I began my career as a well-known writer for the very few readers of an unknown weekly publication. Now the reverse is true: I am unknown writer for the many readers of a well-known weekly publication. I think of my job as covering capitalism.



Edit: Thank you Reddit. Feel free to pm-me. Now back to anonymity.

Comments: 117 • Responses: 25  • Date: 

HCAalum36 karma

You've commented that the US economy is moving towards the state-run model used in China and you've seen the effect of that first hand. There are many people in the US who think that's not a bad thing. Can you briefly summarize the top 3 benefits and top 3 disadvantages to this model?

TomEaston57 karma

The Chinese economy functions because of a vibrant semi-legal market built around companies that do not pay taxes or follow national laws. At a certain point of maturity, they come under the system and lose their vitality. This is becoming sort of true in America as well, in as much as even though companies follow laws, the laws themselves are Orwellian - all equal, but more equal for some entities then others. Ones falling into this category include the various branches of private equity companies, master limited partnerships, real estate investment trusts, and business development companies. They largely avoid paying taxes on a corporate level, and are growing components of the American economy. When they get extremely large (and perhaps they are nearing this point), pressure will lead to change (maybe). The good part of this facet of America is that allows economic dynamism. The bad part is that it is extremely unfair. That is just like what occurs in China.

hijklmno25 karma

I find that criticism in The Economist is quite fair across the board. They're critical of practices in Europe, China, and America, and seem willing to go after any political party. Maybe I'm a cynic, but I feel like every media outlet must have some sort of agenda. Do you consider The Economist to have any sorts of biases that the casual reader may not pick up on? Have you ever been pressured (or as an editor, pressured others) to push a certain narrative?

TomEaston39 karma

The Economist is an unusual publication because it often settles on a single line and there is pressure to conform to this line. This isn't necessarily a bad thing. We were founded in the 19th century to support free trade and oppose the death penalty and have remained largely true to this. If you disagree, you probably should not be part of the Economist. That said, there are lots of other issues that are debated internally. Sometimes I prevail - we were more positive about financial regulation in America before I returned from Asia. Sometimes I lose - I am against legislators or bureaucrats setting minimum wage. And just to reduce this argument to what I consider to be its essential element, it should rest entirely on whether it helps or hurts those who are poor. For reasons that many have articulated better than I possibly could, I think it has damaging short and long-term consequences for the most vulnerable people in our society.

therationalskeptic22 karma

What do you think is the biggest danger to the world economy that isn't talked about in the media or intellectual circles today?

TomEaston33 karma

The single biggest danger is that there is no consensus, and perhaps no understanding, on underpins a viable economic system. In America, I think we are at a point where there is no agreement - and again maybe no understanding - of what defines the structure of a company, the role of the state, illegal activity, and even ownership. People often refer to the "american system" but whatever this may be is currently in great flux. That is a huge challenge to the rule of law - meaning clear demarcations of what is right and just, and what constitutes appropriate activity. The result is that there a movement toward cronyism - success is tied to who you know and the friends that can be purchased. The good news is that I believe many in America are aware of this, and it is not illegal to discuss it (untrue in much of the world) and consequently, I anticipate the emergence of better ideas and conditions.

DonMan88485 karma

Where do you expect the driving force against cronyism to come from? Campaign finance especially has undergone such rapid evolution and cemented itself so firmly in Congress that it doesn't seem like the change is coming from within, as the Congressional firebrands who oppose it appear to be in the minority.

TomEaston13 karma

Some state's will have less of it than others, and they will grow. The same is true of schools. But the biggest blow to a large, convoluted, disfunctional, cronyistic government might be Obamacare. The share price of connected health insurance companies have soared; young people have gotten clobbered. There is a message in all this that can't be spun.

DooleyBoy183622 karma

In your opinion, what will the world look like once China's GDP surpasses the United States' GDP?

TomEaston47 karma

it is possible that by then, people will cease to regard GDP as a relevant measure. China's statistics are horribly inaccurate - famously the provincial numbers don't add up to the national numbers but the process is far worse the closer one looks. Not particularly confident in America's numbers either, but even if they are accurate, it isn't clear that theoretical models for gdp are built to capture accurately economic activity. This will become a much bigger, deeper, discussion in the years to come.

MonopolyMillionaire11 karma

How many hours a day do you work? Is this more as you approach deadlines or is there a fairly even spread?

TomEaston19 karma

I am thinking about work all the time. That is a privilege, because my work involves thinking about what is going on.

m401197211 karma

Given the Economist's endorsement of Abenomics style inflationary action by the ECB, do you think such action, in tandem with Japan would put pressure on the Fed to delay its tapering in an effort to avoid rapidly strengthening the dollar in comparison to both the Yen and Euro simultaneously, potentially harmful to the US balance of trade?

