Harvard Democrat Larry Summers Says Trillion Dollar Stimulus Was “Least Responsible” Policy of Past 40 Years

(p. 1) Larry Summers has split his pandemic time between houses in Massachusetts and Arizona. He also seems to live inside the collective mind of the Washington economic establishment.

. . .

Mr. Summers spent his last White House stint as a top economic adviser, when the administration settled for a smaller Great Recession stimulus package out of political practicality, and has since disputed criticism by saying he favored more spending then. He has spent 2021 protesting that the $1.9 trillion spending package the Biden administration passed in March was too large for reasons both political and economic, while fretting that the Federal Reserve will be too slow to sop up the mess. The result, he has warned, could be an overheating economy and runaway inflation.

Other respected academics were repeating variations on the same theme, though most economists argued that a 2021 price pop was more likely to be short-lived. But it was Mr. Summers, a longtime Harvard pro-(p. 6)fessor, whose brash declarations worked a sort of nerd magic, drawing the boundaries of the debate and forcing the White House — one he largely supports — on the offensive.

Mr. Summers had combined the swagger of a former Treasury secretary with the gravitas of a respected academic and punchy lines — the stimulus wasn’t just a bad idea, according to him, it was the “least responsible” policy in four decades — to set off a national conversation that was hard to ignore.

. . .

. . . Mr. Summers has said he takes issue not with the idea of spending aggressively to break the economy out of a malaise, but with the magnitude and style — the trillions spent to combat the pandemic downturn exceeded the size of the hole it blew in the economy, basically. He seemed to worry that if he didn’t speak out, there would be too little discussion of the risks.

. . .

Whether or not Mr. Summers turns out to be the sage of Scottsdale and Brookline, his staying power is perhaps best understood as a statement about what he represents: the belief that government spending has real if hard-to-know boundaries, and that trying to measure and work within economic and practical limits can lead to better policymaking.

For the full story, see:

Jeanna Smialek. “Larry Summers: Yelling From the Sidelines.” The New York Times, SundayBusiness Section (Sunday, June 27, 2021): 1 & 6.

(Note: ellipses added.)

(Note: the online version of the story was updated June 26, 2021, and has the title “Why Washington Can’t Quit Listening to Larry Summers.”)

Older Americans Shifting to Entrepreneurship at Faster Pace

(p. B6) In April [2020], Dave Summers lost his job as director of digital media productions at the American Management Association, a casualty of layoffs brought on by the pandemic.

Mr. Summers, 60, swiftly launched his own business as a digital media producer, coach and animator who creates podcasts, webcasts and video blogs.

And in September, he and his wife, who teaches nursery school, moved from Danbury, Conn., to Maryville, Tenn., which they discovered while visiting their son in Nashville. “My new work is all virtual, so I can live anywhere,” he said. “Not only is it a cheaper place to live, we love hiking and the outdoors, and our new town is in the foothills of the Great Smoky Mountains.”

Droves of small businesses have been shuttered by the economic fallout of the coronavirus, but for Mr. Summers, starting a new one was the best option.

“I’m not sitting on a massive nest egg, so I need to work to keep afloat,” he said. “It’s also about being healthy and happy. I can’t just retire because underneath it all I’m creative, and I have to be busy doing stuff and helping people tell their stories.”

While the coronavirus pandemic is causing many older workers who have lost jobs, or who have been offered early retirement severance packages, to decide to leave the work force, others like Mr. Summers are shifting to entrepreneurship.

In fact, older Americans had already been starting new businesses at a fast rate. In 2019, research from the Kauffman Foundation, a nonpartisan group supporting entrepreneurship, found that more than 25 percent of new entrepreneurs were ages 55 to 64, up from about 15 percent in 1996.

Across the age spectrum, there has been a rise in new business start-ups since May [2020], according to the Census Bureau. The surge is likely “powered by newly unemployed individuals opting to start their own businesses, either by choice or out of necessity,” according to the Economic Innovation Group, a bipartisan public policy organization.

