Subject: EconVue Spotlight May 13, 2018 China's New Era?
From: "Lyric Hughes Hale" <[email-masked]>
To: "R. Hunter Biden" <[email-masked]>
Date: Sun, 13 May 2018 19:59:48 -0700 (PDT)

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EconVue Spotlight

Dear R. Hunter,

I agree with a Twitter commentator today: US-China trade relations is 
also giving me whiplash. As treatment, I recommend two new books with a 
longer view on the changes taking place in China. The first, " The End 
of an Era " by Carl Minzer is truly a must-read for any China watcher. 
Devin Stewart at the Carnegie Council conducted a wonderful interview 
with Prof Minzer, which I've included below.

Monday night, Elizabeth Economy will be in Chicago to discuss her new 
book, " The Third Revolution ". As she says "One of the great paradoxes 
of China today is Xi Jinping's effort to position himself as a champion 
of globalization, while at the same time restricting the free flow of 
capital, information, and goods between China and the rest of the 
world." If you cannot make her lecture, The Chicago Council on Global 
Affairs will be streaming it live tomorrow night here.

https://www.thechicagocouncil.org/event/xi-and-his-china-third-revolution

My conclusion from reading both books is that despite the twitter 
theatrics, changes in the US-China relationship are being driven more by 
fundamental changes in China's system of governance than they are by US 
politics.

In addition to some really excellent reports by our EconVue experts on 
corporate tax cuts, Japanese corporate governance, China in Latin 
America, and reform of the US Post Office, my favorite link is about the 
persistence of the Roman system of roads across Europe today and its 
role in economic development. It is worth clicking on the first graphic, 
which shows the Roman network of roads in 117 CE compared with nighttime 
light intensity in this decade.

Happy Mother's Day to all!

RESEARCH BY ECONVUE EXPERTS

Corporate Tax Cut to Yield More Investment &amp; Wages, Gradually

https://econvue.com/pulse/corporate-tax-cut-yield-more-investment-wages-gradually

Michael Lewis

https://econvue.com/experts/michael-lewis

How long do we have to wait for this fiscal stimulus? Or should we heed 
Nancy Pelosi as she channels her inner Gerschwins, and "let's call the 
whole thing off?"

The short answer, FMI believes, is that stimulus is already occurring, 
but it will take a while to garner all the economic benefits. That it 
would happen instantly is wildly optimistic. Yes, Trump and Co. 
over-promised -- they are politicians -- but the end results will be 
significant.

Public Comment to the Proposed Revisions to Japan's Corporate Governance 
Code

https://econvue.com/pulse/public-comment-proposed-revisions-japan%E2%80%99s-corporate-governance-code

Nicholas Benes

https://econvue.com/experts/nicholas-benes

As the one who proposed this governance code in the first place...an 
English translation of my public comments. I hear the Keidanren would 
not let FSA use the word "Code" after "stewardship", even though both 
codes are the FSA's. (!!) And in the age of AI, the JPX/TSE still have 
not made the disclosure items in CG Reports machine-readable. They 
remain machine-UN-readable.

China Recognizes Dominican Republic — We Should Worry

https://econvue.com/pulse/china-recognizes-dominican-republic-%E2%80%94-we-should-worry

R. Evan Ellis

https://econvue.com/experts/r-evan-ellis

Dr. Ellis' work on the Dominican Republic's recent establishment of 
diplomatic relations with the PRC. He examines the activities which are 
likely to follow, based on other countries which have changed their 
diplomatic posture toward China in recent years.

Venezuela's Election, the Day after: A Handover of the Nation's Oil 
Riches to Russia and China?

https://econvue.com/pulse/venezuela%E2%80%99s-election-day-after-handover-nation%E2%80%99s-oil-riches-russia-and-china

R. Evan Ellis

https://econvue.com/experts/r-evan-ellis

Dr. Ellis argues that the deepening political and economic crisis of the 
Venezuelan regime, and its associated need for resources from Russia and 
the PRC to maintain itself in power, make it likely that after its 
almost inevitable victory in this month's "elections," it will use its 
"honeymoon period" to modify laws (and possibly the constitution) to 
give Chinese and Russian companies the expanded presence, control and 
safeguards they require before providing a significant new inflow of 
capital. Such a move would change Russia and China's position just 
across the Caribbean from the US in important ways, and present the US 
government with important questions regarding how to respond.

The Case for Reforming the United States Postal Service

https://econvue.com/pulse/case-reforming-united-states-postal-service

Robert Shapiro

https://econvue.com/experts/robert-shapiro

Economist Robert Shapiro presents the results of his new study 
evaluating the subsidies the USPS receives to provide universal 
first-class and bulk mail deliveries, and how much of those subsidies 
are used by the USPS to support its business division that competes with 
FedEx, UPS, and others. Amazon uses the USPS to deliver packages, 
especially over the "last mile" from a local depository to its 
customers' homes and offices, because those "cross subsidies" lower the 
rates the USPS charges Amazon and others. The source of the problem that 
spurred Trump's tweets lies with the USPS, not with Amazon.

