Monday, August 30, 2010

Congressional Budget Office Says the Stimulus Created Several Million Jobs

On August 24, 2010, the CBO released its estimate of the number of jobs funded through the American Recovery and Reinvestment Act of 2009 (ARRA) in the second quarter of calendar year 2010. The estimates are based on the number of jobs funded by ARRA reported by most grant and loan recipients, contractors, and subcontractors.

By way of background, the Great Recession cost the U.S. economy 7.88 million jobs between July 2007 and July 2010, while the adult population grew by 6 million.

CBO’s estimate of the increase in the budget deficit due to ARRA during fiscal years 2009-2019 is $814 billion, a modest increase of $27 billion in the projected deficit of $787 billion when ARRA was being considered. (Readers may recall that Senator Susan Collin’s vote was secured by agreement to reduce ARRA’s size by some $100 billion.)

The Director’s Blog summary can be read here and the full report here. The CBO estimates are qualified for several reasons stated in the blog and report, producing a wide spread in each result.

ARRA raised the real level of GDP between 1.7%-4.5%.

ARRA lowered unemployment between 0.7-1.8 percentage points.

ARRA increased the number of people employed between 1.4-3.3 million.

ARRA increased the number of full-time equivalent jobs by 2.0-4.8 million compared with what would have been otherwise in its absence.

The effects of ARRA are projected to diminish during the second half of 2010 and beyond.

For purposes of discussion, assume that ARRA produced the maximum result in each of the four preceding estimates. This means that about $800 billion or so of stimulus increased employment by 3.3 million jobs. News reports state that some in the government, such as CEA head Christina Romer, wanted a larger stimulus package of $1.2-1.4 trillion, but were advised that $800 billion was the politically feasible maximum.

Suppose the stimulus had been doubled to $1.6 trillion. Assuming a linear response, a double-sized ARRA could have increased employment by as many as 6.6 million jobs. A tripling to $2.4 billion could have yielded 9.9 million jobs. The latter number would have recovered almost all the jobs lost in the last three years and produced an unemployment rate as low as 5.9%. Even taking the midpoint of each estimate would have produced a large improvement in employment and output.

Given the tens of trillions of dollars cited as the long-term unfunded liability of the federal government for such entitlements as Social Security and Medicare, $2.4 trillion in one-time stimulus pales in comparison.

Let me be clear on one point. I’m not recommending a fresh stimulus package of another $1 trillion and more. Neither I nor anyone else can predict how the bond market would respond to such legislation. But, and it’s a big but, if the bond vigilantes were to remain quiescent during another big stimulus, who’s to say....

Friday, August 27, 2010

Potpourri For a Friday

1. On all prior trips to China, I tried to find something to buy with my renminbi (RMB) bank notes, lest I return home with “funny money.” That appears to have been a mistake. I should have kept them for future use. RMB notes will steadily increase in value against the dollar and become more widely used as a means of payment around the globe.

2. Economists and government officials are in a tizzy about the unwillingness of banks to lend money to small businesses that are the engine of job creation in America. (Large corporations are flush with cash and don’t need to borrow.) The September 2010 “Monetary Trends” newsletter of the St. Louis Fed is titled “The Monetary Base and Bank Lending: You Can Lead a Horse to Water...” A better characterization might be that lecturing banks on the need to lend money to jump start the economy is akin to lecturing rats about the benefits of proper hygiene to prevent plague.

3. The federal government has heavily involved itself in the U.S. economy during the past decade. Its interventions includes banks, vehicles, health care, financial regulation, and so on. This represents a creeping (accelerating) collectivization of society. Star Trek devotees would say that we are becoming Borg, being assimilated into the collective. Resistance is futile. The Borg does not allow for individual identity.

Thursday, August 26, 2010

Disseminating Public Policy Ideas: 1969 vs. 2010

I first got into the public policy business in 1969 consulting on several aging projects for the former TransCentury Corporation in Washington, D.C. At that time there were three important newspapers (Wall Street Journal, New York Times, Washington Post), three business magazines (Forbes, Fortune, Business Week,), three national television networks (ABC, CBS, NBC), a handful of prominent columnists who wrote on public policy, and a small number of influential think tanks (e.g., AEI, Brookings, Hoover, CSIS). Getting coverage in this small network of ideas gave one a good chance of being heard.

Fast forward to 2010. There are still only a handful of important newspapers. Business magazines have seen their page count fall by 80% or more to less than a hundred of which half is advertisements (the magazines are now principally digital). The number of columnists is well in the hundreds (Drudge has a long list). There are more than a hundred cable channels of which several are 24/7 policy and news oriented. There are some 600 talk radio shows with tens of millions of listeners, There are a thousand or so think tanks focusing on international, federal, and state and local government topics. An equal or larger number of policy centers have been established in America’s colleges and universities. The Internet and Blogosphere add hundreds of thousands more sources of information and chatter on public policy. Google’s rapid translation facility makes it possible to search foreign language sites.

The volume of digital publications is growing exponentially while sales of print books are slowly declining. Borders and Barnes & Noble are losing sales to Amazon and have responded by establishing their own e-book readers. Public policy institutions rely increasingly on the Internet to disseminate the ideas of their fellows, using Twitter, Facebook, YouTube, RSS feeds, and other links. The number of people who have signed up to receive tweets or join a particular facebook page is an indication of the outreach of digital marketing efforts.

The following numbers represent a sampling of networks of political and media personalities and conservative (or center-right) and liberal (or center-left) think tanks as of August 20, 2010. (n.a. means not available on the web site.)

Name                   Twitter           Facebook

Newt Gingrich    1,309,088             81,454
Karl Rove              164,455             32,923
Bill O’Reilly            36,583            118,459
Glenn Beck            272,939        1,375,443
Sean Hannity           64,794           509,017
Rush Limbaugh             n.a.          454,000
Huffington Post      138,916           651,746
Daily Beast              56,454             35,057
MoveOn                  12,619             97,314
Daily Kos                 32,590              6,366
Brookings                    n.a.              2,035
Urban Institute          2,714               1,293
Economic Policy Inst.   216                  468
Heritage Found.       62,583            240,621
Cato Institute           51,292             64,927
Hoover Institution      3,855              1,900

The above numbers show that a handful of political personalities can overwhelm the think tanks in communicating with the policy-interested public. Should think tanks try to embed their research into these communication networks to reach a larger audience?. Not clear. There is a danger that the scholarly-based policy work emanating from think tanks embedded in the networks of prominent personalities would be instantly politicized and rejected out of hand by the broader public as biased or tainted.

What then becomes the business model of the research-based think tank? The pre-high tech model of transmitting a clear signal through static, itself difficult. has been replaced by pointing decision makers in the direction of finding diamonds in mountains of ore. Much harder. Moreover, in the next five to ten years, new technologies will be developed that further clog the arena of ideas. Much as the Internet helped elect Barack Obama as president, the fleet afoot will have a disproportionate influence on policy, while those clinging to the old approach will languish.

Those with the most creativity and innovation, coupled with good ideas that are easy to explain and understand, will emerge at the top of the policy pile. The contest in the space of ideas will become more vigorous and more interesting. Let the games continue.

Wednesday, August 25, 2010

Modernizing the American Economic Association

Professors of economics have displayed their prowess at constructing elaborate mathematical models in seeking to explain economic phenomena. They have also developed elegant econometric methods to analyze reams of data produced by governments or private associations to confirm, reject, or modify their models. Too few economists get their hands dirty in “reality.”

To that end, the time is ripe to modernize the American Economic Association. The next annual meeting is set for January 7-9, 2011, in Denver. The preliminary program can be viewed here.

Given the failure of most economists to anticipate the financial crisis and Great Recession, now would be a good time to include a new series of economic “reality” panels. Here are six possible titles for inclusion in January:

1. So you think you can forecast the economy and the effects of economic policies.
2. So you think you can dance around bad numbers and spin the results.
3. Top chef economists cooking up numbers.
4. The real economists of New Jersey.
5. Extreme makeover of economics.
6. Back to reality.

