Editor’s Note

JG, our indefatigable correspondent editor’s note from Passadumkeag, Maine, wonders why I waste trees making jokes when I could be extolling the brilliance of this issue’s articles. Couldn’t have said it better myself, JG. So without further ado:

Sebastian Edwards, a Chilean-born economist at UCLA’s Anderson School, asks why Latin America’s most prosperous economy collapsed into populist chaos last winter. “Chile’s seemingly easy recovery from a pathological right-wing dictatorship captured the sympathy of the civilized world, offering hope to policy analysts that economic development could be divorced from political development — that economic success was mostly a matter of putting the right policies in place and waiting for the dust to settle,” he writes. “What we don’t know yet is whether the damage, so long hidden from sight, can be repaired without a long period of uncertainty and hardship.”

Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics, assesses the collapse of American-engineered, rules-based global trade. “The system buttressing international trade is in deep trouble,” Schott writes, “and the United States has ceased to be a leader in designing fixes that have any prospect of generating a consensus. The only practical way forward is one that recognizes the legitimate concerns with a system built before the rise of China … and gets on with the job of saving global economic integration from its myopic enemies.”

Simon Haeder, a political scientist at Penn State’s School of Public Policy, compares the public choice option in health insurance with full-blown reform to a single-payer system. “How one views the public option turns on how one views efforts at incremental improvements in a system that’s just limping along and someday, some way, must come to terms with tough economic realities,” he writes. “It’s hard to envision a scenario in which minor fixes lead seamlessly to major ones.”

Bill Frey, a senior fellow in the Brookings Institution’s Metropolitan Policy Program, points out that America’s population growth rate has fallen to the slowest pace since the census was first taken in 1790.” After 2030, “immigration will account for more than half of the nation’s population growth,” he writes. And “like it or not, immigrants will become an increasingly important source of enterprise and innovation in the American economy. This period of immigration-bashing will probably prove to be an ironic footnote to a transition in which immigrants will once again revitalize American society.”

Tsung-Mei Cheng, a health policy research analyst at Princeton’s Woodrow Wilson School, assays the remarkable success of Taiwan’s single-payer health care system, and its implications for U.S. health care reform. “Taiwan is the poster child for how a well-run single-payer system can do the job efficiently and still enjoy high public satisfaction,” she writes. “But a single-payer Medicare for All for the United States may be a bridge too far.”

Joshua McCabe, a sociologist at Endicott College in Massachusetts, challenges two enduring myths about fiscal federalism. “The first,” he writes, “is that states like West Virginia, Maine and Tennessee have shortsightedly pursued ‘low tax, low service’ growth strategies while states like New York, Massachusetts and Connecticut have wisely pursued a ‘high tax, high service’ strategy. The second is that our system of federal grants massively redistributes funding to the former states from the latter.”

Tim Taylor, the managing editor of American Economic Association’s Journal of Economic Perspectives, explains why China’s trade surpluses are rapidly evaporating and what this means to the global economy. “China’s shift to a near-zero balance of trade will have subtle but meaningful effects,” he writes. For example, “as national saving declines in China, one notable consequence is likely to be less demand for U.S. Treasury securities at bargain interest rates — an unwelcome reality when the U.S. budget deficit, which must be financed by selling Treasuries, exceeds $1 trillion even in a time of full employment.”

James Manyika and Monique Tuin of the McKinsey Global Institute outline the new environment facing multinational corporations. “The new era is shaping up to be one of extraordinary opportunity for leading companies and those that aspire to be — provided they are fleet and flexible,” they write. “In spite of the current wave of economic nationalism, the great forces of technology and globalization continue to open new markets — but are also creating unanticipated complications that leading firms will need to navigate.”

Marsha Vande Berg, a director of Quantum Advisors in Mumbai, looks at how the global business environment is changing through a different lens. “Institutional investors who manage trillions of dollars in workers’ and retirees’ savings are in the vanguard of a movement that stands to fundamentally alter the rules of corporate finance,” she writes. Their “failure to stay ahead of the curve on ESG-risk factors would open them to charges that they failed their duties as fiduciaries.”

Happy perusing. – Peter Passell