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Mario Monti, Italy's prime minister, tells Alessandra Galloni of the WSJ, "Germany will never let France go." French economist Sorman says Americans do not realize that the EU and the Euro were created for political, not economic reasons, and the idea was to bring peace to Europe and especially between France and Germany. He sees the EU countries staying through this crisis together, and France emerging more competitive from this experience.

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A 93 year old hero of the French Resistance, Stephane Hessel, publishes a pamphlet called "Indignez-Vous!," released by a small publishing house from the publisher's home. He calls for resisting the "international dictatorship of the financial markets" and "defending the values of modern democracy." He protests France's treatment of illegal immigrants, the influence on the media by the affluent, cuts to the social safety net, French educational reforms. It was first published in October, and now has sold 1.5 million copies, all through word of mouth advertising. It has been translated into Spanish, Italian, Portuguese, and Greek. New editions are planned for Slovenian, Korean, Japanese, Swedish and other languages. In Britain, it was published with the title "Time for Outrage." The pamphlet is about 4000 words and only 14 pages of text. Its timing is good, as the French are debating what to do in their politics with an election approaching and Sarkozy's standing at new lows. The short length and low price are a big plus, at $4 it made a convenient Christmas gift. Britain, Spain, Portugal and Greece are going through austerity cuts. Public sentiment has been aroused by the cuts, and by the overarching influence of financial markets on the economies of these countries. Some of these countries referred derisively as piigs- Portugal, Ireland, Greece, Spain -countries in the financial markets. The economic impact has fallen disproportionately on the young, with high jobless rate for young people from Italy to Spain, and cuts in funding for universities and schools in the UK also fall heavily on young people. A sense that something has gone wrong in the free market system and the western world. Austerity cuts in spending in the U.S. create a similiar feeling and joblessness among young people is also high in the U.S....

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Porter of the NYT points out that the figures released from census information that the U.S. median household income increased by 5.2% in 2015 to $56,500 is good news for Americans including minority and working class families at the lower tiers. However more needs to happen compared to previous recoveries in the mid-90's, and for people who suffered during the recession to finally put that experience behind them, says Porter. 

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Krugman points out that about 13 million Americans without insurance gained health insurance under the Obama plan. He says if it is turned back 8 million whites without a college degree in that 13 million will lose health insurance. Of these eight million about two out of three voted for Trump, so that 5 million Trump supporters could now lose health insurance even though they are older and have more health conditions. Krugman says this aspect of the election campaign was not covered well in the misinformation and social media information of the 2016 campaign, and the lack of media focus on the important issues in the election. On manufacturing jobs he says most of the jobs lost are not returning, and only token jobs such as at a Carrier plant in the news will take their place.

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According to the General Accountability Office inquiry, 28 drug products had price increases over 100% in 2000, in 2008 71 drug products had such large increases. Medicines like Adderall for attention deficit disorder, Inderal for chest pain, Sumycin for infections were in the list of 416 brand name drug products where makers or distributors raised prices at least once by 100% or more for period 2000-2008. As large pharmaceutical companies sold their marginally profitable drug products or small selling products to smaller companies, these smaller companies would immediately increase prices to recover the money they paid to the large pharmaceutical companies. 26 of the brand name products saw prices raised 10 fold. A third of the drugs with large price increases treat depression and disorders of the central nervous system.

