In the US, China’s pan-Eurasian infrastructure initiative is more or less invisible outside of news reports from domestic media that mostly frame it as Beijing’s grand plan for geopolitical domination
Under President Trump, it is possible, for the first time in a generation, to imagine a concerted attack on the central bank. Conceivably, the United States could repeat the story of the mid-1960s and ’70s, when a 15-year period of central-bank independence was brought to an end by presidential bullying. Back then, Lyndon B. Johnson summoned the Fed chairman, William McChesney Martin Jr., to his Texas ranch and shoved him around the living room while proclaiming that low interest rates were imperative in a time of war.
Friedman had discovered in human capital theory more than just a means for boosting economic growth. The very way it conceptualised human beings was an ideological weapon too, especially when it came to counteracting the labour-centric discourse of communism, both outside and inside the US.
Globalisation is supposed to be in retreat. How, then, do you reconcile the following? Since 2005, the number of travellers crossing international borders each year has risen by around half, to 1.2 billion. The number of people using the internet has soared from 900,000 to more than 3 billion. By 2020, their ranks are projected to exceed 4 billion, while the number of connected digital devices is forecast to more than triple, to nearly 21 billion. Global data flows, which have exploded by tenfold over the past decade, to 20,000 gigabits per second, are also projected to triple by 2020.
You may know the name Thomas Piketty. His work launched him to prime time as the “rock star economist”; his sultry French accent and general attractiveness, of course, helped. You may not know the name of his intellectual counterpart: Branko Milanović. Balding and bespectacled, the 63-year-old looks much more like a dismal scientist than a revolutionary.
A new commodity spawns a lucrative, fast-growing industry, prompting antitrust regulators to step in to restrain those who control its flow. A century ago, the resource in question was oil. Now similar concerns are being raised by the giants that deal in data, the oil of the digital era. These titans—Alphabet (Google’s parent company), Amazon, Apple, Facebook and Microsoft—look unstoppable.
Twenty years ago next month, the British government gave the Bank of England the freedom to set interest rates. That decision was part of a trend that made central bankers the most powerful financial actors on the planet, not only setting rates but also buying trillions of dollars’ worth of assets, targeting exchange rates and managing the economic cycle. Although central banks have great independence now, the tide could turn again.
Since 1950, middle-income countries have nearly always grown faster than expected. Looking just at the past decade and a half, current middle-income countries that had an average gross national income of $2,381 in 2000 have seen that more than double, to $4,951 in 2015. U.S. income, in contrast, climbed just 15 percent over the same period.
Indeed, the US-China relationship is a classic example of the old saw: if you owe the bank a thousand dollars, you have a problem; if you owe the bank a trillion dollars, the bank has a problem. Trump holds the important cards and it is simply a case of whether he wants to play them.