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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 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
Michael Pettis Profile picture
Dec 8
1/10
Keith Bradsher: "A growing number of economists and business leaders, including former senior officials at China’s own central bank, are calling on Beijing to let the renminbi increase in value against the dollar and other currencies."
nytimes.com/2025/12/07/bus…
2/10
He adds: "For China, a stronger RMB would make foreign goods cheaper to import. Savings on such purchases would leave China’s households with more money to spend on Chinese goods and services. Reviving consumer spending in China is one of the top goals of Beijing leaders."
3/10
But that's not the end of the story, because "doing so by allowing the renminbi to strengthen would also carry costs for China. A stronger renminbi would hurt China’s exporters."

That's the problem with every policy designed to boost domestic demand.
Read 10 tweets
Michael Pettis Profile picture
Dec 8
1/6
 China’s exports in November rose 5.9% year on year, leading to a $111.7 monthly trade surplus. A few years ago, a monthly trade surplus of over $100 billion would have seemed almost inconceivable, but so far this year it has happened six times

bloomberg.com/news/articles/…
2/6
 While exports to the US in November were down 29% year on year, according to Bloomberg, "Exports to the EU expanded almost 15% last month. Shipments to Africa surged nearly 28%, while those to the 10-nation Southeast Asian trading bloc gained only 8.4%."
3/6
 Contrary to what many think, it is not just a lucky coincidence that Chinese exports to the rest of the world have surged even as exports to the US have declined. The fact that US imports from the rest of the world have surged even as US imports from China have declined...
Read 6 tweets
Michael Pettis Profile picture
Dec 8
1/6
 Emmanuel Macron: "Today, we are caught between the US and China and it is a matter of life or death for the European industry. We have become the adjustment market and this is the worst-case scenario."

He is absolutely right.
reuters.com/world/china/fr…
2/6
 This is the point I have been making again and again over the years. The global economy is a closed system, and it must balance. This means that domestic imbalances created by countries that control their external accounts must...
3/6
 necessarily be exported to and absorbed by those of their trade partners that chose not to control their external accounts. It also means that the latter must end up with domestic imbalances that accommodate the domestic imbalances of the former.
Read 6 tweets

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