Editor’s Note

Welcome to the 103rd quarterly edition of the Review.

As usual, there’s no single theme. Think of it as a smorgasbord for policy nerds – one also intended to appeal to non-nerds interested in jargon-free, math-light insights into economic policy. And this issue’s fare is a tasty selection (if I do say so myself).

Bill Frey, a demographer at the Brookings Institution, warns of the consequences of the current wave of anti-immigrant sentiment. “Vitriolic anti-immigrant rhetoric has become so commonplace that we’ve lost the edge of outrage toward nativism that would have been the public’s response just a few years ago,” he writes. “But unless we allow immi- grants to fill the workforce gaps left by a combination of rapid population aging and low birth rates, there is little hope of sustaining growth in living standards for those already here.”

Mary Lovely and Tianlei Huang of the Peterson Institute in Washington assess the impact of Xi Jinping’s marching orders to create a Chinese economy fit for a superpower. “China’s businesses remain scarred by the zero-Covid lockdowns, its households fear the next big shock to their livelihood and freedoms, and its labor force is rapidly aging,” they write.

“As the old crumbles, the big question is whether China can summon the confidence needed to embrace the new era that China’s leadership promises is on the horizon.”

Jayson Lusk and Brandon McFadden, economists at Oklahoma State and the University of Arkansas, respectively, explain the role technology must play in keeping the world fed as the atmosphere warms. “The relentless march of climate change is now threatening to return us to an environment in which Reverend Malthus’ bleak vision of society ever at risk of being derailed by food shortages is all too realistic,” they write.

“Climate change reduced total factor productivity in global agriculture by about one-fifth from 1961 to 2020,” they estimate. But on the bright side, “the potential for rapid adaptation using gene-editing and other technologies is pretty clear.”

Charles Castaldi, a former correspondent for NPR, takes a snapshot of the new Poland, a thriving post-Soviet Bloc democracy too close for comfort to the Russian bear. “When Russia attacked Ukraine in February of 2022, 1.5 million Ukrainians sought refuge across the border,” he writes. “Once again Poland found itself a pawn in a geopolitical conflict.”

Gernot Wagner, a climate economist at Columbia University, takes a hard look at “tipping points,” potential instabilities in the Earth’s response to warming that could generate radical changes in climate. “The most pernicious property of tipping points is that we can’t know for sure where the point is until we have passed it,” he writes. “And once passed, there may be no winding back the clock.”

But the bad news bears don’t win every round: “The underappreciated storyline on the climate front is that climate technology, finance and public policy are moving very fast in the right direction. ... Tipping, it turns out, is a two-way street.”

“Ideally, all countries would manage sufficient productivity growth to raise living standards in line with popular expectations,” write Jan Mischke and Marc Canal of the McKinsey Global Institute. “But that’s the aspiration, not the reality. Productivity growth has, in fact, been slowing worldwide for years now.” Their survey outlines the most promising ways to rekindle it.

Simon Haeder, a political scientist at Texas A&M’s School of Public Health, explains how Medicare is being transformed by the explosive growth of Medicare Advantage, the giant program’s managed-care option. Here, he assesses what we know about MA and how it is affecting the whole health care system.

“Is the primary goal of MA to expand the number of service providers and choice of services available to enrollees? (It has done that.) Is it to increase the average quality of services provided? (It probably has.) To reduce the total cost of the Medicare system? (It has not.) Or is it to create a benchmark against which to measure the efficiency of traditional Medicare? (Not clear.)”

In this excerpt from their new book Breaking the Mold: India’s Untraveled Path to Prosperity, Raghuram Rajan, the former chief economist of the IMF, and Rohit Lamba, an economist at Penn State, offer an out-of-the-box analysis of India’s economy. “Unlike the situation for early-developing economies decades ago, Indian workers will not be much cheaper than their competitors,” they explain. “Any labor cost advantage will be small and will not pay for other deficiencies.”

They go on to advise: “So while India should create the conditions for more manufacturing at home, export-led, low-skilled manufacturing no longer offers the most effective path to becoming a middle-income nation. Instead of trying to capture the bottom of the value-added chain and climbing up from there, India could aspire to own the high end of the value chain directly.”

Happy perusing.