Latest news with #EconomicInnovationGroup
AllAfrica
6 days ago
- Business
- AllAfrica
AI vs jobs, China trade truths and dictator economics
Here's a roundup of recent radical research. It's practically conventional wisdom that AI is going to take jobs away from large numbers of humans, leaving them without anything useful to do in the economy. People are so convinced of this that they'll jump at practically any hint in the data that allows them to believe that it's happening. A little while ago I wrote a post about why both economists and popular commentators are getting way over their skis on this. Anyway, Sarah Eckhardt and Nathan Goldschlag of the Economic Innovation Group have a good new report on this, which shows that as far as we can tell, AI isn't taking jobs yet — at least, not on any measurable scale. Eckhardt and Goldschlag start with a measure of predicted AI exposure for various jobs. These measures don't tell you which jobs are going to be replaced by AI; instead, they just tell you which jobs currently involve more tasks that can probably be done by AI. These measures actually have a pretty good track record at predicting which workers will end up using AI. Basically, Eckhardt and Goldschlag find no correlation — or even a negative correlation — between that measure of AI exposure and any measure of labor market distress. For example, here's the unemployment rate of workers with varying degrees of predicted AI exposure (1 is the least exposed, 5 is the most exposed): Source: EIG There has been a recent rise in unemployment, but it's concentrated among the people who are least exposed to AI, while those who are the most exposed almost all still have jobs. The same is true when we look only at recent college graduates, who have been the focus of the most concern in the media: Source: EIG And the same is true when we look at which workers are exiting the labor force completely: Source: EIG And one more interesting finding is that the most-exposed workers are actually less likely to switch to less-exposed occupations than they were before generative AI hit the market! In other words, coders and paper-pushers are not becoming plumbers to protect themselves from AI: Source: EIG The researchers also try using alternative measures of AI exposure, and they find pretty much the same thing. In other words, AI job displacement just hasn't happened yet. It may happen in the future, but so far, every time people have jumped at a particular data point to claim it's finally happening, it has turned out to be a mirage. Bernie Sanders and his followers deeply believe that America's economy is in a prolonged state of crisis — that capitalist economic policies have steadily immiserated the American public, creating a country where regular people are economically drowning even as corporate fat cats enrich themselves. Their absolute faith in this narrative often leads them to interpret economic statistics in dubious or even ridiculous ways. The latest example of this is when Bernie Sanders posted a chart of housing versus wages: This is a pretty ridiculous chart. Why would you plot home prices on the same y-axis as weekly income? Does anyone think these two things should be even remotely close to the same size? Do we think people should be able to afford a house on a single week of income? That's ridiculous. A non-ridiculous way to present this data would be to divide home prices by weekly earnings. That would show us how many weeks a typical worker would need to work in order to afford a home. But actually, the 'median weekly earnings' number is for full-time workers only, so instead we should use median personal income, which counts everybody. Here's what that looks like: In the 80s and 90s, it took about 8 years of work to afford a home. Since then, the number has climbed to about 10 years — a significant and concerning drop in affordability, but not a catastrophic drop. A breakdown by the Economic Innovation Group shows that mortgages are about as affordable as they ever were, but down payments have gotten less affordable: Source: Ben Glasner While the drop in housing affordability over the past half century is certainly a problem, it's not the kind of crisis that Bernie paints it as. Using silly charts in service of alarmist narratives ultimately just weakens trust in your movement — or at least, it should. The three most powerful countries in the world are now all ruled by strongmen. In China, Xi Jinping has subdued all rivals, and concentrated what used to be a dispersed bureaucratic oligarchy under his own personal rule. In Russia, Putin is effectively an emperor. The US is still officially a democracy, but democratic norms and institutions are eroding rapidly, and in April a majority of Americans called Trump a 'dictator.' The question is what effect these personalistic regimes will have on the economy. China's growth over the past four decades pretty much proves that democracy isn't necessary for a strong or even dominant economy. But there's a difference between countries ruled by a single strongman, and countries ruled by a system of elite institutions that distribute power among a number of oligarchs. A new paper by Blattman, Gehlbach, and Yu shows that