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Michael Pettis Profile picture
@michaelxpettis
Aug 19, 2019 • 6 tweets • 2 min read • Read on X
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
May 30
1/8
 In a piece for Caixin, Wu Ge, chief economist at Changjiang Securities, writes: "The economic fallout from the real estate slump has been masked in part by strong overseas demand for Chinese goods."

caixinglobal.com/2025-05-29/com…
2/8
 "If foreign demand takes a turn for the worse," he continues, "it will become clear just how important real estate is to stabilizing China’s economy."

He's right, and he makes a very important point.
3/8
 In 2021-22 China's property sector, after reaching some of the highest levels in history, began such an extended collapse that in any other economy it would have set off much lower growth and even recession. But there was no associated slowdown in China's GDP growth rate.
Read 8 tweets
Michael Pettis Profile picture
May 28
1/7
 Very good FT article on how China achieved its dominance in manufacturing, along with the cost both to China and to its trading partners: "Using a unique combination of industrial policy, subsidies and other state-support coupled with private sector...
ft.com/content/724431…
2/7
 entrepreneurialism and ferocious competition in China’s vast market, the country was able to sharply increase the share of Chinese producers domestically and internationally in many of the sectors, in some cases matching or exceeding foreign competitors’ technology."
3/7
 Because the subsidies and other state support mostly came in the form of direct and indirect transfers from the household sector, the huge expansion in China's manufacturing sector was also the flip side of the huge contraction in the consumption share of GDP.
Read 7 tweets
Michael Pettis Profile picture
May 27
1/4
 SCMP: "China has become the leading debt collector of developing countries, shifting from a net capital provider, “as bills coming due from its belt and road lending surge in the 2010s now far outstrip new loan disbursements”."

via @scmpnewssc.mp/gtrfe?utm_sour…
2/4
 It may not seem so at first, but this has trade implications. Some analysts have argued that if the US is successful in reducing its trade deficit, China can manage the process by redirecting its exports to developing countries.
3/4
 But if developing countries are going to replace any part of the US accommodation of global trade surpluses, they can only do this with rising deficits, which in turn must be financed with rising net capital inflows.
Read 4 tweets
Michael Pettis Profile picture
May 26
1/7
 SCMP: "Xu Lin, who helped draft Beijing’s five-year plan for decades while an official at the National Development and Reform Commission, has called...
scmp.com/economy/china-…
2/7
 for China’s annual growth target to be lowered for the next five years to 4%, factoring in the likelihood of a protracted rivalry with the United States and the need to solve deep-rooted structural problems in China."
3/7
 The country's GDP growth target is not the best estimate of what the economy can deliver in any given period but rather a target designed to achieve a growth rate that satisfies political needs.
Read 7 tweets
Michael Pettis Profile picture
May 22
1/12
This Liberty Street account of trade makes the same mistakes most mainstream American economists make when it comes to explaining the US trade deficit.

libertystreeteconomics.newyorkfed.org/2025/05/why-do…
2/12
Thomas Klitgaard notes, correctly, that by definition the US current account is equal to the excess of US investment over US savings.

But then he insists that causality can only run in one direction: from the internal account to the external account.
3/12
In other words, he claims that US savings and US investment are both determined by domestic factors (mainly low US savings), and because the former is less than the latter, the US must turn to foreigners to fill the gap.
Read 12 tweets
Michael Pettis Profile picture
May 21
1/9
 Martin Wolf says the world has three options in considering the future of the hegemonic role of the dollar. One is "continued domination by the dollar". Another is that some other currency, perhaps the euro or even the renminbi, replace it as hegemon.

ft.com/content/d96568…
2/9
 And the third is "a world with two or three competing currencies, each dominant in different regions."

The first option means maintaining the existing system, with all it problems, but I suspect that this may be much easier said than done.
3/9
 Since the GFC, there has been a transformation of the way in which we think about the global trade and capital regime, along with a growing bipartisan consensus in the US that the costs to the US economy, and especially to its manufacturing sector, have become unsustainable.
Read 9 tweets

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