Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
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  • “…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
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, June 1, 2026

AI Summary. The author argues that standard productivity measures do not carry the implications for cross-country comparisons of living standards and economic welfare that many economists assume, rather than that European productivity is mismeasured. Faster measured US productivity growth coexists with European relative productivity and purchasing power at current prices not declining.

Paul Krugman Krugman Wonks Out
Date Posted:

Krugman responds to Aghion et al’s critique of his argument that Europe’s lagging productivity vis-à-vis the US has not produced a drop in relative welfare: Constant-price deflators miss Europe’s benefits from falling prices of US tech goods.

Do productivity measures capture cross-country differences in living standards?

Core argument: Responding to Aghion, Bergeaud and Garicano, the author clarifies that he does not claim European productivity is mismeasured, but that standard productivity measures lack the implications for cross-country comparisons of living standards and welfare that many economists attribute to them.

Phillipe Aghion, Antonin Bergeaud and Luis Garicano have written a discussion of the response to my Europe/US productivity gap. Let me be clear: I am not arguing that European productivity is mismeasured, and never said that. I am, instead, arguing that standard measures of productivity do not have the implications for cross-country comparisons of living standards and economic welfare that many people – including many economists – think they have. I wanted to understand how to reconcile these different rates of productivity growth with the fact that relative European productivity and purchasing power at current prices have not declined. I have no idea why Aghion et al believe that a table showing multiple estimates of higher productivity growth in the US contributes to the discussion. [Aghion, et al argue] “Current PPPs and national deflators are giving sharply different answers to what at first sight looks like the same price question, but as we saw, is not.” Indeed. That’s exactly the point I’ve been trying to make.

Takeaways by Macro Roundup® AI

  1. Responding to Aghion, Bergeaud and Garicano, the author clarifies that he does not claim European productivity is mismeasured, but that standard productivity measures lack the implications for cross-country comparisons of living standards and welfare that many economists attribute to them.
  2. The author seeks to reconcile faster measured US productivity growth with the fact that relative European productivity and purchasing power at current prices have not declined.
  3. Aghion, Bergeaud and Garicano state that current purchasing power parities and national deflators give sharply different answers to what at first sight looks like the same price question, which the author identifies as precisely his own point.

Related Articles:

  • The Mismeasurement of Europe’s Productivity — Purchasing-power-parity comparisons match similar products across countries at a point in time, while national price deflators adjust for quality change over time, so the two can diverge even when both are well constructed. Standard measures show US labor productivity growing substantially faster than France's over three decades, while annual current-PPP conversion shows similar growth.
  • Challenging the Narrative of European Decline, Continued — Euro-area income per person falls behind the US when measured in constant 2021 prices but gains on the US when measured using each year's prices, suggesting Europe is holding its own in applying technology. The author argues Europe's real risk is being cut off from strategically important technologies.
  • European Stagnation Is Real — Comparing the United States, France, and Germany at current purchasing power parity prices shows the European economies roughly constant relative to America since 2000, but current-price measures miss output gains in sectors where prices fall, such as software. The author argues constant-price comparisons, the standard approach for growth over time, reveal greater European stagnation.

AI Summary. European productivity growth has trailed the United States for three decades, and measures using current purchasing-power-parity conversions versus national price deflators answer different questions. The authors argue the flat current-purchasing-power-parity series reflects changing the price yardstick each year rather than showing Europe is keeping pace.

Philippe Aghion, Antonin Bergeaud, and Luis Garicano Silicon Continent
Date Posted:
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Aghion et al. note that Krugman does not dispute the claim that Europe’s productivity has lagged the US for 30 years, but sidestep his case for measuring the role of falling prices of US tech goods in cushioning the welfare impact on European consumers.

Does Europe's flat productivity gap reflect a shifting price yardstick?

Core argument: European productivity growth has trailed the United States for three decades, a point on which both Krugman and the authors agree, with Krugman stating explicitly that he is not arguing European productivity is mismeasured.

