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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
Dec 17
1/10
President Macron says "We must acknowledge that these imbalances are both the result of weak EU productivity and China’s policy of export-driven growth."

The first part of that statement is technically not true.
via @ftft.com/content/c8fdf1…
2/10
Countries don't run trade deficits because of low productivity, any more than they run surpluses because of high productivity. That is not at all what global trade imbalances around the world tell us, and that is not why countries have lower or higher saving rates.
3/10
American productivity, to take one obvious example, is higher than that of Europeans, and several times higher than that of the Chinese, and yet it is the US that runs huge deficits and China, with the highest saving rate in the world, that runs huge trade surpluses.
Read 10 tweets
Michael Pettis Profile picture
Dec 15
1/8
 It's hard to find anything good in the November economic data for China, just as it is hard to find anything new to say. All the important indicators continue to weaken, as they have throughout the year, in some cases even decelerating further.
english.news.cn/20251215/a5915…
2/8
 Retail sales, for example, were expected to grow a very disappointing 2.9% year on year in November. In fact they only grew 1.3%.

For all the talk of a greater role for consumption in driving growth, in the first 11 months of the year, retail sales were up just 4.0%.
3/8
 Meanwhile industrial output rose 4.8% in November, a little below expectation and well below the 6.0% growth in the first 11 months of the year.

For me the main worry is the gap between the two, with the former so far this year growing 2 percentage points more slowly than...
Read 8 tweets
Michael Pettis Profile picture
Dec 12
1/8
 Caixin: "While concerns about weak demand and external uncertainties persist, this year's Central Economic Work Conference, which concluded on Thursday, marked a shift in tone. The official readout framed China's core economic challenge as...
caixinglobal.com/2025-12-12/chi…
2/8
 a “prominent contradiction between strong supply and weak demand” — a structural issue rather than just insufficient consumption."

"The change" Caixin writes, "suggests Beijing sees supply-side imbalances, not just inadequate consumption, as a constraint."
3/8
 Perhaps, but the only way you reduce a “contradiction between strong supply and weak demand” is either by reducing GDP growth, which Beijing doesn't seem to want, by increasing growth in consumption, which for all its efforts Beijing has been unable to do, or by increasing...
Read 8 tweets
Michael Pettis Profile picture
Dec 11
1/4
 WSJ: "President Trump’s barrage of tariff increases threatened to chill global trade flows, but commercial exchanges continued to increase as most of the international commerce system functions as it did before the onslaught."
via @WSJwsj.com/economy/trade/…
2/4
 Contrary to what WSJ says, Trump's tariffs never really threatened to "chill global trade flows" except in the view of those (including far too many economists) who mistakenly thought of trade in incremental terms rather than in systemic terms.
3/4
 As I wrote two years ago, the word "resilience" was going to be used over and over to describe trade as Trump's tariffs shifted trade and trade imbalances around without fundamentally changing them. That's because the only way the US can cause a reduction in its trade...
Read 4 tweets
Michael Pettis Profile picture
Dec 10
1/4
 The IMF formally recognizes that it is a depreciating RMB, not rising manufacturing efficiency, that drives China's growing trade surplus.
ft.com/content/9c92aa…
2/4
 That's because a depreciating currency is both a subsidy for manufacturing (and tradable goods) and a tax on consumption. It works by reducing the household share of GDP, especially when reinforced by other production subsidies paid for directly or indirectly by households.
3/4
 The net result of boosting manufacturing with subsidies and restraining consumption with taxes is to force the production of manufactured goods to grow faster than consumption – which also means forcing up the saving rate.
Read 4 tweets
Michael Pettis Profile picture
Dec 10
1/4
 China's CPI was up 0.7& year on year in November, the biggest monthly increase in nearly two years, but those who see this as a revival of inflation are getting it wrong. On the contrary, after four months of flat to positive month-on-...
english.news.cn/20251210/cd188…
2/4
 month changes, CPI prices were actually down 0.1% month on month in November. Even that was flattered by higher food prices caused by bad weather and a surge in gold prices that drove the “miscellaneous goods and services” category up by more than 14%.
3/4
 I credited the stable or rising prices between July and October to the fight against involution, but expected deflation to resume early next year as investment shifted out of the involuted manufacturing sectors to the non-involuted sectors.
Read 4 tweets

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