personalist regimes tend to experience lower economic growth than either democracies or autocracies with more distributed power. The difference isn't huge, but you can see it on a graph: Source: Blattman, Gehlbach, & Yu (2025) It's not clear which direction the causation runs here; it could be that countries with bad economies tend to turn to strongmen to save them. But Blattman et al. test for this using variables that tend to predict regime transitions, and they don't find any change. That implies that personalist regimes actually make mistakes that slow down economic growth. Xi, Putin, and Trump certainly don't exactly seem to be violating that rule of thumb. China's growth has slowed relentlessly under Xi, and his industrial policy seems to be simply driving Chinese companies into unprofitability rather than extricating the country from its economic slump. Putin's war in Ukraine is slowly crushing the life out of the Russian economy, while Trump's tariffs continue to wear down the resilient US economy. The trend toward strongmen is a bad one. Does it ever seem like modern political discourse is dominated by crazy idiots? Well, that's because it is. In a new paper entitled 'Dark personalities in the digital arena: how psychopathy and narcissism shape online political participation', Ahmed and Masood find that your intuition isn't wrong: This cross-national study investigates how psychopathy, narcissism, and fear of missing out (FoMO) influence online political participation, and how cognitive ability moderates these associations. Drawing on data from the United States and seven Asian countries, the findings reveal that individuals high in psychopathy and FoMO are consistently more likely to engage in online political activity…. Conversely, higher cognitive ability is uniformly associated with lower levels of online political participation. Notably, the relationship between psychopathy and participation is stronger among individuals with lower cognitive ability in five countries, suggesting that those with both high psychopathy and low cognitive ability are the most actively involved in online political engagement. Almost everyone blames recent political trends on their chosen enemy group, but the real culprit is social media, which has elevated the worst people in our society to positions of influence from which they were previously shut out. What force can defeat the terrible power of social media and its armies of crazy idiots? In my Fourth of July post, I expressed hope that AI algorithms could be harnessed to defeat the hordes of humanity's worst: LLMs give platforms the ability to cheaply and quickly filter content according to sentiment. Simply having an LLM downrank angry content and uprank positive content would lean against the natural tendencies of social media technology. Call it Digital Walter Cronkite. Of course, that solution would depend on the willingness of platform owners like Elon Musk to unleash algorithms in the service of moderation and reasonability. That seems a bit like wishful thinking, I admit. But there's another possibility, which is that AI itself will simply naturally drive humans off of social media, by generating infinite amounts of slop. A new paper by Campante et al. finds evidence that AI-generated images nudge news consumers toward more trustworthy human-gatekept media: We study how AI-generated misinformation affects demand for trustworthy news…Readers were randomly assigned to a treatment highlighting the challenge of distinguishing real from AI-generated images. The treatment raised concern with misinformation…and reduced trust in news… Importantly, it affected post-survey browsing behavior: daily visits to [the mainstream newspaper's] digital content rose by 2.5%…[S]ubscriber retention increased by 1.1% after five months…Results are consistent with a model where the relative value of trustworthy news sources increases with the prevalence of misinformation, which may thus boost engagement with those sources even while lowering trust in news content. A similar effect might happen with AI agents, which are already flooding social media with trash commentary. As X and other social media companies lose the battle against the bot swarms, human users may stop relying on those feeds for their window on the world. The psychopaths and attention-seekers might simply get drowned out in the automated cacophony. That would be a weird end to the age of mass social media, but honestly, it's not the worst ending I could think of. The American and Chinese economies continue to decouple. Even though Trump keeps 'pausing' his tariffs on China, China is selling less and less to America: Source: Bloomberg via Noahpion But you'll notice that China's exports to Europe and Southeast Asia are still growing strongly. This has led some commentators to claim that China is simply shipping its good through third-party countries, avoiding tariffs (or the threat of tariffs) by essentially just slapping a different 'made in' label on stuff that was actually made in China. Those claims are wrong. You can see that they're wrong by looking at the actual products that China is selling to countries in Southeast Asia (the region usually accused of transshipping