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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
Nov 14
1/7
 China's fixed-asset investment declined 1.7% year on year in the first 10 months of 2025, more than twice the expected rate of decline, and well above the 0.5% decline during the first nine months of the year.

english.news.cn/20251114/2bcf2…
2/7
 Excluding a 14.7% decline in the property sector, investment rose by 1.7% during the first ten months of 2025, led by a 2.7% rise in manufacturing investment.

As I see it, the weakness in investment growth suggests that the fight against "involution" is working so far.
3/7
 It suggests that the post-2022 surge in investment in preferred manufacturing sectors, such as EVs, batteries and solar panels, is being reversed.

But this leaves us with the same questions that we were left with following the post-2022 collapse in property investment.
Read 7 tweets
Michael Pettis Profile picture
Nov 13
1/5
 Good Setser piece on rising global imbalances. Thanks in part to his work, central bankers and mainstream economists are slowly beginning to acknowledge that rising global imbalances can be a problem for the global economy.

Eventually they all will.
@Brad_Setser
cfr.org/blog/chinas-ma…
2/5
 Most mainstream economists know that every country's internal imbalances are always perfectly consistent with its external imbalances, just as its external imbalances are always perfectly consistent with the external imbalances of its trade partners.
3/5
 But they are rarely able to understand the implications. When each country's external economy is linked through nearly-frictionless trade and capital flows, each country's domestic economy is also linked through the same mechanism. A country with deep internal imbalances...
Read 5 tweets
Michael Pettis Profile picture
Nov 13
1/4
 Caixin: "A significant increase in the household consumption ratio hinges on Beijing’s ability to solve a chronic problem of low household spending, a challenge rooted in sluggish income growth, widening inequality and inadequate public services."

caixinglobal.com/2025-11-13/ana…
2/4
 It is by now widely recognized among academics and policy advisors that China's weak consumption is a function of a low household income share of GDP, and that the solution is to implement "demand-side measures to boost employment, income and confidence."
3/4
 What still isn't much discussed, at least publicly, is the structural relationship between China's supply-side strength and its demand-side weakness. For all the talk of boosting domestic demand, in other words, no one has really wanted to discuss...
Read 4 tweets
Michael Pettis Profile picture
Nov 7
1/5
 FT: “German Chancellor Friedrich Merz has backed protectionist measures to shield the country’s ailing steel industry from cheap Chinese imports, in a striking departure from the country’s traditional commitment to free trade.”
via @ftft.com/content/a02d77…
2/5
 I’d argue that what Germany traditionally displayed wasn’t a commitment to free trade so much as the standard trade-surplus country’s insistence that their trade partners don’t intervene against their abilities to run trade surpluses.
3/5
 Germany’s post-2003 trade surplus, after all, didn’t emerge from free trade. It emerged from labor reforms that effectively pushed down the household share of GDP, combined with the role of the newly-created euro in preventing “normal” currency and interest rate adjustments.
Read 5 tweets
Michael Pettis Profile picture
Nov 4
1/10
NYT: "China has offset the decline from America with breathtaking speed. Shipments to other parts of the world have surged this year, demonstrating that China’s manufacturing dominance will not be easily slowed."
nytimes.com/interactive/20…
2/10
"That’s because." the New York Times explains, "China was prepared. It has been seeking out new customers for years, and its massive manufacturing investment allows it to sell goods at low prices."

This explanation shows just how confused analysts remain about trade.
3/10
It also illustrates why my mentor at Columbia, Michael Adler, threatened to fail any student who mentioned bilateral trade imbalances. In a our hyperglobalized world of extremely low transportation costs, bilateral trade imbalances tell us almost nothing about trade pressures.
Read 10 tweets
Michael Pettis Profile picture
Oct 24
1/4
 Interesting article by Yanmei Xie: "Why does involution defy repeated attempts to purge it?" she asks. "Because the foundational structure of China’s political economy breeds it."
ft.com/content/e768df…
2/4
 She's absolutely right. "Involution:" is just the latest name for a decades-old problem arising from a development model built around the need to keep increasing investment in capacity, even when capacity is already excessive.
carnegieendowment.org/posts/2025/08/…
3/4
 Xie points out that what creates this excess capacity is simply the flip side of the very thing that creates global competitiveness, concluding that "what begins as glut at home could end as supremacy abroad."
Read 4 tweets

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