Krugman and we agree that (1) European productivity growth has trailed the United States for three decades, and Krugman says so clearly (”I am not arguing that European productivity is mismeasured, and never said that.”) (2) Current-PPP chain and a national deflator answer different questions. (3) The weighting mechanism by which an economy that produces goods with falling relative prices sees part of its volume gain valued away, is part of the channel to explain the paradox. We disagree still on one crucial question: Krugman reads the flat current-PPP line as evidence that Europe is not falling behind, while we see it as the product of moving the price measurement stick every year. Hence we do not see the current- PPP line as indicative of anything interpretable.

Takeaways by Macro Roundup® AI

  1. European productivity growth has trailed the United States for three decades, a point on which both Krugman and the authors agree, with Krugman stating explicitly that he is not arguing European productivity is mismeasured.
  2. Current-PPP chain measures and a national deflator answer different questions, and the authors argue the flat current-PPP line reflects moving the price measurement stick every year rather than evidence that Europe is not falling behind.
  3. The authors identify a weighting mechanism, in which an economy producing goods with falling relative prices sees part of its volume gain valued away, as part of the channel explaining the paradox.

Related Articles:

  • How Should We Measure Economic Power? — The authors argue profits measure economic power because they show a firm can do what others can't, and by that metric U.S. firms dominate globally—with Japan and Europe significant and China second-tier—implying greater U.S. power than GDP or industrial output comparisons suggest. The gap favoring the U.S. is most pronounced in high-tech products.
  • Ed Conard Debates Furman On “The Expected Value of Risk Taking” — A debate on U.S. fiscal policy argues that spending increases, rather than the tax increases needed to fund them, slow growth, and that higher taxes would reduce the expected value of America's innovative risk-taking. The argument holds that cutting debt below 100% of GDP is critical.
  • Challenging the Narrative of European Decline, Continued — Euro-area income per person falls behind the US when measured in constant 2021 prices but gains on the US when measured using each year's prices, suggesting Europe is holding its own in applying technology. The author argues Europe's real risk is being cut off from strategically important technologies.

AI Summary. The cyclically adjusted price/earnings ratio developed at Yale University stands at its highest level since 2000, above where it was before the 1929 crash, while sales multiples are the highest in history. Earnings forecasts have surged, leaving room for multiples to expand further only if revenues and margins deliver.

John Authers Bloomberg
Date Posted:

John Authers argues investors have an underlying confidence that the “Iranian situation will not cause serious damage,” noting the S&P 500 is up 10% since the start of the Iran War relative to a flat MSCI All-World net American equities.

Are stock valuations stretched to their highest levels on record?

Core argument: Robert Shiller's cyclically adjusted price/earnings ratio stands at its highest level since September 2000, exceeding even its reading on the eve of the 1929 Great Crash.

Historic earnings multiples, looking back at profits over the last decade, appear extreme: The widely followed cyclically adjusted price/earnings ratio mapped by Robert Shiller of Yale University is at its highest since September 2000, exceeding even where it was on the eve of the Great Crash in 1929. But earnings forecasts have been through a dramatic surge in the last three months. If current profit forecasts are accurate, there is indeed some room for multiples to expand a bit further. But sales multiples are by far the highest in history, so much rests on both revenues and margins delivering on their promise.

Takeaways by Macro Roundup® AI

  1. Robert Shiller's cyclically adjusted price/earnings ratio stands at its highest level since September 2000, exceeding even its reading on the eve of the 1929 Great Crash.
  2. Earnings forecasts have surged over the past three months, leaving some room for multiples to expand further if those profit forecasts prove accurate.
  3. Sales multiples are by far the highest in history, leaving valuations dependent on both revenues and margins delivering on their promise.

Related Articles:

  • Chart of the Day: U.S. Households at Record Equity Allocation Heading into AI IPOs — U.S. households hold a record share of their assets in equities, exceeding the dot-com and Nifty Fifty eras, while price-earnings multiples sit near all-time highs and fewer than 10 stocks account for almost 40% of the S&P 500's market value. The author argues equity ownership has become structural rather than discretionary, making markets simultaneously more stable and more fragile.
  • Bayes and Base Rates 2.0: How History Can Guide Our Assessment of the Future — Applying historical base rates to OpenAI's published sales forecasts, the authors find that no U.S. public company in roughly 18,900 firm-period observations from 1950 to 2024 achieved five-year sales growth as fast as the company projects. Reported forecasts imply compound annual growth rates ranging from 85% to 118%.
  • One Hundred Years in the U.S. Stock Markets — Over a century, U.S. publicly traded stocks generated roughly $91tn in shareholder wealth enhancement, with returns strongly positively skewed and dominated by a relatively small number of high-performing firms. Because most possible outcomes fall below the mean in a skewed distribution, the authors argue financial planning should focus on median outcomes or the full distribution.

