Are capital markets healthy? Thoughts on IPOs, dwindling public firms, private equity, and politicized funds

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The bull market in U.S. stocks is now nine years old, one of the longest such streaks in history. The United States boasts many of the world’s most valuable companies, and investors have enjoyed high returns with low volatility.

Yet there’s reason to wonder whether U.S. capital markets, broadly considered, are as healthy as they look. We asked this question two years ago and return to it now, with a little more data, a few more answers, but still many outstanding puzzles.

The number of publicly listed U.S. firms, for example, is just one half what it was in the mid-1990s. Depending on the type of listings counted, the number of U.S. public firms has fallen to a range of 3,500-4,000 today from a range of 7,500-8,000 in 1996. Adjusted for population, the number of publicly listed firms has dropped to 13 per million people from a peak of 30 per million. continue reading . . .

 

Energy Industry Shows How Infotech Can Boost Productivity

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America’s oil and gas boom has been one of the biggest economic stories of the past decade. The doubling of daily US oil output and the 50 percent increase in natural gas production have transformed energy markets and are altering the geostrategic landscape. Russia, for example, is desperately lashing out, while Saudi Arabia is showing signs of an ambitious political, economic, and cultural modernization.

The US energy boom is interesting for another reason. It’s a demonstration of how the physical industries, which too often underperform their innovative potential, can boost productivity through creative use of information.

The energy industry had known about petroleum soaked shale formations for 100 years. What it lacked was a cost-effective way to pinpoint the formations and unleash and extract the oil and gas from the rock. Horizontal drilling and hydraulic fracturing were of course the key to unlocking the shale resources.

These mechanical innovations, however, were themselves made possible and perfected by infotech, such as 3D seismic modeling, cloud computing, and big data. Pinpointing the formations and the very best places to crack them took massive computer power. Guiding the drills many miles under — and then horizontally across — the earth’s surface took precision guidance systems. The data generated from the models and experiences were then refined to constantly improve the process. In so doing, oil and gas drilling today looks more like an advanced manufacturing process than the hit-and-hope, drill-and-pump process of the past.

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Tax reform can boost technology, productivity . . . and pay

admin Economic Update

Our take, in The Hill, on the prospects for tax reform and its effects on investment, productivity, and wages.

Tax reform can boost technology, productivity and, yes, your wage

by Bret Swanson | The Hill | December 14, 2017

What’s the link between robots, artificial intelligence and tax reform? We’ve been debating whether new technologies can ignite a productivity resurgence or whether tech has lost its potency; whether increased productivity will benefit workers or eliminate jobs altogether.

Understanding these relationships can help show why tax reform might boost all three — technology, productivity, and pay.

One of the most serious anti-tax reform claims is that it won’t help the average worker. Investment, productivity and growth, this argument says, are accruing mostly to the fortunate few. So, even if we could boost those top-line metrics, we may not be doing much for the typical American.Read More