John Van Reenen, Professor of Applied Economics at MIT Sloan School of Management
From the London School of Economics and Political Science Blog
As I write on 31 January 2020, Britain leaves the European Union (EU). The loss I feel is almost as much as when my father died, almost a quarter century ago. He was 16 when he came to Britain with my grandfather who was a South African political refugee. After completing his UK national service, he married the daughter of a Merseyside dockworker. They moved to Carlisle where I was born, to run a new community centre. Then later back to Liverpool where I started school.
My secondary education was in Kelsey Park Comprehensive School. When I started it had just converted from a Secondary Modern, schools for kids who failed their 11+ exams. It was in the late 1970s and early 1980s – a brutal place in a brutal time. I remember our class having a mock vote in the 1979 election. The most popular two parties for our boys were Mrs. Thatcher’s Conservatives and the National Front, an overtly racist party promising to send foreigners ‘back to where they came from’.
Daron Acemoglu, Elizabeth and James Killian Professor of Economics, MIT Sloan School of Management
From Project Syndicate
White nationalism is on the rise in the United States. According to the Anti-Defamation League, there were 6,768 incidents of extremism and anti-Semitism (mostly from the right) in the US in 2018 and 2019. That figure is significantly higher than in previous years, leading many to conclude that President Donald Trump is to blame for the uptick in domestic extremism.
Since the launch of his presidential campaign in 2015, Trump has overtly and covertly encouraged violence by his supporters. After a white supremacist, James Alex Fields Jr., drove his car into counterprotesters in Charlottesville, Virginia, killing one and injuring dozens, Trump infamously said that there were “some very fine people on both sides.” And he has not shied away from racist rhetoric when describing African countries and even non-white members of Congress.
Yasheng Huang, Epoch Foundation Professor of International Management & Faculty Director of Action Learning, MIT Sloan School of Management
From The New York Times
A decade ago, after the 2008 global financial crisis, China seemed to save its economy by decoupling it from the rest of the world’s with a massive domestic investment program. Today, it is progress on the trade war with the United States, or the recoupling of China’s economy with those of other countries, that is seen as the way for it to regain momentum.
But to think in these terms is to miss the main point: The trade war has merely compounded an economic slowdown in China that is substantially of the country’s own making.
The deceleration is serious. In 2018, China’s gross domestic product grew by about 6.5 percent, the lowest rate since 1990. And part of the slowdown is a predictable result of deliberate government decisions, in particular policies that favor the state sector at the expense of the private sector — even though the state sector is woefully inefficient, whereas the private sector has long been the country’s growth engine.
Media Geddes, Media Relations Assistant, MIT Sloan School of Management
From South China Morning Post
In 1992, I was abandoned as a baby and found in a public place in Hefei, China. For almost two years, I lived in an orphanage and with a foster mother. Then my adoptive mother flew me to Sacramento, California, where I grew up.
My existence here in the United States is due to China’s infamous one-child policy, which was imposed for more than three decades before it was eased to a two-child policy in 2015. I am one of more than 90,000 children adopted from China and raised in the US between 1992 and 2018. About 40,000 other children went to families in the Netherlands, Spain and Britain.
In her devastating poem, One Art, Elizabeth Bishop writes of loss in a way I relate to. She describes misplacing stuff like keys and a watch, but also losing things a little less trivial: names and places; rivers, cities and continents; and finally, that mysterious “you”.
Yasheng Huang, Epoch Foundation Professor of International Management and Faculty Director of Action Learning, MIT Sloan School of Management
From South China Morning Post
Critics often claim China is using its massive Belt and Road Initiative as a form of coercive debt-trap diplomacy to exert control over the countries that join its transnational infrastructure investment scheme. This risk, as Deborah Brautigam of Johns Hopkins University recently noted, is often exaggerated by the media. In fact, the initiative may hold a different kind of risk — for China itself.
At the recent belt and road summit in Beijing, Chinese President Xi Jinping seemed to acknowledge the “debt trap” criticism. In his address, Xi said that “building high-quality, sustainable, risk-resistant, reasonably priced, and inclusive infrastructure will help countries to utilise fully their resource endowments”.
This is an encouraging signal, as it shows that China has become more aware of the debt implications of the initiative. A study by the Centre for Global Development concluded that eight of the 63 countries taking part are at risk of “debt distress”.
But, as John Maynard Keynes memorably put it: “If you owe your bank a hundred pounds, you have a problem. But if you owe your bank a million pounds, it has.” In the context of the belt and road, China may turn out to be the banker who is owed a million pounds.
In particular, China may fall victim to the “obsolescing bargain model”, under which a foreign investor starts to lose bargaining power over time as it invests more in a host country. Infrastructure projects are a classic example, because they are bulky, bolted to the ground and have zero economic value if left incomplete.