Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “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
  • “…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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “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
  • “…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
  • “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 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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, June 10, 2024

AI Summary. A study of 17 Chinese industries finds that each 1% increase in industrial robot density is associated with a 0.018% rise in labor productivity, measured as output per worker. The estimated effect is larger in industries with lower robot density, which the authors say points to a possible diminishing marginal effect.

Yantong Zhao, Rusmawati Said, Normaz Wana Ismail, et al. Innovation and Green Development
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An analysis of 17 Chinese industries from 2006-21 finds that a 1% increase in industrial robots per 10,000 workers (robot density) raises nominal labor productivity by 0.018%, with evidence of diminishing returns.

How much do industrial robots raise labor productivity?

Core argument: Across a panel of 17 Chinese industries from 2006 to 2021, the study estimates that every 1% increase in industrial robot application density raises labour productivity by 0.018%.

Fig. 1 illustrates the relationship between robot density and [labor productivity] LP in the Chinese economy during 2006–2020. Robot density is reflected by the number of industrial robots per 10,000 workers in the Chinese labour force. LP is calculated as gross domestic product divided by the number of workers in the labour force. The density of robots in China increased from 0.23 in 2006 to 12.57 in 2020, with an average growth rate of 33%. LP increased from 28,313 yuan/person in 2006 to 135,349 yuan/person in 2020, with an average annual growth rate of 12 % without correction for inflation [Note that inflation in China has been in the low single digits during this period]. A country's continued economic growth becomes increasingly dependent on rising LP to supplant a shrinking labour force. Based on a panel data sample of 17 different Chinese industries from 2006 to 2021, this study explores the impact of China's industrial robots on LP. On average, every 1% increase in industrial robot application density raises LP by 0.018%. The influence coefficient of the low density robot industry is larger than that of the high-density robot industry, [and though] the scale of industrial robot usage before 2012 was smaller than that after 2012, its effect on LP was more significant. The study outcomes highlight the possibility of diminishing marginal effect of industrial robots in promoting LP.

Takeaways by Macro Roundup® AI

  1. Across a panel of 17 Chinese industries from 2006 to 2021, the study estimates that every 1% increase in industrial robot application density raises labour productivity by 0.018%.
  2. China's robot density rose from 0.23 to 12.57 industrial robots per 10,000 workers between 2006 and 2020, an average growth rate of 33%, while labour productivity rose from 28,313 to 135,349 yuan/person, averaging 12% annually without inflation correction.
  3. The estimated effect of robots on labour productivity is larger in low-density robot industries than in high-density ones and more significant before 2012 than after, which the study highlights as a possible diminishing marginal effect.

Related Articles:

  • The Characteristics and Geographic Distribution of Robot Hubs in U.S. Manufacturing Establishments — Establishment-level U.S. Census data on roughly 35,000 manufacturing plants show that those using robots tend to be larger, pay higher earnings per worker, employ a larger share of production workers, and spend more on capital including information technology. Robots are highly concentrated geographically even after accounting for industry mix.
  • What Progress Has There Been In Industrial Robots? — Industrial robot repeatability improved little between 1972 and 1984, with a typical 1-meter reach, 10kg payload arm accurate to about 1 mm in both years, but a comparable 2023 robot achieves roughly 0.01–0.02 mm, 50 to 100x more precise. Such a robot cost 2 to 3x more in the 1980s than today, before accounting for cheap Chinese robot arms.
  • Chinese Robot Maker Says Protectionism Will Not Stop Its March — Shenzhen Inovance, China's largest industrial automation company, says its role in keeping global supply chains running will insulate it from rising protectionism as it expands abroad, and it aims to rank among the world's three largest companies in the sector within five years. The International Federation of Robotics reports more than half of global industrial robot installations occurred in China.

AI Summary. US households in every income tier had higher inflation-adjusted incomes in 2022 than in 1970, with median income rising 55% for lower-income households, 60% for middle-class households, and 78% for upper-income households. The gap widened: upper-income median income was 7.3x that of lower-income households, up from 6.3x.

Rakesh Kochhar Pew Research Center
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Between 1970 and 2022 median middle-income US households saw real income growth of 60%. Low-income households saw a 55% increase, excluding non-cash government transfers. @pewresearch

Have incomes risen across all tiers while income gaps widened?