If reality panels prove popular, they can become a regular feature in the annual meeting.

Tuesday, August 24, 2010

Deflation? Inflation? What’s the Government to Do?

The great American poet Robert Frost posed a serious question when he wrote “Some say the world will end in fire, some say in ice...”

Today the question plaguing the economics community is whether (1) the U.S. economy will suffer deflation, a double dip recession, or worse, or (2) an accelerating inflation due to burgeoning deficits, banks withdrawing excess reserves from the Fed for lending, and corporations spending their large cash holdings all at the same time. Each outcome is trumpeted by distinguished economists in rival camps.

The first team cites falling interest rates on treasuries issued to finance trillion dollar deficits, noting that the “bond vigilantes” are nowhere in sight. Unemployment and underemployment totaled 18.3% of the work force in mid-August. More fiscal and/or monetary stimulus is needed to keep the economy from falling into a deeper hole.

The second team cites historical instances which show that when public debt passes 90% of GDP, or some other important statistical ratio, governments resort to inflation to eliminate unsustainable debt burdens and/or economies go into periods of decline.

We cannot conduct a controlled experiment dividing the economy into Solomonic halves. What we can do, in the future, is try to understand what happened and which of the two teams had the better argument. It could even be that both teams were off the mark.

One thing appears to be missing from the debate. The vast majority of professional economists and investors, save a few (although like Bobby Thomson’s winning home run in the 1951 playoff, twice as many claim to have seen the “shot heard round the world” as there were seats in the Polo Grounds), failed to anticipate the financial crisis and consequential Great Recession. Such an event was not supposed to happen. The outcome represented the tiny tail in the distribution of possibilities, ignorance of history, incomplete or inapplicable theoretical models, closing eyes to reality—whichever you want. The list of “mea culpas” is impressive.

What’s to stop the bond vigilantes from erupting overnight in volcanic fashion, transforming U.S. debt into a Greek-like crisis? Mao Zedong wrote a letter to his colleagues on January 5, 1930, stating that “A Single Spark Can Start a Prairie Fire.” The failure of Lehman Brothers was a spark that almost brought down the U.S. financial system. Can the “don’t worry about deficits” team prevent or stop a prairie fire?

Just asking.....

Monday, August 23, 2010

Democratic Stability in Iraq: Who really won?

The withdrawal of the Army 4th Brigade from Iraq on August 19th ended the U.S. combat mission there. The remaining 50,000 troops, due to withdraw at the end of 2011, are to provide support and training for the Iraqi army.

Seven years, one trillion dollars, more than 4,000 U.S. troops dead and thousands more wounded, the success of U.S. military intervention depends on the Iraqis forming and maintaining a democratic stable government. The matter remains in grave doubt.

From Foreign Policy comes a lead story: “The King of Iraq.” Who might that be? A previous arch enemy of U.S. forces and the previous al-Maliki government, none other than Moqtada al-Sadr, a potential kingmaker of any new Iraqi governing coalition. Would his centrality in a new Iraqi coalition be considered a mission accomplished?

Thursday, August 19, 2010

Redefining Homeownership

Homeownership is usually defined as the percentage of households living in owner-occupied housing instead of rental units. Since 1960, the rate of homeownership has been relatively steady. From a low of 62.1% in 1960, it rose to 64.3% in 1969, 65% in 1978, 66.3% in 1998, 67% in 2000, 68% in 2003, peaking at 69% in 2004. In 2009 it stood at about 67.5%.

On this measure, the subprime mortgage crisis did not seriously harm the incidence of ownership, although many are underwater as their mortgages exceed the value of their homes and face foreclosure.