. . .

It turns out that the importance of entrepreneurship, or self-employment as a form of work, increases significantly with age, according to a report by Cal J. Halvorsen and Jacquelyn B. James of the Center on Aging & Work at Boston College.

According to the report: “While about one in six workers in their 50s are self-employed, nearly one in three are self-employed in their late 60s and more than 1 in 2 workers over the age of 80 are self-employed.

For the full story, see:

Kerry Hannon. “Older Americans Make a New Start in a Business of Their Own.” The New York Times (Friday, November 27, 2020): B6.

(Note: ellipsis, and bracketed year, added.)

(Note: the online version of the story has the date Oct. [sic] 21, 2020, and has the title “Making a New Start in a Business of Their Own.”)

Chinese Local Governments Run Up $6 Trillion in Debt, Partly to Build Giant Statues and a Full-Size Replica of Titanic

(p. B1) To officials in her corner of China, the statue of Yang Asha, a goddess of beauty, serves as a tribute to the rich culture of the local people and, they hope, a big draw for sightseers and their money. To many others in China, she is another white elephant in a country full of expensive monuments, gaudy tourist traps and wasteful vanity projects that draw money away from real problems.

Those critics point to the statue of Guan Yu, a general from antiquity, in the city of Jingzhou, where he also towers higher than the Statue of Liberty and wields an enormous polearm called the Green Dragon Crescent Blade.

They point to the Jingxingu Hotel, a 24-story wooden building with lots of empty balconies and open spaces but few actual rooms — and it has not accepted guests beyond a few tourists who come to gawk.

They point to the construction of a full-size, $150 million replica of the Titanic in a reservoir deep in China’s interior, 1,200 miles from (p. B5) the ocean.

. . .

Singling out the $38 million Jingxingu Hotel and the $224 million Guan Yu project, which also included an elaborate base and surrounding park, the Ministry of Housing and Urban-Rural Development ordered on Sept. 29 [2020] that communities may not “blindly build large-scale sculptures that are divorced from reality and the masses.”

Chinese government officials have long prized big projects. China now has four-fifths of the world’s 100 tallest bridges, more miles of ultramodern expressways than the American interstate highway system and a bullet-train network long enough to span the continental United States seven times. Those projects have employed millions of people and helped fuel the country’s breakneck growth.

But local officials borrowed heavily to fund those projects. Estimates put the amount of local debt as high as $6 trillion, raising fears of financial bombs lurking in the ledgers of far corners of the country.

Beijing has doubled down on further investment spending this year in an initially successful bid to shake off an economic hangover from the outbreak of coronavirus in China last winter.

Yet with each passing year, as projects are built in ever-more-remote places, the economic kick from each project becomes less and less. China is on track this year to add debt equal to four months’ economic output while its economy grows by an amount equal to less than two weeks’ output.

Local government borrowing “is still out of control,” said Gary Liu, an independent economist in Shanghai.

For the full story, see:

Keith Bradsher. “As China Battles Poverty, Colossal Projects Draw Ire.” The New York Times (Fri., Nov. 27, 2020): B1 & B5.

(Note: ellipsis, and bracketed year, added.)

(Note: the online version of the story has the date Nov. 26, 2020, and has the title “A Soaring Monument to Beauty in China Is Stirring Passions. Mostly Anger.”)

Some Tech Startups, and Big Tech Firms, Want Workers Back in Office

(p. A1) For a tech guy, Mike de Vere, chief executive of fintech software startup Zest AI, has a contrarian return-to-work plan for his 100 employees: he wants them in the office full time.

Mr. de Vere said having employees together in the Burbank, Calif., headquarters improves communication, builds trust and allows for them to absorb knowledge from more experienced colleagues.

“We believe that we will be our best selves the more that we are together,” he said.