AI Summary. Index providers are shortening the waiting periods that determine when newly listed companies can be added to major stock indexes, with Nasdaq cutting the wait for its Nasdaq 100 Index to 15 trading days from a three-month minimum and FTSE Russell moving to five trading days. The changes accommodate companies large enough at listing that index rules cannot exclude them.

Lu Wang, Bailey Lipschultz and Isabelle Lee Bloomberg
Date Posted:

If the S&P follows its competitors by fast-tracking SpaceX, the resulting passive demand for SpaceX from funds tracking indexes would be a collective ~$20B or ~25% of the offering.

Are index providers shortening waiting periods to admit newly listed giants?

Core argument: Nasdaq cut the minimum listing period for Nasdaq 100 Index eligibility to 15 trading days from a three-month minimum, allowing SpaceX to join the index of the largest non-financial companies on its exchange.

Indexes built to track markets are now being asked to accommodate companies that are already too large to exclude by the time they arrive. To the index overlords who steer trillions of dollars in flows through the eligibility rules they set, adding a company like SpaceX is simply a matter of reflecting the market as it really is. Nasdaq changed its rules so SpaceX can join the Nasdaq 100 Index, a cohort of the largest non-financial companies listed on its exchange, in just 15 trading days, down from a three-month minimum. FTSE Russell adopted a similar approach, shortening the waiting time to five trading days, and S&P Dow Jones Indices is expected to decide soon following its own consultation on the subject, potentially opening the S&P 500 Index itself to welcome instant mega-caps like SpaceX.

Takeaways by Macro Roundup® AI

  1. Nasdaq cut the minimum listing period for Nasdaq 100 Index eligibility to 15 trading days from a three-month minimum, allowing SpaceX to join the index of the largest non-financial companies on its exchange.
  2. FTSE Russell shortened its waiting period to five trading days, and S&P Dow Jones Indices is expected to decide soon after its own consultation, potentially opening the S&P 500 Index to instant mega-caps like SpaceX.
  3. Index providers, whose eligibility rules steer trillions of dollars in flows, are being asked to accommodate companies already too large to exclude by the time they arrive.

Related Articles:

  • An AI IPO Impact Update: The AnthroPix Effect May Be $5-Trillion+ — A closed-end fund holding small private stakes in OpenAI, SpaceX, and Anthropic has more than doubled in under two weeks and trades at nearly triple its last reported net asset value. The author argues this reflects investor appetite for any exposure to pre-IPO artificial intelligence companies, which will pull money out of other assets.
  • SpaceX Shows $4.3 Billion Loss as Musk Targets Record IPO — SpaceX reported revenue of $18.7bn, up from $14bn a year earlier, while swinging from a $791m profit to a loss of $4.94bn, according to its filing. Its Starlink satellite internet business supplies about two-thirds of sales, with subscribers rising from 2.3m to 8.9m over two years.
  • Trampled Underfoot by a Stampede of Unicorns — A database trawl counts 1,727 private companies valued above $1bn globally, and if private market valuations are accurate, the largest of them have outperformed public markets since the pandemic. Several, led by SpaceX and OpenAI, plan initial public offerings, which can signal trouble ahead since insiders are choosing to sell.

AI Summary. Blue Origin reported an anomaly during a hotfire test in which its New Glenn rocket was fueled and its engines fired, and employees said an initial assessment showed severe damage to the company's only launch pad and related equipment. Employees said the failure was expected to severely affect launch plans, including 12 planned New Glenn flights.

