Michael Mandel for the Progressive Policy Institute: Most economists, if they have put any thought into a Chinese economic collapse, believe that the government will deflate the currency and ramp up exports to get out of trouble.
But that simply misses the nature of the Chinese economy. In recent years. China has been a massive machine for importing components in other countries, assembling them in China and shipping them abroad. According to the Organization for Economic Cooperation and Development, roughly one-third of the value of Chinese exports consists of “foreign value-added,” meaning imported components and the like.
Depreciation can only help so much, since a weaker currency also will increase the cost of the components, even as it makes exports less pricey. What’s more, as the financial system implodes, it will become harder for Chinese companies to get the financing to import the needed components, or to pay back loans for their factories…
What does this mean for the U.S.? China will have to start liquidating some of its mammoth foreign exchange reserves to deal with the crisis, including handling bad debt and importing consumer goods from the rest of the world. And if the Chinese government starts selling U.S. treasuries in large quantities, rather than buying, that will mean upward pressure on interest rates.
More important will be the effect on inflation. Arguably the flood of cheap exports coming out of China has been the single most important force holding down the U.S. inflation rate. Chinese-made goods have dropped in price in recent years, while U.S.-made consumer goods (excepting food and energy) have risen in price at the producer level. If the China export machine stalls or rises in price, we could see a spike in inflation. Rising interest rates and inflation could be bad news for the U.S. economy.
Poverty in the U.S. is not what it seems
Robert Rector for the Heritage Foundation: The Left often claims that the U.S has a far higher poverty rate than other developed nations have. These claims are usually based on a “relative poverty” standard in which being “poor” is defined as having an income below 50 percent of the national median. Since the median income in the United States is substantially higher than the median income in most European countries, these comparisons establish a higher hurdle for escaping from “poverty” in the U.S. than is found elsewhere.
To measure the poverty-fighting success of the United States versus Europe according to this uneven standard is like having a race in which the European sprinters run 100 meters and the American runner runs 125 meters…
A more meaningful analysis would compare countries against a uniform standard. To their credit, liberal scholars Irwin Garfinkel, Lee Rainwater and Timothy Smeeding in Wealth and Welfare States: Is America a Laggard or Leader? provide this.
They measure the percentage of people in each country who fall below the U.S. poverty income threshold ($24,008 per year for a family of four in 2014) and reasonably broaden the measure of income to include “non-cash” benefits such as food stamps, the earned income tax credit and equivalent programs in other nations. They also subtract taxes paid by low-income families, which are heavy in Europe. The poverty comparison does not include healthcare and education.
By this uniform measure, the U.S. was found to have a poverty rate in 2000 that was lower than the United Kingdom’s but higher than the poverty rates of most other Western European nations. But the differences in poverty according to this uniform standard were very small. For example, the poverty rate in the U.S. was 8.7 percent, while the average among other affluent countries was around 7.6 percent. The rate in Germany was 7.3 percent, and in Sweden, it was 7.5 percent.
Fewer people are going to work
Joseph Kane and Adie Tomer for the Brookings Institution: From 2000-14, nearly 2.4 million more people, or 13 percent of all new commuters, are working at home to bring the national total to 6.5 million. Moreover, the share of workers at home has risen from 3.2 percent to 4.5 percent, surpassing the rate of growth in all other commuting categories and building off a series of emerging work patterns in the public and private sectors.
The pattern is nearly universal across the country. With the exception of Omaha, Neb., all metropolitan areas experienced a gain since 2000 in the share of people working from home, topped by Raleigh, N.C., Boise, Idaho, and Austin, Texas, which each realized a jump of 3 percentage points or more. There’s a bit of a regional pattern to the growth, too, with the largest gainers primarily in the South and West.
In addition to working at home, many commuters are seeking alternate transportation options in the form of transit and biking, in particular. Since 2000, almost half of the 100 largest metro areas have increased their levels of commuting by public transportation, with the biggest gains concentrated in transit-rich places sch as New York, Washington and San Francisco…
While driving remains the dominant force in most of our commutes, even as declines of 5 percentage points or more have occurred in some markets since 2000, there is a growing penchant for a wider variety of transportation modes.
Compiled by Joseph Lawler from reports published by the various think tanks.
