Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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 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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
  • “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
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, September 20, 2023

AI Summary. U.S. manufacturing output per hour has grown about 0.2% a year since 2009, below the overall economy and peer economies in Europe and Asia except Japan, with motor vehicle manufacturing productivity falling 32% from 2012 through last year. Unlike warehouses and hospitals, manufacturers face foreign competition and cannot pass higher labor costs to customers.

Greg Ip Wall Street Journal
Date Posted:

As the UAW strike gets underway, @greg_ip notes that American manufacturing productivity is lagging peer economies. Since 2009, manufacturing output per hour has grown at only 0.2% per year in the US.

Is weak manufacturing productivity the core problem facing American labor?

Core argument: U.S. manufacturing output per hour has grown just 0.2% a year since 2009, below the overall economy and peer economies in Europe and Asia, with the exception of Japan.

Since 2009, manufacturing output per hour in the U.S. has grown just 0.2% a year, well below the economy as a whole and peer economies in Europe and Asia, except Japan. In motor vehicle manufacturing, the picture is especially bad: From 2012 through last year, productivity plummeted 32%, though some of this was no doubt due to pandemic disruptions. Warehouses and hospitals can pass the cost of higher wages and reduced hours to customers without being undercut by foreign competitors. Manufacturers don’t have that luxury. That’s why Detroit is recoiling at the UAW’s demands. While their output per employee is among the highest of 11 global manufacturers ranked by consultants AlixPartners, so are their costs per vehicle. The lowest cost: China’s.

Takeaways by Macro Roundup® AI

  1. U.S. manufacturing output per hour has grown just 0.2% a year since 2009, below the overall economy and peer economies in Europe and Asia, with the exception of Japan.
  2. Productivity in U.S. motor vehicle manufacturing fell 32% from 2012 through last year, though part of that decline reflected pandemic disruptions.
  3. Detroit automakers rank among the highest in output per employee of 11 global manufacturers ranked by AlixPartners, but also among the highest in cost per vehicle, with China's costs the lowest.

Related Articles:

  • Autoworkers Have Good Reason to Demand a Big Raise — Inflation-adjusted average hourly pay for US production and nonsupervisory workers has risen 13% over 20 years, about 0.6% a year, while the average hourly wage for auto production-line workers has fallen 30%. General Motors, Ford and Stellantis earned a combined $42bn in net income over 12 months.
  • Auto Union Boss Wants 46% Raise, 32-Hour Work Week in ‘War’ Against Detroit Carmakers — The United Auto Workers union has demanded a 46% raise, a return to traditional pensions, and a 32-hour work week from the three Detroit automakers. The companies say meeting those demands would raise labor costs by $80bn and lift total pay and benefit expenses to more than $150 an hour from about $64.
  • EV Boom Remakes Rural Towns in the American South — Automakers have announced more than $110bn in electric-vehicle investments in the US, with about half directed to Southern states and most of the remainder to Great Lakes states including Michigan, Ohio and Indiana. Great Lakes auto employment, though still nearly double the South's, has fallen 34% over two decades to 382,000 workers.

AI Summary. Large language models can assist at each stage of economic experiments: designing them (wording of questions, coding, documentation), implementing them (creating consistent participant experiences, improving comprehension of instructions, monitoring engagement in real time), and analyzing the resulting data, including pre-processing and cleaning. The authors argue each use improves the probability of reporting accurate findings.

Gary Charness, Brian Jabarian and John List National Bureau of Economic Research
Date Posted:

Large Language Models (LLM) will likely accelerate knowledge creation by making science research and data more transparent and rigorous. @Econ_4_Everyone @brian_jabarian

Large Language Models (LLM) will likely accelerate knowledge creation by making science research and data more transparent...

Can language models improve the design and analysis of economic experiments?

Core argument: Large language models can improve experimental design by refining elicitation wording, coding experiments, and producing documentation.