A more informative measure of ownership is owners’ equity as a percentage of household real estate holdings, which appears in Table B.100 in the annual statistical releases of the Federal Reserve Board's Flow of Funds Accounts of the United States. That share fell from 80.2% in 1952 to 47.9% in 2007, the first time the ratio fell below 50%. The crash in home prices further reduced owners’ equity to 38.4% and 37.6% in 2008 and 2009 respectively.

Simply put, the reduction in down payments, refinancing of home loans and use of the funds for personal consumption, and the correction in home prices has transformed homeowners from owning 80% of their homes in 1952 to only 37.6% in 2009. Holders of mortgages, whoever they may be, own 62.4%. In the course of promoting the American dream of homeownership, the dream has turned out to be a nightmare for many.  To the extent that Fannie Mae and Freddie Mac hold a significant share of mortgages, it means that the government has replaced families as a principal source of owners' equity.
 
(HT:  Michael S. Bernstam)

Wednesday, August 18, 2010

Job Losses to Come

The top three political and economic issues of the day are job, jobs, and jobs. Some economists are concerned that technology and outsourcing will keep many jobs from coming back and unemployment high in the U.S.

Consider Battery Electric Vehicles (BEVs). High cost and limited range make BEVs a poor substitute for gasoline- and diesel-powered vehicles. But as cost comes down and technology improves range, BEVs will have two advantages over internal combustion engines: lower operating costs and zero tail pipe emissions.

Consider the following numbers. The U.S. Census Bureau and the Bureau of Labor Statistics reported that 763,700 persons were employed as automobile service technicians and mechanics in 2008. Motor vehicle and parts manufacturing employed 877,000 in 2008, but this number is forecast to decline 16.3% by 2018 due to automation, robotics, and efficiency gains. Gasoline stations employed 927,000 paid employees in 2002. There is likely some overlap between the first and third categories.

BEVs production and maintenance are simpler and require fewer employees. The vehicles employ a gearless or single gear design. They have few moving parts which are vulnerable to wearing out. The electric motor has one moving component, whereas the drive train of an internal combustion engine has a lot of moving parts in the engine, transmission, and gearbox. Maintenance of a BEV requires replacement of a battery every seven years or so, but otherwise is simple and inexpensive. In contrast, annual maintenance of an internal combustion vehicle requires spark plug, more frequent oil changes, and numerous other parts and repairs.

The bottom line is that the gradual replacement of internal combustion vehicles with electric vehicles means that fewer workers will be required to manufacture and service BEVs. Most of the lost jobs will never come back. Other potential losses may occur in the oil business and related industries. New green/electric jobs will offset some oil-job losses, but the new industries are likely to be more efficient and demand higher educational qualifications.

Tuesday, August 17, 2010

Questions to Ponder at Summer’s End

As the new school year opens, and the countdown to November 2 begins in earnest, here are a few questions that could use answers. Lt. Kaffee demanded of Colonel Jessup: “I want the truth!” Or, is it the case as Jessup replied, “You can’t handle the truth”?

1. If so many Americans are racist, why do millions of people legally or illegally immigrate to the United States to become victims of racism and profiling?

2. When will “conservatives,” after election to office, act like “conservatives” and stop seeking the approval of “liberals” and the MSM?

3. Why are Olympia Snowe and Susan Collins still members of the Republican Party?

4. Does President George W. Bush regret having supported Arlen Specter over Pat Toomey in Pennsylvania’s Republican primary six years ago?

5. If Karl Rove is a Republican electoral wunderkind, why did the Republicans lose both Houses of Congress in 2006? Why does he have a weekly column in the Wall Street Journal giving political advice?

6. Do economics professors really believe that political decision makers can choose intelligently among competing algebraic and statistical proofs?

7. How does Fed chairman Ben Bernanke expect lower-income retired elderly to enjoy their remaining years with the pittance of interest they earn on savings if savings are their sole supplementary source of income to Social Security?

8. Will professors concerned about the growing inequality in the distribution of income favor ending tax deductions, or limiting them to the lowest tax bracket, for philanthropic contributions to elite universities?

