Economy

In his 1996 book Democracy’s Discontent, the political philosopher and Harvard professor Michael J. Sandel sharply outlined why decentralisation is crucial for democracy. Encapsulating Woodrow Wilson’s 1912 argument against centralised monopoly powers of all kinds, which was one of the many precursors to the massive economic shifts of the 1930s, he writes: “Restoring liberty meant restoring a decentralised economy that bred independent citizens and enabled local communities to be masters of their destiny, rather than victims of economic forces beyond their control.”This sums up not only the founding principle of the country, but the core challenge of our era — how to reconnect global markets and the value created within them to nation states, in a way that supports shared, sustainable growth. There are lots of different approaches being bandied about right now. Harvard economist Dani Rodrik has been fleshing out “productivism,” an economic theory that would focus on encouraging localism and work — rather than finance, consumerism, and globalism.Treasury Secretary Janet Yellen and the Council of Economic Advisers chair Cecilia Rouse talk about “modern supply-side” economics. This is the idea that government should be in the business not just of redistribution, but of production, too, in order to supply certain goods and services that the public needs, but that the market might not deliver — like, say, semiconductors. In today’s world, the idea that “it doesn’t matter whether a country makes computer chips or potato chips,” a quip attributed to Michael Boskin, an economic adviser to George H.W. Bush, seems totally ridiculous.I’m obviously for the US and Europe underwriting things like chip production. But there are those who see a thin and precarious line between smart industrial strategy and protectionism, or even warmongering. Last Friday, I attended an all-day conference, co-sponsored by the Columbia Law School, the FT, and the Columbia World Projects Center for Political Economy called “Connecting the Dots,” which aimed to foster discussion about the post-neoliberal world and what the balance between local and global should be. It was organised by myself and Columbia law professor Kate Judge. I hope it will be the first of many.One of the most interesting panels, moderated by INET founder Rob Johnson, featured Open Markets executive director Barry Lynn, and historians Gary Gerstle (author of The Rise and Fall of the Neoliberal Order), and Quinn Slobodian (who wrote The Globalists: The End of Empire and the Birth of Neoliberalism).Slobodian pointed out that the global trade framework has always had a “national security exception,” but that there is a risk right now that the US is veering too close to fear-mongering about China as a strategy to unify diverse interest groups around one economic strategy, rather than simply focusing on the domestic merits of that strategy.I take his point, and I worry a lot about both the reality and the perception of this. For example, President Joe Biden is taking a lot of heat for export controls on high-end chips to China, which some consider unduly aggressive. (It’s true that he did more in a week to shift the dynamics of that supply chain than Trump did in four years.) Personally, I don’t know how you can consider China the country’s top strategic adversary and continue shipping dual-use chips that can potentially be used in things like hypersonic weapons. I think that the truth of the matter — that the US and China are very different countries, with different political systems and few shared strategic interests (with the exception of climate change) — simply scares people, understandably so. They blame Biden, because it’s easy, but also because they want the core conundrum to simply go away. But the US is in many ways just reacting to China’s own stated goal of being independent from western technology within the next few years, as well as decades of intellectual property theft (and more recently, reports of increased political cyber-hacking).Meanwhile, the footage of former President Hu Jintao being roughly escorted out of the party congress, didn’t make me feel any more confident in Xi’s regime. Both the US and China clearly want more control over the direction of their domestic economies, but the path to getting there is tricky. I think the Biden administration made the right decision on chip controls, particularly given that the lines between civilian and military use of such technology have become so blurred. Ed, would you agree?Recommended readingScary piece from the Times of London on the possibility of China invading Taiwan within the year. Fits with what I’ve heard from some White House sources and supply chain experts. I find it fascinating what pops on TikTok, like the videos of sandwichmaking that have become a gold mine for certain fast food workers profiled in this New Yorker piece. After years of posting, my own son once — and just once — made a TikTok that went viral. Around 7mn people watched him — a skinny kid, looking to bulk up in the gym in a video that featured inspirational work out music and a gentle sort of self-deprecating humor. It was cute, but 7mn? Why that one and not the hundreds of other similar ones? Who the heck knows. But that was his 15 seconds of internet fame.I hope Swampians will enjoy the FT Weekend cover essay I wrote based on my new book. It summarises my view of our deglobalising world, and what the opportunities and challenges are, in six rules. Edward Luce responds Rana, I think Biden’s semiconductors move was highly consequential because it takes US-China relations much closer to a point of no return. I wrote about it in my column last week. High end chips are indeed used in military applications. They are also integral to all parts of the modern economy. So America’s new stance on chips is also an admission that 40 years of opening has not resulted in a China that acquiesces to the US-led global order. Both Biden and Xi Jinping are now proponents of a zero-sum world in which the rise of one comes at the expense of the other. This is very dangerous territory for everybody. Other countries will increasingly be forced to make a binary choice between the US and China. Most of them do not want to have to do so. Could Biden have done otherwise? That’s a hard question to answer. If America now sees China as a mortal threat, then Biden’s move was arguably belated. No power should help its adversary’s military expansion. But it is also a gamble. They say semiconductor chips are the oil of the 21st century. In July 1941, Franklin Roosevelt’s administration imposed an oil embargo on Japan. Five months later Japan attacked Pearl Harbor. That infamous day came a decade after Japan’s invasion of Manchuria, which was arguably the real start of the second world war. China, by contrast, is not at war with anyone. Its last military expedition was in 1979 when Vietnam gave it a “bloody nose”. My fear is that the events of the last three weeks — both Biden’s semiconductor ban and Xi’s tightening grip on power — have made Taiwan’s forcible reunification with China more likely. On four occasions Biden has said the US would come to Taiwan’s defence. I hope Biden has the correct measure of Xi. I also hope Biden and Xi will engage at length with each other in Bali at the G20 summit next month. The risks of world war three are too real to cede the field to the economic and military hawks who dominate thinking in Washington and Beijing. Your feedback And now a word from our Swampians . . . In response to ‘America is back to being world’s tallest dwarf’:“Whatever the outcome with Russia and China, America has the deepest and most flexible capital markets of both countries combined. It has the chips, artificial intelligence skills and technology. It has the energy commodity supply, talented and increasing immigration (and not emigration like the two other countries) — and more importantly — a market driven economy which has the capacity to adjust within a few weeks to a year, not over a long term plan and bureaucratic stalled meetings.” — Albert May, London, England More