Core argument: Median income of middle-class U.S. households rose 60%, from about $66,400 in 1970 to $106,100 in 2022, in inflation-adjusted 2023 dollars scaled to a three-person household.

Households in all income tiers had much higher incomes in 2022 than in 1970, after adjusting for inflation. Gains for middle- and lower-income households were less than the gains for upper-income households. The median income of middle-class households increased from about $66,400 in 1970 to $106,100 in 2022, or 60%. Over this period, the median income of upper-income households increased 78%, from about $144,100 to $256,900. (Incomes are scaled to a three-person household and expressed in 2023 dollars.) The median income of lower income households grew more slowly than that of other households, increasing from about $22,800 in 1970 to $35,300 in 2022, or 55%. Consequently, there is now a larger gap between the incomes of upper-income households and other households. In 2022, the median income of upper income households was 7.3 times that of lower-income households, up from 6.3 in 1970. It was 2.4 times the median income of middle income households in 2022, up from 2.2 in 1970.

Takeaways by Macro Roundup® AI

  1. Median income of middle-class U.S. households rose 60%, from about $66,400 in 1970 to $106,100 in 2022, in inflation-adjusted 2023 dollars scaled to a three-person household.
  2. Median income of upper-income households grew 78%, from about $144,100 to $256,900, between 1970 and 2022, while that of lower-income households grew 55%, from about $22,800 to $35,300.
  3. The median income of upper-income households was 7.3 times that of lower-income households in 2022, up from 6.3 in 1970, and 2.4 times that of middle-income households, up from 2.2.

Related Articles:

  • Chetty and Saez Debunk the Claim that Income Mobility is Declining in the U.S. — Chetty and Saez debunk the claim that income mobility is declining in the U.S.
  • Upward Mobility Is Alive and Well in America — Comparing children's adult incomes with the inflation-adjusted income quintiles of their childhood rather than contemporaneous quintiles produces much higher measured upward mobility: only 28% of children raised in the bottom quintile remained below that childhood threshold as adults, while 26% reached the top childhood quintile, which required $111,416 (2016 dollars) for a family of four.
  • Intergenerational Mobility in American History: Accounting for Race and Measurement Error — Accounting for Black families, who historical studies routinely drop, and for measurement error in fathers' economic status can double estimates of intergenerational persistence in linked United States census data from 1850 to 1940. The author argues historical mobility was lower than previously estimated, implying greater equality of opportunity today than in the past.

AI Summary. The average monthly pay increase for the typical U.S. worker has been revised up to 0.34% (4.1% annualized) from 0.29% (3.6% annualized), following a monthly gain of 0.45% and an upward revision to earlier data. That leaves wage growth above the pre-pandemic average of about 0.26% a month (3.2% annualized).

Matt Klein The Overshoot
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.@M_C_Klein notes that for the first four months of 2024, wage growth had moderated to 3.6%/year, near the pre-pandemic trend of 3.2%. An uptick in May and an upward revision for March call this moderation into question.

Is wage growth still running above its pre-pandemic pace?

Core argument: The typical U.S. worker's average hourly pay rose 0.45% in May versus April on a seasonally adjusted basis, and March 2024 wage growth was revised up.

From the middle of 2022 through the end of 2023, the typical U.S. worker’s wage consistently rose about 0.4% each month (4.9% annualized), compared to a pre-pandemic average growth rate of about 0.26% (3.2% annualized). By last month, however, it seemed that things might have changed, with wage growth in the first four months of 2024 remarkably close to the pre-pandemic average. [However,] the typical worker’s average hourly pay jumped by 0.45% in May relative to April on a seasonally-adjusted basis, [and] at the same time, wage growth for March 2024 was revised up. As a result, the average monthly pay increase in 2024 has ticked up from 0.29% (as of last month’s data) to 0.34%, or from 3.6% a year to 4.1%.

Takeaways by Macro Roundup® AI

  1. The typical U.S. worker's average hourly pay rose 0.45% in May versus April on a seasonally adjusted basis, and March 2024 wage growth was revised up.
  2. The average monthly pay increase in 2024 has ticked up from 0.29% to 0.34%, or from 3.6% a year to 4.1%.
  3. From mid-2022 through the end of 2023, the typical U.S. worker's wage rose about 0.4% per month (4.9% annualized), versus a pre-pandemic average of about 0.26% (3.2% annualized).