TomEaston14 karma

This raises an issue about how the Economist works. We have positions that are held by the magazine, but everyone doesn't always agree. I am not currently part of the debate about Abecomics given my position in America, but I am not particularly impressed by it or any other explicitly inflationary policy, nor do I like the consumer tax. I think Japan needs other sorts of structural changes to make it a more open country. This is, in a way, just more distortive government.

learn1teach110 karma

Tom, What do you think of levying a small tax (pennies) on each stock exchange transaction as a way of raising tax revenue? Would it also have an effect on machine trading and slow volatility?

TomEaston15 karma

It would just push trading into more obscure places, which to some extent is already happening.

losttobefound9 karma

As time passes by, the price for intellectual property is steadily decreasing because of the many facets we have (the Internet, publications like the Economist, governments) that can easily provide intellectual property. In result, the demand for consultants is decreasing. Is this a temporary change or is it something that will be continuous?

TomEaston15 karma

The ability to profit from lots of different sorts of intellectual property is collapsing, but the value of intellectual property is growing. Success means generating this sort of property and then figuring out the business side. Media is particularly bad at this. If someone at Reddit can figure out how to improve its business model, all journalists (which is what I consider the people asking me questions on Reddit to be) will benefit!

thecounterpoint8 karma

Would it be fair to say that this mirrors the same paradox posed in the Economist article regarding publishing scientific research?

TomEaston8 karma

Maybe. Excellent question requiring lots of thought.

Section829 karma

Hi again Tom,

I've got some questions from some of my friends as well here if you don't mind. They were wondering:

"Do you think there will be any economic reprocutions down the road due to the late start young adults are having in terms of jobs, starting careers, settling down etc?"

Thanks again!

TomEaston16 karma

At the Economist we have meetings in the editors office. Ideas are debated and often research cited. Sometimes I feel that what I hear is exactly contrary to what I have experienced. This is one of those areas. In a meeting I attended, one of our economic writers cited a piece that said the damage caused by a delayed or adverse start to a career will cause profound long-term damage to a career, and the reverse is true as well - there are golden moments to begin work. I have certainly seem anecdotal evidence of the latter - business school graduates from the late 1940s controlled vast swathes of the American economy. That said, I found that many of the most talented, driven and open people I have encountered were hit hard early on by adverse economic circumstances. When I began my career, the most extraordinary people I encountered had lived through bitter times during the Depression. It is no secret that Apple and Microsoft were founded in the 1970s. I think the key is how miserable the person is about their late start. The more miserable they are, the happier they will be.

LumpenBourgeoise5 karma

So my decision to tough out my PhD for another year or so, just so I can teach high school, might actually make me happy in the long-run? I think you just made me happy now.

TomEaston28 karma

There is nothing more important for a person to be than a committed, informed, high school teacher. If that isn't the official position of the Economist, it should be.

bae88 karma

Treasury Secretary Lew--and the current Administration more broadly--recently began to promote the idea that Dodd-Frank and related Basel III capital and liquidity reforms have solved the problem of Too Big to Fail.

What are your thoughts on the metrics economists and analysts use to measure TBTF, specifically the existence of a "subsidy" in the form of cheaper debt financing as a result of implicit government support. Does the subsidy accurately measure TBTF? And if not, how can we know when we have addressed one of the core symptoms of the financial crisis?

And what do you think of the glaring holes in financial regulatory reform that the TBTF debate seems to ignore, i.e., securities financing transactions, money market funds, and other shadow banking entities.

TomEaston19 karma

I think the notion we have contained too big to fail is ludicrous. In many ways, during the crisis we merely shifted risks from private institutions to the government, and governments can still fail. Student loans, medicaid and social security are all structurally unsound, as are numerous large public pension plans. Nobody understands Dodd Frank, and I say this having read it, heard incoherent blather from its named authors, and spoken to numerous lawyers making a fortune from its nuances. Worse, perhaps the one uncontroversial ingredient of the financial crisis was its tie to improperly backed housing loans, and there is every indication the administration is pushing in this direction once again. Risk can not be eliminated and to suggest otherwise is to deceive. At best, it can be channeled and made more transparent. Consider one key plank of Dodd Frank: the stress test by the Fed. No one really understands what is in the test, and to the extent there is opacity, good credit will be curtailed and credit broadly will be provided by other sorts of entities that aren't exposed to the same bureaucracy. There are already signs that it will come through companies which themselves are backed by bank, merely making the system more convoluted. The end of this questions suggests the author, bae8, clearly understands the limitations of the rules. We may have gotten the worst of both worlds - a "safety" net full of holes that nonetheless asphyxiates virtuous economic activity.

dbarefoot8 karma

How do you think Japan's crisis of an aging population will be resolved (or not) in the next 50 to 100 years?