Investing.com — Xi Jinping spooks Chinese markets with a brutal consolidation of power, which distracted from a third-quarter growth figure that was well short of Beijing’s target (albeit ahead of expectations). Business surveys in Europe point to an ever-sharper economic slowdown, but the pound strengthens as the risk of a potentially divisive comeback by Boris Johnson is removed. Stocks are set to open higher although Tesla is struggling after reports of a price cut in China, while oil prices react badly to the data out of China and Europe. Here’s what you need to know in financial markets on Monday, 24th October.1. Xi may be the one they can’t forgetChinese stock markets and offshore yuan sold off sharply after President Xi Jinping’s consolidation of power at the National People’s Congress sparked fears of a fresh campaign against the country’s biggest Internet companies and richest businessmen.The Hang Seng Tech index had its worst day on record, falling over 8%, with individual stocks such as Tencent (HK:0700) and Alibaba (HK:9988) falling by even more. China also finally released the third-quarter gross domestic product data that had been due last week. The annual growth figure of 3.9% was better than consensus forecasts of 3.3% but clearly below the Communist Party’s own 5.5% target, a testament to the headwinds from the ongoing real estate crisis, Xi’s Covid-zero policy and, increasingly, the slowdown in its key export markets in North America and Europe.2. PMIs point to Q4 contraction in EuropeThe scale of that economic slowdown was on full display with the release of purchasing manager indices for the Eurozone and U.K., both of which put GDP on track for a contraction in the fourth quarter.The Eurozone flash PMI fell to 47.1, its lowest since December 2020, while the comparable U.K. figure fell to 47.2, as the universal pressures of inflation and supply chain problems were compounded by an avoidable political crisis.The economic outlook remains clouded most of all by the impact of sky-high energy prices. Warmer weather forecasts for Europe this week and near-full storage levels across the EU pushed natural gas prices to a four-month low on Monday but forward contracts for next year still predict a price level that will likely have a crippling effect on industrial profits.3. Stocks set to rise at open on hopes for Fed pivot U.S. stock markets are set to open higher later, having decided on Friday that the Federal Reserve had chosen to flag the start of a policy pivot through The Wall Street Journal. The WSJ had reported that the Fed is set to discuss slowing the pace of rate hikes at its meeting in November, although it will likely carry out one more 75 basis point hike first.By 6:20 ET (10:20 GMT), Dow Jones futures were up 102 points, or 0.3%, while S&P 500 futures were up 0.3% and Nasdaq 100 futures were up 0.1%. The three main cash indices had all risen over 2% on Friday on the back of the WSJ report.Stocks in focus later will include Tesla (NASDAQ:TSLA), down 3.5% in premarket after reports of a price cut in China. Earnings are due after the bell from – among others – Cadence Design (NASDAQ:CDNS), Alexandria RE (NYSE:ARE) and Discover (NYSE:DFS). The monthly business survey from the Chicago Fed and a speech by Treasury Secretary Janet Yellen are the day’s macro highlights.4. U.K. markets buoyant as Johnson’s withdrawal leaves Sunak in pole positionU.K. markets shrugged off the gloomy PMI news to post sharp rises, in response to the strong U.S. close and signs that Rishi Sunak will take over as Prime Minister from Liz Truss.Former Prime Minister Boris Johnson, who had been reportedly plotting a comeback, withdrew from the race on Sunday after it became clear that many of the Tory Party lawmakers who had ousted him over ethics issues in the summer would not accept his return.Sunak had raised taxes sharply when he was Chancellor of the Exchequer to cover Johnson’s more centrist spending plans. He is one of few remaining party figures with market credibility, having warned Truss during the summer leadership contest that her plans for unfunded tax cuts would be punished by the markets.The pound rose, despite markets scaling back their expectations of Bank of England rate hikes in the context of a more prudent fiscal policy. Yields on 2-Year and 10-Year benchmark Gilts fell by 29 and 19 basis points, respectively, while the FTSE 250 rose 0.2%.5. Oil slumps on weak Chinese, European dataCrude oil prices fell as the extent of the growth problems in China and Europe once again raised fears for the global demand outlook.By 6:35 ET, U.S. crude futures were down 1.0% at $84.19 a barrel, while Brent futures were down 0.8% at $90.62 a barrel.There was little sign of the geopolitical premium on oil rising from reports over the weekend that Russia’s Defense Ministry had tried – unsuccessfully – to convince western counterparts that Ukraine was about to deploy a “dirty bomb” and put the blame on Russia. The U.K.’s Ministry of Defense noted that Russia’s attempts to mislead the West before its invasion had left it with little credibility.Ukraine’s government claimed that Moscow was trying to construct a pretext for its own use of tactical nuclear weapons to cover an increasingly urgent retreat from the southern city of Kherson. More