Related Articles:

  • Is Nominal Wage Growth Starting to Slow? — Aggregate nominal wage income, which tracks closely with nominal gross domestic product, has grown at a yearly rate of just 4.5%—identical to the pre-pandemic pace—compared with almost 7% over the prior six months. The author argues that several consecutive slow months, rather than a one-off, suggest the deceleration could be significant.
  • Global Views: A Global Perspective on Monetary Easing — US growth is projected to slow to about 2.2% from 4.1%, close to potential given the boost to labor force growth from recent immigration, while growth in other advanced G10 economies is projected to pick up from about -0.4% to +1.2%. Core inflation estimates point to two Federal Reserve rate cuts, with timing sensitive to incoming data.
  • and — US growth is projected to slow to about 2.2% from 4.1%, close to potential given the boost to labor force growth from recent immigration, while growth in other advanced G10 economies is projected to pick up from about -0.4% to +1.2%. Core inflation estimates point to two Federal Reserve rate cuts, with timing sensitive to incoming data.
  • The Inflation Outlook Is Getting Better, But Also Worse? — US growth is projected to slow to about 2.2% from 4.1%, close to potential given the boost to labor force growth from recent immigration, while growth in other advanced G10 economies is projected to pick up from about -0.4% to +1.2%. Core inflation estimates point to two Federal Reserve rate cuts, with timing sensitive to incoming data.

AI Summary. Survey data from the Survey Center on American Life show a large education split among Hispanic voters, with the Democratic presidential candidate leading by 24 points among college-educated Hispanics but only 2 points among those without degrees. 13% of working-class Hispanics are undecided, and non-college Hispanics make up roughly 7% of the electorate versus 3% for college-educated Hispanics.

Nate Moore The Liberal Patriot
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Polling suggests Biden now leads Trump among non-college Hispanics by only 2 points, down 17 points from his 2020 margin, with a group likely to represent 7% of the 2024 electorate. @NateMoore1287

Does education divide Hispanic voters' party preferences?

Core argument: Survey Center on American Life data show Biden leading Trump by 24 points among college-educated Hispanic voters but by only 2 points among non-college Hispanics.

Fresh data from the Survey Center on American Life offers a rare opportunity to split Hispanic voters by their education level—and what a split indeed. Biden leads Trump by 24 points with degree-holding Hispanics, but only by 2 points with non-college Hispanics. Trump is at 41% with the latter group, already outpacing his last performance. Biden, meanwhile, is at just 43%, seventeen points shy of his 2020 mark. 13% of working-class Hispanics remain undecided, well more than the 7% of college Hispanics or non-college whites. Non-college Latinos will represent about 7% of the 2024 electorate, considerably more than the 3% share of college-educated Latinos.

Takeaways by Macro Roundup® AI

  1. Survey Center on American Life data show Biden leading Trump by 24 points among college-educated Hispanic voters but by only 2 points among non-college Hispanics.
  2. Trump draws 41% of non-college Hispanics, exceeding his last performance, while Biden sits at 43% with that group, 17 points below his 2020 mark.
  3. Non-college Latinos are projected to make up about 7% of the 2024 electorate versus 3% for college-educated Latinos, and 13% of working-class Hispanics remain undecided, compared with 7% among college Hispanics and non-college whites.

Related Articles:

  • The Shaky Foundation of Trump’s Lead: Disengaged Voters — Polling shows Trump's narrow national lead is built on gains among voters who pay little attention to politics, don't follow traditional news, and don't vote regularly, while Biden leads among those who voted in the prior presidential election. Almost all of Trump's gains have come from these less engaged voters.
  • The Deepening Diploma Divide — Recent polling averages show the Democratic presidential candidate winning white college-educated voters by 18 points and losing white voters without college degrees by 27 points, a 45-point education gap. Earlier decades saw the two groups vote much more similarly, with one election producing a divide of just two points.
  • The Road to A Political Realignment in American Politics — College-educated voters are now more likely to identify as Democrats while those without degrees back Republicans, with educational attainment increasingly correlated with views on abortion, LGBTQ+ rights, and religion's relationship to government. This sorting leaves most states politically uncompetitive, with eight states near the national average in education levels holding 97 electoral votes in play.