We discuss how Large Language Models (LLM) can improve experimental design, including improving the elicitation wording, coding experiments, and producing documentation. Second, we discuss the implementation of experiments using LLM, focusing on enhancing causal inference by creating consistent experiences, improving comprehension of instructions, and monitoring participant engagement in real time. Third, we highlight how LLMs can help analyze experimental data, including pre-processing, data cleaning, and other analytical tasks while helping reviewers and replicators investigate studies. Each of these tasks improves the probability of reporting accurate findings

Takeaways by Macro Roundup® AI

  1. Large language models can improve experimental design by refining elicitation wording, coding experiments, and producing documentation.
  2. In implementing experiments, large language models can enhance causal inference by creating consistent participant experiences, improving comprehension of instructions, and monitoring participant engagement in real time.
  3. Large language models can assist in analyzing experimental data through pre-processing, data cleaning, and other analytical tasks, while aiding reviewers and replicators in investigating studies, with each task improving the probability of reporting accurate findings.

Related Articles:

  • Centaurs and Cyborgs on the Jagged Frontier — In a pre-registered experiment at Boston Consulting Group covering 18 realistic consulting tasks, consultants using ChatGPT-4 completed 12.2% more tasks, worked 25.1% faster, and produced 40% higher quality results than those without it. The tool acted as a skill leveler: the lowest-scoring consultants improved 43%, while top performers gained less.
  • Society’s Technical Debt and Software’s Gutenberg Moment — Every wave of technological innovation has been unleashed by something costly becoming cheap enough to waste, and large language models are collapsing the cost and complexity of producing software. The authors argue that decades of underproduced software have left society with immense technical debt that is poised to contract, releasing a wave of innovation.
  • Generative AI at Work — A study of 5,179 customer support agents finds that access to a generative AI conversational assistant raised issues resolved per hour by 14% on average, with the largest gains for novice and low-skilled workers and minimal effect on experienced, highly skilled ones. The authors also find AI assistance improved customer sentiment, reduced requests for managerial intervention, and improved employee retention.

AI Summary. The author estimates an 80–85% chance the incumbent Democratic president wins his party's nomination and a 75% chance Donald Trump wins the Republican nomination. Trump's 25% risk is attributed to a 10% chance of a conventional primary defeat, a 5% chance of a health-related exit, and a 10% chance legal jeopardy ends his bid.

Nate Silver Silver Bulletin
Date Posted:

.@NateSilver538 argues that the prediction markets are underpricing both Trump and Biden’s odds of being their party’s nominee.

How likely is a presidential rematch between the two nominees?

Core argument: The author puts Joe Biden's chances of winning the Democratic nomination at 80–85% and Donald Trump's chances of winning the Republican nomination at 75%.

Joe Biden is likely to be the Democratic nominee. I would put his chances in the range of 80 to 85%. Donald Trump is likely to be the Republican nominee. I would put his chances in the range of 75%. The chance of an average non-Hispanic white man of Biden’s age (80) dying in the next year is about 5%. Biden’s odds are presumably lower than this, however. Even if he’s lost a step or two, I feel comfortable asserting that his physical and mental health are better than that of the typical 80-year-old. However, there are a lot of medical events other than Biden literally passing away that might end his bid for a second term. Overall, I figure there’s a 10% chance that Trump loses the nomination in “typical” fashion, such as being caught from behind in Iowa, a 5% chance that a health-related issue ends his campaign, and a 10% chance that legal jeopardy forces Trump to reconsider or compels Republicans to turn on him, even though they haven’t so far.

Takeaways by Macro Roundup® AI

  1. The author puts Joe Biden's chances of winning the Democratic nomination at 80–85% and Donald Trump's chances of winning the Republican nomination at 75%.
  2. An average non-Hispanic white man of Biden's age, 80, faces roughly a 5% chance of dying within the next year, though the author judges Biden's physical and mental health to be better than that of a typical 80-year-old.
  3. The author assigns Trump a 10% chance of losing the nomination in typical fashion, such as being caught from behind in Iowa, a 5% chance that a health issue ends his campaign, and a 10% chance that legal jeopardy forces him to reconsider or turns Republicans against him.

Related Articles:

  • Five Reasons Why Biden Might Lose in 2024 — Working-class voters are projected to outnumber college-educated voters by roughly half again in the US presidential electorate, so slippage among them carries outsize weight. The author argues that if Republicans matched their 13-point national House margin among working-class voters, Democrats would need a college-educated advantage above 30 points to offset it.
  • For Some Key Voters, Trump Has Become Toxic — The number of white Americans without college degrees, a group that backed Donald Trump by 67% to 32%, has fallen by 2.1m, while the number of white college graduates, a constituency that narrowly favored Joe Biden, has grown by 13.3m. These demographic shifts work against Republican candidates.
  • How to Interpret Polling Showing Biden’s Loss of Nonwhite Support — Since 1980, the gap between white and Black voter turnout has been related to the share of Black registered voters backing Democrats in pre-election polls, meaning Black voters who don't support Democrats tend not to vote. Polls showing weaker Democratic support among Black voters may therefore signal a smaller Black share of the electorate.