Rafe Rosner-Uddin Financial Times
Date Posted:

Blue Origin’s New Glenn rocket exploded days before a planned satellite launch for Amazon’s Leo internet constellation. The explosion resulted in severe damage to Blue Origin’s only launch pad and will severely impact the firm’s 2026 launch plans.

Does damage to a sole launch pad disrupt planned flights?

Core argument: A Blue Origin New Glenn rocket exploded during a hotfire test, which the company described as "an anomaly," causing what employees told the FT was severe damage to Blue Origin's only launch pad.

The company said it had “experienced an anomaly during today’s hotfire,” a pre-flight procedure in which the rocket was loaded with fuel and its engines were fired to test systems. Multiple employees told the FT an initial assessment of the site showed severe damage to Blue Origin’s only launch pad and other equipment, including a lightning tower and transporter erector used to lift rockets into position ahead of launch. The failure was expected to severely impact the company’s launch plans this year, the people added. New Glenn was scheduled to ferry 48 satellites for Amazon’s Leo internet constellation. Blue Origin has been seeking to build up its launch cadence and planned to carry out 12 flights using New Glenn this year.

Takeaways by Macro Roundup® AI

  1. A Blue Origin New Glenn rocket exploded during a hotfire test, which the company described as "an anomaly," causing what employees told the FT was severe damage to Blue Origin's only launch pad.
  2. Damage extended beyond the pad to a lightning tower and the transporter erector used to lift rockets into launch position, according to employees who spoke to the FT.
  3. Blue Origin planned 12 New Glenn flights this year, including one carrying 48 satellites for Amazon's Leo internet constellation, and employees said the failure was expected to severely impact those plans.

Related Articles:

  • Jeff Bezos Steps Up Challenge to Elon Musk’s SpaceX with New Glenn’s Maiden Launch — Blue Origin's 98-metre heavy-lift New Glenn rocket reached orbit on its maiden flight from Cape Canaveral, five years later than originally planned, positioning the company to compete with SpaceX in the satellite launch market. The attempt to land the booster on an ocean platform to demonstrate reusability failed.
  • It’s Not a Space Race, It’s the Space Olympics — 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.
  • 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.

Tuesday, June 2, 2026

AI Summary. The authors' bottom-up tracking puts deduplicated artificial intelligence sector revenue at $25bn a quarter, up from $13bn under the same value-added method that strips out double-counting across cloud, model-lab, and application layers. They argue industry strain remains negative but should turn positive if revenue growth holds and capital spending forecasts don't rise.

Azeem Azhar and Nathan Warren Exponential View
Date Posted:

Azeem Azhar and Nathan Warren argue that while the large AI labs’ capex relative to revenue growth is “concerning…if revenue growth holds on trend and capex forecasts don’t revise upward, it should exit the red by the end of the year.”

Is AI revenue growth keeping pace with capital spending?

Core argument: Bottom-up tracking of deduplicated AI sector revenue puts the figure at $25 billion a quarter, up from $13 billion in September, using a value-added method that reduces double-counting across the cloud, model-lab, and application layers.

Quarterly revenues have roughly quintupled year on year: OpenAI from $1.7 billion to $6 billion, and Anthropic from $400 million to $4.8 billion. Based on our own bottom-up tracking of deduplicated sector revenue, we now put the figure at $25 billion a quarter, up from $13 billion in September. One note on that number. Since the first piece, we’ve refined how we calculate sector revenue, moving to a more nuanced value-added approach that reduces double-counting across the cloud, model-lab, and application layers. Our original September figure for Q3 2025 was $25 billion; under the new method, that same quarter comes out at $13 billion. This keeps industry strain in the red for now. But if revenue growth holds on trend – and capex forecasts don’t revise upward – it should exit the red by the end of the year.

Takeaways by Macro Roundup® AI

  1. Bottom-up tracking of deduplicated AI sector revenue puts the figure at $25 billion a quarter, up from $13 billion in September, using a value-added method that reduces double-counting across the cloud, model-lab, and application layers.
  2. Quarterly revenues have roughly quintupled year on year, with OpenAI rising from $1.7 billion to $6 billion and Anthropic from $400 million to $4.8 billion.
  3. Industry strain remains in the red, and is projected to exit the red by the end of the year if revenue growth holds on trend and capex forecasts are not revised upward.