TomEaston13 karma

Left to itself, I think Japan would whither in ever more elegant ways. Competition with South Korea and China, however, will prompt the single most difficult thing to predict about Japan: change. When this occurs will depend on the emergence of a national consensus that in the best of circumstances would be hard for an outsider to see. It is even harder now because the closed-nature, and relative decline or the Japanese economy has resulted in outsiders departing for opportunities elsewhere.

FriezeDirtbag5 karma

How much should a CEO make?

TomEaston16 karma

It depends if the person is operating in an open, competitive, economy without state protection. Given this, I think the CEO of a major league baseball, football or basketball team should make absolutely nothing. For the proprietor of a lemonade stand, the sky is the limit regardless of age.

huachaos5 karma

Do you think that the SOX Act is effective and worth the cost associated with it?

TomEaston5 karma

no and no!! One interesting aspect is how another law was passed with the catchy if utterly misleading title of "JOBS ACT" which waives SOX for smaller companies and creates a template for avoiding all of Obama-era legislation not be rescission but by exemption.

vertigo885 karma

Do you believe that China will be able to sustain such growth (ie 7% a year) in the near future (next 10 years)? Or the central government has been fudging the numbers (for better or for worse)

And thanks for doing this AMA!

TomEaston14 karma

When Chinese officials mention economic growth, they often do it to a decimal point, for example "7.2%" which makes it sound precise. My sense is that the only thing likely to be true about the gdp report is the direction. If the number is higher than the one before, the chinese economy is probably expanding; if it is lower, the reverse is true. I think the chinese economy will grow because there are so many smart people in china willing to work unbelievably hard. I realize that skips all the usual ingredients of an economic forecast, but i think for china, it distills what is relevant.

the1akshay5 karma

Should the Fed/Bank of England/other central banks increase interest rates?

TomEaston12 karma

This is a huge subject of debate at the Economist. The biggest question is whether either of these institutions should set rates at all. There are huge consequences, mostly unpredictable, that come with depressing or inflating prices, and particularly with depressing or inflating the price of money. I think the American government is probably particularly concerned about allowing rates to float because it would need to recognize the cost of the expanding debt. That will be extraordinarily painful now but it is hard to imagine that covering up a cost will make it cheaper later on.

LumpenBourgeoise4 karma

You should "guest-narrate" one of your own articles in the audio edition (the only edition I consume). My imagining of the Economist editorial and writing staff is the same set of 4-5 BBC voices I hear each week (they also don't credit writers as they narrate).

TomEaston11 karma

If people knew how I really sounded, they might not subscribe. One of our virtues is the combination of anonymity with whatever computer generates BBC sounds.

yyedditt3 karma

  1. As someone studying in Europe (Germany) atm (and with an opportunity to stay here for good)... what are some good reasons I should go back to my home country in Asia (in particular, the Philippines)?

  2. Why is The Economist so expensive?

TomEaston11 karma

Answer for number 2 first: I am on the editorial side, which means I have nothing to do with business and would probably wreck it if I did, but that said, I hate our pricing approach toward Asia. We charge a fortune and thus get a certain sort of reader. If we are to be helpful, we want to be far more broadly available. I am very sorry about this. I am just told we have a Reddit rate which can be accessed at economist.com/reddit. By providing this, I think my contribution to the Economist, the Philippines and the world has peaked.

TomEaston7 karma

Answer for number 1: The Philippines should be a prosperous country. It obviously is not, and to some extent, its greatest virtue has been its wonderful emigrants. An important issue is whether your return could help change this. I hope so.

eastbeasts3 karma

What's your stance/feeling regarding the recent anti-Chinese sentiment real or perceived ?

TomEaston15 karma

China is a remarkable, exasperating country. Internally, it seems to be stoking a toxic nationalism which I think is self-destructive, because it has such extraordinary talents and will succeed without that sort of thing. Because I like China so much, I am saddened and dismayed by the anti-Chinese sentiment I see in America. I say that even though as a correspondent, I have personally seen it be unfair verging on frightening. Perhaps this is the inevitable mix that comes with a great nation.

Time-Is-Money3 karma

I'm a sociology major at my University and while I love studies and believe that I will be forever enlighted on the injustices and short comings of our society, at times I get depressed thinking about my economic future and my generation as a working class. So, 2 questions. 1. What should I invest my money into, being a sociologist major and all, and two 2. Give me a reason why I should be optimisitic about our future economic state

TomEaston12 karma

I think being worried is an important part of being successful, but that may have as much to do with my growing up in gloomy climates as on any verifiable facts. To be successful requires being useful, which is an odd conclusion for a person at the Economist since it is a stretch to suggest anything we write is particularly useful. That said, we cover people who do stuff and they tend to be really happy and successful.

huachaos2 karma

Do you think that the SOX Act really works?

TomEaston7 karma


minibabybuu1 karma

I had a teacher claim to be related to you (I think it was you) are you related to any teachers?

TomEaston5 karma

My mother was a teacher.