Guy Hands, the co-founder and chair of Terra Firma Capital Partners and a long-term Conservative supporter, said on the BBC’s Today program Monday that the UK economy is “frankly doomed” unless the Conservatives pick a leader who “has the intellectual capability and the authority to renegotiate Brexit.”Hands, who backed the Remain side in the 2016 referendum, said that the present Brexit deal only worked under the “extreme Thatcherism” of low taxes and low benefits, which “the British people have never voted or even shown any inclination to vote for.”Politicians should recognize that the current Brexit deal is “completely hopeless and will only drive Britain into a disastrous economic state.”Failure to do so would likely lead to a higher taxes and interest rates and lower social services, and eventually a bailout from the IMF, Hands said.©2022 Bloomberg L.P. More

China’s economy grew well below target in the last quarter, sending stock markets lower as the country enters a new political era following the appointment of President Xi Jinping to an unprecedented third term.The delayed release of gross domestic product data showed that the second-largest economy in the world grew by 3.9 per cent in the three months to the end of September compared with the same period last year. The announcement follows the conclusion of the Communist party’s 20th congress in Beijing over the weekend and the appointment of Xi to a third term in power, making him China’s most powerful leader since Mao Zedong.In a sign of Xi tightening his grip on power he packed the new ruling Politburo standing committee with loyalists and sidelined former rivals.But the closing session of the congress on Saturday was overshadowed by the extraordinary images of Xi’s predecessor, Hu Jintao, being escorted off the leadership rostrum disrupting what is normally a carefully choreographed event.