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The Washington Post survey of 1200 readers on how the Republican healthcare plan of Speaker Ryan and the House of Representatives looks to them, how it affects them in their lives. Here Somasekhar of the Post gives the stories of 5 Americans. Some see the prospect of losing their insurance under the Republican plan even as they reach an older age, others a smaller segment says the Post, whose premiums jumped under the Affordable Care Act say they faced high premiums and high deductibles. The Post says the large majority of opinions have expressed anxiety over the proposed Republican Ryan House plan for healthcare. One of them is an uninsured poor farmer, Mr. Woosley,  income about $18000 who gained benefit from expanded Medicaid under the Affordable Care Act,  one Mr. Smith, 32 years, a personal injury attorney who faces paying $10,000 if he did not take insurance and $10,000 if he took insurance because of high premiums so a wash either way deciding to do without it, one a tech worker Mrs. Powers, 62 years, income $22,000 on year and $4000 the next, from middle class during the tech boom but facing fewer opportunities and uncertain income from part time work, hit by the deep recession facing fewer opportunities as she gets older and now the prospect of losing insurance without government subsidies, one who is from the middle class who sees little benefit from the Affordable Care Act and is forgoing insurance because of the high premiums yet faces a penalty for not being insured under the ACA, another Mr. Blanchard, 52 years, is from the middle class, a computer programmer who lost his job in downsizing, earns $100,000 as a consultant self-employed, pays $767 in premium a month and relies on the Affordable Care Act which helps him gain freedom from working at a company that could downsize,  another is a middle class programmer Mr Riffle,age 44, and his wife, who does not qualify for a subsidy with a $71,000 family salary from working 4 jobs between himself and his wife- this person finds it too expensive for his salary to buy insurance $900 a month and $14,000 deductible under the Affordable Care Act. His views are worth listening to as they go to the crux of the problem- he says he may not be any better with the Republican plan. He sees the real problem as the high cost of health care in the U.S. and the only way this can be fixed is for members of Congress to be asked to use the insurance exchanges they create. If this sample is representative it shows that there are real problems with both the Affordable Care Act and the Republican plan, that the high cost of health care the problem lurking behind every plan that does not squarely address this, and till that happens and members of Congress experience what ordinary people face, this problem can never by fully solved.   Woosley, Smith, Powers, Blanchard, Riffle, and their personal experience is at the crux of what is right and wrong  with the Affordable Care Act, and also with the new Republican plan of Speaker Ryan and the House of Representatives. For every Woosley, Powers and Blanchard who benefit, there is a Smith and a Riffle who are indifferent or are affected by the high cost under Affordable Care Act and the current system of medical care with its high cost. The Affordable Care Act does not  tackle high cost, for that to happen the culture in America that makes it possible and acceptable to charge high prices must change. Another problem apart from bringing health care costs is that any solution needs to have the whole country behind it. If the notion that all people are entitled to basic health care is to stand, the whole country needs to believe it as they do in countries like France, Britain, Germany and Japan. If this has to be made a workable proposition health care has to be offered at a price that makes this possible to achieve, and that idea also needs the deep and broad sense of support from the culture in America similar to that in these other countries. Until that happens politicians in America will get elected and turned out of office in turns on issues such as health care, based on which side they take and which problems they choose not to face squarely and responsibly. ...

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Estimates show the 50 million Americans enrolled in Medicare today will increase to 80 million by 2030, according to the program's actuaries. Simple demographics as the baby boom generation ages is making controlling the deficit without controlling increase in health care costs as both sides in the fiscal cliff negotiations are attempting to do can only lead to defunding critical areas such as education, R&D and infrastructure, and breaching the safety net for lower income Americans. Health care spending took up 7% of GDP in 1960, increasing to 17.9% of GDP in 2010. Federal spending on healthcare has grown to about 25% in 2012 from 10% in 1960, and is projected to increase to about 33% in ten years by the Congressional Budget Office.

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Germany's Economy minister Zypries warned that Germany would take legal action by taking the case to the World Trade Organization if president Trump imposes tariffs above that allowed by WTO rules. She said this before a meeting at the White House between president Trump and Chancellor Merkel. The U.S. is Germany's largest export market with 107 billion in imports and the U.S. exports 58 billion euros of products to the U.S. Zypries accepted that the large trade surplus of Germany was "a problem," but that America "needs our machines and industrial plants" for the time being. Germany has insisted that it does not provide unfair advantages to its companies, and that German companies were simply more competitive. Trump has focussed largely on China for anti-competitive practices, though he mentioned BMW by name during the campaign. In the last 2 years the euro has depreciated significantly against the dollar giving German companies competitive advantage, largely as a result of the ECB- in opposition to German economic policy- trying to stimulate the economy of other southern eurozone countries such as Spain, Italy and France. ...