AI Summary. Trust in government is consistently higher among members of the party holding the White House than among the opposition party. Republicans have often been more reactive to changes in political leadership, expressing much lower trust during Democratic presidencies, while Democrats' attitudes have been somewhat more consistent regardless of which party governs.

Pew Staff Pew Research Center
Date Posted:

In 2023, only 16% of Americans said they trust the government always/most of the time. Republican-leaning voters are lower trust at 8% relative to 25% of Democratic-leaning voters.

Does trust in government depend on which party holds the White House?

Core argument: Since the 1970s, trust in government has been consistently higher among members of the party that controls the White House than among the opposition party.

Since the 1970s, trust in government has been consistently higher among members of the party that controls the White House than among the opposition party. Republicans have often been more reactive than Democrats to changes in political leadership, with Republicans expressing much lower levels of trust during Democratic presidencies; Democrats’ attitudes have tended to be somewhat more consistent, regardless of which party controls the White House. However, the GOP and Democratic shifts in attitudes from the end of Donald Trump’s presidency to the start of Joe Biden’s were roughly the same magnitude.

Takeaways by Macro Roundup® AI

  1. Since the 1970s, trust in government has been consistently higher among members of the party that controls the White House than among the opposition party.
  2. Republicans have often been more reactive than Democrats to changes in political leadership, expressing much lower levels of trust during Democratic presidencies, while Democrats' attitudes have tended to be somewhat more consistent regardless of which party controls the White House.
  3. The shifts in attitudes among Republicans and Democrats from the end of Donald Trump's presidency to the start of Joe Biden's were roughly the same magnitude.

Related Articles:

  • Collapsing Social Trust is Driving American Gun Violence — The statistical link between gun availability and gun deaths across countries and US states is driven largely by suicides, which account for the vast majority of gun deaths, while the link to gun homicides alone is much weaker. Adding interpersonal trust alongside gun ownership restores the relationship with homicides.

Thursday, September 21, 2023

AI Summary. There is no good evidence that China has reduced its dollar exposure; accounting for the higher dollar share of its hidden reserves, China's dollar holdings have likely increased. Rather than shifting out of dollars, China has moved from US-custodied Treasuries to offshore custodians and risk assets such as agency bonds and equities.

Brad Setser @Brad_Setser
Date Posted:

.@Brad_Setser argues that there is little evidence that China has shifted reserves out of dollars since the start of the Russo-Ukrainian War; he writes that the dollar share of Chinese reserves has likely increased since 2014.

Is China actually reducing its dollar exposure?

Core argument: Setser contends China has shifted from US-custodied Treasuries to offshore custodians and risk assets such as Agencies and equities, rather than out of the dollar itself.

There is no good evidence that China has reduced its exposure to the dollar. In fact, if you account for the higher dollar share of China's hidden reserves, its USD likely has increased since 2014. I am pretty sure that over the last year China hasn't shifted its reserves out of the dollar. It has shifted from US custodied Treasuries to offshore custodians and risk assets (Agencies, equities). When China stops targeting 60% for the dollar share of its formal reserves, we will know. The interesting question is what is the dollar share of China's shadow reserves -- and I think the answer is that it is a lot higher than the dollar share of China's formal reserves.

Takeaways by Macro Roundup® AI

  1. Setser contends China has shifted from US-custodied Treasuries to offshore custodians and risk assets such as Agencies and equities, rather than out of the dollar itself.
  2. Setser argues that de-dollarization will be evident when China stops targeting a 60% dollar share of its formal reserves, and that the dollar share of China's shadow reserves is likely much higher than that of its formal reserves.
  3. Setser finds no good evidence that China has reduced its dollar exposure, and says that accounting for the higher dollar share of its hidden reserves, China's USD holdings have likely increased since 2014.