9. Several formerly “conservative” foundations (Pew, Ford, MacArthur) have become “liberal” foundations. Can “liberal” foundations ever become “conservative” foundations? Any examples anyone can cite? Is transformation a one-way street?

10. Finally,...? Add a tenth from your list.

Thursday, August 12, 2010

Democratic Stability in Iraq: A Growing Shia Alliance?

The media and blogosphere are replete with articles and comments about the growing strength of Al-Qaeda in Iraq and the defection of the Sons of Iraq, the Sunni Awakening, to Al-Qaeda for money and out of fear that a Shia government in Baghdad might turn upon them.

A Shia government in Bagdad with ties to Iran could threaten Sunnis and Kurds inside Iraq, along with Sunni-led states in Saudi Arabia and the oil-rich gulf Emirates. More than five months have passed since the March 7 national elections in Iraq and still no government has been formed. In a few more weeks, U.S. troop strength will be down to 50,000, too few to keep Iraq’s communal groups from each others’ throats.

It would be a supreme irony, after seven years, if the U.S. overthrow of Saddam Hussein results in a more dangerous Shia Iraqi-Iranian alliance. Just thinking...

Wednesday, August 11, 2010

Economist Warning Labels and Disclosures

To protect the public, cigaret packages have warning labels, as do over-the-counter and prescription medicines, air bags, gasoline pumps, pesticides, herbicides, fertilizers, paint, and so on. It seems to me that writings and public pronouncements of economists should also be required to include warning labels.

I have in mind something along the following lines: “Warning: The recommendations and advice stated or implied in my paper or remarks can result in damage to your financial health, or that of your family, community, and country. Use with care.”

Over the years, I have watched a succession of members of the president’s Council of Economic Advisers appear on CNBC and other networks after important economic data are released, e.g., Department of Labor monthly jobs gains/losses and the unemployment rate. It’s easy to take credit for good news; not so easy for bad news.

Compounding the problem is that members of CEA are usually economics professors with a track record of publications in books and academic journals. Sometimes a CEA member appears in an awkward position when his or her academic research contradicts the president’s economic policies and objectives. Everyone understands that a CEA member must defend the president’s policies (although the member will be free to criticize them after leaving public office and returning to academia).

I suggest the following disclaimer appear each time a member of the CEA [or other government office] states an opinion, or spins economic results to make them look good: “As head of CEA I am required to publicly defend the president’s policies and put the best face on monthly economic data, even if my academic research does not support or even contradicts the president’s policies.” One might add “This statement applies to all past and future heads of CEA.”

Alternatively, the media could stop interviewing government spokespersons knowing that they cannot reply with full candor. Stating political talking points or slogans does not inform the public.

Tuesday, August 10, 2010

China-Harvard Connection: A Modest Proposal

During the past twenty years, China has accumulated several trillion dollars of foreign exchange reserves. In 2007, the China Investment Corporation (CIC) was established as a sovereign wealth fund to manage part of China’s foreign reserves. Initially funded with US $200 billion, total assets reached US$ 332 billion in December 2009.

CIC invests in a variety of global enterprises. The Wall Street Journal reported on August 4, 2010, that CIC was negotiating with Harvard University to buy its stakes in several U.S. real-estate funds for about $500 million. Investing in real estate funds is a less visible investment that avoids the political and public-relations backlash from attempts to buy outright large U.S. corporations (e.g., oil giant CNOOC’s offer to buy Unocal Corp, which it later withdrew), or U.S. trophy properties.

Harvard’s interest in the sale is to raise cash by offloading illiquid property assets that suffered large losses following the collapse of the real estate bubble.

Prior to the financial crisis, Harvard was planning a massive expansion into neighboring Allston, a $1 billion, 589,000-square foot science complex to house the new department of stem cell and regenerative biology and program in biologically inspired engineering. Harvard’s new president, Drew Gilpin Faust, was forced to delay the project owing to a near 30 percent loss in the university’s $36.9 billion endowment, which supplied more than a third of the university’s operating budget in 2008-09.

