1/4
About China's "wildly unbalanced" economy Krugman says: "For reasons I don’t fully understand, policymakers have been reluctant to allow the full benefits of past economic growth to pass through to households, and that has led to low consumer demand."
nytimes.com
About China's "wildly unbalanced" economy Krugman says: "For reasons I don’t fully understand, policymakers have been reluctant to allow the full benefits of past economic growth to pass through to households, and that has led to low consumer demand."
nytimes.com
2/4
I don't think they are "reluctant". In the 1990s and early 2000s, policymakers were eager to drive up the domestic savings needed to fund huge increases in investment, and so they implemented policies that prevented wages from growing as fast as GDP.
I don't think they are "reluctant". In the 1990s and early 2000s, policymakers were eager to drive up the domestic savings needed to fund huge increases in investment, and so they implemented policies that prevented wages from growing as fast as GDP.
3/4
In recent years, and perhaps as early as 2007, they have wanted to reverse these policies, but as Albert Hirschman explained decades ago, a wide range of institutional constraints—political, business, and financial—make this extremely hard to do.
In recent years, and perhaps as early as 2007, they have wanted to reverse these policies, but as Albert Hirschman explained decades ago, a wide range of institutional constraints—political, business, and financial—make this extremely hard to do.
4/4
The point is that switching from an investment- or export-driven economy to a consumption-driven economy is not something that policymakers can simply decide to do. It requires major structural transformations in the distribution of wealth and, inevitably, political power.
The point is that switching from an investment- or export-driven economy to a consumption-driven economy is not something that policymakers can simply decide to do. It requires major structural transformations in the distribution of wealth and, inevitably, political power.
Loading suggestions...