There is, of course, one big convention kicking off in Milwaukee today, but 6,500 miles away, an equally notable political gathering is underway. 

The once-every-five-years plenary session of China’s ruling party will likely introduce economic reforms and policies addressing a growing laundry list of impediments to the country’s growth and post-pandemic recovery.

Nothing to Xi Here

The Chinese government faces a demographic slump (the population shrank by 2 million people last year), sluggish growth (which the IMF expects to fall from 5% this year to 4.5% next year), a property sector in full-blown crisis (new property sales were down 28% in the first five months of 2024), and debt piling up at local governments (the national debt-to-GDP ratio was nearly 300% in 2023). And that’s just at home — there’s also pressure from the US via sanctions and an increasingly frosty relationship with NATO, which last week dubbed China a “decisive enabler” of Russia’s war in Ukraine.

In June, China’s consumer price index (CPI) rose just 0.2% year-over-year, the lowest since March, as consumers have pulled back on spending. CPI has been mostly stagnant since last April, and well below the 3% target. Meanwhile, the producer price index — a measure of the cost of industrial goods at the factory gate — fell 0.8% last month. So, what’s a Sleeping Giant to do?

• “No one should expect breakthroughs,” wrote analysts at the independent Rhodium Group, which studies Chinese economics, in a research paper last week. “The key question is whether Beijing can message its reform priorities—progress toward a unified national market, some fiscal reforms, changes in land quota allocations, reforms to the power system, liberalization of foreign investment in some sectors—as a coherent plan to change China’s economic trajectory in the near future.”
• Officials tipped their hand in December, suggesting a “new round of fiscal and tax reform” was forthcoming, but other reforms have generally come slowly and cautiously. For example: To stem the housing sector crisis, the central bank announced a $41 billion buy-up of unsold homes by state-owned firms in May, but Bloomberg economists said it would account for less than 1% of unsold inventory.

Throwback: President Xi Jinping met entrepreneurs at a party meeting last month with notably pro-business remarks, telling them, “We must resolutely eliminate the ideological concepts and institutional shortcomings that hinder the advancement of Chinese-style modernization.” It’s not exactly Adam Smith, but it does harken back to the so-called socialist market economy of Chinese leaders before Xi’s more controlling regime.

Greece is the birthplace of democracy, but now it’s given us something a little less appealing to the masses.

Last week, Greece’s government put new labor laws into effect that mean workers can be asked to work a six-day workweek. Meanwhile, in the UK, the campaign for a four-day workweek is gaining momentum, looking to the new left-wing Labour government with some optimism that it can get more trials underway.

Greeks Bearing Grift

In 21st-century history, Greece’s economy has limped behind the rest of Europe and trailed the UK by some margin. At the moment, however, Greece’s economy is experiencing something of a comeback, while Britain’s GDP is only just beginning to creep out of a flatline. Greece’s pro-business government seems to be capitalizing on that growth and trying to drive productivity with its new six-day workweek. 

But, in 2024, will extra time on the clock really drive that much productivity for a nation? Or is it just a bit of nostalgia for a 19th-century work ethic that doesn’t fit into current economic models:

• “Before we had the third Industrial Revolution, having more people on the assembly line did lead to improved productivity,” Dr. Grace Lordan, an economist at the London School of Economics, told The Daily Upside. 
• In a world where more work is knowledge-based, that model hits a ceiling. “The more you work, the more you get done up to a point, and then you get diminishing returns,” Lordan said.

Friday, I’m in Love: But how do we know if a five-day workweek is the sweet spot? Trials of the four-day, 32-hour workweek in the UK have been largely successful: 54 out of 61 companies that tried it kept the policy 18 months after the trial began. Lordan said the general result was more satisfied employees and no drop in productivity, but she doesn’t see the four-day workweek as a silver bullet. In some industries with high numbers of vacancies, like supermarket work, it hasn’t worked so well. She added it’s not ideal for working parents or employees who care for elderly relatives — it can actually constrain their flexibility.

Open discussion does not seem to be a cardinal virtue at OpenAI.

At least, that’s what a group of company whistleblowers allege in a complaint to the SEC. According to a seven-page letter sent to the agency and seen by The Washington Post, the artificial intelligence company issued employees overly-restrictive non-disclosure agreements that could penalize anyone who blows the whistle to government agencies. In the rapidly developing Wild West of AI, what could go wrong?

Blow Out

The contents of the employees’ letter shouldn’t exactly be surprising. In June, a group of current and former employees of OpenAI and Google’s DeepMind AI unit published an open letter criticizing a culture of retaliation against and silencing of internal dissenters, and called on the government to establish effective guardrails for the industry. 

In the letter to the SEC, employees alleged that said culture is illegal, and violates four specific SEC rules:

• The letter writers alleged OpenAI issued “[n]on-disparagement clauses that failed to exempt disclosures of securities violations to the SEC.” They also said OpenAI required “prior consent from the company to disclose confidential information to federal authorities.”
• Employees were also allegedly required to sign “[c]onfidentiality requirements with respect to agreements, that themselves contain securities violations” and had to “waive compensation that was intended by Congress to incentivize reporting and provide financial relief to whistleblowers.”

“These contracts sent a message that ‘we don’t want … employees talking to federal regulators,’” one of the whistleblowers, who spoke anonymously, told The Washington Post.

Stress Test: Of course, federal regulators have little oversight over the industry anyway. Congress has yet to pass legislation that includes comprehensive AI regulation, leaving an executive order from October that calls on AI firms to share some critical information with the government as the strongest guardrail on the industry. It may not be strong enough. On Friday, The Washington Post published a report in which sources within OpenAI said employees were pushed to rush through safety-testing procedures to meet the May launch date for GPT-4 Omni, the firm’s latest model. “We basically failed at the process,” one source said.