Hu Jintao is escorted out of the closing session of the Chinese Communist party’s congress in Beijing

The official Xinhua news agency wrote on Twitter that Hu left because “he was not feeling well”. Video and photos appeared to show party officials first trying to pull — then cajole — him out of his seat and off the stage.Hu’s apparent reluctance to leave the platform provided fodder for observers who speculated that the 79-year-old, who served as party general secretary and state president for two five-year terms from 2002 to 2013 until Xi took over, was forced to leave.Meanwhile, confirmation China’s economy is on course to expand below the official target of 5.5 per cent this year sent shares in China and Hong Kong sharply lower today as investors worried about the outlook for growth. The Hang Seng China Enterprises index in Hong Kong fell as much as 7.4 per cent to a 14-year low. The benchmark CSI 300 index of Shanghai and Shenzhen-listed stocks was down as much as 3.1 per cent. China is grappling with a property sector slowdown and the consequences of the strict zero-Covid policy of lockdowns which Xi confirmed last week would stay in place.Go deeper: China’s economy will not overtake the US until 2060, if ever, argues Ruchir Sharma. Five more stories in the news1. Rishi Sunak on course to become Britain’s new prime minister The former chancellor is on course to become Britain’s new prime minister after Boris Johnson pulled out of the contest last night, a surprise development that sent sterling higher this morning. Penny Mordaunt, leader of the House of Commons, remains in the contest but only has 25 declared backers, well below the 100 needed to secure a nomination and an official vote of Conservative MPs. Nominations end at 2pm today.2. Yen swings as traders speculate about third intervention After starting the morning in Japan at around ¥149.71 per US dollar, the yen exploded to reach ¥145.56 at 8.44am in the space of a few minutes. But by the afternoon the yen was back at the level before the morning surge began, prompting speculation that the Bank of Japan had once again entered the currency market to buy the yen. 3. Russia warned against Ukraine escalation The US, UK and France have warned Russia against using claims of an alleged Ukrainian effort to use a “dirty bomb” as a pretext to escalate the war against the country. The three countries held talks with Russian defence minister Sergei Shoigu over the weekend. Shoigu also spoke to his Turkish counterpart. Kyiv denied it planned to use the conventional explosive devices that spread radioactive material. 4. Hedge fund manager predicts Japan-style bear market Global stock markets could be heading for a Japan-style bear market lasting decades, said Boaz Weinstein, who runs New York-based Saba Capital which was one of the world’s top-performing hedge funds in the market turmoil of 2020. “I’m very pessimistic. There isn’t a rainbow at the end of all this,” he told the Financial Times.5. European offshore wind companies push into Asia With South Korea, Taiwan and Japan having committed to boosting their share of renewables as part of net zero targets, European companies are pushing into east Asia’s offshore wind market, seeking to leverage their technological advantages over Chinese competitors.The day aheadOutlook for markets US stock futures fell ahead of a week of third-quarter earnings results for Big Tech companies including Meta, Alphabet and Amazon. Futures contracts tracking Wall Street’s S&P 500 fell 0.5 per cent ahead of the New York open. The broad-based index last week recorded its biggest five-session gain since June, adding 4.7 per centTrump Organization trial begins The former US president’s family company has been charged with tax fraud by Manhattan’s district attorney. The Trumps face a penalty of at least $250mn in what the district attorney claims were ill-gotten proceeds. The judge and lawyers in the case will today begin the process of jury selection. Film producer Harvey Weinstein faces a criminal trial in Los Angeles that begins today. What else we’re readingGlitz and Gladwell: the infighting over prized JPMorgan wealth clients Infighting at JPMorgan Chase over how to manage the fortune of retired baseball star Alex Rodriguez has escalated into a two-year battle within the bank, involving prominent personalities such as pop star Jennifer Lopez and author Malcolm Gladwell, as well as chief executive Jamie Dimon. “I thought he was supposed to be a statesman, Jamie Dimon. This is like a game an 11-year-old would play,” Gladwell told the FT. 