Chinese goods to the US.), versus the products it used to sell to the US. The two sets of products don't match up very well, meaning that only a modest portion of Chinese trade with Southeast Asia could reflect diversion of trade from the US Gerard DiPippo did this exercise: Facing US tariffs, China's exports to the US are down—while exports to Southeast Asia are up. Is that trade diversion and potential transshipment? My estimate: at most 34% of the increased PRC exports to SE Asia in Q2 could reflect trade diverted from the United States. In fact, this is an upper bound. Many of the countries being accused of transshipping Chinese goods — Mexico, Vietnam, etc. — have their own industries as well, which export a lot to the US. Increased US imports from those countries are likely to at least partially — or perhaps mostly — be locally made goods. All this goes to show that you can't draw conclusions about decoupling just from macro data. There are a number of popular ideas out there about who marries whom. One is that rich men primarily want physically attractive wives and don't care about social status, education, and so on. Another is that power couples tend to be dual earners. In fact, both of these stereotypes are wrong. As Lyman Stone shows in a post for the Institute for Family Studies, rich men tend to marry highly educated, high-earning women who become housewives after marriage. Here are some charts: Source: Lyman Stone Source: Lyman Stone Source: Lyman Stone I don't like the use of the word 'overwhelmingly' in any of these charts, but the point is clear — rich men, who presumably have greater choice in who they marry, often tend to prefer women who are educated and high-income before marriage, but many of these women become homemakers after marriage. Call it the 'power trad' couple. This article was first published on Noah Smith's Noahpinion Substack and is republished with kind permission. Become a Noahopinion subscriber here.
Forbes
21-07-2025
- Business
- Forbes
How AI Might Blur The Differences Between Small And Medium Enterprises
American small businesses are navigating uncertain waters. There are new opportunities provided by the tax benefits in the OBBBA. There will be integration of artificial intelligence into everything. There are also obstacles to navigate past, including potentially crippling tariffs and a potential recession. This macroeconomic uncertainty is forcing small businesses to become leaner, invest in technology and potentially diversify their products and services. For many American small businesses, tariffs present the greatest concern. It is estimated that every American will have to pay an additional $3000 a year for the same products as a result of price hikes related to American tariffs. Many SMEs (small and medium enterprises) can't raise prices or absorb additional expenses. Furthermore, retaliatory tariffs could close market access to critical parts of the supply chain or sales partners. Combined with interest rates that continue to remain high, businesses have to run lean. At the same time, the recent OBBBA legislation did codify an important initiative from the first Trump Administration – Opportunity Zones. According to the Economic Innovation Group, the premise of the OZ incentive is to encourage private investment in low-income and high-poverty areas. For small businesses, the new version of the program provides incredible benefits to investors and SMEs in rural areas and blighted urban districts. US Senator Edward Markey, Democrat of Massachusetts, speaks during a press conference on "Youth vs. ... More Oligarchy Day of Action" to discuss cuts to social programs in the One Big Beautiful Bill Act that President Donald Trump recently singed into law, outside the US Capitol in Washington, DC, July 17, 2025. (Photo by SAUL LOEB / AFP) (Photo by SAUL LOEB/AFP via Getty Images) Far from Washington, DC, American small businesses are already investing in artificial intelligence. According to Bessemer Venture Partners and Bain Consulting, AI adoption is accelerating, with 60% of private companies reporting that AI is becoming a larger portion of their overall budgets – driven in large part by solutions developed for them by tech companies and other vendors. Large companies are switching to AI-based procurement systems, which will benefit small businesses. Even the adoption of the most mainstream AI tools, like ChatGPT, is improving SME performance in areas like proposal writing and marketing. One company that has been helping SMEs for a long time to manage their IT operations and security is Electric. Founded in 2017, Electric supports SMEs in every aspect of their information technology needs, from procuring and provisioning new hardware to automating IT onboarding and offboarding, compliance, application permissions and cybersecurity. For growing SMEs and startups, the potential of companies like Electric could be game changing. Now, instead of allocating resources to a technology department, SMEs can shift those resources to more engineers or sales staff. Electric represents an important trend in enterprise technology. Instead of multiple software and SaaS solutions, AI is allowing companies to develop more comprehensive