3 min read

The 20th National Congress

Xi Jinping and China's 20th National Congress; what actually causes higher house prices; Europe's energy crisis will be front page again soon; and Joe Biden's student debt forgiveness is much bigger than you think.
Cartoon showing Xi Jinping resurrecting Mao Zedong.
Xi Jinping has a lot in common with China's last dictator Mao Zedong. Source.

1—The 20th National Congress

China's 20th National Congress approaches (Oct/Nov), an event at which President Xi Jinping is widely expected to be sworn in for a third term in power – a practice that was once outlawed by Deng Xiaoping to avoid another Mao-esc dictatorship and all the human tragedy it caused.

According to China observer Bill Bishop, the discourse (i.e. propaganda) in July shows that there's still support for "the continued political importance of the CCP's Covid policies", although "both phrases slipped slightly in terms of the total number of articles, suggesting reports related to the pandemic might be cooling".

But above all else, the propaganda has focused "on the core status of Xi Jinping... [and] drawing Xi even with Mao Zedong in theoretical importance within CCP history". Bishop continues:

"Consider that the history of the CCP is 101 years; the history of the New China, counting from the founding of the PRC, is 73 years; the history of reform and opening is 44 years; the history of socialism is 500 years according to the CCP's reckoning; and the history of Chinese development is several thousand years. This line suggests that the past 10 years have been immensely significant in the context not just of CCP history but of human history — a claim with obvious benefits for Xi himself."

There's plenty more in Bishop's full article here (~13 minute read), including how the CCP boasted that China's Covid response "yielded the best results in the world", and that the huge levels of unemployment (especially amongst the youth) are "frictional", rhetoric that Bishop claims "cannot cover up the real dilemma of structural unemployment".

2—(lack of) Supply and demand

"The entire literature about the housing boom and bust has been built on the axiom that high prices were unsustainable because they rose more than rents had risen. It is an axiom that is superficially true, and yet, utterly wrong. Practically everything that has been written and said about the 2000s housing bust has rested on it. Yet, rising home prices have been, directly or indirectly, entirely driven by rising rents."

That's from Kevin Erdmann, who reviewed a recent paper on the drivers of higher house prices. The cause? "Low rates of building, with constrained lending", which punishes "residents with low incomes" the most (there's a significant lag between anti-building policy choices and the outcome of those policies).

You can read the full article here (~9 minute read).

3—Winter is coming

Tweet showing France's energy price shock.
The situation in the UK is even worse, with the typical household's energy bill to increase 80% this year.

4—Much bigger than you think

Apparently student debt forgiveness is not the most expensive part of US President Joe Biden's executive order. Instead it's the new HECS-with-a-twist repayment scheme, for which US colleges have demonstrated an unabashed willingness to exploit:

"Suppose a student will make 150k per year for 10 years working in the public sector. If they have 200k in debt they pay 15k every year to the government for 10 years and then 50k is 'forgiven.' But now the law school comes to the student and says 'heh, I have a deal which will make both of us better off. We are going to raise the price of law school to 400k but don’t worry not only won't that cost you a penny more than the 15k a year you are already obligated to pay it will actually cost you much less because we will pay your payments of 15k per year!' This indeed is a great deal for the student who pays nothing and it's a great deal for the law school which gets 200k more revenue immediately in return for 150k of payments paid out over the following 10 years. Win-win! Except for the taxpayer of course."

There's plenty more from Alex Tabarrok here (~3 minute read), including "how even wealthy parents may be able to game the system".

5—Further reading...

🕵️‍♀️ A GRU agent [Russian spy], who charmed her way into NATO circles in Italy, was caught by investigative journalists who discovered that "Russia's military intelligence agency had furnished their spies with consecutively numbered passports".

🥽 Mark Zuckerberg spent three hours chatting to podcaster Joe Rogan discussing all things metaverse.

☀️ Unprecedented drought and extreme heat continue to compound China's economic woes.

⚔️ Russia's President Vladimir Putin ordered an increase in military personnel "from 1.9 million to nearly 2.04 million".

👵 From Bloomberg: "The typical age of a new mother in South Korea is 32, according to the National Statistical Office. The number of births per woman sank to a record low of 0.84 last year, the lowest rate in the world; in Seoul the rate is 0.64. The United Nations estimates that by 2050, Korea's share of elderly people will become the largest of any country."