Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, July 20, 2023

AI Summary. Saudi Arabia's Public Investment Fund appears to have taken over a significant portion of the foreign asset allocation previously handled by the Saudi Central Bank, making its balance sheet a window into a new form of petrodollar recycling. Of roughly $777bn in total assets, $305bn were current and $472bn non-current, with $225bn of the latter held as investment securities.

Alex Etra Money: Inside and Out
Date Posted:

.@EtraAlex documents the shift in petrodollar recycling from FX reserves at central banks to sovereign wealth funds, most notably Saudi Arabia’s Public Investment Fund (PIF).

Has a sovereign wealth fund taken over central bank petrodollar recycling?

Core argument: Saudi Arabia's Public Investment Fund held roughly $777bn in total assets at end-2022, split between $305bn of current assets and $472bn of non-current assets.

While clearly not all of the foreign asset allocation that was previously done by Saudi Central Bank is now being done by the Public Investment Fund (PIF), some significant portion of it does seem to be. Hence a look at PIF’s Annual Reports can provide some basic insights into some aspects of the new form of petro-dollar recycling. In particular, we focus on the more transparent and traditional assets PIF shows on balance sheet. Of the roughly $777bn in total assets at end 2022, $305bn are listed as current assets, and $472bn are listed as non-current assets. However, of the non-current assets, nearly half—$225bn—are held as investment securities.

Takeaways by Macro Roundup® AI

  1. Saudi Arabia's Public Investment Fund held roughly $777bn in total assets at end-2022, split between $305bn of current assets and $472bn of non-current assets.
  2. Nearly half of PIF's non-current assets, $225bn, were held as investment securities.
  3. Some significant portion of the foreign asset allocation previously done by the Saudi Central Bank appears to be done now by PIF, so PIF's annual reports offer insights into the new form of petrodollar recycling.

Related Articles:

  • The New Geopolitics of Global Finance — Trade surpluses of energy-exporting autocracies and China are projected to total roughly $1tn, with Russia's topping $250bn and Saudi Arabia's topping $200bn. Because these surplus countries are not adding to official foreign exchange reserves, private financial intermediaries globally must absorb U.S. Treasury bonds and the associated interest rate risk.

AI Summary. Analysis of US patent data finds that the largest firms are more likely to file novel patents even after controlling for size, industry, and patent counts, and that firms produce more novel patents as they become mega firms. Venture-backed startups also account for a disproportionate share of novel patents.

Serguey Braguinsky, Joonkyu Choi, Yuheng Ding, Karam Jo and Seula Kim National Bureau of Economic Research
Date Posted:
Is Database:
Database

.@_seulakim documents the importance of the 50 largest US firms in generating novel patents that combine technical components in new ways.

Do the largest firms produce more novel patents?

Core argument: The share of U.S. mega firms in novel patent applications declined for nearly two decades before turning around in the early-mid 2000s, reaching by the mid-2010s its highest level since the sample begins in 1980.

The share of mega firms in novel patent applications had been declining for almost two decades but there has been a turnaround since the early-mid 2000s. By the mid-2010s, the share of mega-firms was the highest since 1980 when our sample starts. We show that mega firms are more likely to apply for novel patents even after controlling for various firm characteristics including size, industry, and the total number of patents. This finding also holds within firms––firms produce more novel patents than before as they become mega firms. This suggests that closing on market leadership is associated with more, not less new combinations. We also examine the opposite side of the spectrum, the not-yet-public VC-backed startups, and find that those also play a disproportionately large role in generating novel patents, especially “hit” novel patents, so that successful novel patents appear to be produced in a bi-modal pattern, both by super large mega firms and relatively small startups.

Takeaways by Macro Roundup® AI

  1. The share of U.S. mega firms in novel patent applications declined for nearly two decades before turning around in the early-mid 2000s, reaching by the mid-2010s its highest level since the sample begins in 1980.
  2. Mega firms are more likely to apply for novel patents even after controlling for firm size, industry, and total patent counts, and the same pattern holds within firms as they become mega firms.
  3. Not-yet-public venture-capital-backed startups also play a disproportionately large role in generating novel patents, especially "hit" novel patents, so successful novel patents appear to follow a bi-modal pattern across mega firms and relatively small startups.

Related Articles:

AI Summary. More than 650,000 US workers are on strike or threatening to strike, a level of union activity not seen in decades, with actors and writers already out and unions at UPS and Detroit's three largest automakers poised to join if contract talks fail. One Bank of America analyst put the odds of a United Auto Workers strike above 90%.

