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Edmund Phelps, is 2006 Nobel prize winner and director of the Center on Capitalism and Society at Columbia University. Phelps offers a deep reflection on capitalism and what it is as a system and isn't, from the insights gathered and knowledge accumulated about its workings- conditions in which operates best, and conditions under which it is stressed or fails. It is the actors and overseer's, the public's ignorance about how the system works, the insights about its advantages and its serious hazards if neglected, that lead him to say we need deep reform and re-education. Capitalist systems, he says, are mechanisms by which economies may generate growth in knowledge- with much uncertainty in the process owing to the incompleteness of knowledge- with growth in that knowledge leading to income growth and job satisfaction. The uncertainty can be serious and dangerous if not accounted for, and the knowledge offers opportunities for personal growth, problem solving and exploration. There has been an intellectual failure in developing a wide understanding of its benefits as well as its serious costs if not kept in check, costs that arise from uncertainty and moral issues of proper behaviours if not properly guided. This is an admirable and clear expression of what capitalism is and how it should be understood....

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During the primaries Trump appealed to blue collar voters of a white working class that felt neglected by leaders and policies of both parties that did not seem to work for ordinary people. Having caught onto this early long before Republican candidates, Trump registered a series of wins in the Republican primaries. He continued this theme in his acceptance speech at the Republican National Convention on July 21, 2016, saying- "The forgotten men and women of our country- people who work but no longer have a voice: I am your voice." The idea was to couple this with the theme of law and order and put perception of Hillary Clinton as part of the rigged system of the past that Trump would change, with Clinton's legacy described in terms of "death, destruction, terrorism and weakness." As a change agent Trump described his entering the political arena in terms of coming into this election only to help blue collar people "so that the powerful can no longer beat up on people that cannot defend themselves." The two themes for the rest of the election season- law and order, and blue collar lives- and who can best defend them a traditional Democratic politician with a fighting spirit for traditional Democratic values, or a blustery newcomer adept with slogans and the public mood and ironically representing the Democratic values of representing the working class to become the  Republican nominee, with the law and order theme thrown in. The voter or independent listening in to all this will hopefully ask what all this means. As the WSJ, July 19, 2016, pointed out in a recent look at economc policies under the two candidates- on Glass Steagall Act being reinstated to increase safety of the banking system that caused many of today's problems through the 2008 financial crisis both Trump and Clinton are similiar, on opposing trade agreements similiar except that Trump's bluster is a riskier approach, on infrastructure building similiar with Clinton's $275 billion plan spelled out out for source of financing and Trump's unclear as to source of financing. On immigration the candidates are different, on the minimum wage which impacts low income people Clinton supports $15 minimum wage and Trump has not taken a stand. On ISIS and the Middle East Clinton is in reality a hawk and not much difference in the candidates, on law and order more chance of divisions in the country with Trump than Clinton. Overall for the working class and blue collar voter his life will take a decade or more to rebuild, with both candidates commiting to go in that direction. And the bluster and ads to come- just that.  ...

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U.S. Commerce Secretary, Wilbur Ross, has balanced the rhetoric of president Trump on trade in the NAFTA debate by saying the U.S. is looking for win-win solutions in trade relations with Mexico. At the WSJ CFO network Ross says the trade regime from the post war years is now an anachronism and does not work well especially for the U.S. Many experts agree that the trade framework from that period is problematic. It does not take into account, for instance say experts, the situation where a command economy such as China could help manufacturing industries with state policies, including currency policies. The rapid growth in China was different from the rapid growth in an earlier period of Japan, in terms of its impact say experts. The U.S was the dominant economy during the sixties, and the growth in Japan was not at the accelerated pace and of the magnitude that happened in China. As a result the impact on  some communities in the U.S. was much more intense in the last two decades, as documented by prominent trade studies, leading to the sense that trade did not work for these communities. ...

