Trade Wars Are Class Wars Quotes

“government tightly regulates supply and heavily subsidizes demand. In the rest of the economy, prices have been flat.”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“The rest of the world’s unwillingness to spend—which in turn was attributable to the class wars in the major surplus economies and the desire for self-insurance after the Asian crisis—was the underlying cause of both America’s debt bubble and America’s deindustrialization. Foreign financial inflows forced Americans to absorb their glut of manufacturing capacity at the expense of U.S. jobs and incomes. This necessarily required foreign savers to mitigate the impact of job losses on American spending by buying dollar-denominated assets, which pushed down interest rates, expanded credit, and facilitated a surge in household borrowing.”
― Matthew C. Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“to lend to favored companies to invest in as much infrastructure, manufacturing, and real estate as necessary. Whether the investments are worthwhile is irrelevant. All that matters is that the quantity of spending generates enough reported GDP to meet the central government’s objectives.”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“But this is not what happens in China. In China, the GDP growth rate is an input into the system. It is set early in the year as the GDP growth target for that year and represents the amount of growth needed to accommodate social and political objectives, among which of course is the desire to keep unemployment low. As such it modifies the standard economic constraints, allowing local governments to generate enough economic activity that, together with the economic activity of the private”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“Regardless of where they live, workers are required to pay into the national social security system, which covers health, education, pension, and other benefits. Chinese are only eligible to receive those benefits, however, if they are resident where they were officially registered. This has curtailed social spending for hundreds of millions of poor Chinese even as they pay taxes to support relatively rich local governments. Even without these distortions, China’s official tax system”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“The result of all this is that workers at nonfinancial corporations in China are paid only 40 percent of the value of what they produce. In most other countries, by contrast, the labor share of corporate value added is closer to 70 percent. The hukou system further functions as a regressive”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“Local governments have declined to enforce the laws preventing rural migrants from holding jobs in cities because it has been good for business. Yet these workers remain under constant threat of eviction, especially in the largest and richest cities, which”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“The Chinese government’s distinct attitude to worker protections also extends to its treatment of hundreds of millions of migrants moving from the countryside to the cities. Thanks to China’s hukou system, these workers are effectively illegal immigrants in their own country. Originally meant to keep workers on farms in the Maoist era, the hukou system limits the rights of Chinese to move and settle anywhere in China outside of where they were born.”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“The Chinese government is also able to suppress consumption to subsidize investment using what the Chinese historian Qin Hui has called the “comparative advantage of lower human rights.”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“of the least-appreciated mechanisms for suppressing consumption, and the most important, was financial repression. (Tellingly, however, the gradual elimination of financial repression over the past few years has only partially reversed China’s domestic imbalances.) There were few ways in China to save other than holding deposits in one of the government-run banks. Interest rates on those deposits were set at extraordinarily low levels, especially relative to growth. Lending rates were also far below what they would have been in a market-based system but were high enough above deposit rates to generate a guaranteed profit for the banks. Borrowing was limited”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“Many of these measures are regulatory. Property rights are often ignored, which allows local governments to seize valuable land from Chinese households to sell to developers. Expropriations were encouraged by the central government’s incentive system for local party officials. Those incentives, which often prioritized reported output growth above all else, also encouraged local governments to ignore pollution and environmental degradation to attract business investment. Ordinary Chinese had their wealth and health taken from them to benefit elites. Their living standards grew far less than China’s domestic production. The share of Chinese GDP consumed by Chinese households fell by 15 percentage points between the late 1980s and the bottom in 2010.”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“devalued the yuan by a third, from 5.8 yuan per dollar to 8.7 yuan per dollar. By the middle of 1995, a new hard peg had been established at 8.3 yuan per dollar. This exchange rate would be rigidly maintained until the middle of 2005. The result was that the yuan became progressively undervalued relative to economic fundamentals. China had tied its currency to the dollar even though productivity was growing far slower in the United States than in China, or much of the rest of the world. This made Chinese exports increasingly cheap for foreign consumers and simultaneously deprived Chinese consumers of the ability to buy everything their labor had earned. It was a transfer from China’s consumers that subsidized the profits”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“First, perhaps because of uncertain property rights, noncredible legal systems, and unstable financial and political systems, they do not generate enough domestic savings to fund investment. Second, for many of the same reasons, the private sector fails consistently to direct investment into productive projects. Gerschenkron’s”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“With investment levels so high and already being misallocated on a massive scale, the central government might have preferred higher consumption. But China’s myriad institutional constraints, which we will discuss in more detail later in the chapter, meant that consumption could not have grown quickly enough except through a surge in household borrowing. Unsurprisingly, given what the Chinese leadership had just seen occur in the United States, there was no interest in a similar experience. That is why the government chose to focus on boosting investment. The most straightforward response to the global financial crisis was a massive boost in infrastructure and housing investment to offset the decline in foreign spending. This simultaneously magnified China’s long-standing imbalances while shifting them inward. China was able to sustain growth even as its current account surplus fell at the cost of a nearly unprecedented surge in Chinese indebtedness. Unproductive investments have failed to pay for themselves.2 The danger is that the Chinese government, having reached the limits of its ability to generate rapid growth through debt-funded investment, will once again attempt to shift the costs of its economic model to the rest of the world through trade surpluses and financial outflows. The only way to prevent this is to rebalance the Chinese economy so that household consumption is prioritized over investment. That means reversing all of the existing mechanisms transferring purchasing power from Chinese workers and retirees to companies and the government—reforms at least as dramatic and politically difficult as the reforms implemented by Deng Xiaoping beginning in 1978. Unfortunately for China, the choices of the past few decades have become politically entrenched. It is easy for an antidemocratic authoritarian regime to suppress workers’ rights and shift spending power from consumers to large companies. Stalin did it, after all. The problem is that years of state-sponsored income concentration creates a potent group of “vested interests”—Premier Li Keqiang’s preferred term—that will fiercely resist any reforms that would shift spending power back to consumers. Any successful adjustment”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“Since 1990, most inflation in the United States has come from higher prices for health care (including prescription drugs), housing, and education—all sectors where the”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“The innovation of the high-savings development strategy is that consumption is squeezed to pay for productive investment in infrastructure and capital goods, rather than to pay for elaborate monuments and the military. Done correctly, this investment raises ordinary people’s living standards even as their share of economic output declines. The high-savings model is therefore the original version of trickle-down growth.”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“According to the British economist and social critic John A. Hobson, the need to find outlets for “surplus capital which cannot find sound investments within the country” was the central explanation for American and European imperialism. The underlying problem was an economic and political system that “placed large surplus savings in the hands of a plutocracy.”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

“Where the distribution of incomes is such as to enable all classes of the nation to convert their felt wants into an effective demand for commodities, there can be no over-production, no under-employment of capital and labour, and no necessity to fight for foreign markets. . . . The struggle for markets, the greater eagerness of producers to sell than of consumers to buy, is the crowning proof of a false economy of distribution. Imperialism is the fruit of this false economy. . . . The only safety of nations lies in removing the unearned increments of income from the possessing classes, and adding them to the wage-income of the working classes or to the public income, in order that they may be spent in raising the standard of consumption. John A. Hobson, Imperialism: A Study (1902)”
― Matthew C Klein, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace