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Transcript

Growing the Debt

The Sino Consensus

Week Thirteen

Coming Up

Class Canceled

Less Deadlines for Original Article

Optional Discussion Post

Washington

Consensus

Washington

Consensus

Economic Policy

Domestic

Economic Policy

Taxes

Fiscal Discipline

Spending

Pro:

Taxation

People taxed, not when they are making money, but when they are spending money

Income Tax

Taxation

Con:

Tax Lower Income People disproportionately more

Broad-Based

Sales Tax

Public Expenditures

Purpose of Govt Services:

Public Expenditures

  • Grow an Economy
  • Social Safety Net

Privatization

Property Rights

Privatization

Privatization

Privatization

Liberalizing Trade

Trade

Policy

Monetary Policy

Foreign Direct Investment (Inward)

Liberalizing Interest Rates

Competitive Exchange Rates

The Weight of the World

U.S. Debt & Currency Burden

Intl Standard

1944 to 1971

Intl Standard

Domestic Constraint

1944 to 1971

Domestic Constraint

Petrodollar

Sharing the Burden

IOU

Sharing the Burden

Saudi Arabia

U.S.

IOU

Growing the Debt

https://www.youtube.com/watch?v=pSS7iJUsYCY

Global Reserve?

China's Rise

In your opinion, are China and the U.S. likely to have a cooperative, competitive, or conflictual relationship over the next fifteen to twenty years? Justify your position with explanations of what is motivating the Chinese policies we covered this week in class.

State in the Market:

Gas or Brake?

State-Led Capitalism

Brake

  • Regulation
  • Taxation takes money out of market
  • Inefficient use of resources (based on political rather than market demand)

Gas

  • Economy of Scale
  • Ability to invest in huge projects without as much need for short-term profits

Deng Xiaoping's strategy of “crossing the river by touching the stones.”

Coastal Special Economic Zones

  • Privatize & Liberalize in Key Export Areas & Key Industries
  • See what works and then try that elsewhere

Gradual Economic Reforms

Middle Income Trap

Employment

Workers in China make around one-twentieth of the average monthly wage in America.

Employment

Money Supply

Demand

Prices

Prices for both domestic and imported goods increase

Expanding

Cheaper Resources

Cheaper Transport Costs

https://www.aiib.org/en/projects/approved/index.html

Connectivity to New Markets

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