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Deocuments from the weekly cabinet meeting show the new budget in France will increase revenues from household income taxes by 23%, and business taxes by 30%. The top marginal income tax rate goes up to 45% from 41%. Limiting a deduction for financial charges for company's taxable income brings in $4 billion in 2013, according to the finance ministry. The goal is to cut the budget deficit to 3% of GDP in 2013 from 4.5% in 2012. The finance ministry has assumed higher borrowing rates for future years- 2.9% on 10 year debt for 2013, up to 3.65% in 2015, and is not relying on the low rate of 2.18% on 10 year government bonds as reported by Trade Web Sept 28, 2012. The overall tax burden will be 46.3% in 2013, and 46.7% in 2015. French debt is at 91% of GDP for the 2nd quarter 2012, expected to be 91.3% in 2013 and falling to 82.9% in 2015. Prime minister Ayrault emphasized- "If we don't put a stop to this, taxpayer money will keep paying for debt reimbursement." Swift anticipatory action and unified government-business-labor posture under a favorable borrowing environment characterizes the approach for Britain and France in 2011-2012, compared to the situation in Spain where government action has been slow, not tough enough in cleaning up the banks, fallen behind in anticipating events and the government-business-labor unified posture has cracked under the strain. As a result under an unfavorable borrowing environment money raised from austerity type tax increases now goes to paying for debt reimbursement in Spain, leading to a situation in which debt and deficit reduction targets just get harder to achieve. A looming drop in credit ratings to junk status for Spain only makes the situation harder to overcome. ...

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The head of Italy's statistics agency Istat, Enrico Giovannini, says Italy's manufacturing sector has performed quite well, and the problem is with the services sector, in lagging sectors such as transport, communications, tourism, retail and social services. The manufacturing sector is only one sixth of the economy. He says productivity is poor and there is lack of investment in human capital and information technology for the services sector. IT's contribution to growth in Italy's labor productivity is the lowest in Europe, according to the European Investment Bank. Italy's total efficiency gains declined one half percentage point from 1995-2005. Retail and tourism sectors lack the needed productivity gains. This means actions taken by prime minister Monti to change labor laws and related changes will not be enough to generate confidence in the economy and economic growth. Giovannini says investment in human capital and productivity is badly needed, and shifting education and training to where there are new job opportunities....

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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.

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Fletcher cites statistics from the federal Bureau of Labor Statistics showing that between December 2007 and June 2010, private sector employment in Texas went down by 0.6%. During that period public sector jobs increased by 6.4%. Government employees make up about 17% of the workforce in Texas. The Texas economy gets a large amount of federal money because of military installations and NASA- $227 billion in 2009, according to the Census Bureau. By comparison California received $346 billon in 2009. During the recession period after the global financial crisis of 2008, Texas received $25 billion in stimulus money. Richard Fisher of the Dallas Federal Reserve Bank acknowleges the federal money going into Texas, yet he points out the driving force in the economy of Texas is still the private sector. For the private sector there are several advantages to being in Texas. There are lower taxes- no state income tax and lower business taxes. The large supply of land for development and few land-use restrictions make development easier. Corporate efficiency was a key advantage cited by Fluor when it moved from Orange County, California to Texas. A growing energy sector has helped, along with the growing trade with Mexico. The housing regulations in the state have acted as a check on housing prices, and left Texas with less of the detrimental effects of the housing mortgage crisis than the rest of the nation, especially California and Florida. The governor of Texas, Rick Perry, says he is not against all regulation, and the kind of housing regulation in Texas certainly has played a good role for Texas. Perry's tort reforms have reduced the legal burden on business prevalent in the rest of the U.S....

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Bill Keller of the New York Times, reflects on his experience in Moscow during the fall of communism, and the Russian youth then and their children in the protest marches in Moscow today. He sees a new generation with different expectations, not limited by the past in what they think is possible, should be and is normal.

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The median net worth of Hispanic and Black families has been severely affected by the recession. Because minorities hold a much larger part of their assets in household equity the foreclosure crisis and the recession have had a devastaing impact on both minority groups. The median net worth of Hispanic families dropped by two thirds and black families by half after the 2008 recession from the 2005 figures, and was around $6000 for 2009 for both groups, according to data from the Pew Research Center. The Pew report shows median net worth of a white family is 20 times that of a black family, and 18 times that of a Hispanic family, with the gap between these minorities and whites twice as large in 2009 compared to the period before the recession in 2005. This was even true for Asian American families, whose median net worth dropped by half from 2005 to 2009, to $78,000. The figure for whites dropped much less from $135,000 to $113,000 during the same period. Another significant finding is that within each group the share of the wealthiest 10% of the people increased between 2005 and 2009, for all households this went up from 49% to 56%, for Hispanics from 56% to 72%, for Blacks from 59% to 67%....