STORIES IN OUR SPOTLIGHT World

On Roman roads and the sources of persistence and non-persistence in 
development

https://voxeu.org/article/roman-roads-and-persistence-development#.Wu8FMLqAT0A.facebook

Carl-Johan Dalgaard, Nicolai Kaarsen, Ola Olsson, Pablo Selaya 4/10/2018 
Vox

Although spatial differences in economic development tend to be highly 
persistent over time, this is not always the case. This column combines 
novel data on Roman Empire road networks with data on night-time light 
intensity to explore the persistence and non-persistence of a key 
proximate source of growth – public goods provision. Several empirical 
strategies all point to the Roman road network as playing an important 
role in the persistence of subsequent development.

Modern slavery

https://www.cfr.org/interactives/modern-slavery/?utm_medium=social_share&utm_source=tw&utm_campaign=modern-slavery#!/section1/item-1

https://www.carnegiecouncil.org/studio/multimedia/20180504-end-of-an-era-in-china-carl-minzner

5/9/2018 Council on Foreign Relations Infoguide

A sober read. Slavery, long banned and universally condemned, persists 
in many corners of the world, victimizing tens of millions of people. 
Much of it is debt bondage.

"End of an Era" in China

https://www.carnegiecouncil.org/studio/multimedia/20180504-end-of-an-era-in-china-carl-minzner

Podcast with Carl Minzner 5/4/2018 Carnegie Council

Best podcast of the past week. I nterviews with Carl Minzner about his 
new book " End of an Era ". Minzer's thesis is that China's recent 
prosperity and 40-year ascent was due to its open reform policies and 
political stability - and that this era has come to an end with 
unpredictable consequences for China's future.

A record 22% surge in international debt securities&nbsp;issuance pushed 
up annual growth in&nbsp;US Dollar&nbsp;credit to emerging 
economies&nbsp;to 10% in 2017, hitting $3.7 trillion

https://twitter.com/hashtag/DebtSecurities?src=hash

http://A record 22% surge in international #DebtSecurities issuance 
pushed up annual growth in #USDollar credit to #EmergingEconomies to 10% 
in 2017, hitting $3.7 trillion

4/30/2018 Bank for International Settlement

What could possibly go wrong? Much of this emerging market dollar debt 
is not related to financing trade, but is unhedged speculative 
investment. If the dollar really strengthens, we could be heading 
towards a 1998 moment.

U.S.

Fed unwinding the Bernanke experiments: Progress report

http://www.cmegroup.com/education/featured-reports/fed-unwinding-bernanke-experiments-progress-report.html#.WvXYmMW6SR0.twitter

Bluford Putnam & Erik Norland 4/30/2018 CME Group

This is intriguing from the CME - is it time for a change in the Fed 
policy that goes back to 1951 and the Truman Accord? Will the Fed target 
the Secured Overnight Funding Rate (SOFR) instead of the Federal Funds 
Rate?

The US employment rate has returned to its pre-recession level adjusted 
for aging

https://piie.com/blogs/realtime-economic-issues-watch/us-employment-rate-has-returned-its-pre-recession-level

Harris Eppsteiner , Jason Furman and Wilson Powell III

People are both living and working longer. Are wages depressed because 
older workers have savings, pensions, and social security benefits which 
enable them to take lower paying jobs? Looking for answers to low wage 
growth.

FinTech

World's second most valuable cryptocurrency under regulatory scrutiny

https://www.wsj.com/articles/worlds-second-most-valuable-cryptocurrency-under-regulatory-scrutiny-1525167000

Dave Michaels & Paul Vigna 5/1/2018 Wall Street Journal

The SEC could decide that Ethereum is a security and Bitcoin is not. But 
would Bitcoin be insulated from the shock to cryptomarkets? Or could 
regulatory certainty help Ethereum?

The State of Cryptocurrency Mining

https://blog.sia.tech/the-state-of-cryptocurrency-mining-538004a37f9b

David Vorick 5/13/2018 Sia

Absolute tour de force from David Vorick. Your understanding of ASICs 
and mining is incomplete if you don't read this. "At the end of the day, 
cryptocurrency miner manufacturers are selling money printing 
machines...The buyer needs to understand why the manufacturer is selling 
the units instead of keeping them for themselves."

Coinbase is allowing customers to make big trades in the shadows in 
attempt to lure big Wall Street traders to its exchange

http://content.davidhaleweb.com/acton/ct/3037/s-01f2-1805/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct20_1/1?sid=TV2%3A55f6nPt5B

Frank Chaparro 5/1/2018 Business Insider

Coinbase said to be opening a Chicago trading office.

Illinois

How to mislead Illinoisans into accepting higher tax cuts

https://www.illinoispolicy.org/how-to-mislead-illinoisans-into-accepting-higher-taxes/

Orphe Divounguy, Bryce Hill & Joe Tabor 5/3/2018 Illinois Policy

A new report would have Illinoisans believe that a progressive income 
tax means tax cuts and economic growth. Illinois lawmakers' 
tax-and-spend tendencies and evidence from all 50 states say otherwise.

Historical Lincoln items could go on auction block amid presidential 
museum foundation money woes

http://www.chicagotribune.com/news/local/politics/ct-met-abraham-lincoln-artifacts-sale-20180510-story.html

Ray Long 5/13/2018 Chicago Tribume

Oh Illinois, Land of Lincoln. Selling the family jewels.

With all best wishes,

Lyric Hughes Hale

Editor-in-Chief

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