solutions that can be used across verticals. Similarly, in a world of changing regulatory and compliance requirements, and sometimes dramatic changes, like in the United States, AI can more quickly keep companies updated and in compliance. Electric boasts hundreds of clients around the world who use its AI platform for mission critical tasks like security monitoring and compliance. Ryan Denehy, CEO of Electric Recently, Electric announced a partnership with Justworks, an HR technology solutions company, to create a partner API where clients can seamlessly integrate their Justworks and Electric accounts together. SMEs perennially under invest in HR departments. With the growth of remote work, HR departments are often tasked with IT-related tasks, such as securely buying, tracking, and retrieving laptops. People-led teams often aren't well-equipped to handle these tasks, but AI-driven startups like Electric and others can simplify, evaluate preferred pricing and integrate with existing workflows. In addition, HR departments are using AI for workforce planning across geography and skills sets. Lastly, SMEs are looking for integrated solutions, like the Electric and Justworks partnership, that allows them to more efficiently onboard and offboard employees, providing a better employee experience and less cost, while also getting access to cybersecurity solutions should they need it. For a small business with anywhere between 10-500 employees and only 1-2 IT and HR employees, these tasks can swallow up executives' time and distract from mission-critical activities. Suddenly, small businesses can act like medium-sized businesses. According to Qamar Saleem, Global Head of the SME Finance Forum at the International Finance Corporation (IFC), SME's make up 90% of businesses in the world and generate nearly 70% of employment. Overall, SMEs contribute about 50% of the global GDP. Yet, the total global SME financing stands at just $4 trillion — a fraction compared to the $700 trillion global GDP. This gap symbolizes the urgent need for innovative, inclusive, and scalable finance solutions to support the backbone of our economies worldwide According to Saleem and the World Bank, one of the biggest barriers for small businesses to secure financing is strong internal processes and management practices. With AI, and tools like Electric, SMEs become more bankable, efficient and cognizant of their operations.
New York Post
28-06-2025
- Politics
- New York Post
Why it's time to Make America Think Again
The numbers tell a stark story. According to a new report by the Economic Innovation Group, foreign-born workers who arrived on student visas out-earn their American peers by nearly $30,000 annually. They're twice as likely to work in research and development. But this isn't a zero-sum game where one group's success diminishes another's potential. Instead, it's a mirror reflecting what America could achieve if it stopped settling for mediocrity and started demanding excellence from its own educational system. Walk across any American university campus today, and the contrast becomes painfully clear. While international students pack engineering labs and computer science departments, too many American students have drifted toward paths of least resistance — degrees in Critical Race Studies, Queer Theory and Gender Analysis. Advertisement 6 America's higher education system is doing a masterful job of training future leaders. ALLISON DINNER/EPA-EFE/Shutterstock One group is building the future; the other is deconstructing the past. These fields offer little beyond debt and limited career prospects. Yet they proliferate while hard sciences struggle for enrollment. The real revelation isn't that international students are outperforming Americans. It's that they're succeeding within systems America built, but has allowed them to decay. They're mastering curricula Americans designed, conducting research in labs Americans constructed, and launching careers from universities Americans funded. The infrastructure for greatness already exists. America has simply forgotten how to use it. Advertisement Consider the typical trajectory of today's international STEM student. They arrive focused, disciplined, and pragmatic. They pursue electrical engineering, computer science, and biotechnology. Not because these fields are fashionable, but because they understand something fundamental: Education is a tool for building the future, not just exploring feelings about the present. They treat university as a launching pad, not a four-year therapy session. There's an opportunity hidden within this crisis. America doesn't need to choose between welcoming global talent and developing domestic potential. The country can do both, and doing both is precisely what made it a superpower in the first place. 6 Along with working to Make America Great Again, critics believe President Trump should strive to 'Make America Think Again.' REUTERS The solution begins with recognizing that excellence attracts excellence. The same rigorous programs that draw international students can inspire American ones — if we make them accessible and appealing. This means rebuilding pathways that connect high school students directly to high-impact fields, regardless of their background or ZIP code. Advertisement Imagine a system where every public university receiving federal funding must maintain world-class STEM programs with guaranteed spots for qualified American students. Picture apprenticeship programs that blend university research with practical training, giving students hands-on experience while they earn degrees, or partnerships between elite universities and community colleges that create seamless transitions from technical training to advanced research. 6 Higher education in the US must be retooled to make it both easier to access and more attractive to US students, who are falling far behind their global peers, according to critics. Wavebreak Media – 6 When classrooms contain students from around the world, all working at the highest level, everyone benefits from the elevated — and more, yes, diverse — standards. Getty Images Advertisement This isn't about lowering standards or creating separate tracks. It's about raising expectations across the board while removing the barriers that prevent talented Americans from reaching their potential. The farm kid in rural Iowa who builds robots in his garage should have access to the same opportunities as the international student with perfect test scores. The key is understanding that competition drives excellence. International students aren't just filling seats. They're setting benchmarks. Their success should inspire their American counterparts to rise up and meet them, not retreat into easier alternatives. When classrooms contain students from around the world, all working at the highest level, everyone benefits from the elevated — and more, yes, diverse — standards. 6 Students are mastering curricula Americans designed, conducting research in labs Americans constructed, and launching careers from universities Americans funded, according to reports. REUTERS America needs to rehabilitate the culture around education itself. Learning must be reframed as adventure, not obligation. Discovery should be celebrated more than comfort. The pursuit of knowledge needs to be understood as both personally fulfilling and nationally essential. This cultural shift requires leadership from academic institutions. Universities must stop marketing themselves as lifestyle brands and start functioning as intellectual boot camps. They should measure success not by graduation rates or student satisfaction surveys, but by the real-world impact of their graduates—the patents filed, the companies launched, the problems solved. President Trump's instinct to 'Make America Great Again' is correct, but greatness begins with thinking. To MAGA, we must MATA: Make America Think Again. 6 America doesn't need to choose between welcoming global talent and developing domestic potential, some believe. REUTERS Advertisement That doesn't mean closing the door to foreign talent. It means refusing to accept a future where American students are bystanders in their own country's labs and lecture halls. It means ensuring American students can stand shoulder to shoulder with foreign talent. Foreign students dominating scientific fields aren't the problem. They're the reminder of what happens when a system still believes in mastery and refuses to apologize for it. Now it's time to give American students that same shot. Not a head start, but a fair fight. Because if America intends to lead the world again, it'll need to outthink it first. Greatness isn't handed down. It's trained, tested, and taught.
The Hill
16-06-2025
- Business
- The Hill
Opportunity Zones have quietly become America's most effective housing program
America is facing a major housing shortage. Experts say we're short about 7 million homes. While many government programs try to help by offering rent subsidies or putting limits on rent increases, the real problem is that we aren't building enough housing to meet demand. Opportunity Zones weren't originally designed to solve this specific problem. They were created in 2017 as part of the Tax Cuts and Jobs Act to encourage broad private investment in struggling communities. But over time, they've become one of the most effective ways to add new housing across the country. Here's how the program works: If investors put money from capital gains into projects in low-income areas and keep their investment for ten years, they receive a major tax advantage in return. Now, as Congress decides whether to renew or expand the program, we should look at the results. So far, the results are promising. Opportunity Zones have helped create new housing in places that don't usually get much attention or funding — and they've done it at a much lower cost to taxpayers. Today, 23 percent of all new housing under development is in an Opportunity Zone. These investments are happening in all kinds of places. In fast-growing cities like Austin, Texas, new housing is helping relieve pressure on sky-high rents. In Rust Belt communities like Erie, Pa., more than $100 million in Opportunity Zones investment has helped revive the downtown. In mountain ski towns in Colorado, where workers struggle to afford to live, Opportunity Zone projects have brought enough workforce residents into the