Related Articles:

  • Everyone’s Looking For A Bubble. No One Sees The Stampede — A proprietary model estimates monthly artificial intelligence revenue grew roughly 18-fold in two years, from $772m to $13.8bn, with AI accounting for an estimated 23% of Google Cloud, 10% of Azure and 5% of Amazon Web Services. The model's ratio of investment to revenue fell from 6.1x to 4.7x, still historically high.
  • Abandon Ship! — 42 AI-related stocks have accounted for 75%-85% of S&P 500 returns, earnings and capital spending since generative AI chatbots launched, and 80%-100% over the more recent period. Unlike the dot-com era, rising tech capital spending has not been accompanied by increased debt financing in aggregate.
  • Commoditization, Orchestration, and the New AI Stack — The author argues that as incremental gains from larger AI training runs shrink, the return on additional computing power falls, weakening the case for the training spending that dominates data center demand. Survivors of model commoditization will be those owning the orchestration layer or the applications where outcomes are priced.

AI Summary. Alphabet is seeking $80bn to finance data-center expansion and computing capacity for training and running AI models, with Berkshire Hathaway buying a $10bn stake. The company has said its capital expenditures could reach $190bn in 2026 and expects a significant increase the following year.

Katherine Blunt Wall Street Journal
Date Posted:

Google is issuing $80B (upsized to $85B) in equity to finance its AI buildout. It expects capex to be ~$190B in 2026 and to rise from that in 2027; the stock fell on the news.

Are tech giants turning to outside financing for AI data centers?

Core argument: Alphabet is seeking $80 billion to finance data-center expansion and secure the computing capacity needed to train and run AI models, with Berkshire Hathaway buying a $10 billion stake.

Alphabet said the proceeds would be used to finance data-center expansion and secure computing capacity needed to train and run AI models. The company earlier this year said that its 2026 capital expenditures were expected to be as much as $190 billion and that it expects capital expenditures next year to significantly increase by comparison. Shares in Alphabet fell more than 1% in aftermarket trading.

Takeaways by Macro Roundup® AI

  1. Alphabet is seeking $80 billion to finance data-center expansion and secure the computing capacity needed to train and run AI models, with Berkshire Hathaway buying a $10 billion stake.
  2. Alphabet said its 2026 capital expenditures were expected to reach as much as $190 billion, and that it expects capital expenditures the following year to significantly increase by comparison.
  3. Alphabet shares fell more than 1% in aftermarket trading.

Related Articles:

  • The Macro Implications of the AI Capex Boom — Artificial intelligence capital spending is estimated to add roughly 1.4 percentage points to US growth in one year and about 1.5 points the next, comparable to business investment's contribution during the tech bubble. A material part of that estimate reflects profits at Nvidia and a few other chipmakers that are unlikely to be recycled back into the economy.
  • One Hundred Years in the U.S. Stock Markets — Over a century, U.S. publicly traded stocks generated roughly $91tn in shareholder wealth enhancement, with returns strongly positively skewed and dominated by a relatively small number of high-performing firms. Because most possible outcomes fall below the mean in a skewed distribution, the authors argue financial planning should focus on median outcomes or the full distribution.
  • How Much Is Donald Trump Costing America’s Economy? — Excluding artificial-intelligence-related categories, US non-residential fixed investment has contracted at roughly a 3% annual rate over the past year, versus average growth above 5% in the prior decade, running about $130bn below trend and cutting GDP growth by roughly 0.4 percentage points. Credit remains plentiful, with tight corporate bond spreads.

AI Summary. Goldman Sachs research finds that large companies floating 7% or less of their shares at initial public offering have 54% of shares in circulation two years later, while across its full sample of listings a 24% float at debut became 69% within 24 months.

John Authers Bloomberg
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Goldman Sachs finds that large firms with low floats at IPO have 54% of their shares in circulation two years later. If SpaceX/Anthropic/OpenAI “follow this pattern, then the weight of new equity supply could well become unbearable next year or in 2028.”