As more tech companies leverage the promise of flexible work arrangements as a competitive advantage, some are going the opposite route, betting that a strong office culture is what will help them recruit and retain the best talent.

Proponents of fully in-office work cite a range of benefits, from the collaboration that can result from happenstance interactions to easier communication. Plus, they add, plenty of people enjoy working in offices, especially after months spent, for some, in makeshift arrangements. Given the tech industry’s status as a bellwether for workplace trends, professionals in many industries are watching to see where it lands.

. . .

(p. A4) Dan Kaplan, a partner with organizational consulting firm KornFerry International, said the pandemic has permanently changed the equation for employees. The days of being in the office just to show your face are over: “People aren’t willing to do it anymore,” he said.

Though people early in their careers crave mentorship and the ability to build their social circles on the job, Mr. Kaplan said he’s started seeing flexibility as a point of negotiation between job seekers and employers. Candidates are trying to broker fewer days a week in the office and CEOs prefer more time in person, he said.

“There is going to be tension in the system,” he said. What tech companies do will have impacts across industries, he added.

. . .

An Amazon spokesman said the company plans to gradually return to an office-centric workweek because it “enables us to invent, collaborate, and learn together most effectively.”

For the full story, see:

Katherine Bindley. “Tech Startups Eye a World, Post-Covid, Back in the Office.” The Wall Street Journal (Monday, April 26, 2021): A1 & A4.

(Note: ellipses added.)

(Note: the online version of the story has the date April 25, 2021, and has the title “Five Days in the Office? For These Startups, the Future of Work Is Old School.” The online edition says that the title of the print edition was: “Tech Startups Eye a World, Post-Virus, Back in the Office Some Tech Firms View Office As Place to Lure, Hold Talent.” My copy of the print edition had the title in the citation above.)

Maple “Sugaring Is a Sticky Business,” but Has Low Barriers to Entry and Is Highly Scalable

If you were a long-term maple sugarer, you might have expected the pandemic to boost your business. People at home under stress would be likely eat a lot of comfort food. And you would have been right about that–the average American has gained more pounds than usual over the pandemic. But as you were congratulating yourself for your foresight, you might have noticed that the supply of maple sugar was increasing because many staying at home during the pandemic decided that collecting maple sap outdoors was a safe, relaxing, and edifying way to bond during a pandemic.

Who can foresee all of the exogenous events, and the decisions of others, that will influence the success or failure of our dreams? The best we can do is to be broadly curious, to be always alert, and to make nimble adjustments. (A great relevant book is Adner’s The Wide Lens.)

(p. D4) Stress-baking and panic shopping. Vegetable regrowing and crafting. Now we can add another hobby to a year of quarantine trends: backyard maple sugaring.

Among the many indicators that it’s on the rise: a run on at-home evaporators and other syrup-making accouterments. A surge in traffic and subscriptions to maple-syrup-making websites and trade publications. And, of course, lots and lots of documentation on social media. (The Facebook group Backyard Maple Syrup Makers added some 5,000 members, almost doubling the number of people in its community, in the past year.)

Tapping maple trees and boiling the sap into syrup — known as sugaring — isn’t a new hobby. What’s unique about this year is the influx of suburban and urban backyard adventurers fueling these maple sugaring highs.

. . .

Because sugaring is a sticky business — and boiling sap indoors can mean resin all over the walls — many backyard amateurs turn to small-scale, hobby-size evaporators like the ones sold by Vermont Evaporator Company in Montpelier, Vt. The company said its number of customers had doubled in the past year.

. . .

Peter Gregg, the founder of The Maple News and the maple sugaring classifieds, The Maple Trader, isn’t surprised that sugaring supplies have been selling out. He saw his print subscription increase over 14 percent, he said, and his website traffic increase by 50 percent this year — a quite uncommon phenomenon for a maple-themed newspaper.