China and Harvard have a win-win opportunity that can serve as a model for joint cooperation in higher education. China could readily fund the Allston expansion for a third of one percent of CIC’s assets. What could China get in return? One possibility is a fixed number of slots, say, 500 to 1,000 a year, of Chinese graduate students at Harvard in fields of special need and interest to China. Both China and Harvard would have to approve the students’ qualifications for admission. China would pay the living costs and tuition of its students.

Harvard could increase its physical capital while China would receive an annual return in an increased number of students earning Harvard degrees. This could serve as a model of cooperation with other U.S. universities for which private and government funding is much tighter for expansion and renewal of physical plant.

Monday, August 9, 2010

Think Tanks Continued: The Supreme Court

Two women nominated by President Obama have been approved by the Senate to serve as Associate Justices of the Supreme Court. Conventional wisdom holds that Judge Sonia Sotomayor leans left on social and economic issues and that Dean Elena Kagan will be part of a center-left bloc that includes justices Ruth Ginsburg and Stephen Breyer. Should Obama get to replace one of the four consevatives (Roberts. Scalia, Thomas, Alito) with a like-minded center-left or left-leaning justice, the liberal bloc would have a majority without justice Antony Kennedy.

One might think that fellows in a “conservative” think tank would express some opposition to Sotomayor, Kagan, or both. Indeed, this is so, but not at Hoover.

The Hoover Institution roster of fellows includes lawyers, of whom two have been judges and one a U.S. Attorney General. One is a full-time Hoover fellow (emeritus), three are joint appointments with Stanford law school, one joint with Chicago and NYU, one with GWU, and two with other conservative think tanks. What were their public statements about the two lady nominations?

None opposed Kagan. Only one, majority employed by another explicitly conservative think tank, opposed Sotomayor. Some openly supported one or both.

I previously blogged that Hoover falls into the centrist category of think tanks where the fellows’ scholarly merit, not ideology, determines appointments and research agendas. Hoover fellows’ views on Supreme Court appointments lends further credibility to my statement.

Friday, August 6, 2010

TI Liveblogging from Speaker-Elect John Boehner’s Office: November 4, 2010

(TI:  Speaker-Elect Boehner called a meeting of leading House Republicans after the party’s success in the November 2 mid-term election, giving it a majority.)

“Ladies and Gentlemen. We won a great victory on Tuesday. The American people said no to the Obama-Democrat agenda of bigger government, higher spending, large deficits, mandated health care, and other measures.

“Now it’s up to us to deliver. The Democrats and the main stream media will denounce us for trying to undo Obama’s achievements. We need to remind the Democrats, the media, and the American people that elections have consequences, that the American people have spoken, and that we have heard them.

“We need to start each day remembering why the voters gave us this majority. We need to resist the siren song of spending that destroyed our majority during the Bush administrations. If we go back to building bridges to nowhere, we deserve to be thrown out in 2012.

“We need to keep in mind an important constitutional principle. Article I, Section 7 of the U.S. Constitution states that “All Bills for raising Revenue shall originate in the House of Representatives...” We can block Obama-care, sections of the Dodd-Frank financial law, and other deleterious legislation by refusing to appropriate funds for those sections of the laws the American people have said they do not want. Only those laws fully funded by trust funds are secure; for all the others, our refusal to appropriate funds means that personnel can not be hired to establish and administer those sections.

“We will be called names, accused of being heartless, lacking compassion, and so on. But always remember, we were sent here to do the peoples’ bidding. They have said no to Obama’s radical vision for America. Keeping faith with the voters requires that we mutually pledge our sacred honor.”

Tuesday, August 3, 2010

The Dog Days of Summer: Thoughts to Ponder

1. Kudos to First Lady Michelle Obama for her “Lets Move” childhood obesity initiative, a problem disproportionately prevalent among African-American and Hispanic children. Perhaps the FL can use her web site to recruit thousands of fit, healthy volunteers among the African-American and Hispanic communities to periodically visit schools with large percentages of minority children to emphasize healthy eating and fitness.