A political backlash against monetary policy is looming The credibility of central banks is only as good as the credibility of the macroeconomic regime as a whole. That is not to say central bank independence should be jettisoned, but to ask openly whether it actually works for the economy. Avoiding a debate over whether our macroeconomic regime is fit for purpose is more perilous than having one, argues Martin Sandbu.Steven Pinker, the ‘oracle of optimism’ The Harvard psychology professor does not sign on to the pessimistic conclusion that humans are inherently irrational. His books The Better Angels of Our Nature and Enlightenment Now compile data that show humans are living longer and better, even if news headlines suggest the opposite. Harsh lessons learnt from corporate rebrands Up until last Thursday, Manchester-based travel business Intravelr went by the name Invasion. The group was motivated to rebrand after Russia’s invasion of Ukraine. While they had sensible reasoning, the decision to drop the second “e” in the spelling of their name makes less sense, writes Pilita Clark.‘Big Brother’ managers should turn the lens on themselves The number of employers using data surveillance software to monitor employees has doubled since the start of the pandemic, writes Rana Foroohar. The rise of workplace surveillance represents what Microsoft chief executive Satya Nadella has called a new “productivity paranoia” on the part of employers.SportFormula One driver Max Verstappen paid tribute to the founder of the Red Bull racing team after winning the US Grand Prix in Austin, Texas yesterday. Dietrich Mateschitz, the Austrian entrepreneur who co-founded the Red Bull energy drink company, died on Saturday aged 78.

‘That one was for Dietrich,’ Max Verstappen said after winning the Austin Grand Prix and securing the constructors’ title for his Red Bull team © AFP via Getty Images More

SHANGHAI (Reuters) – Overseas business groups in China expressed on Monday wariness about President’s Xi Jinping’s newly unveiled leadership team and his stated priorities, with some urging against greater state intervention in the market.Eric Zheng, president of the American Chamber of Commerce in Shanghai, told Reuters the chamber was “encouraged” by a commitment to deepening reform and opening up expressed in Xi’s speech at a Communist Party Congress that concluded on Sunday.”However, at a time when China’s economy faces a challenging environment, we are concerned that the use of non-market tools such as government subsidies to support the state sector could be counterproductive,” he said.Xi secured a precedent-breaking third leadership term on Sunday and introduced a new Politburo Standing Committee stacked with loyalists, triggering a sharp slump in mainland and Hong Kong stocks as investors sold on fears that economic growth would be sacrificed for ideology-driven policies.The European Union Chamber of Commerce in China said in a statement it was taking a “wait-and-see” approach to the impact of the Congress as major policy announcements would likely not surface until March 2023, when the party convenes for annual meetings known as the “two sessions.”While the European business group was positive on remarks Xi made on environmental protection, it said it wanted more clarity on how China planned to remain committed to reform and opening up but also how it would “stay independent and self-reliant”. “It is not clear how these two statements can be reconciled in practice,” it said.Steve Lynch, managing director of the British Chamber of Commerce in China, said that while the remarks at the congress pointed to some continuity with the past, the chamber had seen “considerable shifts” in certain policies, and it had to wait to see how they would be implemented.Overseas businesses in China have grown increasingly critical of policies such as a tough zero-tolerance stance on COVID-19, which they say is discouraging investment and preventing them from attracting foreign staff. More

UK economic activity contracted at its fastest pace in almost two years in October, suggesting the country has fallen into a recession during a period of political uncertainty and high energy and borrowing costs.The S&P Global/Cips flash UK composite output index, a measure of activity in the private sector, dropped to a 21-month low of 47.1 in October from 49.1 in September.October’s was the third consecutive reading under 50, which indicates a majority of businesses reporting a contraction in activity, and was below the 48.1 forecast by economists polled by Reuters.The gloomy outlook comes amid domestic political uncertainty, with Rishi Sunak on course to become prime minister after Liz Truss resigned last week. Chris Williamson, chief business economist at S&P Global Market Intelligence, said October’s flash PMI data showed “the pace of economic decline gathering momentum” after recent political and financial market upheaval.The economy “therefore looks certain to fall in the fourth quarter after a likely third-quarter contraction, meaning the UK is in recession”, he added.The latest official data showed that economic output fell 0.3 per cent in the three months to August compared with the previous quarter.Eurozone PMIs also fell one point to 47.1 in October, suggesting recessionary pressures are widespread across Europe. The UK survey, based on responses collected between October 12 and 20, also showed that new orders had decreased at the sharpest pace since January 2021, with panellists attributing it to the worsening economic outlook. Manufacturers reported a particularly steep fall in new work, with export sales falling at the fastest pace in almost two-and-a-half years.

