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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.
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I meant to paste this:
monticello.org/site/research-…

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More from @michaelxpettis

Michael Pettis Profile picture
Mar 6
1/6
 Good Bloomberg article on why China needs to raise the consumption share of GDP and how Beijing has become increasingly aware of the need to do just that.

But for all the rising awareness, it will not be any easier than it has in the past.

bloomberg.com/news/features/…
2/6
 We might get a 2-3 percentage point rise in the consumption share of GDP if there is a revival of household confidence, and Beijing is certainly betting on reviving household confidence, but I'd argue that any such revival...
3/6
 is more likely to be a consequence of rebalancing than a cause, and even if China raises the consumption share of GDP by 10 percentage points, it will still be among the lowest consuming economies in the world.
Read 6 tweets
Michael Pettis Profile picture
Mar 6
1/8
 SCMP: "Premier Li Qiang vowed to launch a “comprehensive crackdown on neijuan” – the first time the premier has mentioned the concept in his agenda-setting annual address."

via @scmpnewssc.mp/qr8dy?utm_sour…
2/8
 SCMP explains: "The term neijuan, or “involutionary competition”, refers to a self-defeating cycle of excessive competition in which companies are forced to invest ever greater resources without generating proportional returns."
3/8
 But while neijuan is definitely a problem, especially for the private sector, it didn't emerge by accident. It is a direct consequence of China's need to maintain high investment levels in order to meet excessive GDP growth targets.
Read 8 tweets
Michael Pettis Profile picture
Mar 5
1/14
Maurice Obstfeld argues that the US trade deficit is "caused" by the excess of US spending over US production, but, like most American economists, mainly because he cannot imagine a world in which foreigners, and not Americans, have agency.

ft.com/content/ae84d7…
2/14
The US current account deficit is certainly equal to the excess of US spending over US production, but Obstfeld may be confused over the direction of causality implied in macro accounting identities. In fact it can go in either direction.
3/14
If US spending exceeds US production, after all, this is just another way of saying that foreign production exceeds foreign spending. To put it more technically, if US investment exceeds US saving, then it also must be true that foreign saving exceeds foreign investment.
Read 14 tweets
Michael Pettis Profile picture
Mar 5
1/10
China's Two Sessions meetings have ended, and it would be a real stretch to say that they mark a major change in Beijing’s economic policies. Beijing set a GDP growth target for 2025 of 5%.

english.news.cn/20250305/2b2b2…
2/10
This of course wasn’t a surprise, especially as the weighted average of the provincial GDP growth targets set in February came in at around 5.2%. That is why most analysts assume that this target was effectively decided months ago.
3/10
Li Qiang noted that this would be an especially difficult year. In most countries, we would expect GDP to be higher when conditions are good and lower when they are bad, but his point was that whatever the conditions, China had already determined its economic growth rate.
Read 10 tweets
Michael Pettis Profile picture
Mar 3
1/8
 This Reuters article on the falling value of China's premium liquor company, Kweichow Moutai, cites Victor Shih as pointing out the company's role as "an important part of the strategy to help Guizhou's government repay debt".

reuters.com/world/china/eb…
2/8
 Provinces like the highly-indebted Guizhou in fact own a lot of assets that are vital for their roles in the economy. Not only does Moutai employ more than 30,000 people, according to Reuters, it accounts for a fifth of...
3/8
 the province's tax receipts and 5% of its GDP. Perhaps more importantly, the provincial government also uses it "to bail out local highway-builders and contribute to public works such as roads, railways, airports and hospitals."
Read 8 tweets
Michael Pettis Profile picture
Mar 1
1/9
 Dan Hannan says that free trade is an IQ test. He may well be right, but not in the way he thinks (and what is more, he would score poorly). For example, he doesn't understand the very model he cites as fundamental.

@DanielJHannan
washingtonexaminer.com/magazine-colum…
2/9
 He makes the astonishing claim that "More than 200 years have passed since David Ricardo proved, as a matter of mathematics, that free trade always benefits the weaker and the stronger participants."

This simply isn't true, and for reasons that should be fairly obvious.
3/9
 First, Ricardo "proved" that under the right set of conditions free trade maximizes global output, but nothing in Ricardo's model suggests that this benefits both the weaker and the stronger participants. His model says nothing about the distribution of these benefits.
Read 9 tweets

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