2. It took the better part of a decade for the relevant culprits to throw the U.S. financial system and economy into the “Great Recession,” the worst economic conditions since the Great Depression. Why do economists, politicians, and pundits think it won’t take the better part of another decade to put things right?

3. Iraq held its second national election, the first after the “Petraeus surge,” on March 7, 2010. Almost five months have passed and still no government has been formed among the contending parties. Would supporters of the view that U.S. intervention, which began in 2003, explain why they believe the departure of the remaining U.S. combat troops from Iraq will leave in place a stable democracy friendly to the U.S.

4. Why bother with Immigration and Customs inspectors at U.S. airports and seaports if the federal government doesn’t want to strictly enforce existing immigration laws on those crossing our southern border illegally?

5. Having begun with the FL, let me close with her husband. President Barack Obama could contribute to honest government by issuing an Executive Order which mirrors how Hong Kong eliminated widespread corruption in the colony’s police force. On February 15, 1974, the colony’s Legislative Council enacted the Prevention of Bribery Ordinance, which established the Independent Commission Against Corruption. The ICAC engages in corruption prevention and community relations, and is overseen by four independent citizens’ committees. Under the ordinance, any public official found living beyond his means, who cannot prove his expenditures come from legitimate sources of income and wealth, can be arrested and prosecuted for corruption. An Executive Order should cover all federal officials. Congress should also establish a similar ICAC.

Monday, August 2, 2010

TI Liveblogging from Zhongnanhai: August 2, 2020

(Backdrop: The last summer meeting of the Politburo Standing Committee of the Communist Party of China in Zhongnanhai before the August break concluded at 3:00 PM on August 2, 2020. The members then departed to meet with people from all walks of life throughout China. TI was invited to blog on the proceedings on the basis of the Chatham House Rule. No restrictions were placed on TI save that its comments were accurate. The succession of open and closed quotes represent statements of different members of the Standing Committee. No attempt was made to identify individuals, though pundits will doubtless try to identify specific members from the nature of their comments.)

“Comrades. We have concluded another year of outstanding economic and social progress. During the last decade [2011-20] our economy has grown at 10% a year. Our GDP has surpassed that of the United States and the European countries. The capitalization of our stock markets is double that of U.S. equities. Our holdings of foreign government and private securities in the U.S., Europe, and Japan are the largest in the world, exceeding all other OECD countries combined. We produce twice as many vehicles as the United States. Our investments in Africa, Latin America, and Asia are many times that of the next leading countries.”

“More than half of global trade is conducted in renminbi.”

“Our leading economists project another decade of 10% growth.”

“Our military forces control East and Southeast Asia waters.”

“In less than four decades since our late leader Deng Xiaoping opened up the economy, saying that it doesn’t matter what color a cat is so long as it catches mice, China has resumed its rightful place in the world.”

“Foreign scholars and analysts continue to underestimate the performance of China’s economy.”

(TI: The members reviewed other statistics highlighting growth trends in transportation, artistic and scientific achievement, success in international sports, worldwide interest in Chinese language and culture, and other topics. There was a general feeling of satisfaction but all agreed that more was to be done, that the Chinese people must diligently continue to work and study.)

“Socialism with Chinese characteristics, our developmental model, has proved to be the most effective model in the history of the world. Other nations look to follow ‘the Chinese consensus,’ growth with equitable distribution. No one talks of a Washington or Brussels consensus any more.”

“Hundreds of thousands of our compatriots have studied in the United States and Europe, bringing back with them the latest technological and scientific discoveries.”

“Many of our returnees have told us that Westerners are obsessed with political correctness, which emphasizes equality over excellence and achieves neither. Our own universities have become intellectual centers of reason, evidence, and cutting edge research, ranking among the top in the world.”

“The leading foreign universities have all established campuses in China.”

“I believe we can proudly proclaim the coming decade “Restoration of the Central Kingdom to global prominence.”

“Let’s drink a toast to the hard work of our comrades and all the Chinese people.”