Business confidence also collapsed, sliding to a level rarely seen in 25 years of survey history, with escalating political uncertainty and rising interest rates among the most commonly cited reasons for the downbeat sentiment.Companies reported that they were still hiring but at the slowest pace for 20 months. The fall in sentiment suggested businesses would “move decisively to reduce employment this winter”, said Samuel Tombs, economist at the consultancy Pantheon Macroeconomics.Williamson said that although price pressures had eased because of the economic downturn, the weak pound and high energy costs meant input cost inflation remained higher than at any time in the survey’s pre-pandemic history, said Williamson.Ashley Webb, economist at the consultancy Capital Economics, said that while the latest PMIs provided further evidence that the economy was heading into recession, with domestic inflationary pressures remaining strong the Bank of England would have “little choice” but to continue raising interest rates.Markets expect the BoE’s Monetary Policy Committee to raise rates by between 75 and 100 basis points when it meets next week. The manufacturing sector remained in a downturn for the third consecutive month, while the services sector reported the first contraction in 20 months.John Glen, Cips chief economist, said that “concerns over rising energy and food bills affected consumer appetite for pubs and restaurants and demand was scaled back”. More

The company moved to contain the labor push after it took off nationally. Now, with strikes and other tactics, organizers seek to regain momentum.For much of the summer, employees reliably turned up at a Starbucks near Boston University. But instead of going inside to serve coffee, they sat outside in lawn chairs — as part of a strike over what they said was retaliation for unionizing.When passers-by inquired how long the strike would last, workers responded, “As long as it has to.” Ultimately, they shut the store for more than two months, until satisfied that Starbucks would not impose new scheduling requirements in union stores that they said would force some of them to quit. Starbucks said it had told union stores for weeks that there would be no such change and denied retaliating against union supporters.The walkout was one of dozens at unionized Starbucks locations in recent months, meant partly to re-energize a labor organizing effort whose momentum has stalled since the spring and has so far yielded no contract.When workers at three Buffalo-area locations filed for union elections in August 2021, it appeared to catch the company off guard. The campaign spread rapidly, unionizing roughly 250 stores.But election filings dropped from about 70 in March to under 10 in August, ushering in a second phase of the campaign: an uneasy stalemate in which organizers struggled to sign up new stores even as the company was hard-pressed to reverse their gains.“In the context of the size of the organization as a whole, it’s a drop in the bucket,” said David Pryzbylski, a partner at the management-side firm Barnes & Thornburg, alluding to the company’s 9,000 corporate-owned locations. But he added: “Anyone who thinks it’s going back anywhere close to zero is foolish. It’s safe to assume they’ll have at least hundreds of cafes unionized going forward.”That has led to a third phase of the campaign, in which the union, Workers United, has stepped up efforts to win concessions from the company through collective bargaining, which is scheduled for the coming weeks.Some of the concessions sought by the union, like a commitment by the company to stay neutral in future elections, could make it easier for workers to unionize. Others, like paid leave tied to a pandemic, which the company has discontinued, could encourage more workers to join the union by showing it can deliver concrete benefits.But to win such concessions and greatly expand the union’s reach, labor experts say, supporters will almost certainly have to increase pressure on the company, through strikes or other means. And that has heightened the importance of a number of cities — in addition to Boston and Buffalo, places like Eugene, Ore.; Albany, N.Y.; and Ann Arbor, Mich. — where there are several unionized stores, dozens of workers willing to coordinate their actions and a community that is largely sympathetic.“Massing forces in a particular geographic region and attempting to spread the conflagration there has the potential to work,” said Peter Olney, a former organizing director of the International Longshore and Warehouse Union. “I would focus on those metro areas.”One architect of the union’s strategy in Boston is a recent law school graduate named Kylah Clay, who works as a barista at a unionized store.On a blistering afternoon in August, Ms. Clay, wearing a tank top and green army pants, sat outside the Boston University store holding a stack of checks that workers came to collect, courtesy of the union’s Starbucks strike fund.In between, she recalled how she and a colleague had recently ambushed their district manager at another store after he had become slow to respond to their calls and text messages. “We went up to the district manager and started making our demands,” Ms. Clay said. As Ms. Clay tells it, she knew almost nothing about unions before last year, when company officials began pouring into Buffalo after the campaign had gone public. Among them was Howard Schultz, who was between tours as chief executive. “When Buffalo filed, Howard should have kept his mouth shut,” she said. “I would have never gotten involved.”Employees at her store, where she had first worked during law school, and another Boston-area store filed for union elections in December and won their votes in April. Since then, more than 15 stores in New England have also unionized, most of them with her help. Nationwide, the union has won about 250 out of