area that formerly budget-strapped schools can now afford to keep open for five-day weeks. Of course, not everyone supports the program. In a recent op-ed for The New York Times, Kevin Corinth and Naomi Feldman argued that the money is going to neighborhoods that were already improving. But even they admit that Opportunity Zones have helped speed up housing construction — it just was, in their words, 'the wrong neighborhoods,' or places that 'didn't really need it.' And yes, many Opportunity Zone investments were made in low-income neighborhoods showing signs of growth or revitalization. But it is not a failure to catalyze investment in those places — rather, it is a sign the program is working. It is smart to invest in neighborhoods just as they start to improve, so they don't slip backward. Also, the criticism that this housing 'would have been built anyway' usually isn't true. A 2024 report by the Economic Innovation Group found that Opportunity Zone designations led to 313,000 new homes between 2019 and 2024 — almost half of all new homes built in those neighborhoods during that time. Opportunity Zones also save money. Unlike other government programs that require big subsidies and long approval processes, Opportunity Zones rely on private capital. That makes them a faster and cheaper tool to build housing. One study found that Opportunity Zone housing costs taxpayers about $26,000 per unit, compared to up to $1 million per unit government-subsidized affordable housing. A recent Washington Post article highlighted a government-funded housing development that cost $1.2 million per unit and didn't even include in-room washer-dryers. For every dollar the government gives up in tax revenue, nearly $9 of private money is invested in these communities. That's a much better return than other major housing programs, which usually achieve one private dollar for each government dollar at best. Finally, the idea that Opportunity Zone investors is a 'tax giveaway' is not financially true. Investors only get a tax advantage if their project succeeds. Unlike major government programs that spend significant taxpayer money regardless of success or failure, if an Opportunity Zone project fails, taxpayers don't lose money — the investors do. For example, a Ritz-Carlton hotel project in Portland, Ore., was criticized for being too upscale for the Opportunity Zone program's intent. But when the project ran into trouble, the investors lost everything. That's how the system is supposed to work. There's still room to make the program better. Stronger reporting rules and an updated map of eligible areas are two areas of bipartisan consensus, and Congress has been working for years on improvements. The House included an extension in its recent budget bill, and Sen. Tim Scott (R-S.C.) is leading efforts in the Senate to make the program stronger and more transparent. An updated and improved Opportunity Zone program must pass as a part of the final reconciliation bill if we have a shot at addressing America's housing crisis. Leaders from government, business, philanthropy and universities all agree: Poor communities almost never turn around on their own without investment. Opportunity Zones aren't perfect, and they're not the only answer — but they're one of the few tools that are getting real results. As Congress works on the next budget, it should keep what's working — and make it even better. Ross Baird is the CEO of Blueprint Local, a real estate investment firm which has invested over $200 million in distressed communities in the U.S. through the Opportunity Zone program.
Axios
16-06-2025
- Business
- Axios
Foreign students out-earn their native-born peers
Workers with college degrees who come to the U.S. on student visas out-earn their native-born peers, but also do more of the research and development work critical to the economy, according to a new analysis of data from the National Survey of College Graduates. Why it matters: The Trump administration is using student visas as both policy tool and negotiating leverage on trade, potentially forcing a sharp decline in the number of foreign students in coming years. By the numbers: As of 2023, there were about 2.1 million year-round full-time workers in the U.S. with Bachelor's degrees who first came here on a student visa, per the Economic Innovation Group, which did the research. They earned a median salary of $115,000, compared with an $87,000 median for native-born workers with at least a college degree. The salary gap holds firm across age groups, the analysis finds. The intrigue: 27% of those who came here on student visas are engaged in research and development work, compared with 12% of native-born workers, a sign of how critical students from outside the U.S. are to innovation. "Further impeding international students' ability to stay and work after graduation would be a major blow to the United States' R&D ecosystem," according to the report. Zoom out: " The story here is that people who come here on student visas are very talented and ambitious and hardworking," Connor O'Brien, research and policy analyst at Economic Innovation Group, tells Axios. "They offer skills that employers are willing to pay a premium for."