Tuesday, June 11, 2024

AI Summary. A stochastic simulation of 187 large US state and local government defined benefit pension plans finds that if investment returns are poor but within historical experience, about 11% of plans would see very large drops in funded status and several would approach insolvency. Employer contributions would on average double, and triple for roughly one in seven plans.

Mark Warshawsky American Enterprise Institute
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Mark Warshawsky simulates the performance of government pensions based on the past ten-year history of bond and stock returns. At the 25th percentile of historical returns, few plans are fully funded, and many are below 50% funding. @AEIecon

How would poor investment returns affect public pension funding and contributions?

Core argument: A stochastic simulation of 187 large state and local pension plans finds that under poor but historically plausible investment returns, about 11% of plans would see very large drops in funded status and several would be at or near insolvency.

Most state and local governments provide defined benefit (DB) pension retirement plans to their employees. A traditional measure of the funded status and hence the security of a pension plan is its funded ratio, that is, the ratio of assets to liability. Using a 2022 database of 187 large pension plans, basic plan features and conditions, actuarial relationships, simple economic projections, and varied bond and stock investment returns based on past ten-year historical periods in the US and the current asset allocation of the plans, I create a risk model. This risk assessment is denominated as the range of reasonably possible future actuarial funded ratios and amounts of indicated employer contributions across plans, when investment performance is poor but within historical experience. Several plans would be at or near insolvency, about 11 percent of plans would see very large drops in funded status, while employer contributions would, on average, double, and for about one in seven plans, triple. At the 25th percentile, shown in Exhibit 5, the modal projected funded ratio is around 75%, the liability-weighted mean is 72%, few plans are fully funded, and a substantial segment is below 50% funding, with a few showing severely worsening funded ratios.

Takeaways by Macro Roundup® AI

  1. A stochastic simulation of 187 large state and local pension plans finds that under poor but historically plausible investment returns, about 11% of plans would see very large drops in funded status and several would be at or near insolvency.
  2. Under poor investment performance within historical experience, employer contributions to state and local pension plans would double on average, and triple for about one in seven plans.
  3. At the 25th percentile of simulated outcomes, the modal projected funded ratio is around 75% and the liability-weighted mean is 72%, with few plans fully funded and a substantial segment below 50%.

Related Articles:

  • Flanked by Union Allies, Biden Touts $36 Billion Pension Bailout — The U.S. government allocated $36bn to the Central States Pension Fund, one of the country's largest multi-employer plans, aiding 350,000 union workers and retirees who otherwise faced benefit cuts estimated at 60%.
  • The Long-Term Budget Outlook Under Alternative Scenarios for the Economy and the Budget — The Congressional Budget Office projects that if private investment were more sensitive to federal deficits, debt held by the public would exceed 250% of GDP and real national income per person would be 18% ($21,300) lower than its baseline, with the average interest rate on federal debt 2pp higher.
  • The Budget and Economic Outlook: 2024 to 2034 — The Congressional Budget Office projects the federal budget deficit will grow from $1.6tn to $2.6tn over a decade, rising from 5.6% to 6.1% of gross domestic product. That end-point is well above the 3.7% average of the past 50 years, as outlays are projected to rise faster than revenues over most of the period.

AI Summary. A review of existing research finds no reduction in employment within broadly defined demographic groups from the 2021 expansion of the Child Tax Credit, which raised benefits to families and especially the lowest-income families. The authors estimate that among unmarried mothers with low levels of education, the group most affected, employment fell by 4.5 percentage points during the advance payments.

Diane Whitmore Schanzenbach and Michael Strain National Bureau of Economic Research
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The 2021 Child Tax Credit (CTC) expansion increased government benefits to low-income families but reduced employment only among mothers with relatively low levels of education. @dwschanz @MichaelRStrain

Does expanding the child tax credit reduce employment among low-income mothers?

Core argument: Among unmarried women with some college or less, the authors estimate a statistically significant 4.5 percentage-point reduction in employment during the advance Child Tax Credit payments.

