One Economy to Rule Them All

ARBITRARINESS IS THE ENEMY OF JUSTICE:

Dead Tape: Annual Federal Paperwork Hours Consume Equivalent Of 14,983 Human Lifetimes (Nov. 20th, 2024, Forbes)

The ICB’s “Paperwork Reduction Accounting” appendix indicates that 10.5 billion hours were required to complete paperwork from 39 departments, agencies and commissions—up from 10.34 in 2022. A table below depicts these.

The bulk—6.657 billion hours—is attributable to the Department of the Treasury (up from 6.603 in 2022). The runner-up Department of Health and Human Services clocks in at 1.59 billion hours (compared to 1.65 billion in 2022; here we do find reduction). Past years’ cross-governmental paperwork-hour tallies appear below, by fiscal year.

2015: 9.865 billion hours
2016: 11.442
2017: 11.529
2018: 11.357
2019: 10.998
2020: 11.618
2021: 9.974
2022: 10.34

Despite the emphasis on ease of access to programs, paperwork hours are considerably higher today than the 7.2 billion at which they stood back in 2000. There are far more programs today, although the Government Accountability Office (GAO) affirms we don’t know how many.

SO MUCH DONE, SO MUCH YET TO DO:

Is the US national debt a risk to investments? (Brian Levitt, 7/03/24, Invesco)

The US is a very wealthy country. For example, the total US household net worth is over $150 trillion, which is close to five times the size of the nation’s debt.5 From that lens, the debt level may not seem as troubling. It may be one reason to explain why the nation is generally viewed by markets as a good creditor.

With $34 trillion in liabilities and $200+ trillion in assets, the US federal government has far more assets than many realize.1 Rather than measuring debt as a percentage of GDP, which is primarily an income measure, measuring debt against total assets paints a far more solvent picture. If all the US government land, buildings, and natural resources were combined, the country would likely have more than $200 trillion in assets. While not all are liquid, they certainly paint the US as a much better creditor than many would believe.

Given that Treasuries are one of the safest and most liquid assets in the world, it’s unlikely investors will lose their appetite for US debt. The federal government owns 20% of US debt, making it the largest single holder.2 Since this debt is just money the government owes itself, however, it has no effect on overall government finances. More than 40% of US debt is owned by US savers, pensions, mutual funds, and financial institutions, who hold Treasuries for safety, yield, policy requirements, or regulatory reasons.2 While it’s true that more than 20% of US debt is held abroad, it’s not heavily concentrated in one country. The largest foreign investors include Japan and the UK, where yields are historically lower than they are in the US. 2

The debt, like the Border, is only an aesthetic matter, not an economic one. But the aesthetics make people believe government isn’t functioning well. Some showy but trivial “fixes” would be worthwhile in that context.

AT THE eND OF hISTORY OUR MAIN “PROBLEM”…:

The real story of inflation (Peter R. Orszag, November 14, 2024, Washington Post)

The results show that supply-chain variables directly accounted for 79 percent of the rise in underlying inflation in 2021. These effects then continued into 2022, with ongoing supply issues directly explaining 60 percent of the rise in inflation that year. The rest was more than accounted for by spillovers from the 2021 supply-driven inflation. All of which leaves only a modest role for demand-driven effects like the covid relief package.

Why did these effects play out over such a long time? At the start of the pandemic, Americans shifted their spending from services (like travel, eating out and going to the movies) to goods (like computer hardware and exercise equipment) — just as a snarled supply chain caused those goods to be in short supply. This caused prices to spike.

…is having too much money to spend. Tax consumption.

BUT HE WON’T:

President Trump Should Abandon Biden’s Misguided War on Big Business (Mark Jamison, 11/14/24, AEIdeas)

Yes, industry concentration has increased—but this trend reflects a more productive economy, not a broken one. Mergers and acquisitions (M&A) have a marginal impact on concentration, and rising concentration is largely a result of two factors: improving productivity and expanding regulation. Ironically, Biden’s regulatory efforts risk making concentration worse, not better. Large firms benefit from regulatory barriers to entry and economies of scale in compliance, leaving smaller competitors at a disadvantage.

Our study examined five potential drivers of industry concentration: productivity, regulation, M&A activity, imports, and information technology (IT). Although data limitations prevented us to showing causation, we did find that productivity is the primary consideration. Larger firms achieve economies of scale, allowing each worker to produce more and giving consumers more of what they want. In other words, concentration signals economic strength, not weakness.

Regulation, the second biggest factor, exacerbates concentration in multiple ways. Large firms can absorb the costs of compliance more easily than small ones, gaining a competitive edge. Regulatory barriers also reduce opportunities for “creative destruction,” a process where new firms can disrupt and replace established players. There are counter examples, such as the 1994 Riegle-Neal Act, an act of deregulation that encouraged industry concentration by allowing interstate banking and branching. But on net, more regulation means larger businesses.

Regulations kill.

AS maga CALLS IT, bIDENOMICS:

The Dow jumps 150 points as strong earnings and GDP growth boost stocks (Vinamrata Chaturvedi, October 30, 2024, AP)

The Dow and other major indices jumped Wednesday morning, fueled by a stronger-than-expected earnings report from Alphabet (GOOGL) Google’s parent company, and new GDP data signaling a stable U.S. economy. Released just days before the U.S. election, the third-quarter Gross Domestic Product (GDP) report showed an annualized growth rate of 2.8%.

MANAGERS ARE THE DRAG ON PRODUCTIVITY:

In-office work mandates are really all about control, not efficiency or value (Gleb Tsipursky, 10/15/24, The Hill)

Recent research led by Pitt professor Mark Ma and graduate student Yuye Ding sheds light on the complex reasons behind organizational leaders’ decisions to force employees to return to working in-office. And it turns out that managers’ motivations diverge significantly from the commonly stated objectives of improved productivity and financial performance.

Ma told me in an interview that the push for more in-office work is more closely associated with managerial desires for control and a tendency to attribute organizational underperformance to the workforce, rather than evidence-based strategies aimed at enhancing corporate value.

Reports from organizations such as Hubstaff and Thumbtack reveal that remote work can lead to higher efficiency and productivity, challenging the assumption physical office presence is inherently more productive. Furthermore, insights from McKinsey and Aquent highlight that remote and hybrid models done right foster high-performing teams and support diversity and innovation compared to in-office models.

IT’S ABOUT TO GET MUCH BETTER:

Let us pause to appreciate the remarkable U.S. economy: It really doesn’t get much better than this, folks (Noah Smith, Oct 05, 2024, Noahpinion)

Essentially, there are four things you want from a macroeconomy:

You want high employment rates, so that everyone who wants a job has a job.

You want low and stable inflation rates, so that people know how much a dollar will be worth a month from now.

You want fast wage growth, so that regular working people are taking home their share of economic growth.

And you want fast productivity growth, because ultimately that’s what creates durable gains in living standards.

Right now, the U.S. economy is giving us all of those things.

Only the last matters and it will be driven by the trend towards zero of labor and energy costs.