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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
Feb 2
1/7
 SCMP: "Chinese scholars have called for greater urgency in reducing reliance on US dollar assets, particularly after Washington and its allies froze about US$300 billion in Russian foreign exchange reserves in 2022."
scmp.com/economy/global…
2/7
 Although this may be a favorite new topic among academics – and not just Chinese academics - few seem to understand that a country cannot restructure global capital flows without also restructuring global...
3/7
 trade flows, nor that a country cannot change its external imbalances without either changing its internal imbalances or changing the external imbalances (and thus the internal imbalances) of its trade partners.
Read 7 tweets
Michael Pettis Profile picture
Jan 22
1/12
This talk about Europe's ability to wield its holdings of US Treasuries as a political tool is as divorced from reality as the talk about China's ability to wield its holdings of US Treasuries as a political tool.
via @ftft.com/content/7d6436…
2/12
For all the huffing and puffing, Chinese holdings of US assets actually increased. This shouldn't have been a surprise. If you run massive trade surpluses, you have no choice but to acquire foreign assets, and if you won't acquire the alternatives, you must buy US assets.
3/12
These analysts seem to forget that you cannot change your capital account without also changing your trade account, and that you cannot change your external imbalances without also changing your internal imbalances.
Read 12 tweets
Michael Pettis Profile picture
Jan 21
1/7
 EU commissioner for trade Maroš Šefčovič is absolutely right to question the usefulness of the WTO: "If the WTO is to meet today’s challenges, its rules must be fair and deliver balanced, legitimate outcomes. Currently, they do neither."
ft.com/content/2ff1d4…
2/7
 The fact that decades of the largest, persistent trade imbalances in history have largely been WTO compliant suggests strongly that the WTO is more about maintaining legal fictions than it is about discouraging the adverse impact of trade intervention on the global economy.
3/7
 As Keynes (and many others) pointed out nearly a century ago, evidence that a country is intervening in trade shows up very clearly in the form of persistent, beggar-thy-neighbor trade surpluses. If the latter exists, then the former exists.
Read 7 tweets
Michael Pettis Profile picture
Jan 21
1/6
 Reuters: "Chinese leaders have pledged to "significantly" lift household consumption’s share of the economy over the next five years, but have not given a specific target."
reuters.com/world/asia-pac…
2/6
 If we assume that Beijing hopes to raise the consumption share of GDP by 3-5 percentage points (roughly a third of what it would need to be a more "normal" low-consuming economy), consumption would have to grow by 1-2 percentage points faster than GDP over the period.
3/6
 That's a pretty big gap, and one we have never yet seen in the past 3-4 decades of Chinese growth. The good way to manage this, of course, would be for consumption growth to accelerate, although it is not at all clear what would cause that acceleration.
Read 6 tweets
Michael Pettis Profile picture
Jan 20
1/7
 Good Martin Wolf piece on the global return of mercantilism. What is new about this piece is that it seems part of a growing recognition among global opinion makers that mercantilism and trade war didn't start when deficit economies with...
ft.com/content/cd68b3…
2/7
 open external accounts began to implement trade restrictions and otherwise control their external accounts. It started earlier, when economies that controlled their external accounts implemented trade and industrial policies that led to beggar-thy-neighbor trade surpluses.
3/7
 We are returning, in other words, to Joan Robinson and her 1937 explanation of how trade conflict emerges. What I would add is that in a hyperglobalized trading system (i.e one in which transportation costs, communications costs, and the costs of...
ia802806.us.archive.org/16/items/essay…
Read 7 tweets
Michael Pettis Profile picture
Jan 18
1/6
 Wall Street bankers and owners of movable capital would hate it, but if the rest of the world were to reduce its dependence on the US dollar, this would be good for the US economy, good for US manufacturing, and good for US farmers and workers.
wsj.com/finance/curren…
2/6
 The claim that the US benefits from the global use of the dollar is one of those things that people believe even though they can't explain why – except perhaps in terms of sanctions. None of the world's fastest-growing economies (including...
foreignaffairs.com/united-states/…
3/6
 advanced economies like the US in the 100 years before the 1970s, Germany in the same time period, or post-war Japan, Taiwan and South Korea) had major reserve currency status, and yet they all had rapidly growing economies driven by even more rapid growth in manufacturing.
Read 6 tweets

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