How quickly do small initial public offering floats expand afterward?

Core argument: Goldman's research shows that large companies floating 7% or less of their shares at IPO have 54% of shares in circulation two years later.

Goldman’s research shows that big companies with a very low float — putting only 7% or less on the market at IPO — have 54% of their shares in circulation two years later. For the full sample of IPOs it examined, a 24% float at the market debut had turned to 69% within 24 months. History isn’t encouraging. In the dot-com cycle, the chart further up the page shows that the peak in IPOs came in 1999 — and the top of the market and subsequent crash hit the following year as lockups ended and founders tried to make some cash.

Takeaways by Macro Roundup® AI

  1. Goldman's research shows that large companies floating 7% or less of their shares at IPO have 54% of shares in circulation two years later.
  2. Across Goldman's full sample of IPOs, a 24% float at market debut had risen to 69% within 24 months.
  3. In the dot-com cycle, IPOs peaked in 1999, with the market top and subsequent crash arriving the following year as lockups ended and founders sought to cash out.

Related Articles:

  • An AI IPO Impact Update: The AnthroPix Effect May Be $5-Trillion+ — A closed-end fund holding small private stakes in OpenAI, SpaceX, and Anthropic has more than doubled in under two weeks and trades at nearly triple its last reported net asset value. The author argues this reflects investor appetite for any exposure to pre-IPO artificial intelligence companies, which will pull money out of other assets.
  • Trampled Underfoot by a Stampede of Unicorns — A database trawl counts 1,727 private companies valued above $1bn globally, and if private market valuations are accurate, the largest of them have outperformed public markets since the pandemic. Several, led by SpaceX and OpenAI, plan initial public offerings, which can signal trouble ahead since insiders are choosing to sell.
  • One Hundred Years in the U.S. Stock Markets — Over a century, U.S. publicly traded stocks generated roughly $91tn in shareholder wealth enhancement, with returns strongly positively skewed and dominated by a relatively small number of high-performing firms. Because most possible outcomes fall below the mean in a skewed distribution, the authors argue financial planning should focus on median outcomes or the full distribution.

AI Summary. Inequality between 1980 and 2000 mainly reflected divergence in wages and salaries, while the more recent rise reflects a growing share of income going to capital, especially corporate profits. Two candidate mechanisms are capital-biased technological change and growing monopoly power, alongside rising concentration of wealth among the top 0.1% of Americans.

Paul Krugman Krugman Wonks Out
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Changes in American inequality btw 1980 and 2000 were largely due to changes in employee compensation, whereas changes in inequality since 2000 have largely been driven by changes in capital income, particularly that of the .1%.

Is inequality now driven by capital income rather than wages?

Core argument: The 1980–2000 surge in U.S. inequality mainly reflected divergence in wages and salaries, with big gains near the top coming from soaring executive compensation and large hedge fund bonuses rather than capital income.

Unlike the current period, the surge in inequality between 1980 and 2000 mainly reflected divergence in wages and salaries. Even near the top of the income distribution, big income gains largely came from big paychecks — soaring executive compensation, big bonuses for hedge fund managers, and so on. Capital income rose much less. In contrast, what we’re experiencing now is a huge rise in capital income, especially corporate profits, as a share of total income. There are two well-known mechanisms that can shift the distribution of income in a market economy away from labor and toward capital: 1) Capital-biased technological change, and 2) a rising share of income going to profits could be growing monopoly power, with big corporations exploiting their market dominance to raise prices and hold down wages. I won’t try today to figure out which of these stories is right about changes since 2000. However, let’s talk about something that has been happening within the capitalist class — the growing concentration of capital itself in the hands of an ever-smaller group. Here, for example, is the share of wealth held by the top 0.1% of Americans. In recent years the 0.1% haven’t just seen their share of total wealth rise, they’ve seen a sharp rise in their share of top 1% wealth.

Takeaways by Macro Roundup® AI

  1. The 1980–2000 surge in U.S. inequality mainly reflected divergence in wages and salaries, with big gains near the top coming from soaring executive compensation and large hedge fund bonuses rather than capital income.
  2. The current rise in inequality features a large increase in capital income, especially corporate profits, as a share of total income.
  3. Two well-known mechanisms can shift income in a market economy from labor toward capital: capital-biased technological change and growing monopoly power, with big corporations exploiting market dominance to raise prices and hold down wages.

