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Modi's success in tackling problems of electricity development in Gujarat state and the model for India, as a new Modi administration is elected for India in 2014. Other areas that are the focus for development include high speed rail and transportation, other infrastructure development, creating new jobs in manufacturing. Modi made three trips to China in the last decade as a four term chief minister of Gujarat state (similiar to a governor of a U.S. state), and has adopted a China type focus on infrastructure development and manufacturing for the western state of Gujarat, which was part of the old Bombay state in British times. Mumbai, the new name for the old British settlement of Bombay on the west coast, is about 300 miles south of the major Gujarat city of Ahmedabad, at one time a major textile manufacturing center. Mumbai and commercial minded people from Gujarat occupy a role similiar to Shanghai in India's economic development. Under British times trading minded Gujaratis settled on the east and southern coast of Africa, in the Persian Gulf, with retail businesses. Of India's two largest companies the Reliance Group made its early start in textiles in Gujarat in the seventies, set up by a young emigrant who returned from the Persian Gulf. The Tata Group which owns Land Rover was set up by a Parsi immigrant community in Gujarat. Its founder Jamshedji Tata set up India's steel industry under the British at the turn of the century. The Parsis settled in Navsari, Gujarat, immigrating from Iran and other parts of the Persian Gulf centuries ago. When the media talks of Modi's origins as a tea seller's son, one has to take this in the context of the origins of people such as Reliance founder Ambani who was the son of a schoolteacher from a rural village in Gujarat. With about a 1000 mile coastline facing the Persian Gulf, Gujarat has been known to engage in the textile trade long before the arrival of the Portuguese and the British in the 1600's, and before the Muslim period from the 1300's. Many Gujaratis settled in Mumbai and are a key part of the commercial, financial center in the city. Just as Britain with its commercial centre of London evolved over centuries with commerce affecting attitudes towards democracy, free media and capitalism compared to more feudal France, Gujarat and Mumbai has evolved in a similiar manner compared to other states in the north of India. With all the media infomation and misinformation on Modi's mishandling of communal riots little has been said of the unique position of Gujarat and Gujaratis in the industrial development and modernization of India. Compared to other parts of India historically there is a greater degree of tolerance in Gujarat for other communities, similiar to Britain's compared to France and Spain, because of this commercial outward looking orientation for new ideas. ...

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How globalization which for over a long period since China and India and other emerging nations joined the global trading system helped bring disinflation and lower prices to the developed countries is now closing that chapter. And starting a new one in which the rapid development of these developing countries is strengthening their currencies and the growth of the middle class and increasing demand for commodities, food and energy, in this way driving up prices. China wants to move up to manufacturing more sophisticated products and is no longer interested in the kind of development where workers wages suffered so that domestic consumption suffered, where lax environmental protection caused serious damage to the environment and where the fous was on production of low value added products in textile, toys, shoes, furniture. This means a lot of factories from this era will close and those that operate will raise prices to reflect increased costs to meet new laws and loss of rebates for low value added products. All this means the disinflationary impact of production and export from China is over. Meanwhile a number of trends have gone to raise prices of food products and commodities. Its astonishing but the price of rice has gone up by 147% over the last 12 months. The World Bank estimates that food prices have gone up by 83% over the last 3 years. This adds to the distress of communities across the developing world. And iron ore producer Vale of Brazil pushed through price increase of iron ore by 65%. This will be reflected in price increases in everything made of steel like Caterpillar tractors and so on. Baosteel in China has raised prices by 17-20% recently. Countries with pegs to the dollar and exporters of commodities like the Middle Eastern countries are seeing inflation from both the peg as the dollar loses value and everything costs more and from the boom fueled by government spending....

