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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
May 20
1/10
Important FT article by Mark Sobel, Brad Setser and Robin Brooks. They make the seemingly counterintuitive point that while incremental trade agreements, in which one side or the other agrees to buy a little more of this or a little less of...
ft.com/content/b600db…
2/10
that, may impress policymakers (and dealmakers) who don't understand trade – or, for that matter, how the balance of payments work – in fact they have no impact at all on the overall trade imbalances.
3/10
Whether or not China buys more soybeans or Boeings might matter to American soybean farmers or to Boeing shareholders, in other words, but it will have no impact on either the American trade deficit or on overall American deindustrialization.
Read 10 tweets
Michael Pettis Profile picture
May 18
1/5
 It’s hard to know how significant this is, given the uncertainties created by the war, but April numbers were terrible for China. Industrial output grew 4.1% year on year in April, well below expectations.
bloomberg.com/news/articles/…
2/5
 For the first four months of 2026, industrial output grew 5.6%. Against this, retail sales grew by a measly 1.9% year on year in the first four months of 2026, and by a shocking 0.2% in April.
3/5
 Overall consumption growth is almost certainly a little higher, but it is hard to explain such a large gap between production and consumption except if more production is not resulting either in higher wages, higher profits, or stable household confidence.
Read 5 tweets
Michael Pettis Profile picture
May 17
1/4
 NYT: "President Trump departed Beijing on Friday, touting trade deals to sell American-made airplanes, farm goods and other products, the signature outcome of his two-day summit with Xi Jinping, China’s top leader."
nytimes.com/2026/05/15/bus…
2/4
 This is the kind of thing that confuses far too many policymakers and analysts. China's huge trade surplus is the result of income distribution and transfer policies that force Chinese production to exceed, by a large margin, China's total consumption and investment.
3/4
 The US trade deficit is largely driven by the extent to which economies with trade surpluses decide to balance those surpluses by acquiring US assets.

The purchase commitments last week will have no impact on either, and so won't change the imbalances.
Read 4 tweets
Michael Pettis Profile picture
May 16
1/12
Very good article by Greg Ip. I think the most important point he makes is this one: "The Achilles’ heel of Chinese industrial policy is its cost and waste. China runs bigger budget deficits relative to economic output than the U.S."
@greg_ip
wsj.com/world/china/be…
2/12
Most trade and industrial policy consists effectively of transfers from less favored to more favored sectors. In China's case this has meant very large explicit and implicit transfers from the household sector to subsidize infrastructure and manufacturing investment.
3/12
Other countries have followed similar policies, but this was taken to such an extreme in China that one result has been the lowest consumption share of GDP and the highest investment share ever seen in history (no other country even came close).
Read 12 tweets
Michael Pettis Profile picture
May 11
1/4
 According to Reuters, domestic car sales in China were down 21.6% year on year in April, even as car exports surged 80.2%. Everyone knows that domestic demand remains incredibly sluggish in China, but such sharp drops in domestic car...
reuters.com/business/autos…
2/4
 sales in the past seven months should still seem surprising, until we remember that much of the consumer-voucher programs of earlier years were directed at car purchases. This meant that Chinese households who had planned to buy cars anyway just accelerated their purchases.
3/4
 This has important implications. The consumer-voucher programs still get a lot of attention, and do cause a surge in purchases of the targeted goods, but they they mostly accelerate purchases that would have occurred anyway, and have no impact on total consumption.
Read 4 tweets
Michael Pettis Profile picture
May 10
1/7
 Bloomberg: "China pledged to step up efforts to defuse local government debt risk while supporting growth, as the State Council called for stronger policy execution in a challenging global environment."
bloomberg.com/news/articles/…
2/7
 Every few months for the past 4-5 years we have seen similar promises to get debt under control while maintaining high GDP growth rates, and every time I have the same response: China cannot do both, because the determination to maintain high GDP growth rates is...
3/7
 precisely what causes the surge in the country's debt burden. Because it cannot get consumption growth to accelerate without undermining the manufacturing sector, high GDP growth rates mean that the country must maintain high investment growth rates.
Read 7 tweets

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