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Pope Francis is strongly critical of the manner in which the capitalist system has functioned in recent decades, increasing inequality, and hurting the marginalized, the working class and poor. Pope Francis tells people during his visit to the poorest countries in Latin America, Ecuador, Bolivia and Paraguay, that the Catholic Church committed grave errors during the period of Spanish colonialism by allying with the ruling classes and creating great inequalities and suffering. The director of the Institute for Policy Research and Catholic studies at Catholic University of America, Stephen Schneck, says the Pope is reflecting a century of activism on social issues since the Pope Leo XIII encyclical in 1891, calling for social and economic fairness for labor, with the encyclical "Rerum Novarum" - or "On the Condition of Labor." The Pope's message in Santa Cruz, Bolivia, to nearly 2000 social activists, farmers and trash workers, neighborhood activists, was that change has to come from grassroots, that the local communities have acquired the knowledge which is valuable to act for economic and environmental betterment. He praised cooperatives and local organizations that enhanced the value of labor. His message resonates say Catholics because he has stayed in close contact with local communities, and the poor, working class people in Argentina. It is focussed on empowerment of local communities. In Bolivia the left government has adopted measures that attract foreign capital and investment, so that it is a model that stays away from socialist ideology, while at the same time embracing the grassroots idea of empowering local people and communties. In this way it has improved living standards in Bolivia and received favorable ratings in capital markets....

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There are similarities in the Republican and Democratic party platforms in 2016. One area of agreement is in the reinstatement of Glass Steagall Act. That legislation made in the Depression period to separate commercial banking from investment banking was changed  when president Clinton made changes in a deal with Senators Phil Gramm and Jim Leach in 1999. The too big to fail problems of banks and the problems of investment banks during the 2008 financial crisis are attributed to the lack of Glass Steagall protections for financial stability and safety. The result is that in the post 2016 environment banks can expect a tougher regulatory environment. Another are is in trade where both parties are expected to take tougher positions to protect U.S. interests. The Republican platform calls for "better negotiated trade agreemets that put America first."

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Porter cites a report by Kai Daniel Schmid and Ulrike Stein of the Macroeconomic Policy Institute in Dusseldorf. The report shows the top 10% of Germans having 26% of the country's income before taxes and transfers in 1991. This increased to 31% by 2010. For the same period of about 20 years the bottom half of the population took in 17% in 2010 dropping by 5% from 22%. The growing income inequality in Germany is comparable to what has happened in the U.S. over this period.

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A big hurdle for local brands in China is the Chinese consumer's interest and respect for foreign brands. Asked about local brands buyers say they can't think of any, or say Chinese brands are shoddy in quality and value. Brands such as Haier in consumer appliances and Lenovo in tech are an exception. During the big surge in consumer sales in the last two decades Chinese companies producing local brands thought it adequate to simply imitate foreign brand names rather than take the difficult route of establishing the credibility of their own brand- an effort which might take years. Often the foreign name was changed slightly to keep the resemblance but mean something positive to Chinese consumers in the local language. Common are names such as Adidos, Hike, Cnoverse and Fuma for sneakers. Clio Coste keeps the connection to Lacoste with its crocodile logo. Coca Cola in Chinese is Kekoulele, translated to mean Tasty Fun. Only now are local companies giving serious attention to creating long term brand entity and image. The serious attention to brand names and branding comes at a time when China increasingly depends on consumer sales to power the economy with the decline in real estate and slower manufacturing. For the 11 months of 2014 retail sales were up 12 percent over the prior year period to $3.8 trillion, according to the National Bureau of Statistics. ...

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In a first at Davos World Economic Forum, China's president Xi Jinping uses the 2017 meeting to give a one hour long spirited defense of the world trading system, critical of U.S. president elect Trump's protectionist views without naming him. Xi pointed out that "no one will be winners in a trade war." And went on to add that restricting world trade was like "locking oneself in a dark room, keeping out wind and rain from outside but also light and air." For the first time Jinping stated that China would take the U.S. role of defending the world trading system from attack as needed. On climate change Xi defended the Paris accords, and gave China's commitment to pursue changes regardless of what the U.S. under president Trump does. This follows Chancellor Merkel of Germany's statements on the issue critical of the views of president elect Trump, and taking the lead to defend the world trading system. Xi also pointed out that many of the ills that led to voter discontent in the West were not really from the freeing up of trade but from the pursuit of excessive profit with the financial crisis of 2008.   ...

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Rosa Ines Rivera, a cook at the cafeteria for the Y.H. Chan School of Public Health, Harvard University, with 2 small children, describes the protests over the increase by Harvard administration of the premiums charged on health insurance that now take up over 10% of the income. She says she lives in public housing with her parents as she lost her apartment because she is behind on the rent, and now cannot afford to pay the increase in premiums. About 750 workers at Harvard are on strike on this issue. She says dining hall workers want the current pay of $31,193  a year increased to $35,000 to provide a living wage that helps them afford medical care, because of the high cost of living in Boston.  To get some idea of the plight of workers who provide the kind of nutritious meals that a lot of students depend on for healthy living- Rivera says she takes in about $450 a week after taxes, or about $1800, rent is $1150, which leaves $650 for herself and two children for all food, and expenses in Boston. The $4000 in premiums for health insurance would be about 330 per month, leaving her about $320 for food and living expenses with 2 children. Why the need to bring up children in poverty in America, for generation after generation, after putting in a full day of work? ...

