China needs to trust Hong Kong, and vice versa

The single most important cause of unrest in Hong Kong, and the core reason why it will be enormously difficult to overcome, is the lack of trust that permeates the political system. People don’t trust the courts in China, and many do not trust the SAR government to be strong enough to withstand pressure to extradite people for political purposes. At the same time, the Chinese Communist Party (CCP) – for good reasons – does not trust Hong Kong to protect its national interests. Overcoming this mutual suspicion is at the heart of any resolution to the current state of unrest.

What is at risk is the right of the world’s third most important business and financial center to manage its own affairs within the context of the People’s Republic of China. It is well past time for all sides to take a step back from the brink of disaster.
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World Economic Outlook, July 2019

Weak demand, soft trade, muted inflation and much of it is due to policy mistakes such as Trumpism and Brexit. Global GDP is forecast to rise 3.2% this year and 3.5% in 2020, both down from the April 2019 forecast.

In the Advanced Economies, the pattern is reversed: 1.9% this year, slowing to 1.7% in 2020. Emerging Asia will grow 6.2% in each year, and with the exception of the CIS (1.9% => 2.4%) and sub-Saharan Africa (3.4% => 3.6%), the rest of the developing world is stuck at 1%, more or less.

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Insights for people who think about policy, seriously.

1. The Trump Tax Reform, As Seen in the U.S. Balance of Payments Data
2. Knowledge in the hands of the best, not the rest: The decline of US business dynamism
3. US Multinationals Expand their Foreign-based Research and Development

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Stop bad mouthing the peg

[first published in Harbour Times July 2, 2019: ]

The surprisingly broad and persistent protests that erupted in Hong Kong in early June call into question a host of established institutions and familiar arrangements, and rightly so. This is not that story. Rather, it is a warning about the dangers that arise when amoral profit-seekers play fear games.
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Trade wars

Trump’s trade war is not only economically ineffective, it is also directly opposed to the best interests of American consumers.

Trade diversion has been enormously positive for the American consumer because of the dramatic reduction in the price of imports. The fact that car parts were made in the US and then production shifted to Japan and other parts of East Asia is a historical fact that both reduced the prices consumers (and original producers) paid, but also cost some jobs.
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US congressional reform


Here’s a radical idea for electoral reform.

Determine the number of congressional representatives from each state based on the average number of ballots cast in the three previous mid-term elections. Since every state gets at least one representative, the state with the fewest ballots cast – Wyoming – sets the standard. In the 2010, 2014, and 2018 midterm elections, Wyoming cast an average of 189,083 ballots. So, each state gets a representative for every 189,083 ballots cast (rounded off).
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