Related Articles:

  • Shadow Reserves — How China Hides Trillions of Dollars of Hard Currency — Institutions reporting to China's central government likely hold closer to $6tn in foreign assets than the $3.12tn officially reported as reserves, with the state banking system the main vehicle for holding these uncounted foreign currency assets. China remains a massive global creditor whose foreign exchange accumulation is felt worldwide.
  • Great Power Conflict Puts the Dollar’s Exorbitant Privilege Under Threat — Current account surpluses in China, Russia, and Saudi Arabia are being channeled less into traditional reserve assets such as US Treasuries, which offer negative real returns, and more into gold, commodities, geopolitical investments, and liquid bank deposits. Less dollar-invoiced trade and reduced recycling of surpluses into Treasuries could erode the dollar's reserve-currency privilege.
  • Pettis On Pozsar — China's record trade surplus makes it more, not less, dependent on the world's willingness to hold dollars, since currency dominance requires allowing transparent foreign ownership of domestic assets and giving up control of capital and trade accounts. Because China's reserve accumulation runs indirectly through state-bank dollar purchases, whether its dollar holdings have fallen is unclear.

AI Summary. About 45% of Americans ages 18 to 29, roughly 23m people, live with family, a share comparable to the 1940s. A Harris Poll survey of 4,106 US adults found nearly 90% say people shouldn't be judged for moving back home, viewing it as a pragmatic way to get ahead.

Paulina Cachero and Claire Ballentine Bloomberg
Date Posted:

45% of Americans (23mm) aged 18-29 are living with their families, the highest rate since the 1940s.

Do Americans still stigmatize young adults living with their parents?

Core argument: About 23 million Americans ages 18–29, or 45%, live with family, roughly the same share as in the 1940s, when women often stayed home until marriage and men lingered on family farms after the Great Depression.

Almost 90% of surveyed Americans say people shouldn’t be judged for moving back home, according to Harris Poll in an exclusive survey for Bloomberg News. It’s seen as a pragmatic way to get ahead, the survey of 4,106 adults in August showed. Covid-19 lockdowns in 2020 drove the share of young adults living with parents or grandparents to nearly 50%, a record high. These days, about 23 million, or 45%, of all Americans ages 18 to 29 are living with family, roughly the same level as the 1940s, a time when women were more likely to remain at home until marriage and men too were lingering on family farms in the aftermath of the Great Depression.

Takeaways by Macro Roundup® AI

  1. About 23 million Americans ages 18–29, or 45%, live with family, roughly the same share as in the 1940s, when women often stayed home until marriage and men lingered on family farms after the Great Depression.
  2. Almost 90% of Americans surveyed say people shouldn't be judged for moving back home, with the arrangement seen as a pragmatic way to get ahead, according to a Harris Poll survey of 4,106 adults in August for Bloomberg News.
  3. Covid-19 lockdowns in 2020 drove the share of young adults living with parents or grandparents to nearly 50%, a record high.

Related Articles:

  • Millions of US Millennials Moved in With Their Parents This Year — A survey of 1,200 people found about one in four millennials—roughly 18m people aged 26 to 41—living with their parents, with more than half of those having moved back in within the past year. Rising rental costs were the most common reason given, and about 15% of millennial renters report spending more than half their after-tax income on rent.
  • Young Adults in the U.S. Are Reaching Key Life Milestones Later Than in the Past — Pew Research Center analysis of Census Bureau data finds 21-year-olds in the US are less likely than their counterparts four decades earlier to have a full-time job, be financially independent, live on their own, be married, or have a child. Among 21-year-olds, 39% worked full time versus 64% four decades earlier, and a quarter were financially independent versus 42%.
  • Americans’ Ideal Family Size Is Larger Than the Birthrate Suggests — The share of Americans saying the ideal family has three or more children rose to 44% from about one-third in the mid-1990s, while the share favoring two children fell to 51.7% from 62%, according to the University of Chicago's General Social Survey. This rise in stated ideal family size came as the actual number of births declined.

AI Summary. Democrats have won U.S. special elections by margins averaging 11 points better than their districts' underlying partisanship, across a wide range of districts. Lower-turnout special elections draw a more college-educated electorate that has shifted Democratic, but that realignment does not fully explain the size of the overperformance.

Nathaniel Rakich ABC News
Date Posted:

Democrats have been outperforming in special elections in 2023; their margins have been 11pp higher than the district’s partisan margins in the last two presidential elections. @baseballot

Does electorate composition explain Democrats' special-election overperformance?