just over 300 votes.But adding to the total has become more difficult. “Stores that are easy to organize, that had people in them who were natural leaders, who were excited about it — those have filed already,” said Brick Zurek, a former Starbucks employee in Chicago who helped organize workers there.Adjustments in the way that Starbucks treats workers have also appeared to play a role. During the early phase of the union campaign, the company generally did not fire workers involved in organizing. But this year, Starbucks began to do so more regularly — like when it fired seven workers in Memphis who were recently reinstated by a federal judge.The National Labor Relations Board issued multiple complaints against Starbucks for firing union supporters, and the agency’s judges have ruled against the company in a few cases so far.Reggie Borges, a Starbucks spokesman, denied that the company had unlawfully forced out workers, saying any increase in disciplinary action against union supporters reflected an increase in violations.In May, the company announced wage increases and new benefits, like faster sick leave accrual, that would apply only to employees of nonunion stores or those not in the process of organizing.Kylah Clay, a recent law school graduate, works at a unionized Starbucks in Boston, and she leads a committee that has helped other stores in New England organize.Tony Luong for The New York TimesJulie Langevin, a worker involved in organizing a Starbucks store near Boston that voted against the union, said several longtime employees in her store relied on Starbucks for health care and had become alarmed that unionized workers might miss out on benefits.“They were extremely concerned that they would actually lose health insurance,” Ms. Langevin said.The labor board has issued a complaint against the company for withholding new benefits and wage increases from unionized employees. Starbucks has said it is forbidden by federal law from adding certain benefits unilaterally in unionized stores.Workers United is an established union with more than 70,000 members across the United States and Canada, but has often relied on Starbucks workers to organize their own stores and plan their own labor actions.Ms. Clay leads a committee that helps New England stores organize, sending out union “starter kits” that include Starbucks Workers United T-shirts and union cards with envelopes addressed to the labor relations board. “I have one closet with 300 shirts in it,” she said in August.She also leads the region’s collective action committee, which came about after workers at a Boston-area store staged a daylong strike over a leaky roof in late May. (Starbucks said the leak had been repaired within a business day.)Six weeks later, as the committee was contemplating a series of daylong walkouts in response to the company’s withholding of new benefits from union stores, workers at the store near Boston University decided to strike. Spencer Costigan and Nora Rossi, two union leaders at the store, which is at 874 Commonwealth Avenue, said workers were fed up with what they described as retaliation for unionizing and the company’s refusal to bargain.“They texted me out of the blue and said, ‘I think we’re ready to do it,’” Ms. Clay said. “Not as many stores were interested at the time. But then they saw 874 and were like, ‘Ah, OK.’” Workers eventually waged strikes that closed five stores for one week; the strike at 874 Commonwealth sprawled across nine weeks.The actions seemed to build support for their cause. The Boston City Council passed a resolution backing the strikers, and politicians, activists, students and other union members joined the picket line at all hours of the day and night.Ms. Clay also leads the region’s collective action committee.Tony Luong for The New York TimesWorkers at the Boston University store called off the strike in late September, a few days after Starbucks posted an announcement to baristas saying stores that had unionized by early July would not be subject to a requirement that workers be available to work at least 18 hours a week. (The requirement would take effect at nonunion stores.)Ms. Rossi said that, before the workers went on strike in mid-July, their manager had pressured some union supporters to increase their availability under the new rule or leave their jobs. Other unionized workers in Massachusetts made similar complaints on a messaging app as recently as early September.Mr. Borges, the Starbucks spokesman, said the rule had never applied to union stores, citing communications to managers in July and a tweet by the Starbucks union the same month. He emphasized that the company had not negotiated with the striking workers or offered them concessions.A few days after the strike ended, Starbucks began sending letters to worker representatives at unionized stores proposing a window for bargaining in October. The union’s president, Lynne Fox, had sought to bargain on a regional or national scale as the union prepared proposals with input from thousands of workers, but the union has accepted the store-by-store approach preferred by the company. Starbucks has nonetheless continued to portray the union as resistant to store-level bargaining.The outcome of the negotiations could reverberate beyond Starbucks. In an email that Geico sent to employees in August, after some workers there began union organizing, the company emphasized that Starbucks had recently offered wage and benefit increases only to nonunion stores. Other large employers are surely watching closely as well.Ms. Clay, for one, believes the stakes are high enough that she has altered her career plans, declining a job in the local public defender’s office so she can stay at Starbucks and push for a contract.“There was some grieving to it — I spent the last five years trying to do that job,” she said. “But you have to go where the wind takes you.” More