Josh Eidelson Bloomberg
Date Posted:

While only 6% of American private sector workers are unionized, as many as 650,000 workers might soon be on strike according to a Bloomberg tracker. @markets

Is US strike activity reaching levels unseen in decades?

Core argument: More than 650,000 American workers are threatening to strike this summer or have already walked out, a scale of union activity not seen in the US in decades.

More than 650,000 American workers are threatening to go on strike this summer — or have already done so — in an avalanche of union activity not seen in the US in decades. The combined actors and writers strikes in Hollywood are already a once-in-a-generation event. Unions for UPS and Detroit’s Big Three automakers are poised to join them in coming weeks if contract negotiations fall through. One Bank of America Corp. analyst put the odds of a United Auto Workers strike at more than 90%. And while logistics experts and financial analysts expected the Teamsters to reach a deal with UPS, their confidence has dwindled as the July 31 deadline approaches. Even before the 100,000-plus actors joined in last week, both the number of strikes and workers on strike were up in the first half of this year.

Takeaways by Macro Roundup® AI

  1. More than 650,000 American workers are threatening to strike this summer or have already walked out, a scale of union activity not seen in the US in decades.
  2. A Bank of America analyst puts the odds of a United Auto Workers strike at more than 90%, while unions at UPS and Detroit's Big Three automakers are poised to strike if contract negotiations fall through.
  3. Both the number of strikes and the number of workers on strike rose in the first half of this year, before more than 100,000 Hollywood actors joined the writers already on strike.

Related Articles:

  • Unions Inflation Warning — The share of people aged 16 and over working or looking for work fell when the pandemic hit and has only partly recovered, with population aging accounting for most of the remaining shortfall. That implies economic activity must run at a lower level to avoid persistent wage and price inflation.

AI Summary. The Joint Economic Committee's Social Capital Index ranks Louisiana, Nevada, New Mexico, Florida, and Arizona lowest and Utah, Minnesota, Wisconsin, New Hampshire, Vermont, and Colorado highest, with low- and high-ranking states falling consistently below or above the median across subindexes. All but one of the 21 cross-state correlations among the seven subindexes are positive.

Scott Winship and Thomas O’Rourke American Enterprise Institute
Date Posted:

.@swinshi Thomas O’Rourke @AEIecon find that the Southeastern/Southwestern US have the lowest levels of social capital, while the Upper Midwest, Mountain West, and northern New England regions have the highest levels.

Can social capital be reliably measured across states?

Core argument: The Joint Economic Committee's Social Capital Index shows that of 21 cross-state correlations among its seven subindexes, all but one are positive.

Consider the Social Capital Index developed by the Joint Economic Committee. States shaded red and orange have the lowest levels of social capital, whereas states shaded green and blue have the highest levels of social capital. Each of the five states in the lowest decile of social capital—Louisiana, Nevada, New Mexico, Florida, and Arizona—consistently rank below the median on each subindex, suggesting that each subindex captures related features of social capital. Similarly, the six states in the highest decile of social capital—Utah, Minnesota, Wisconsin, New Hampshire, Vermont, and Colorado—tend to rank above the median across subindexes. Of the 21 cross-state correlations among the seven subindexes, all but one are positive.

Takeaways by Macro Roundup® AI

  1. The Joint Economic Committee's Social Capital Index shows that of 21 cross-state correlations among its seven subindexes, all but one are positive.
  2. Louisiana, Nevada, New Mexico, Florida, and Arizona make up the lowest decile of the Social Capital Index and consistently rank below the median on each subindex.
  3. Utah, Minnesota, Wisconsin, New Hampshire, Vermont, and Colorado make up the highest decile of the Social Capital Index and tend to rank above the median across subindexes.

AI Summary. A real estate firm estimates about 712,000 people will migrate from China to the US, Canada, and Australia over a three-year period, a sustained exodus likely to keep driving Chinese property purchases abroad. Capital flight from mainland China could reach $150bn in a year as people move money offshore.

Selina Xu Bloomberg
Date Posted:

Real estate firm Juwai IQI estimates 712,000 Chinese will migrate to the US, Canada, and Australia between 2023 and 2025.

Is Chinese emigration driving property purchases and capital flight abroad?