The American Rescue Plan Act of 2021 made several temporary changes to the Child Tax Credit (CTC). The 2021 Child Tax Credit (CTC) expansion increased government benefits to families, and especially to families with the lowest incomes. Our review of available [pre-existing] research suggests that employment within broadly defined demographic groups was not reduced by the 2021 CTC changes. However, we present evidence that employment was reduced among mothers with relatively low levels of education — the demographic group that was most affected by the CTC expansion. Table 1, column 3 [shows] the analysis for a sample of women with low levels of education, who are more likely to have incomes in the ranges impacted by the changes in incentives described above. Among women with some college or less, the estimated treatment effects are both independently and jointly small and negative and not statistically significant. Column 4 further restricts the sample to women with low levels of education who are also unmarried. The treatment effect is negative and statistically significant and implies a 4.5 percentage-point reduction in employment during the advance CTC payments. We interpret these new findings as additional evidence that there is little to no detectable short-term negative impact of the advance CTC payments on employment broadly defined in August to December 2021. At the same time, among the demographic groups most likely to be affected by the advance CTC, we do see some evidence of employment reductions

Takeaways by Macro Roundup® AI

  1. Among unmarried women with some college or less, the authors estimate a statistically significant 4.5 percentage-point reduction in employment during the advance Child Tax Credit payments.
  2. For the broader sample of women with some college or less, the estimated treatment effects of the 2021 Child Tax Credit expansion are small, negative, and not statistically significant.
  3. The authors' review of existing research suggests employment within broadly defined demographic groups was not reduced by the 2021 Child Tax Credit changes, which increased benefits to families and especially to those with the lowest incomes.

Related Articles:

  • Per-Child Benefit in Wyden-Smith Child Tax Credit Bill Would Discourage Full-Time Work for Families with Multiple Children — A proposed child tax credit expansion would raise the effective tax rate on a parent with multiple children moving from part-time to full-time work from 69% to 83%, so doubling earnings from $20,000 to $40,000 would raise total income by only $3,400. The author argues such work disincentives could stunt upward mobility.
  • The Child Tax Credit Is a Failed Experiment — The Tax Policy Center estimates about 74m tax filers—48.3% of all filers—had no income tax liability in 2021. Congress's Joint Committee on Taxation models project that expanding the child tax credit would reduce labor supply by 0.2% and capital by 0.4% over a decade, shrinking gross domestic product by 0.2%.
  • The Short-Term Labor Supply Response to the Expanded Child Tax Credit — Comparing families that qualified for smaller and larger Child Tax Credit payments, the authors detect no significant differences in labor force participation or hours worked. Their confidence intervals rule out a 0.3 percentage point participation decline from a 10 percentile increase in the credit relative to income.

AI Summary. US productivity gains are attributed to mass layoffs followed by a rapid rebound: consumption and employment shifted away from low-pay, low-productivity in-person services, and when demand returned, restaurants and hotels could not hire fast enough and adopted labor-saving innovations while many laid-off workers moved into higher-pay, higher-productivity jobs.

Justin Fox Bloomberg
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In 2022, GDP/hour in France was 15% under the US and Germany was 11% lower. @foxjust argues this is likely driven by mass layoffs from low-pay services jobs in the US during the pandemic, and a reallocation of labor towards more productive activities.

Do mass layoffs followed by rapid rebound raise productivity?

Core argument: U.S. pandemic mass layoffs were followed by a rapid economic comeback, with productivity rising initially as both consumption and employment shifted away from low-pay, low-productivity in-person services hit hardest by shutdowns.

So what the US got was mass layoffs followed by a rapid economic comeback. Productivity rose initially because both consumption and employment shifted away from the low-pay, low-productivity in-person services most affected by pandemic shutdowns. But it held up even as Americans started eating out and traveling again because restaurants and hotels weren’t able to hire nearly as fast as demand grew, forcing them to come up with labor-saving innovations. In the meantime, many laid-off restaurant and hotel workers found opportunities to upgrade to higher-pay, higher-productivity work. “There was a silver lining to the — brutal, almost inhumane — shedding of labor in the US,” emailed Philipp Carlsson-Szlezak, global chief economist at Boston Consulting Group. European countries avoided the layoffs, he went on, “but it looks like they missed out on the learnings that came with these massive gyrations (while US stimulus also managed to protect the population via stimulus checks).”

Takeaways by Macro Roundup® AI

  1. U.S. pandemic mass layoffs were followed by a rapid economic comeback, with productivity rising initially as both consumption and employment shifted away from low-pay, low-productivity in-person services hit hardest by shutdowns.
  2. U.S. productivity held up even as Americans resumed eating out and traveling because restaurants and hotels could not hire as fast as demand grew, forcing them to adopt labor-saving innovations, while many laid-off workers moved to higher-pay, higher-productivity jobs.
  3. Philipp Carlsson-Szlezak, global chief economist at Boston Consulting Group, argues European countries avoided the layoffs but appear to have missed the learnings that came with those gyrations, while U.S. stimulus checks protected the population.

Related Articles:

  • Labor Productivity Is Popping — Labor productivity, measured as output per hour worked, rose 0.8% quarter over quarter and 2.7% year over year, compared with average paces of 0.3% and 1.3% in the decade before the pandemic. Productivity growth is volatile and can turn negative even outside recessions.
  • Comparing EU-to-US Output Per Hour — European Union output per hour worked has risen from about 72% of the US level in the early 2000s to about 82%. The EU's 28% shortfall in GDP per capita versus the US is roughly two-thirds attributable to lower output per hour and one-third to fewer hours worked; Germany's shortfall reflects fewer hours alone.
  • Productivity Has Grown Faster in Western Europe than in America — Adjusted for purchasing power, the EU's GDP is roughly 95% of America's, the same share as a decade earlier, while at market exchange rates US prices went from 5.4% above EU levels to 46% higher, largely because of a strong dollar. GDP per person has still grown faster in America than in most of Western Europe.

AI Summary. Start-up TerraPower has begun building a sodium-cooled nuclear reactor designed to be smaller and cheaper than conventional water-cooled plants, with completion expected no earlier than 2030 and the design not yet approved by the Nuclear Regulatory Commission. The company says the reactors should ultimately generate electricity at half the cost of traditional nuclear plants.

Brad Plumer New York Times
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.@BillGates broke ground on the first nuclear power plant from @TerraPower, which uses liquid sodium vs. water as a coolant and is projected to generate power at half the cost of the current US nuclear fleet. Gates has invested $1B in TerraPower.

Can sodium-cooled reactors make nuclear power smaller and cheaper?

Core argument: Bill Gates has put more than $1 billion of his fortune into TerraPower and expects to increase that amount, backing a smaller, cheaper reactor design whose construction began Tuesday and won't be finished until 2030 at the earliest.

Workers began construction on Tuesday on a novel type of nuclear reactor meant to be smaller and cheaper than the hulking reactors of old. The reactor being built by TerraPower, a start-up, won’t be finished until 2030 at the earliest and faces daunting obstacles. The Nuclear Regulatory Commission hasn’t yet approved the design, and the company will have to overcome the inevitable delays and cost overruns that have doomed countless nuclear projects before. What TerraPower does have, however, is Bill Gates. Who has poured more than $1 billion of his fortune into TerraPower, an amount that he expects to increase. TerraPower’s reactor uses liquid sodium instead of water, allowing it to operate at lower pressures. In theory, that reduces the need for thick shielding. In an emergency, the plant can be cooled with air vents rather than complicated pump systems. Chris Levesque, TerraPower’s chief executive, said its reactors should ultimately produce electricity at half the cost of traditional nuclear plants.

Takeaways by Macro Roundup® AI

  1. Bill Gates has put more than $1 billion of his fortune into TerraPower and expects to increase that amount, backing a smaller, cheaper reactor design whose construction began Tuesday and won't be finished until 2030 at the earliest.
  2. TerraPower's reactor uses liquid sodium instead of water, operating at lower pressures that in theory reduce the need for thick shielding and allow emergency cooling through air vents rather than complicated pump systems.
  3. TerraPower chief executive Chris Levesque said its reactors should ultimately produce electricity at half the cost of traditional nuclear plants, though the Nuclear Regulatory Commission has not yet approved the design.

Related Articles:

  • Electravision — The fossil fuel share of global primary energy is falling about 0.40% per year, matching the pace of decarbonization during the 1973–1988 nuclear buildout, though total carbon dioxide emissions have not declined because energy consumption keeps rising. Renewable energy is used almost exclusively for the electricity grid, with little penetration in industry and transport.
  • Bill Gates’ TerraPower Plans To Build First US Next-Generation Nuclear Plant — TerraPower, founded by Bill Gates, plans to seek a US construction permit for its Natrium reactor, which is cooled with liquid sodium rather than water, at a first plant in Kemmerer, Wyoming. The company says the reactors could be built for about half the cost of standard water-cooled reactors.
  • Plant Vogtle Unit 4 Begins Commercial Operation — The 1,114-megawatt Unit 4 reactor at Georgia's Plant Vogtle entered commercial operation, completing an 11-year expansion that brings the plant's capacity to nearly 5 gigawatts and makes it the largest US nuclear plant. No nuclear reactors are currently under construction in the United States, where nuclear supplies about 19% of electricity.

AI Summary. Japan and the United States agreed to create working groups on joint missile production, ship and aircraft repair, and supply chain resiliency as part of a defense industry cooperation forum. U.S. officials say Japan's engineering, industrial, and manufacturing capacity is a significant addition for the U.S. defense industrial base.

Tamayo Muto Nikkei Asia
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The US and Japan have started talks aimed at integrating key aspects of their defense industries ranging from “joint missile production, ship and aircraft repair, [to] supply chain resiliency.”

Can allied manufacturing capacity strengthen the U.S. defense industrial base?

Core argument: Japan and the U.S. agreed at the Defense Industrial Cooperation, Acquisition, and Sustainment Forum in Tokyo to establish working groups on joint missile production, ship and aircraft repair, and supply chain resiliency.

Japan and the U.S. concluded the Defense Industrial Cooperation, Acquisition, and Sustainment Forum (DICAS) aimed at promoting defense industry cooperation in Tokyo on Tuesday in which they agreed to set up working groups on joint missile production, ship and aircraft repair, and supply chain resiliency. "It is clear that the U.S. military-industrial base cannot meet all the security challenges," U.S. Ambassador to Japan Rahm Emanuel told reporters on Monday. "Japan's engineering, industrial and manufacturing capacity is a major, significant development" for the U.S. defense industry, he said. The DICAS meeting was followed by its first working group meeting on ship repair on Tuesday. A working group meeting on aircraft repair is scheduled for August, Emanuel said.

Takeaways by Macro Roundup® AI

  1. Japan and the U.S. agreed at the Defense Industrial Cooperation, Acquisition, and Sustainment Forum in Tokyo to establish working groups on joint missile production, ship and aircraft repair, and supply chain resiliency.
  2. U.S. Ambassador to Japan Rahm Emanuel said the U.S. military-industrial base cannot meet all the security challenges and called Japan's engineering, industrial and manufacturing capacity a major, significant development for the U.S. defense industry.
  3. The first working group meeting on ship repair followed the forum, and Emanuel said a working group meeting on aircraft repair is scheduled for August.

Related Articles:

  • China’s Shipyards Are Ready for a Protracted War. America’s Aren’t — China produced more than half of the world's commercial shipbuilding output, while Europe accounts for about 5% and the US next to nothing, with most of the remainder built in South Korea and Japan. Analysts argue that in a protracted conflict China's wartime-scale yards could quickly accelerate production, replace lost ships, and repair damaged ones.
  • Why is the U.S. Navy Running Out of Tomahawk Cruise Missiles? — The U.S. Navy has been firing Tomahawk land-attack cruise missiles faster than it can replace them, with opening-day strikes in Yemen expending more than 80 missiles against 30 targets. An entire year's purchase of 55 Tomahawks accounted for 68% of the precision munitions fired at the Houthis in a single day.
  • Keeping Up with the Pacing Threat: Unveiling the True Size of Beijing’s Military Spending — China's publicly released military budget understates its spending; adjusting for purchasing power and adding uncounted expenditures, the authors estimate the buying power of China's military budget at $711bn, roughly triple Beijing's stated figure and nearly equal to the United States'. Such parity favors China, whose spending concentrates on Asia while US resources are spread across multiple theaters.