages in China in 2022, the lowest level since 1985, driven by a decline in the population aged between 20-34, and a gender imbalance of 10M more men than women in that cohort.

Are marriages in China falling to multi-decade lows?

Core argument: About 6.8 million Chinese couples registered marriages last year, down 11% from 2021 and the lowest total since 1985, when available government data begins, with unions peaking in 2013 before declining rapidly.

About 6.8 million couples registered marriages in China last year, down 11% from 2021 and the lowest number since 1985, when available government data begins. The data shows the number of unions peaked in 2013 and has since rapidly declined. In 2021, the number of people aged 20-34 fell below 300 million for the first time since the mid-1980s, and there were more than 10 million more men than women in that age cohort, according to data from the United Nations. That gender imbalance could make it even harder to get married, especially as same-sex marriage isn’t legal in China. The average age of a first marriage in 2020 was almost 29, up almost four years from 2010, local media Yicai reported over the weekend, citing national census data.

Takeaways by Macro Roundup® AI

  1. About 6.8 million Chinese couples registered marriages last year, down 11% from 2021 and the lowest total since 1985, when available government data begins, with unions peaking in 2013 before declining rapidly.
  2. China's population aged 20–34 fell below 300 million in 2021 for the first time since the mid-1980s, and that cohort had more than 10 million more men than women, according to United Nations data.
  3. The average age of first marriage in China was almost 29 in 2020, up almost four years from 2010, Yicai reported, citing national census data.

AI Summary. China's total credit to the nonfinancial sector reached $49.9tn, more than triple the level 10 years earlier, according to the Bank for International Settlements, with the debt concentrated in households, the private sector and local governments rather than the central government. Total debt reached 295% of GDP, above the US at 257%.

Stella Yifan Xie Wall Street Journal
Date Posted:

Fueled by Long Credit Binge, China’s Economy Faces Drag from Debt Purge

Is China's debt burden now larger relative to GDP than America's?

Core argument: China's total credit to the nonfinancial sector reached $49.9 trillion last September, more than triple the level of 10 years earlier, according to Bank for International Settlements data.

Total credit to the nonfinancial sector was $49.9 trillion last September, more than triple the level 10 years ago, according to the Bank for International Settlements, a consortium of global central banks. The figure has begun to drop in dollar terms from $51.4 trillion at the end of 2021, though in local currency, the debt continued to climb. The issue isn’t the central government, whose debts are relatively low as a percentage of gross domestic product, but households, the private sector and local governments. Total debt as a share of GDP hit 295% in China last September, surpassing 257% in the U.S. and an average of 258% in the eurozone, BIS data show.

Takeaways by Macro Roundup® AI

  1. China's total credit to the nonfinancial sector reached $49.9 trillion last September, more than triple the level of 10 years earlier, according to Bank for International Settlements data.
  2. China's total debt hit 295% of GDP last September, exceeding 257% in the U.S. and an average of 258% in the eurozone, BIS data show.
  3. China's debt problem lies with households, the private sector and local governments rather than the central government, whose debts are relatively low as a share of GDP.

Related Articles:

  • Can China’s Long-Term Growth Rate Exceed 2-3 Percent? — China invests roughly 42–44% of its GDP, while more mature, capital-intensive economies typically invest about 15–20%. Modeling a ten-year path that lowers China's investment share to 30% of GDP, the author argues the resulting growth rate depends mainly on how fast consumption grows.