Core argument: Real estate firm Juwai IQI estimates about 712,000 people will migrate from China to the US, Canada, and Australia over 2023–2025, an exodus expected to keep driving Chinese property investment abroad.

A sustained exodus over the next few years will likely continue to drive Chinese property investments abroad. About 712,000 people from the country will migrate to the US, Canada, and Australia from 2023 to 2025, a report by real estate firm Juwai IQI’s estimated. Capital flight from the mainland could reach $150 billion this year, as more people park their money abroad for fear of additional measures at home.

Takeaways by Macro Roundup® AI

  1. Real estate firm Juwai IQI estimates about 712,000 people will migrate from China to the US, Canada, and Australia over 2023–2025, an exodus expected to keep driving Chinese property investment abroad.
  2. Capital flight from mainland China could reach $150 billion this year, as more people park money abroad for fear of additional measures at home.

Related Articles:

  • Booming Chinese Family Offices Recruit Top Bankers in Singapore — Wealthy mainland Chinese moving assets out of China account for up to half of the increase in Singapore-based single-family offices, private wealth managers for rich individuals and their relatives, whose numbers have nearly tripled since the coronavirus pandemic began to an estimated 1,500. Singapore has tightened rules with higher minimum capital and hiring requirements.
  • China Notes, July ’23: On Technological Momentum — China's political environment poses a threat to its technological momentum, with Chinese undergraduates in the US reporting that their parents urge them not to return to the mainland. China retains strengths independent of slowing growth and demographic drags, chiefly an entrenched workforce that continues to advance manufacturing complexity.

Friday, July 21, 2023

AI Summary. The authors find that the rise in reported pain among Americans was almost entirely concentrated in the 2007–2010 recession period rather than following a smooth upward trend, with the disproportionate increase among the less educated also occurring primarily then. The authors state they find this jump difficult to explain.

Sneha Lamba and Robert Moffitt National Bureau of Economic Research
Date Posted:

The increase in reported pain among Americans wasn’t a linear trend over decades but was almost entirely concentrated in the 2007-2010 period among the less educated. @ramoffitt4

Did the rise in American reported pain occur during one recession?

Core argument: The authors find the rise in American pain was almost entirely concentrated in the 2007–2010 period of the Great Recession rather than following a smooth upward trend, a result they say prior work did not uncover.

We show that, rather than resulting from a smooth upward trend, the increase was almost entirely concentrated in the 2007-2010 period, the time of the Great Recession, a result not uncovered in prior work. The disproportionate increase in pain among the less educated is also shown to have occurred primarily at the time of the Recession, with either little or no trend before or after. The Recession jump occurred only at older ages and primarily only at the points during each cohort’s lifetime when they experienced the Recession. However, we too find the jump difficult to explain, for while there is necessarily a temporary decline in employment during a Recession, why there should be a permanent increase in pain as a result is unclear.

Takeaways by Macro Roundup® AI

  1. The authors find the rise in American pain was almost entirely concentrated in the 2007–2010 period of the Great Recession rather than following a smooth upward trend, a result they say prior work did not uncover.
  2. The disproportionate increase in pain among the less educated occurred primarily at the time of the Great Recession, with little or no trend before or after, according to the authors.
  3. The Recession-era jump in pain appeared only at older ages and primarily at the points in each cohort's lifetime when they experienced the Recession, and the authors state they find the jump difficult to explain.

Related Articles:

  • Drug Overdose Deaths Topped 100,000 Again in 2022 — The Centers for Disease Control and Prevention counted a provisional 109,680 US overdose deaths in a year, essentially flat against 109,179 the prior year. The plateau follows a 16% increase in overdose deaths in one year and a 30% surge the year before.
  • America’s Work Ethic Is Under Assault — More than 11% of American men aged 25 to 64 — about 7m — are neither working nor looking for work, and barely half of native-born prime-age men without a high school degree are in the job market. The share not in the labor force has risen about one percentage point every seven years since 1965.

AI Summary. Taiwan Semiconductor Manufacturing Company said a shortage of skilled workers is hampering construction of its first Arizona chip factory, pushing mass production of 4-nanometer chips to 2025 from a previously stated 2024, and may require temporarily bringing in experienced technicians from Taiwan. The company expects to invest $40bn in Arizona.

Yang Jie Wall Street Journal
Date Posted:

TSMC’s new Arizona fab is pushing back the start of production by a year, citing a shortage of skilled workers.

