As with the United States, the massive size of the Chinese economy means that lower GDP growth rates create a headwind for the global economy as a whole. It is therefore no surprise that the International Monetary Fund has just revised its forecast of global economic growth downward by the most substantial margin in three years.
Today's technological revolutions calls for a comprehensive reinvention. The potential benefits of discoveries and new applications in robotics, biotechnology, digital technologies and other areas are all around us and easy to see. Indeed, many believe that the world economy may be on the cusp of another explosion in new technologies.
In essence, the reforms have been crafted to democratize the IMF governance. Now, those sitting at the head of the IMF's table are either American allies, or its Western partners, whereas the developing countries are underrepresented as a whole. They do not have a say in the IMF decision-making process, or in protection of their fundamental interests.
The same forces that are dramatically increasing the world economy's productive potential are largely responsible for the adverse trends in income distribution. Digital technology and capital have eliminated middle-income jobs or moved them offshore, generating an excess supply of labor that has contributed to income stagnation precisely in that range. A more muscular response will require an awareness of the nature of the challenge and a willingness to meet it by investing heavily in key areas -- particularly education, health care and infrastructure.
The question for higher education isn't how to create better employees, but how to open and transform people to more clearly see the possibilities they can create. From a global perspective, we must be prepared to look at the world with fresh eyes, to start seeing challenges as opportunities and be prepared to abandon solutions that no longer offer value in this new landscape.
Since mid-June the price per barrel of petroleum has collapsed by a staggering 37 percent. This almost perfectly mirrors -- in reverse -- the steep rise in oil prices in mid-2008, which was followed by an equally sharp contraction when the Great Recession -- the onset of the global economic and financial crisis -- struck with full fury.
If the Republican Party takes full control of the U.S. Congress in the midterm election, policy gridlock is likely to worsen, risking a rerun of the damaging fiscal battles that led last year to a government shutdown and almost to a technical debt default. More broadly, the gridlock will prevent the passage of important structural reforms that the U.S. needs to boost growth.
The U.S. economy is growing slowly and Europe's hardly at all. The stock market lurch last week is a belated acknowledgement that our two economies share a common affliction, and Europe suffers more seriously. The affliction is austerity. And yet the main remedy being promoted by the U.S. government and its European allies is a trade and investment deal known as T-TIP, which stands for the Trans-Atlantic Trade and Investment Partnership. According to the deal's sponsors, T-TIP would help stimulate recovery by removing barriers to trade and promoting regulatory convergence and hence investment. The proposed deal is not popular in the U.S. Congress, which has to approve negotiating authority. The administration, say well-placed sources, hopes to cram through the necessary approval during the lame duck session of Congress after the November 4 election. That still will not assure approval, because the deal is also increasingly unpopular in Europe.