1/5 It's not so much Atlanticism but international relations more generally that will remain in retreat no matter who wins the US election, and although the world tends to be obsessed with the US and with its bilateral relationships, this retreat won't...
3/5 intensify, and anti-foreign and anti-immigrant feelings rise, and I think this remains a global issue. Perhaps because of its obsession with the US and with, more recently, the Trump circus, much of the world (and the global press) seems to focus on bilateral problems the...
4/5 US has with Europe, China and Russia, but in fact the three have equally, and often more, serious problems with many of their own immigrants, neighbors and international relationships, and this says nothing about either intra-European conflict or similar problems affecting...
5/5 India, the UK, Saudi Arabia, Brazil etc. Unfortunately I think the widespread desire to turn inwards and reject "foreigners" is structural, based on domestic economic imbalances, and so will continue for a few more years before reversing.
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2/5 That is exactly how it should be. Tariffs are effectively a tax on consumption and a subsidy to production (of tariffed goods). They work by transferring income from households (net importers) to producers of tradable goods.
3/5 The idea that Trump's tariffs would be paid for by foreigners was always nonsense. If they were, as I have often pointed out, they would have little to no impact on trade flows or on American deindustrialization.
1/7 My latest piece was written for friends who are EU policymakers or advisors. In it I argue that there is a difference between an inefficient manufacturing sector and a globally uncompetitive manufacturing sector. We shouldn't conflate the two. engelsbergideas.com/notebook/europ…
2/7 A country's manufacturing sector is not globally uncompetitive because it is inefficient, but rather because its wages are higher relative to productivity than those of its trade partners.
Efficiency is about how effectively an economy uses resources to create value.
3/7 Global competitiveness, by contrast, depends largely on how income is distributed within an economy.
This leaves the EU with two options if it wants to prevent domestic deindustrialization.
1/6 According to Greg Ip, in the US economy today, "rewards are going disproportionately toward capital instead of labor. Profits have soared since the pandemic. The result: Capital is triumphant, while the average worker ekes out marginal gains." wsj.com/economy/jobs/c…
2/6 And as Marriner Eccles, FDR's Fed chairman, explained in the 1930s, this creates a dangerous illusion. The extent of business profits depends almost wholly on the purchasing power of ordinary people, which in turn depends on wages.
3/6 In a rapidly-growing developing economy, with huge unmet investment needs, it may be possible (even necessary) for profits to rise faster than wages because the resulting rise in saving can be deployed to productive investment.
1/5 Reuters: "The EU should consider either an unprecedented 30% across-the-board tariff on Chinese goods or a 30% depreciation of the euro against the renminbi to counter a flood of cheap imports, a French government strategy report said on Monday." reuters.com/world/china/fr…
2/5 I think it's only a question of time before the EU will intervene in its external account to protect its manufacturing sector, just as China has done for decades and the US is increasingly trying to do. It can implement all the reforms that have been proposed to improve...
3/5 the efficiency of its manufacturing, but while these reforms may indeed do just that, they won't improve Europe's competitive position.
This may sound counterintuitive at first, but I have a piece coming out soon in Engelsberg Ideas explaining why.
1/11
SCMP: "China’s potential growth rate could fall to about 2.5 per cent in the coming years unless action is taken, prominent Chinese economist Zhou Tianyong has warned." sc.mp/itwrt?utm_sour…
2/11
“Without a strong turnaround in total factor productivity and a meaningful expansion in household consumption, it will be difficult for China’s economic growth to reach 4 per cent or higher,” he added.
3/11
A 2-3% growth rate is becoming an increasingly popular reference growth rate for Chinese analysts. I'd argue that over the past several years, 2-3% has actually been the upper limit of growth once we strip out the "positive" impact of not recognizing bad investment.
1/8 Jason Furman: "A weaker dollar may improve the economy’s long-run balance, but it does so by forcing Americans to cut back on spending. That is like telling children to eat more spinach today so they will be healthier in the future." nytimes.com/2026/02/03/opi…
2/8 Furman is right. Currency appreciation reduces consumption costs in the short term by making imports cheaper, but in a hyperglobalized world, it also undermines domestic manufacturers by making them less competitive against foreign manufacturers.
3/8 Academic economists (mainly in the US) will argue that this is a good thing because the goal should be to maximize consumption, but the only sustainable way to maximize consumption over the longer term is to maximize production. ft.com/content/89110b…