Is a skilled worker shortage delaying advanced chip production in the US?

Core argument: TSMC pushed back mass production of 4-nanometer chips at its first Arizona factory from 2024 to 2025, with Chairman Mark Liu citing a shortage of skilled workers hampering construction.

TSMC Chairman Mark Liu said construction in Arizona is hampered by a shortage of skilled workers and that the company might have to bring in experienced technicians temporarily from Taiwan. He said this would delay the start of mass production of 4-nanometer chips in the first factory until 2025. Previously TSMC described the 4-nanometer chip as the leading product of the first Arizona factory and said production would start in 2024. Overall, it expects to invest $40 billion in Arizona. “We are now entering a critical phase of handling and installing the most advanced and dedicated equipment. However, we are encountering certain challenges,” Liu said.

Takeaways by Macro Roundup® AI

  1. TSMC pushed back mass production of 4-nanometer chips at its first Arizona factory from 2024 to 2025, with Chairman Mark Liu citing a shortage of skilled workers hampering construction.
  2. Mark Liu said TSMC might temporarily bring experienced technicians from Taiwan to Arizona, as the company enters what he called a critical phase of handling and installing the most advanced and dedicated equipment.
  3. TSMC expects to invest $40 billion in Arizona and had previously described the 4-nanometer chip as the leading product of its first factory there.

Related Articles:

  • TSMC To Send Hundreds More Workers To Speed U.S. Plant Construction — Chipmaker TSMC and its suppliers are in talks with the U.S. government on non-immigrant visas to dispatch more than 500 experienced workers to speed construction of its U.S. chip plants, according to chip supply chain executives. Executives said too few U.S. workers have hands-on experience building semiconductor facilities, causing installation delays.
  • The Semiconductor Trade War — A boom in US domestic chipmaking construction has raised demand for semiconductor manufacturing equipment that cannot be met domestically, pushing US equipment imports near an all-time high, with Japan, the European Union, and Singapore as the major sources. This helps explain why the market for semiconductor equipment has not contracted alongside the market for chips.

AI Summary. U.S. small firms account for 49% of employment but 16% of business R&D spending and 18.8% of patents issued, while firms with more than 25,000 workers account for 36% of R&D and the largest firms 37.4% of patents. A survey of nearly 1,000 scientists and engineers found most internationally filed patents came from firms with more than 500 employees.

Robert Atkinson Information Technology and Innovation Foundation
Date Posted:

According to @RobAtkinsonITIF, the public discourse around startups downplays the importance of large firms in driving American innovation.

According to @RobAtkinsonITIF, the public discourse around startups downplays the importance of large firms in driving...

Do large firms drive more U.S. innovation than small firms?

Core argument: Small U.S. firms account for 49% of employment but just 16% of business R&D spending, while firms with more than 25,000 workers account for 36% of that spending.

While small firms account for 49% of U.S. employment, they account for just 16% of business spending on R&D, while firms of more than 25,000 workers account for 36%. Likewise, small firms account for 18.8% of patents issued, while the largest firms account for 37.4% of patents. When ITIF surveyed almost 1,000 U.S. scientists and engineers involved in filing triadic patents (patents filed in the United States, Europe, and Japan), they found that approximately 75% of materials science and IT patents and 60% of life science patents were filed by firms with more than 500 employees. Countering the popular narrative that large firms are sluggish copiers and small firms the true innovators, firms with 500 or fewer workers in the sample accounted for only around 30% of patents, yet they employed 48.4% of workers.

Takeaways by Macro Roundup® AI

  1. Small U.S. firms account for 49% of employment but just 16% of business R&D spending, while firms with more than 25,000 workers account for 36% of that spending.
  2. Small firms account for 18.8% of U.S. patents issued, while the largest firms account for 37.4%.
  3. In an ITIF survey of nearly 1,000 U.S. scientists and engineers filing triadic patents, roughly 75% of materials science and IT patents and 60% of life science patents came from firms with more than 500 employees.

Related Articles:

AI Summary. A review of 494 peer-reviewed studies testing five happiness-boosting strategies against control groups found only 57 met basic standards for sample size or pre-registered hypotheses, and those remaining studies did not confirm that three of the five activities made people happier. The authors note that every field examining its own rigor and reproducibility has found similar problems.