The writer is chair of Rockefeller InternationalAs he embarks on a third term, Xi Jinping’s goal is to make China a mid-level developed country in the next decade, which implies that the economy will need to expand at a rate of around 5 per cent. But underlying trends — bad demographics, heavy debt and declining productivity growth — suggest the country’s overall growth potential is about half that rate. The implications of China growing at 2.5 per cent have yet to be fully digested anywhere, including Beijing. For one thing, assuming that the US grows at 1.5 per cent, with similar rates of inflation and a stable exchange rate, China would not overtake America as the world’s largest economy until 2060, if ever. Growth in the long term depends on more workers using more capital, and using it more efficiently (productivity). China, with a shrinking population and declining productivity growth, has been growing by injecting more capital into the economy at an unsustainable rate. China is now a middle-income country, a stage when many economies naturally start to slow given the higher base. Its per capita income is currently $12,500, one-fifth that of the US. There are 38 advanced economies today, and all of them grew past the $12,500 income level in the decades after the second world war — most quite gradually. Only 19 grew at 2.5 per cent or faster for the next 10 years, and did so with a boost from more workers; on average the working age population grew at 1.2 per cent a year. Only two (Lithuania and Latvia) had a shrinking workforce. China is an outlier. It would be the first large middle-income country to sustain 2.5 per cent gross domestic product growth despite working-age population decline, which began in 2015. And in China this decline is precipitous, on track to contract at an annual rate of nearly 0.5 per cent in the coming decades. Then there’s the debt. In the 19 countries that sustained 2.5 per cent growth after reaching China’s current income level, debt (including government, households and businesses) averaged 170 per cent of GDP. None had debts nearly as high as China’s. Before the 2008 crisis, China’s debts held steady at about 150 per cent of GDP; afterwards it began pumping out credit to boost growth, and debts spiked to 220 per cent of GDP by 2015. Debt binges normally lead to a sharp slowdown, and China’s economy did decelerate in the 2010s, but only from 10 per cent to 6 per cent — less dramatically than past patterns would predict.

China avoided a deeper slowdown thanks to a tech sector boom and, more importantly, by issuing more debt. Total debt is up to 275 per cent of GDP, and much of it funded investment in the property bubble, where all too much of it went to waste. Though capital — largely property investment — helped pump up GDP growth, productivity growth fell by half to 0.7 per cent last decade. The efficiency of capital collapsed. China now has to invest $8 to generate $1 of GDP growth, twice the level a decade ago, and the worst of any major economy. In this situation, 2.5 per cent growth will be an achievement. Sustaining basic productivity growth of 0.7 per cent will barely offset population decline. To hit 5 per cent GDP growth, China would need capital growth rates near those of the 2010s. Most of that money went into physical infrastructure: roads, bridges and housing. Given the scale of the housing bust, it’s likely overall capital growth will fall back to about 2.5 per cent. Of course, the consensus is that China can achieve whatever target the government sets, but consensus forecasts have fallen short of recognising the pace of China’s slowdown in recent years, including this one, when growth is likely to fall below 3 per cent. Around 2010, many prominent forecasters thought China’s economy was going to overtake the US’s in nominal terms by 2020. By 2014, some economists were claiming that China already was the world’s largest economy in terms of purchasing power parity — a construct based on theoretical currency values with no meaning in the real world. These theoreticians argued that the yuan was grossly undervalued and bound to appreciate against the dollar, revealing the dominance of China’s economy.

Instead, the Chinese currency depreciated, and its economy is still a third smaller than the US’s in nominal terms. If anything, 2.5 per cent is an optimistic forecast that plays down the risks to growth, including growing tensions between China and its major trade partners, growing government interference in the most productive private sector — technology — and mounting concerns about the debt load. China at 2.5 per cent growth has major implications for its ambitions as an economic, diplomatic and military superpower. A lesser China is more likely than the world yet realises.

Video: China’s unseen war for strategic influence More