The Great Recession is coming up roses for Mohamed El-Erian. The Egyptian-American investor has already emerged as one of the most important theorists of the economic downturn -- positing a "new normal" of sluggish growth and lower returns -- and is poised to take over the investment firm Pimco, making him what the New York Times called the bond markets' "new leading man."
El-Erian, who made his intellectual reputation by describing the destructive cycle between financial crises and political instability, had proclaimed that 2012 would be "Europe's moment of truth." Now the verdict is in, and El-Erian's warnings about the collapse of the eurozone and global market contagion seem more Cassandra-like than ever. Europe, El-Erian said recently, is simply avoiding the tough decisions that will allow it to recover. "Greece is like the infection in your toe. If you don't pay attention to it, it's small, and then the next thing you know, it's spread to your leg, and the next thing you know it's affecting your vital organs," he said. "You've got to deal with it. And Europe has not dealt with the problem of Greece." Although El-Erian saw the current financial crisis coming before just about anyone, he lays the blame for this latest downturn squarely at the feet of politicians, whose endless bickering and buck-passing have become the dangerous "new new normal." Now, when the markets come crashing down, he writes, Western leaders "won't have anyone to blame but themselves."
China's leaders often declare publicly that their country needs to "reform." "Reform can only move forward," Premier Wen Jiabao waxed after the country's rubber-stamp legislature met in March. "It cannot stagnate. Even more so, it can't move backward." But China's mandarins rarely elaborate on just what reform means, preferring instead to govern by cryptic slogans and vague pronouncements.
Not so Yu Jianrong, the rare Chinese academic who has taken up the challenge of defining how exactly China could change course -- and from inside the system. In April, he released a succinct, two-phase plan he called a "10-Year Outline of China's Social and Political Development." Despite its bland title, Yu's blueprint offers a timetable for Chinese reform that for once is as credible as it is ambitious. The plan puts dates and specifics to the task, advocating, for example, a stronger law on private property, the revealing of "information pertaining to government affairs" and "officials' property," and the abolition of "speech crimes," after which China should "open up" the media and political parties. Yu's short manifesto immediately caused a splash when he released it to his nearly 1.5 million followers on the popular microblogging site Sina Weibo (though the government has maintained a deafening silence). "We've already decided to change," Yu explained in an interview. "The question is: In which direction do we change, and from where do we start?" Sweeping reform in this authoritarian land of 1.3 billion won't be easy, but Yu's plan is as good a place to begin as any. The era, he said, of crossing the river "by feeling the stones" is over. Best idea: Mo Yan won the Nobel Prize. Worst idea: Political reform in China may be delayed. American decline or American renewal? Renewal. More Europe or less? Less.