Nidhi Subbaraman Wall Street Journal
Date Posted:

.@NidhiSubs cites research by @DunnHappyLab showing that most studies on happiness have lacked scientific rigor. Only 57 of 494 peer-reviewed papers evaluated met minimal standards for good research.

.@NidhiSubs cites research by @DunnHappyLab showing that most studies on happiness have lacked scientific rigor. Only 57 of...

Do studies on happiness-boosting strategies meet basic standards of rigor?

Core argument: Dunn and Folk collected 494 peer-reviewed papers testing one of five happiness strategies against a control group, and only 57 survived screening for design quality, leaving the vast majority too poorly designed to support their conclusions.

Dunn and Folk gathered 494 peer-reviewed papers, in which one of the five happiness strategies was evaluated against a control group. When they weeded out weakly designed work, only 57 studies were left. The vast majority of papers were too poorly designed to support their conclusions. The remaining subset of studies met at least one of two conditions for good science: They included sufficient numbers of study participants or the researchers committed to hypotheses or study plans before analyzing their data. These studies failed to confirm that three of the five activities made people happy. “The evidence melts away when you look at it,” Dunn said. A handful of scandals in psychology in the 2010s—including a bombshell paper that demonstrated the danger of p-hacking—sent shock waves through the field and forced researchers to re-examine the status quo. This reform isn’t limited to psychology. “Every field that has bothered to look at issues of rigor and reproducibility in their evidence has found challenges."

Takeaways by Macro Roundup® AI

  1. Dunn and Folk collected 494 peer-reviewed papers testing one of five happiness strategies against a control group, and only 57 survived screening for design quality, leaving the vast majority too poorly designed to support their conclusions.
  2. The 57 surviving studies, which either included sufficient participants or involved researchers committing to hypotheses or study plans before analyzing data, failed to confirm that three of the five happiness activities made people happier; Dunn said, "The evidence melts away when you look at it.".
  3. A handful of psychology scandals in the 2010s, including a paper demonstrating the danger of p-hacking, forced researchers to re-examine the status quo, and every field that has examined rigor and reproducibility in its evidence has found challenges.

AI Summary. A Peking University economist estimated in the financial magazine Caixin that China's youth jobless rate could have been as high as 46.5% if 16m non-students idle at home or dependent on parents were counted. The official rate, which counts only those actively seeking work, reached a record 21.3%.

Reuters Staff Nikkei Asia
Date Posted:

Peking University professor Zhang Dandan estimates that China’s youth unemployment rate could be as high as 46.5% if one includes 16mm young non-working non-students who are living with their parents.

Peking University professor Zhang Dandan estimates that China’s youth unemployment rate could be as high as 46.5% if...

Does China's official youth jobless rate understate actual unemployment?

Core argument: Zhang Dandan, associate professor of economics at the National School of Development, wrote in Caixin that China's youth jobless rate could have been as high as 46.5% if 16 million non-students "lying flat" at home or relying on parents were counted.

If 16 million non-students "lying flat" at home or relying on their parents were included, the rate at that time could have been as high as 46.5%, Zhang Dandan wrote in an online article in respected financial magazine Caixin. The article by Zhang, associate professor of Economics at the university's National School of Development, was published on Monday but has since been removed. The official youth jobless rate, which only includes people actively seeking work, rose further to a record 21.3% in June after the world's second-biggest economy lost steam in the second quarter.

Takeaways by Macro Roundup® AI

  1. Zhang Dandan, associate professor of economics at the National School of Development, wrote in Caixin that China's youth jobless rate could have been as high as 46.5% if 16 million non-students "lying flat" at home or relying on parents were counted.
  2. China's official youth jobless rate, which counts only those actively seeking work, rose to a record 21.3% in June after the world's second-biggest economy lost steam in the second quarter.
  3. Zhang Dandan's article in the financial magazine Caixin has since been removed.

Related Articles:

  • Why Has Youth Unemployment Risen So Much in China? — Young workers aged 15-24 are particularly vulnerable when economic growth slows, and China's youth unemployment rate does not appear to be an outlier relative to its income level among global peers. Mismatches between the skills graduates acquire in higher education and those employers demand may add to labor market frictions.
  • China’s Youth Left Behind As Jobs Crisis Mounts — China's unemployment rate for 16- to 24-year-olds reached 20.8%, the highest since the data series began in 2018 and above levels in European countries such as France and Italy. The national civil service examination drew a record 2.6mn applicants, nearly 2x the 2019 figure, with a 1.4% success rate.