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Michael Pettis Profile picture
@michaelxpettis
Aug 19, 2019 • 6 tweets • 2 min read • Read on X
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Yes, agrees. Ironically democracy seems historically to be “in crisis” precisely when it is most proving its superiority to other systems, i.e. when it is managing us through a difficult, messy adjustment. The books cited here seem to worry that democracy is in trouble because...
...the electorate isn’t just, disinterested and well-informed, but I think this would only be a problem if the purpose of a political system were to express deep political truths. In fact I’d argue that nothing is more dangerous than such a political system: what we need is...
...one that allows our institutions to adjust, however clumsily, as conditions change, and unfortunately because there are times, like today, when change is extremely messy, chaotic and hard to predict, the best we can hope for is to adjust in a messy, chaotic and...
...unpredictable way. Like in the 1930s and the 1970s, I think the populism and “crisis of democracy” that we are experiencing today is just democracy doing what it is supposed to do. It is the non-democracies that are not adjusting, and while this may look like purpose and...
...stability, in fact I think it just reflects institutional rigidity. Jefferson is supposed to have wanted a bloody revolution every fifty years to drive institutional change, but while that may be more aesthetically pleasing, perhaps our way is better.
tabletmag.com/jewish-news-an…
I meant to paste this:
monticello.org/site/research-…

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More from @michaelxpettis

Michael Pettis Profile picture
Mar 5
1/7
 Xinhua: "China will actively boost consumption and implement an income growth plan for urban and rural residents, according to a government work report submitted Thursday to the country's top legislature for deliberation."
english.news.cn/20260305/4203c…
2/7
 This is certainly the right thing to say – the only sustainable way to raise the consumption share of GDP is to raise the household income share – but it tells us very little.

Raising the household income share means reducing the business and/or government shares.
3/7
 So how will these transfers occur? Almost certainly not at the expense of businesses. Given that much of China's manufacturing sector is barely breaking even, even after huge direct and indirect subsidies, the sector is clearly not efficient enough to tolerate...
Read 7 tweets
Michael Pettis Profile picture
Mar 5
1/6
 Xinhua: "China targets an economic growth of 4.5 percent to 5 percent this year."

While this is the lowest target in decades, it's still roughly twice what I think the economy can sustainably deliver without a lot more more non-productive investment.

english.news.cn/20260305/d0f4b…
2/6
 It is a good sign that Beijing has set a lower target this year (certainly better than rigidly sticking to a 5% GDP growth target), but the truth is that it doesn't change much. China will still have trouble – for all its promises – getting consumption growth to accelerate.
3/6
 This suggests that the underlying dynamics of the Chinese economy will remain the same. China still can't tolerate any significant decline in the trade surplus and, more importantly, it can allow only a very small deceleration in investment growth.
Read 6 tweets
Michael Pettis Profile picture
Mar 4
1/12
Very interesting Bloomberg article on one of my favorite topics – how, in a hyperglobalized world (i.e. one with very low transportation, communication, and financial-transaction costs), countries that control their external accounts effectively...
bloomberg.com/news/articles/…
2/12
externalize domestic economic conditions by passing them on to the rest of the world via trade- and capital-flow imbalances. These imbalances are automatically absorbed by those of their trade partners who choose to exert less control over their external accounts.
3/12
According to Bloomberg: "Chinese banks, flush with low-cost funds, are reshaping parts of the global loan market, underscoring how deflationary pressures in the world’s second-largest economy are increasingly influencing competition with international lenders."
Read 12 tweets
Michael Pettis Profile picture
Mar 1
1/9
 Good piece in Nikkei Asia by former acting deputy U.S. trade representative Wendy Cutler on trade-related discussions during Trump's upcoming trip to China. She argues, however, that for a president focused on...
asia.nikkei.com/opinion/trump-…
2/9
 rebalancing, Trump must "hold China's feet to the fire," including pressing for export restraints in sectors like steel and autos and tougher action on transshipments – or tariff dodging via third countries.
3/9
 She continues: "By seeking Chinese agreement to impose export restraint in specified product areas, discouraging Chinese companies from transshipping their goods through third countries to the U.S. and reducing tariffs and nontariff measures in nonsensitive sectors, both...
Read 9 tweets
Michael Pettis Profile picture
Feb 28
1/7
 Bloomberg: "China is balancing productivity gains from AI with labor stability, as automation could displace workers and trigger an economic spiral."

I think this whole AI-will-cause-unemployment argument is very confused.
bloomberg.com/news/articles/…
2/7
 Getting workers to become more productive doesn't cause workers to be fired. In fact that's the only way to make them richer.

What really matters is whether or not wage growth for the overall economy keeps pace with productivity gains.
3/7
 If they don't, growth in production will outstrip growth in consumption, and while this can temporarily be resolved by rising household debt, ultimately it means that production will be reduced and unemployment rise.
Read 7 tweets
Michael Pettis Profile picture
Feb 26
1/5
 SCMP: "“China needs to move decisively towards consumption-led growth,” Sonali Jain-Chandra, IMF mission chief for China, said in an interview with the South China Morning Post."
scmp.com/economy/china-…
2/5
 Yes, but how? The IMF has urged China to put into place a stronger social safety net, but even if China were to do so, until it is credible (which will take years, even decades) it will have little impact on current consumption.
3/5
 I'd argue that the only sustainable way "to move decisively towards consumption-led growth" requires a major shift in the distribution of national income away from either businesses or the government (or both) towards workers and middle-class households.
Read 5 tweets

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