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The downturn starting in the 2008 financial crisis destroyed a huge portion of the average American's personal wealth- some estmates running to 40%. This was followed by periods of unemployment which depleted savings accounts, lower wage jobs, and followed by further erosion of savings accounts with little or no interest. The gains on the stock market have one problem- the benefits go in large part to affluent Americans who are already well prepared for retirement. A U.S. Senate report shows a huge retirement savings deficit- about $6.6 trillion, which comes to $57,000 for every American household.

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Von Mark Schieritz of Germany's Zeit Online describes the changes underway following the election campaigns in the U.S., and France, and the Brexit vote in Britain, all signalling the discontent of people left behind by the tech, capitalism, trade and globalization changes of the last two decades. The appeal of one time fringe politicians using racist slogans and divisive rhetoric to appeal to those left behind, appealing to people lacking intergenerational mobility, and without much hope for a better future, is a serious concern. People who are gullible enough, lack college education, or racially isolated so that they are not likely to look carefully at what is being offered in terms of programs and change of competing parties, and likely to overlook the hard and difficult road for corrective course of action, because of anger and pentup fears. Schieritz cites as part of this change the unanimously approved conclusion in its final declaration at the G-20 meeting in Chengdu, China- "The benefits of growth need to be shared more broadly within and among countries to promote inclusiveness." Yet this can be a sort of "too little, too late."  Bankers who are cited in an email going around Wall Street lack credibility with groups on Main Street, to people adversely affected by tech, trade and globalization changes that have been persistently ignored for over a decade, close to two decades. More convincing is the tone of Theresa May, the British prime minister's first statement outside 10 Downing Street- who spoke of the "burning injustices" and her determination to make this a top priority of her government. Still more convincing are the programs to invest $275 billion over 10 years in infrastructure put forward by the leading candidate in the U.S. presidential election of 2016, to provide easier access to public universities and colleges to those left behind, as a sure way to create new jobs and address intergenerational mobility. In fact every leading candidate had made the loss of upward mobility their central plank already in 2015, long before Trump and Sanders started their campaign. The real hope lies in western leaders Merkel, May, and Clinton, all keenly aware students of changes, all women by the way who have sensed the injustice and have the ability to come up with something new and promising for the future, after learning the lessons of the past. ...

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Two weeks after his election Donald Trump says the U.S. will not join the Trans Pacific Trade Agreement during his term in office. Barack Obama took seven years to negotiate the trade agreement which was opposed by trade unions, the auto industry and was unpopular in the midwestern U.S. because of the impact of trade in hollowing out the manufacturing sector. Here Frank Sieren of the DW.com points out that the agreement was not really about trade, as most of the gains of trade had already been realized according to experts. It was part of the "pivot to Asia" to maintain American dominance in the region, says Sieren. After China pulled together some Asian and European countries into its trade agreement, the Regional Comprehensive Economic Partnership (RCEP), the U.S. pushed for TPP as a counterweight to the China sponsored trade zone. China says it will try to integrate the countries in TPP into the trade zone it has sponsored. President Trump has said that the U.S. is better off negotiating agreements with each country and not getting into multilateral trade agreements. He fought the election campaign on the basis of the opposition to TPP and trade agreements that unfairly hurt American workers. This could have provided the 110,000 margin of victory in the states suffering from the hollowing out in manufacturing such as Michigan, Wisconsin, Ohio and Pennsylvania. A similar hollowing out in Ontario favored Justin Trudeau's Liberals against the Conservatives in Canada's election. ...