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Strikers at a Honda transmission factory in Hoshan, 100 miles northwest of Hong Kong are asking for raises of $117 or 800 renminbi in cash above the $132 a month or 900 renminbi that they are now paid. About 950 of 1900 workers at the plant are trainees, young people from vocational schools or high schools earn $132 a month. Older employees earn upto 1500 renminbi or $220 a month. The significance of this strike is that the Chinese government is tacitly encouraging the strike as it begins making moves to increase domestic consumption and make the economy less dependent on exports. This requires consumer's having larger purchasing power and higher wages. It also means that China will not remain the low cost manufacturer for manufacture goods makers around the world for very long. Consider the size of the increase and the policy change of the government and this implies a significant shift by China.

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Efforts to boost the share of national income that goes to rural households and workers in China. The share of income taken by state owned enteprises and taxes paid by the enterprises would have to change for reducing the gap in incomes and reducing inequality in China.

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Matthew Slaughter of the Tuck School, Dartmouth, says that the principle of comparitive advantage should determine what America exports and imports. Under comparitive advantage each country concentrates its energies on the particular goods and services that it does better than other countries. Free trade operates under the idea of comparitive advantage, but in practice it is quite different than its textbook economic counterpart. It is constantly changing as new countries or industries in different countries try to upset the existing pattern. Under a textbook example Airbus should not exist because Boeing was the most efficient manufacturer upto that time, and new entrants in a industry are nurtured for years with support from the governments of their countries. And in some situations the governments may exclude certain companies or industries from support such as Komatsu and construction equipment in postwar Japan, and Infosys and software outsourcing in India, and still survive and grow. Under comparitive advantage Japan should still be importing construction equipment from Caterpillar in the US, and there would be no serious competition in that industry. This would work to the detriment of the principle of competition in free trade which is just as important to free trade as the idea of comparitive advantage, with new entrants in an industry upsetting the old way of doing things and creating price/quality improvements. Slaughter simply pulls back off the shelf the old idea of comparitive advantage without seriously considering its real life aspects. Without dealing with trade distortion from currency manipulation, from the impact on jobs, without considering the continuing critical role of manufacturing in developed economies to provide the standards of living for a large middle class, and creating the kind of society that people of developed countries aspire to. He mentions GE's Immelt and the President's Council on Jobs, but makes no effort to engage Immelt 's statement in his recent op-ed article in the Washington Post, that the concept of transitioning from a export-oriented economic powerhouse to a services led consumption based economy could be done without loss of jobs, prosperity and prestige, was fundamentally wrong. He has only one line for manufacturing's role in America's economy. This line says knowledge intensive industries such as education and software are just as important as manufacturing, but fails to mention that manufacturing has received less attention in recent decades. In so doing he is discounting his own profession of concern for the high rate of joblessness in the U.S., and the need for a new focus on manufacturing in the U.S. to reverse that trend. By saying that imports are not a sign of failure but can raise standards of living, and leaving it at that, Slaughter does not acknowledge that consumer debt that US consumers have taken on in the process certainly affects future prospects for the US economy. And he makes no mention of the need for rebalancing the world economy, which is exactly how free trade should work ideally. Countries that have high imports export more to rebalance the world trading system, as currency valuations are allowed to adjust makig their exports more attractive. By not taking into account the realities of free trade, and the need for practical measures to rebalance without policy induced distortions by state run economies, Slaughter ignores the idea of free trade that works as it should and for all countries. The irony is that Immelt's own committment to jobs and competitiveness has been questioned in online blogs and most recently by an editorial in the Wall Street Journal on January 26, 2011, titled "The Misallocators." That editorial refers to the outsize role of GE Capital in GE's earnings during the past decade, and the lack of credibility of a focus on competitiveness and jobs that this creates for GE. It mentions the loss of 34,000 GE jobs in the US during the last decade. ...

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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.   ...