“The biggest sugarers in Vermont started in their backyards,” Mr. Gregg said. “Sugaring is great because you can start out doing it in your kitchen but you get the bug and you keep growing and growing, adding more and more taps, buying more and more equipment, and trying to get bigger and more efficient.”

For the full story, see:

Colman, Michelle Sinclair. “Maple Syrup Making Also Boomed as a Pandemic Hobby.” The New York Times (Thursday, April 8, 2021): D4.

(Note: ellipses added.)

(Note: the online version of the article has the date April 7, 2021, and has the same title as the print version. Where the wording in the online version differs from the wording in the print version, the passages quoted above follow the print version.)

The Adner book that I mention above is:

Adner, Ron. The Wide Lens: A New Strategy for Innovation. New York: Portfolio, 2012.

China’s Economic Surge Not Shared by Consumers and Small Businesses

(p. B1) Factories are whirring, new apartments are being snapped up, and more jobs are up for grabs. When China released its new economic figures on Friday, they showed a remarkable postpandemic surge.

The question is whether small businesses and Chinese consumers can fully share in the good times.

China reported on Friday that its economy grew by a jaw-dropping 18.3 percent in the first three months of the year compared with the same period last year. While the figure is steep, it is as much a reflection of the past — the country’s output shrank 6.8 percent in the first quarter of 2020 from a year earlier — as it is an indication of how China is doing now.

A year ago, entire cities were shut down, planes were grounded and highways were blocked to control the spread of a relentless virus. Today, global demand for computer screens and video consoles that China makes is soaring as people work from home and as a pandemic recovery beckons. That demand has continued as Americans with stimulus checks look to spend money on patio furniture, electronics and other goods made in Chinese factories.

China’s recovery has also been powered by big infrastructure. Cranes dot city skylines. Construction projects for highways and railroads have provided short-term jobs. Property sales have also helped strengthen economic activity.

But exports and property investment can carry China’s growth only so far.

. . .

(p. B3) A slow vaccination rollout and fresh memories of lockdowns have left many consumers in the country skittish.  . . .  When virus outbreaks occur, the Chinese authorities are quick to put new lockdowns in place, hurting small businesses and their customers.

. . .

Families continue to save at a higher rate than they did before the pandemic, something that worries economists like Louis Kuijs, who is head of Asian economics at Oxford Economics. Mr. Kuijs is looking at household savings as an indication of whether Chinese consumers are ready to start splurging after months of being stuck at home.

“More people still seem to not go all the way in terms of carefree spending,” he said. “At times there are still some lingering Covid concerns, but there is perhaps also a concern about the general economic situation.”

. . .

Mr. [Jinqiu] Li, who is recently married and has a baby at home, is still choosing to save instead of spend. He had planned to work for the family business, but it has been hit by the pandemic and he doesn’t think there is much opportunity for him if he stays.

“The whole family has some sense of crisis,” Mr. Li said. “Because of the pandemic and because of family business, I have a sense of crisis.”

For the full story, see:

Alexandra Stevenson and Cao Li. “China’s Gain Is Hardly Felt by the People.” The New York Times (Friday, April 16, 2021): B1 & B3.

(Note: ellipses, and bracketed first name, added.)

(Note: the online version of the article has the date April 15, 2021, and has the title “China’s Economy Is Booming. Shoppers Are Skittish Anyway.” The quote starting “More people” appeared in the print, but not in the online, version of the article.)

22% of U.S. Small Businesses Closed from February to April 2020

(p. B4) In early February [2020], things were looking good for Practice San Francisco, a center offering individual psychotherapy and classes for children and adults that promote physical and mental well-being. Business was so good that owner Nina Kaiser, a psychologist, had just renovated and moved into a bigger space with the goal of doubling revenue.

Then the coronavirus pandemic hit. In early March [2020], Ms. Kaiser moved all her classes and counseling services online. Fairly quickly, however, video fatigue set in. “After a few weeks, we saw a big downturn in attendance across all our programs, even psychotherapy,” she said. Thus began a period of “endless pivoting and troubleshooting.”

Like many other small businesses, Practice San Francisco, which has been around for three years, has essentially become a start-up again, employing a strategy similar to the “fail fast” approach well known in start-up culture: A change is made to some aspect of the business and if it works, it sticks, but if it fails, data is collected and something else is tried.

“There has been a lot of flying by the seat of your pants,” Ms. Kaiser said. “We see what doesn’t work, where we run into trouble, and we course-correct. It’s this constant, iterative process.”

That process is crucial right now for small businesses, whose numbers dropped by 22 percent — 3.3 million — between February and April [2020], according to the National Bureau of Economic Research.

For the full story, see:

Eilene Zimmerman. “Small-Business Owners Pivot and Troubleshoot In Battle to Stay Afloat.” The New York Times (Tuesday, December 1, 2020): B4.

(Note: bracketed years added.)

(Note: the online version of the story was updated Dec. 17 [sic], 2020, and has the title “Can a Start-Up Mentality Save Small Businesses?”)

The published-online-ahead-of-print version of the National Bureau of Economic Research (NBER) working paper mentioned above is:

Fairlie, Robert. “The Impact of Covid-19 on Small Business Owners: Evidence from the First 3 Months after Widespread Social-Distancing Restrictions.” Journal of Economics & Management Strategy (2020): 10.1111/jems.12400.

Communist Dictator Kim Jong-un Is “Really Sorry” for North Koreans’ Economic Suffering

(p. A10) “Our five-year economic development plan has fallen greatly short of its goals in almost all sectors,” Mr. Kim said in his opening speech to the ruling Workers’ Party’s eighth congress that began in Pyongyang, the capital, on Tuesday [Jan. 5, 2021].

. . .

. . . he had little to show on the economic front. He apologized to his people for failing to live up to their expectations. “I am really sorry for that,” he said, appearing to fight back tears. “My efforts and sincerity have not been sufficient enough to rid our people of the difficulties in their life.”

For the full story, see:

Choe Sang-Hun. “Kim Admits That He’s Failed In His 5-Year-Plan to Rebuild North Korea’s Feeble Economy.” The New York Times (Thursday, January 7, 2021): A10.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story was updated Jan. 15, 2021, and has the title “North Korea Party Congress Opens With Kim Jong-un Admitting Failures.”)

Least-Well-Off Were Gaining Before Pandemic

(p. A3) U.S. families’ income and wealth rose in the years heading into the coronavirus pandemic, with those in lower-income and lower-wealth categories reaping relatively large gains, the Federal Reserve said in a report on household finances.

. . .

The distribution of wealth between low- and high-income households narrowed slightly in the latest survey period, Fed economists said, a shift from the 2010-to-2016 period when incomes largely stagnated for all but the most well-off after the 2007-2009 recession.

Families in the lowest two income groups recorded large percentage increases in median net worth, suggesting the decadelong expansion benefited a wide swath of society. Net worth rose 37% to $9,800 for the lowest earners, and increased 40% to $44,000 for the second-lowest group. The median net worth of the highest and second-highest groups declined 8% and 9%, respectively.

For the full story, see:

Harriet Torry. “Household Wealth Rose Before Crisis.” The Wall Street Journal (Tuesday, September 29, 2020): A3.

(Note: ellipsis added.)

(Note: the online version of the story was updated Sep. 28, 2020, and has the title “Household Wealth Rose in Years Before Pandemic, Fed Says.”)

Before Covid-19, Poverty and Unemployment Were Lowest in 50 Years

(p. B8) WASHINGTON — A record-low share of Americans were living in poverty, incomes were climbing, and health insurance coverage was little changed in 2019, a government report released on Tuesday showed — though the circumstances of many have deteriorated as pandemic lockdowns and industry disruptions have thrown millions out of work.