Core argument: Democrats have won special elections this year by margins averaging 11 points higher than the weighted relative partisanship of their districts, with overperformances of that magnitude across all kinds of districts.

Democrats have been posting special-election overperformances of that magnitude all year long, in all kinds of districts. And on average, they have won by margins 11 points higher than the weighted relative partisanship of their districts. The types of people who vote in low-turnout special elections tend to be different from the types of people who vote in regularly scheduled elections: Lower turnout generally means a more college-educated electorate, and college graduates have gotten more Democratic in recent years. That could be why special-election overperformance has consistently been a couple of points more Democratic than the House popular vote over the past three cycles. However, college graduates were disproportionately Democratic in 2020 and 2022 too, and Democrats didn’t consistently do this well in special elections in those cycles. So something seems to be different this time that the education realignment doesn’t fully explain.

Takeaways by Macro Roundup® AI

  1. Democrats have won special elections this year by margins averaging 11 points higher than the weighted relative partisanship of their districts, with overperformances of that magnitude across all kinds of districts.
  2. Lower-turnout special elections generally draw a more college-educated electorate, and college graduates have become more Democratic in recent years, which could explain why special-election overperformance has run a couple of points more Democratic than the House popular vote over the past three cycles.
  3. College graduates were also disproportionately Democratic in 2020 and 2022, yet Democrats did not consistently perform this well in those cycles' special elections, so the education realignment does not fully explain the current pattern.

Related Articles:

  • Is a Trump-Biden Rematch Inevitable? — The author estimates an 80–85% chance the incumbent Democratic president wins his party's nomination and a 75% chance Donald Trump wins the Republican nomination. Trump's 25% risk is attributed to a 10% chance of a conventional primary defeat, a 5% chance of a health-related exit, and a 10% chance legal jeopardy ends his bid.
  • Trump’s Electoral College Edge Seems to Be Fading — Polling suggests the demographic basis of the Republican candidate's Electoral College advantage may be eroding, with relative Democratic resilience among white voters and Republican strength among nonwhite voters. Because nonwhite voters are underrepresented in the most critical battleground states, such gains would tend to boost the national vote more than the battlegrounds.
  • How to Interpret Polling Showing Biden’s Loss of Nonwhite Support — Since 1980, the gap between white and Black voter turnout has been related to the share of Black registered voters backing Democrats in pre-election polls, meaning Black voters who don't support Democrats tend not to vote. Polls showing weaker Democratic support among Black voters may therefore signal a smaller Black share of the electorate.

AI Summary. U.S. patent ownership has grown more concentrated over recent decades, a pattern that can affect how innovation spreads, alongside a rise in patent litigation. Annual litigation cases per 100 granted patents rose from about 1.2 in the early 1990s to roughly 1.5 in 1995–2010 and above 1.8 in 2010–2015.

Ufuk Akcigit, Sina Ates and Craig Chikis Economic Innovation Group
Date Posted:

A new paper documents weaker technological diffusion in the economy and relates that to higher concentration of patents and a rise in patent litigation, factors that benefit incumbents and harm new entrants. @ProfUfukAkcigit @UChi_Economics

Has U.S. patent ownership grown more concentrated alongside rising patent litigation?

Core argument: U.S. patent litigation cases filed per 100 granted patents rose from about 1.2 in the early 1990s to roughly 1.5 between 1995 and 2010, then above 1.8 between 2010 and 2015, receding only marginally since.

Patent concentration, which can affect diffusion, has risen over the past several decades with a concurrent surge in patent litigation cases. In the post-1980 period, a parallel trend concerning patents in the U.S. has been the dramatic increase in the number of patent cases filed, which some authors have dubbed the “patent litigation explosion.” The annual number of litigation cases filed per 100 granted patents rises from about 1.2 in the early 1990s to an average of about 1.5 between 1995 and 2010, before rising again to more than 1.8 between 2010 and 2015 and only receding marginally since then.

Takeaways by Macro Roundup® AI

  1. U.S. patent litigation cases filed per 100 granted patents rose from about 1.2 in the early 1990s to roughly 1.5 between 1995 and 2010, then above 1.8 between 2010 and 2015, receding only marginally since.
  2. Patent concentration in the U.S. has risen over the past several decades alongside a surge in patent litigation, a post-1980 trend some authors have dubbed the "patent litigation explosion.".
  3. Rising patent concentration can affect the diffusion of innovation.

Related Articles: