Edward Conard

Top Ten New York Times Bestselling Author

  • “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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “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
  • “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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, August 7, 2024

AI Summary. State-level bans on affirmative action in US higher education are estimated to reduce under-represented minority women's college degree completion, earnings, and employment relative to non-Hispanic White women, driven largely by effects on Hispanic women, widening racial and ethnic gaps among women. Effects on under-represented minority men are more ambiguous and vary across states.

Francisca Antman, Brian Duncan, and Michael Lovenheim National Bureau of Economic Research
Date Posted:

Affirmative action bans by several states have increased racial/ethnic disparities in both college degree completion and earnings among minority women. Effects on minority men are more ambiguous. @FranciscaAntman

How do affirmative action bans affect minority women's degrees and earnings?

Core argument: Using US Census and American Community Survey data, the authors estimate that state affirmative action bans reduced under-represented minority women's college degree completion, earnings, and employment relative to non-Hispanic White women, driven largely by impacts on Hispanic women.

Using data from the US Census and American Community Survey, we compare the college degree completion, graduate degree completion, earnings, and employment of [under-represented minority (URM)] individuals to non-URM individuals before and after affirmative action bans went into effect across several US states. Results suggest that banning affirmative action results in a decline in URM women’s college degree completion, earnings, and employment relative to non-Hispanic White women, driven largely by impacts on Hispanic women. Thus, affirmative action bans resulted in an increase in racial/ethnic disparities in both college degree completion and earnings among women. Effects on URM men are more ambiguous and indicate significant heterogeneity across states, with some estimates pointing to a possible positive impact on labor market outcomes of Black men. These results suggest that the relative magnitude of college quality versus mismatch effects vary for URM men and women and highlight the importance of disaggregating results by gender, race, and ethnicity.

Takeaways by Macro Roundup® AI

  1. Using US Census and American Community Survey data, the authors estimate that state affirmative action bans reduced under-represented minority women's college degree completion, earnings, and employment relative to non-Hispanic White women, driven largely by impacts on Hispanic women.
  2. The authors find that affirmative action bans increased racial and ethnic disparities in both college degree completion and earnings among women.
  3. Effects on under-represented minority men are more ambiguous, with significant heterogeneity across states and some estimates pointing to a possible positive impact on the labor market outcomes of Black men.

Related Articles:

AI Summary. An analysis calculates the "zero bracket" — how much income a household can earn before owing any federal income tax — for single filers and married couples with and without two children, assuming the standard deduction plus broadly available provisions such as personal exemptions, the Child Tax Credit, and the Earned Income Credit.

Jeremy Horpedahl Economist Writing Every Day
Date Posted:

This year a married couple with 2 children can earn $65,708 without paying federal income taxes; the same couple without children would owe $4,000. @jmhorp notes the government already significantly subsidizes parents directly.

How much can households earn before owing federal income tax?

Core argument: The "zero bracket" — income earnable without owing federal income tax — is charted for four household types in inflation-adjusted dollars: single with no children, married with no children, head of household with two children, and married with two children.

Having children is a choice, and most of the benefits are internal to the family, rather than external. I show the “zero bracket” — that is, how much income you can earn without paying any federal income taxes. The four households are: a single person with no children, a married couple with no children, a single person with two children (“head of household”), and a married couple with two children. All dollar amounts are inflation-adjusted to current dollars. For each taxpayer, I assume that they take the standard deduction and only take broadly available deductions and credits — such as the personal exemptions, Child Tax Credit, and Earned Income Credit. There are other credits available to parents of children, such as for childcare, but I don’t include those since not all parents will be able to use those. The chart also doesn’t include payroll taxes, but these taxes don’t differ based on the number of children.

Takeaways by Macro Roundup® AI

  1. The "zero bracket" — income earnable without owing federal income tax — is charted for four household types in inflation-adjusted dollars: single with no children, married with no children, head of household with two children, and married with two children.
  2. The calculations assume the standard deduction plus only broadly available provisions such as personal exemptions, the Child Tax Credit, and the Earned Income Credit, excluding childcare credits that not all parents can use.
  3. The author argues that having children is a choice whose benefits are mostly internal to the family rather than external, and excludes payroll taxes from the chart because they do not vary with the number of children.

Related Articles:

  • Employment and Labor Supply Responses to the Child Tax Credit Expansion: Theory and Evidence — 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.
  • The Cost of Thriving Has Fallen: Correcting and Rejecting the American Compass Cost of Thriving Index — The authors recalculate the Cost of Thriving Index and estimate the cost of supporting a family on one male earner's wages rose by just over 10 weeks of work rather than 22 weeks. Accounting for federal taxes—including the child tax credit—and quality improvements in health care and cars, they estimate the cost is now lower than in 1985.
  • 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%.

AI Summary. Global oil demand continues to grow by at least 1m barrels a day, as strong consumption in the US, India, and Europe offsets weakness in China. Rising non-OPEC production, led by the US, Canada, Brazil, and Guyana, is enough to meet that growth, making supply the larger problem for OPEC+.

Javier Blas Bloomberg
Date Posted:

OPEC+ can defend $75-a-barrel “for a few weeks, or maybe two or three months” but investors should expect lower prices in late 2024 despite robust oil demand. @JavierBlas

Can oil producers hold prices up as non-OPEC supply grows?

Core argument: US total oil consumption rose to 20.8 million barrels a day in May, the highest ever for that month, offsetting weak Chinese demand alongside robust Indian consumption and European demand that is holding up as electric-car sales plummet.

Global oil appetite continues to increase at a healthy clip, despite weak consumption in China. Offsetting the trouble in the Asian giant is runaway demand in America. US total oil consumption rose to 20.8 million barrels a day in May, the highest ever for that month. Even in Europe, oil demand is holding rather well as sales of electric cars plummet. India is witnessing robust consumption, too, helping to offset the weakness in China. Put together, this year the world will consume at least a million barrels a day more than in 2023 — if not more — on par with an average year over the last couple of decades. Despite the naysayers’ warnings, global oil demand isn’t falling off a cliff; it’s just that growth has moderated. Supply is a larger problem for OPEC+. Non-OPEC production is increasing fast, led by the Americas. There, the extra output from the US, Canada, Brazil, and Guyana is enough to meet the growth in global oil consumption.

Takeaways by Macro Roundup® AI

  1. US total oil consumption rose to 20.8 million barrels a day in May, the highest ever for that month, offsetting weak Chinese demand alongside robust Indian consumption and European demand that is holding up as electric-car sales plummet.
  2. Global oil consumption will rise by at least 1 million barrels a day this year versus 2023, on par with an average year over the last couple of decades, reflecting moderated growth rather than collapsing demand.
  3. Supply poses the larger problem for OPEC+, as fast-rising non-OPEC output from the US, Canada, Brazil, and Guyana is enough to meet the growth in global oil consumption.

Related Articles:

  • The Petrodollar Is Dead, Long Live the Petrodollar — Saudi Arabia has no surplus left to recycle and is instead borrowing heavily in sovereign debt markets and selling assets, including stakes in its national oil company, to fund its economic plans. The International Monetary Fund projects the Saudi current account surplus narrowing to 0.5% of GDP before shifting into deficit through the end of the decade.
  • U.S. Energy Production Exceeded Consumption By Record Amount In 2023 — U.S. energy production rose 4% to nearly 103 quadrillion British thermal units while consumption fell 1% to 94, leaving production exceeding consumption by 9 quadrillion British thermal units, the widest gap in records dating to 1949. Dry natural gas, crude oil, natural gas plant liquids, and renewables all reached record output.
  • The World Is Transitioning to American Oil From Saudi Crude — Saudi Aramco scrapped plans to raise production capacity to 13mm barrels a day from 12mm, a cancellation expected to save $20–40bn in capital spending over five years and signaling insufficient demand for additional Saudi oil. Saudi Arabia, pumping about 9mm barrels a day under OPEC+ cuts, appears set on lower output to support higher prices.

AI Summary. China's emphasis on industrial output has produced overinvestment in sectors where domestic demand is already saturated and foreign governments are wary of Chinese supply chain dominance, with surplus steel capacity eventually exceeding the combined steel output of Germany, Japan, and the United States. Similar excesses have appeared in coal, aluminum, glass, cement, robotics, and electric-vehicle batteries.

Zongyuan Zoe Liu Foreign Affairs
Date Posted:

Zongyuan Zoe Liu argues “Simply put, in many crucial economic sectors, China is producing far more output than it, or foreign markets, can sustainably absorb.” Chinese factories can now produce 2X as many solar panels as the world can put to use.

Zongyuan Zoe Liu argues “Simply put, in many crucial economic sectors, China is producing far more output than it, or...

Does China's focus on industrial output create overinvestment in saturated sectors?

Core argument: China's surplus steel capacity eventually exceeded the combined steel output of Germany, Japan, and the United States.

In prioritizing industrial output, China’s economic planners assume that Chinese producers will always be able to offload excess supply in the global market and reap cash from foreign sales. In practice, however, they have created vast overinvestment in production across sectors in which the domestic market is already saturated and foreign governments are wary of Chinese supply chain dominance. In the early years of the twenty-first century, it was Chinese steel, with the country’s surplus capacity eventually exceeding the entire steel output of Germany, Japan, and the United States combined. More recently, China has ended up with similar excesses in coal, aluminum, glass, cement, robotic equipment, electric-vehicle batteries, and other materials.

Takeaways by Macro Roundup® AI

  1. China's surplus steel capacity eventually exceeded the combined steel output of Germany, Japan, and the United States.
  2. China has accumulated similar excess capacity in coal, aluminum, glass, cement, robotic equipment, and electric-vehicle batteries, in sectors where the domestic market is already saturated.
  3. Chinese economic planners assume producers can always offload excess supply in the global market and reap cash from foreign sales, but foreign governments are wary of Chinese supply chain dominance.

Related Articles:

  • Which Country Should Design U.S. Industrial Policy? — Manufacturing is 15% of global GDP but 11% of U.S. GDP versus 19% in Germany, 21% in South Korea, 26% in mainland China, and 34% in Taiwan, according to World Bank data. The author argues this gap stems from trade and industrial policies in surplus economies that effectively force households to subsidize manufacturing, drawing global manufacturers toward the largest subsidies.
  • China’s Record Manufacturing Surplus — China's manufacturing trade surplus has reached about 2% of world GDP, exceeding the peak surpluses of export powerhouses like Japan and Germany, and shows no signs of shrinking as policy continues to emphasize advanced manufacturing capacity. The main offsetting manufactured-goods deficit is in the United States rather than commodity exporters.
  • The Dangerous Myth of Deglobalization — China's manufacturing surplus rose by about 1 percentage point of global GDP over a four-year span and is far larger than those of Germany and Japan. China's $800bn goods trade surplus depends on the large U.S. trade deficit, which is still indirectly financed by China through the large offshore dollar stockpiles held by Chinese exporters.

Thursday, August 8, 2024

AI Summary. Comparing low- and high-wage businesses to isolate the disincentive effects of unemployment insurance, the authors find the employment gap between them widened while a $600 weekly federal supplement was in place and narrowed rapidly after it expired.

Andreas Hornstein, Marios Karabarbounis, Andre Kurmann, Etienne Lale and Lien Ta National Bureau of Economic Research
Date Posted:
Is Database:
Database

.@KurmannAndre and team find that the relative generosity of CARES Act unemployment insurance programs “held back the aggregate employment recovery by 4.7 percentage points between April and December 2020.”

Do expanded unemployment benefits reduce employment at low-wage businesses?

Core argument: With the arrival of the CARES Act's additional $600 weekly unemployment supplement, the employment gap between low- and high-wage businesses stopped closing and widened until the supplement expired at the end of July 2020.

By comparing low and high wage businesses we difference out common demand shifts arising from the [unemployment insurance (UI)] stimulus and construct a measure of the disincentive effects of UI benefits only, [and we exploit the fact that] the pandemic UI programs [increase] the difference between the average replacement rates of low- and high-wage businesses. [Figure 4 shows] that after an initial bigger drop of employment in low-wage businesses at the onset of the pandemic, low-wage businesses are catching up with high-wage businesses and the employment gap narrows from the end of March 2020 to early April 2020. We mark the period from April 2020 to August 2020 when the CARES Act provided an additional $600 weekly supplement and the subsequent period when the Lost Wages Assistance (LWA) program provided a $300 weekly supplement for six weeks, With the arrival of the CARES Act the employment gap not only stops closing, but it starts to widen until the $600 weekly supplement expires at the end of July 2020. Thereafter, employment in low-wage businesses rapidly gains ground and partially closes the employment gap to the high-wage businesses.

Takeaways by Macro Roundup® AI

  1. With the arrival of the CARES Act's additional $600 weekly unemployment supplement, the employment gap between low- and high-wage businesses stopped closing and widened until the supplement expired at the end of July 2020.
  2. After the $600 weekly supplement expired, employment in low-wage businesses gained ground and partially closed the gap with high-wage businesses; the Lost Wages Assistance program then provided a $300 weekly supplement for six weeks.
  3. Comparing low- and high-wage businesses differences out common demand shifts from the unemployment insurance stimulus, exploiting the pandemic UI programs' increase in the difference between the two groups' average replacement rates.

Related Articles:

  • Do Reemployment Bonuses Increase Employment? Evidence from the Idaho Return to Work Bonus Program — The authors estimate that Idaho's return-to-work bonus program, which paid up to $1,500 to people leaving nonemployment, raised employment among prime-age workers by 3.2 percentage points and the flow of unemployed workers into jobs by 18.2 percentage points. State-level estimates associate the program with a 2.9-point higher employment-population ratio and a 0.4-point lower unemployment rate.
  • Measuring Unemployment Risk — The authors estimate individual unemployment risk using employment status, demographic, job, and geographic characteristics, and find that before a recession this risk is concentrated: unemployment risk is below 5% for the vast majority of employed workers. Unemployed individuals, a small share of the population, average nearly 22% risk, about 10x the average for employed (2.7%) or out-of-the-labor-force (2.4%) individuals.
  • The Dual U.S. Labor Market Uncovered — The authors identify a dual U.S. labor market in which a primary segment of about 55% of the population is almost always employed, while a secondary segment of about 14% absorbs most seasonal and business-cycle fluctuations. Workers in the secondary segment have 6x higher turnover and are 10x more likely to be unemployed than primary-segment workers.

AI Summary. Immigrant visas—including employer-based and family-sponsored categories—are being issued at a near record-high monthly level. The author suggests the rising unemployment rate may reflect the government gradually clearing a Covid-related backlog of visa applications, which adds to labor supply.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk argues that an increase in legal immigrant visas was a factor in the rise of the US unemployment rate from 3.5% in July ‘23 to 4.3% in July ‘24.

Is rising immigration pushing up the unemployment rate?

Core argument: Immigrant visas are being issued at a near record-high level every month, continuing an uptrend in immigration.

The uptrend in immigration continues with a near record-high level of immigrant visas issued every month. Examples of immigrant visas include employer-based visas and family-sponsored visas (such as spouses of US citizens). Maybe the reason why the unemployment rate is rising is because the government is gradually working through a Covid-related backlog of visa applications, which increases the labor supply.

Takeaways by Macro Roundup® AI

  1. Immigrant visas are being issued at a near record-high level every month, continuing an uptrend in immigration.
  2. Immigrant visa categories include employer-based visas and family-sponsored visas, such as those for spouses of U.S. citizens.
  3. The rising unemployment rate may reflect the government gradually working through a Covid-related backlog of visa applications, which increases labor supply.

Related Articles:

  • Without Immigrants, US Working-Age Population Would Shrink — All net US employment growth since early 2020 has been among foreign-born workers, and without immigration the US working-age population would be shrinking — a pattern likely to persist for the rest of the decade. The jump in immigration appears to be enabling a soft landing that most economists had thought impossible.
  • Recent Spike in Immigration and Easing Labor Markets — States with higher per capita volumes of undocumented immigrants broadly had a lower ratio of job vacancies to unemployed workers, a common gauge of labor market tightness. Using state data, the author estimates that about one-fifth of the decline in that ratio was associated with higher immigration.
  • The Cost of Illegal Immigration — The US foreign-born population rose by 6.6mm to 51.6mm over a roughly three-year span, lifting immigrants to 15.6% of the population, above the prior records of 14.8% in 1890 and 14.7% in 1910. The authors estimate about 13.7mm illegal immigrants now live in the US, a net increase of 3.7mm.

AI Summary. The US operates 81% of commercial satellites in orbit and 86% of global effective launch capacity, with NATO allies second in satellites at 11% and China second in launch capacity at 9%. China is pursuing mega satellite constellations and reusable rockets, in many cases copying approaches already proven by US companies.

Todd Harrison American Enterprise Institute
Date Posted:

In 2024 the US had 81% of commercial satellites in operation and 86% of global effective launch capacity. @ToddHarrisonDC @AEI argues this creates “a once-in-a-generation opportunity to extend a rules-based international order into space.”

Does the US lead China in commercial satellites and launch capacity?

Core argument: The United States operates 81% of commercial satellites in orbit and holds 86% of global effective launch capacity so far in 2024, with NATO allies second in satellites at 11% and China second in launch at 9%.

The United States holds a commanding lead in the number of commercial satellites (81% of all commercial satellites in operation today) and in launch (86% of global effective launch capacity so far in 2024). NATO allies (mainly the United Kingdom and France) are a distant second place in the number of commercial satellites (11%), and China is a distant second in effective launch capacity (9%). China is working hard to catch up, and it has plans for mega constellations of satellites and reusable rockets. In many cases, however, it is merely copying what has already proven successful for US companies. The other major space powers, such as Russia, India, and Japan, are well behind the United States, Europe, and China in the commercial space competition. The United States has a window of opportunity to build and extend its lead in nearly all areas of the competition in space, but it must act quickly and in partnership with like-minded nations to remain competitive in all events. This is a once-in-a-generation opportunity to extend a rules-based international order into space.

Takeaways by Macro Roundup® AI

  1. The United States operates 81% of commercial satellites in orbit and holds 86% of global effective launch capacity so far in 2024, with NATO allies second in satellites at 11% and China second in launch at 9%.
  2. China is pursuing mega constellations of satellites and reusable rockets to close the gap, in many cases copying approaches already proven successful by US companies.
  3. Russia, India, and Japan trail the United States, Europe, and China in commercial space competition, and the United States has a window to extend its lead by acting quickly in partnership with like-minded nations.

Related Articles:

  • SpaceX’s Starship Rocket Successfully Completes 1st Return From Space — SpaceX's Starship completed its first return from space, with the booster setting down in the Gulf of Mexico and the upper-stage spacecraft surviving atmospheric re-entry for a controlled splashdown in the Indian Ocean. The flight was not flawless — the vehicle lost many heat-shield tiles and sustained a damaged flap — and technical hurdles remain.
  • Building an Enduring Advantage in the Third Space Age — The United States and China each logged their highest-ever annual launch rates, at 103 and 66 launches, while Russia fell to 19 and Europe recorded three. The US accounted for roughly half of global launches but 81% of effective launch capacity, since Falcon 9 and Falcon Heavy comprised 93% of US launches.
  • Space: The Missing Element of Your Strategy — Private-sector funding of space-related companies has topped $10bn, close to a tenfold rise over the past decade, though the US government remains the largest source of space funding. If current momentum continues, commercial funding for space ventures could surpass government funding within 20 years.

AI Summary. Canada's labor productivity is about 30% below the United States and roughly 10% below Australia's, and Canada has fallen from the 6th to the 18th most productive economy in the OECD. The authors attribute this to a shortfall in investment outside real estate, construction, and public services, plus negative multifactor productivity growth.

Nathan Janzen, Rajeshni Naidu-Ghelani, and Darren Chow Royal Bank of Canada
Date Posted:
Is Database:
Database

.@RBC analysts argue that slow investment is the biggest cause of Canada’s drop from the 6th most productive economy in the OECD in 1970 to the 18th as of 2022.

Why has Canada's productivity fallen behind other advanced economies?

Core argument: Canada has fallen from the 6th most productive economy in the OECD in 1970 to 18th as of 2022, and is 30% less productive than the United States, closer in economic performance to Alabama than to California or New York.

At the turn of the [21st] century, the economic output ofthe average Canadian was on par with Australia. Today,Australians are almost 10% more productive, while theireconomy has grown 50% per person faster than Canada’s. We’re further behind the United States. Canada is 30% less productive than the U.S. and closer to lower-income states like AL in terms of economic performance than tech-rich CA or NY. The result: We’ve fallen from the 6th most productive economy in the OECD in 1970 to the 18th as of 2022. Our relatively low [labor] productivity has been held back by a shortfall in investment, especially outside real estate, construction, and public services like hospitals. Since 1999, negative growth in multifactor productivity has been a secondary but important headwind. As a result, we’ve not been able to capitalize on the immigration boom that has added seven million people —most of them working-age and well-educated— since the turn of the century and offset the retirement wave of baby boomers.

Takeaways by Macro Roundup® AI

  1. Canada has fallen from the 6th most productive economy in the OECD in 1970 to 18th as of 2022, and is 30% less productive than the United States, closer in economic performance to Alabama than to California or New York.
  2. Australia and Canada had comparable economic output per person at the turn of the century, but Australians are now almost 10% more productive and Australia's economy has grown 50% faster per person.
  3. Canada's relatively low labor productivity has been held back by a shortfall in investment outside real estate, construction, and public services, with negative multifactor productivity growth since 1999 a secondary headwind, leaving an immigration boom of seven million people uncapitalized.

Related Articles:

  • A “Heat Dome” of Immigration — Canada has adopted some of the most aggressive immigration policies in the OECD, adding 1.273m residents in a year to reach a population of 41m — proportionally equivalent to the US admitting more than 10m immigrants annually. Canadians are increasingly angry as housing prices soar, sprawl expands, and traffic worsens.
  • Immigration Surge Fuels Male Population Boom in Canada — Canada's adult male population grew 3.4% over the past year versus 2.9% for women, the widest gap in nearly 50 years of records, as a higher share of male newcomers shifts the gender ratio. Among those aged 25 to 44, men outnumber women by 141,000, against a long-run average of zero.
  • Canadian Conservatives Have Found A Way To Win Back Young Voters — Canada's Conservative Party has doubled its vote share and moved into the lead, which the author attributes to an explicitly pro-youth platform centered on housebuilding, including proposals to withhold funds from cities that don't build enough housing and reward those that do. Housing affordability ranks as the second most important issue in Canada, behind the broader cost-of-living crisis.