Related Articles:

  • The Record Divide Between Corporate Profits and Worker Pay — Labor's share of gross domestic income fell to 51%, the lowest since records began in 1947, while profits' share rose to 12.1%, the highest since 1950. Inflation-adjusted hourly wages are up 3% since the end of 2019, compared with a 50% rise in profits.
  • The Gilded Age and Beyond: The Persistence of Elite Wealth in American History — The authors find that most extremely wealthy Americans fall out of the top tail within their lifetimes, and that grandparental wealth is associated with reaching the top 1% in a non-linear way. Still, over 90% of grandchildren of top 1% grandfathers did not reach that level.
  • The Economics of Inequality in High-Wage Economies — Information technology created investment opportunities exceeding the supply of properly trained talent, while trade with low-wage economies, low-skilled immigration, trade deficits, and aging demographics eased constraints on low-skilled labor and risk-averse savings. The author argues this framework, rather than rising cronyism, explains high returns to success, slowing productivity growth, and low interest rates.

AI Summary. Texas leads all US states in business investment and population growth, created roughly a fifth of all net new US jobs from 2020 to 2025, and is on course to overtake California as America's largest state economy. Other states are copying its approach, including plans to eliminate corporate income taxes and offer shovel-ready mega-sites.

Economist Staff The Economist
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According to CBRE, at least 184 American firms, including Tesla and Caterpillar, moved their headquarters to Austin, Dallas or Houston btw 2020 and 2025. During that period, Texas drove ~20% of all net job creation in the US.

Is Texas becoming the center of American business investment and growth?

Core argument: Texas created roughly a fifth of all net new jobs in the United States from 2020 to 2025, and no state receives more business investment or adds more people to its population.

On May 27th the shareholders of ExxonMobil approved a plan to cut its ties with New Jersey and reincorporate in Texas, where it has long had its headquarters. The oil giant is not alone. Texas is steadily establishing itself as America Inc’s new centre of gravity. No state receives more business investment or is adding more people to its population. From 2020 to 2025 it created roughly a fifth of all net new jobs in the country. It is only a matter of time before Texas overtakes California as the largest economy in America. Texas’s success should worry those in New York and California monitoring their tax take. At the same time it has spawned a raft of imitators. Legislators in North Carolina have passed a plan to get rid of its corporate-income tax by 2030. Tennessee has copied Texas’s strategy of offering firms shovel-ready mega-sites. Nevada is trying to launch its own business court.

Takeaways by Macro Roundup® AI

  1. Texas created roughly a fifth of all net new jobs in the United States from 2020 to 2025, and no state receives more business investment or adds more people to its population.
  2. ExxonMobil's shareholders approved a plan to cut ties with New Jersey and reincorporate in Texas, where the oil giant has long had its headquarters.
  3. Other states are imitating Texas: North Carolina's legislators passed a plan to eliminate its corporate-income tax by 2030, Tennessee offers firms shovel-ready mega-sites, and Nevada is trying to launch its own business court.

Related Articles:

  • Where Americans Choose to Move and Where They Leave — County-level mapping of net domestic migration within the United States shows some counties gained net movers equal to 10% or more of their 2020 population while others lost an equivalent share, excluding international moves.
  • Fifty Shades of Growth — Boom Belt" states combine high birth rates with low death rates, led by Utah at 13.2 births and 6.3 deaths per 1,000 residents for a natural increase of 6.9 per 1,000. Texas records about 12.7 births versus 9.1 deaths per 1,000, with roughly half its population growth from natural increase.
  • As New Jobs In Finance Dry Up, New York City’s Fiscal Model Is Wilting — New York state's share of US taxpayers reporting over $1m in income fell from 12.7% in 2010 to 8.7% in 2022, and the Citizens Budget Commission estimates state and city income tax receipts from that group would have been $13bn higher had the share held. Job growth has concentrated in lower-paid health care and social assistance.