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Joseph Stiglitz describes policies and programs of the Obama administration that favor banks and avoid a government takeover of over leveraged and badly managed banks in the U.S. President Obama's policy transfers financial assets to banks on highly favorable terms even though some of the banks made bad decisions and highly overleveraged assets creating the 2008 global financial crisis. The policies avoid a government takeover of banks, policies which the U.S. aggressively pushed for in other countries such as S. Korea during the 1997 financial crisis with Rubin, Summers and Geithner at Treasury. These policies would come under strong criticism because it rewarded risk taking and kept in place an incentive system that led to such behaviours- creating "heads I win, tails you lose" psychology. It also delinks the performance-reward relationship that is the basis of free enterprise in western economies. A problem that would be left from the crisis and the Obama administration's response to it is "Too-Big-To-Fail," with banks larger than before. The FDIC and U.S. Fed's plans for banks to have living wills for an orderly windup under Dodd-Frank legislation only goes a part of the way in tackling this problem. In the U.S., and in Britain, France, Germany, Switzerland, the related problem of high bonuses continues into 2014, with RBS bank in Britain one of the egregious examples and highly unpopular with the British public. The lack of similiar government help to homeowners, advocated by Reagan economic advisor Martin Feldstein and FDIC chairwoman Sheila Bair from the beginnings of the crisis stands in sharp contrast to the response of the Obama administration. See the links for Barr, Feldstein and Hoenig. In an ultimate irony from the crisis handling much of the damage from foreclosures was done to minorities which supported the administration. ...

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This report in the Economist magazine says views in the Trump base of support in rural areas and among white working class voters are likely to persist for some time. One reason given is that many of these people live in isolation and little contact with the more educated urban voters in America. Another factor cited here is that only a fifth of voters follow politics closely, and of these voters only a small fraction have a good grasp of the positions of the two major parties. Most people follow the instincts and thinking of the groups they are with. As a result many of the issues covered in the media such as climate change and U.S. withdrawal from the Paris agreement, the Comey firing and the Mueller investigation into Russian meddling in the election, president Trump's Twitter comments, are not having much impact on the president's ratings among his support base at this early stage of the Trump presidency. Yet it is too early to tell only 6 months into the Trump term in office. After 8 years of president Obama's two terms in office voters who feel left out are not likely to change their views in so short a time. Republican voters as distinct from the core Trump base voter are also unlikely to change their views after 8 years of Democratic party administration. By staying close to traditional Republican party positions president Trump is likely to continue to have the support of the lifelong Republican party voters unless things change. Can a centrist position emerge after voter fatigue with excessive partisan opinion, as voters seek to make America a more quieter place and a consensus on working together to lift all boats emerges. This could be expected as time passes.   ...

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Krugman points to the economic muddle that China is getting itself into. He says one way of looking at what is happening now with high inflation is that inflation is the market's way of undoing the currency manipulation that China has engaged in. By following aweak currency policy to protect export interests China has created an artificially high trade surplus. But this is now turning into a lose-lose proposition for both China and the US as market forces push wages and prices up, whittling away at any competitive advantage of China's weak currency policy. He says some estimates he has seen show that Chinese undervaluation could be gone in two or three years. Chinese consumers are asked to accept interest on savings limited to 2.75% and below inflation, with the spread designed to help banks earn their way out of bad loans made during the stimulus lending binge of 2009-2010. What is happening is a massive allocation of capital away from consumers to lending for state owned companies that have created overcapacity in many industries, and use part of this capital to engage in real estate speculation. Krugman says China may be on its way to some kind of crisis with collateral damage to the rest of the world as it is a major importer of commodities from Canada, Brazil, Argentina, Australia, and a major importer of high tech goods from Germany and the USA....

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Since 2004 consumer spending's share of the economy in China has fallen from 40% to 35%.

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A report published by Capital Economics of Toronto, based on Labor Department data, shows the U.S. is not adding the kinds of jobs with the pay, benefits and hours of the 8.75 million jobs that disappeared during the recession. Labor Department data support this analysis. The number of food preparation and serving workers are expected to grow by 394,000 by 2018, but the pay is only $16,430 for these jobs. The good well paying jobs are continuing to be lost. Large employers such as Lowe's home improvement chain is eliminating 1700 managers, and adding 10,000 weekend sales positions and new assistant store manager positions. This use of parttime workers also reduces income levels of workers. The impact of this is to limit the consumer spending. As local government is shrinking from budget cuts, better paying jobs are being lost in state and local government, and workers are earning less in the new jobs that do similiar work.

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Krugman points out that the prevailing bias in the US distorts the facts about Europe's performance. Frankfurt, London and Paris he says are just as lively and modern as New York and Chicago. They are not poor and backward. When you factor out population growth in the USA, since 1980 per capita real GDP which is what affects living standards has grown in America at about the same rate as the 15 European Union countries: 1.95 percent in the USA vs. 1.83 percent for the EU. And for the 25-54 years working age group unemployment in the EU 15 countries in 2008 was 80% of adults (83% in France), which is about the same as in the USA. The French and Germans work fewer hours but output per hour is close to American levels.