The share of Americans living in poverty fell to 10.5 percent in 2019, the Census Bureau reported, down 1.3 percentage points from 2018. That rate is the lowest since estimates were first published in 1959.

Household incomes increased to their highest level on record dating to 1967, at $68,700 in inflation-adjusted terms. That change came as individual workers saw their earnings climb and as the total number of people working increased.

. . .

Unemployment was hovering at around 3.5 percent before the crisis took hold, the lowest in 50 years, and wages were steadily rising.

For the full story, see:

Jeanna Smialek, Sarah Kliff and Alan Rappeport. “Census Shows Record-Low Poverty in U.S. Before Virus Struck.” The New York Times (Wednesday, September 16, 2020): B8.

(Note: ellipsis added.)

(Note: the online version of the story has the date Sept. 15, 2020, and has the title “U.S. Poverty Hit a Record Low Before the Pandemic Recession.”)

Covid-19 May Make New York City “Cheaper, Messier, More Diverse”

(p. B1) Cities are remarkably resilient. They have risen from the ashes after being carpet-bombed and hit with nuclear weapons. “If you think about pandemics in the past,” noted the Princeton economist Esteban Rossi-Hansberg, “they didn’t destroy cities.”

. . .

So even as the Covid-19 death toll rises in the nation’s most dense urban cores, economists still mostly expect them to bounce back, once there is a vaccine, a treatment or a successful strategy to contain the virus’s spread. “I end up being optimistic,” said the Harvard economist Edward Glaeser. “Because the downside of a nonurban world is so terrible that we are going to spend whatever it takes to prevent that.”

. . .

(p. B5) Mr. Glaeser and colleagues from Harvard and the University of Illinois studied surveys tracking companies that allowed their employees to work from home at least part of the time since March. Over one-half of large businesses and over one-third of small ones didn’t detect any productivity loss. More than one in four reported a productivity increase.

Moreover, the researchers found that about four in 10 companies expect that 40 percent of their employees who switched to remote work during the pandemic will keep doing so after the crisis, at least in part. That’s 16 percent of the work force. Most of these workers are among the more highly educated and well paid.

. . .

“Everybody agrees on what are the key forces,” said Gilles Duranton, an economist at the Wharton School of the University of Pennsylvania. “The question is which will play out, and where are the tipping points?” One of the big remaining questions is whether remote work will prove sustainable. The productivity increases captured in the surveys examined by Mr. Glaeser’s team might prove fleeting.

. . .

Consider life in a reconfigured New York City. Rents are lower, after the departure of many of its bankers and lawyers. There are fewer fancy restaurants, but probably still many cheaper ones. People with lower incomes, including the young, can again afford to live in town. City services may be reduced, but if a fifth or more of workers aren’t going to the office on any given day it will be easier to get around.

Mr. Duranton argues that the cities that will be devastated by Covid-19 are the ones that have been falling for a long time: the Rochesters and the Binghamtons, which lost their sustenance once the manufacturing industries that supported them through much of the 20th century folded or moved away.

But for a city like New York, he said, Covid-19 offers an opportunity for redemption. “New York was running into a dead end, turning into a paradise for the rich,” he said. “Culturally dead.” Moving back to a cheaper, messier, more diverse equilibrium may carry a silver lining.

For the full story, see:

Eduardo Porter. “If Workers Opt Out, Star Cities May Dim.” The New York Times (Tuesday, July 21, 2020): B1 & B5.

(Note: ellipses added.)

(Note: the online version of the story has the same date as the print version,s and has the title “Coronavirus Threatens the Luster of Superstar Cities.”)

The study co-authored by Glaeser and mentioned above is:

Bartik, Alexander W., Zoe Cullen, Edward L. Glaeser, Michael Luca, and Christopher Stanton. “What Jobs Are Being Done at Home During the Covid-19 Crisis? Evidence from Firm-Level Surveys.” Harvard Business School Division of Research Working Paper #20-138, (July 2020).