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Emmanuel Macron graduated from Sciences Po University in 2004 with a degree in public affairs. He joins the Finance Ministry as an inspector and then buys himself out of government service contract by 2008 to join a private bank. He arranges an acquisition from Nestle and other business deals during this period. In 2012 he is appointed as deputy secretary general for the president's office after Francois Hollande a socialist is elected to the presidency. In 2014 he is offered the position of Minister of Industry and Digital Affairs in the second Manuel Valls government. He makes some changes to French government but opposes the wealth tax or tax on business, and is generally pro-business, though he acts as a member of the Socialist party.  He uses this period to build momentum for his own run for the presidency as support for Hollande falters having lost support from his working class base with Macron and Valls inspired changes.  Macron finally announces he will run for the presidency forming his own En Marche movement which he finances with his own fund raising. Throughout this period right up to the election in 2017 Macron has not run for public office. When he wins the presidency in that year he lacks the experience needed as the youngest president in French history at the age of 39. Like another young president Obama he handles his public image with the media for his En Marche movement promising to unblock France. This public image and his lack of experience makes him impervious to the social changes going on in France that lead to the yellow vest protests in 2018. This is a period when there are changes in the midwest as workers in Michigan and other midwestern states turn away from Hillary Clinton and Obama.  French workers are in the position of workers in the US with the decline of manufacturing, much of it shifted with the supply chain to China and Japan, and the gap opening between rural and urban tech educated areas. Macron follows Obama's quick rise from Senator to run for president yet lacks experience, and lacks sufficient grasp of the social changes with loss of manufacturing, the wide gaps between rural and urban tech educated people, conditions in the rural and farming areas. Macron survives this period, is reelected in 2022 with the help of socialist Melenchon voters. He says he will govern differently, less distant from average Frenchmen, but his instincts are to push for pension reform. At a time of cost of living crisis, and when the French budget office says the change in pension from 62 to 64 was not critical at the present time when inflation was hitting the public after the pandemic. Macron does this by Article 49 in the way he has done under the Manuel Valls government, by executive action alone. This time he faces a no confidence motion in parliament in March 2023 following some of the largest protests France has seen in years, with two thirds of the French according to FR24 opposing the change in pension law. Women see this as coming at a time when age discrimination hurts their chances of earning a living after 50 years of age.  Age discrimination is widespread in France, in a way it is not in Germany, say reports in the NYT. And with the cost of living crisis acts as a major hurdle for the average French person, if pensions are delayed without addressing these cultural issues in France. The result is that the protests have substance and Macron is seen as not sensitive to this at a time when he lacks a majority in parliament. ...

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Whirlpool shifts 80-100 jobs from its Monterrey plant to an Ohio factory producing machines for laundromats. The Monterrey plant will not lose jobs because it is making more washing machines for the expanding Mexican market. Electricity is cheaper in the U.S. than in Mexico which provides some of the savings. Transportation from Mexico also offsets the higher wage costs in the U.S. of $18-19 at Whirlpool plants. According to Reshoring Initiative- which supports shift back of offshored jobs, the loss of jobs to offshore locations continues but is now being offset by job inflows to the U.S. Some of these inflows that receive less attention are manufacuring facilities being setup by foreign corporations in the U.S. as costs of energy decline and labor become more competitive.

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Apple releases list of suppliers and results of audits of working conditions at plants in China. Many of the facilities show poor working conditions.

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Tom Friedman explains why Applied Materials is one of the largest solar panel manufacturers in the world but makes its panels in 5 factories in Germany, four in China and one each in India, Taiwan and Italy. With no factory in the USA. And all 14 factories put up in the last 2 years, put up overseas. Applied Materials is opening its largest worldwide research facility in Xian, China, in October 2009. Applied develops the knowhow for solar energy at its research facilities for manufacturing technology. These solar panel factories says Applied CEO Splinter go for about $200 million each. Solar panels technology can vary from thin film coated onto glass with nanotechnology using crystalline silicon, to other technologies. Germany is at the forefront of the world solar energy industry. It is the second largest industry in Germany employing some 50,000 people. China is putting a new emphasis on pollution free energy. What Germany has done says Friedman after visiting Applied Materials research facilities, is to allow any business or homeowner to generate solar energy, and if they decide have the power utility to connect them to the grid as well as buy the solar power at apric and duration attractive to the homeowner or business user. Something the USA has still to do. As a result solar energy consumption in the USA lags way behind these countries. Applied Materials largest USA customer is a German owned company in Oregon says Applied CEO Splinter. Splinter points to the fact that solar energy is becoming an important industry, similiar to the way the auto industry assumed importance. For Applied Materials this means revenues of $1.3 billion in the last 12 months, according to Splinter. ...

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Issues of inequality and lack of upward mobility came up in the last presidential election. A Federal Reserve Survey for 2018 shows the financial fragility facing many Americans. One quarter of working individuals say they do not have any retirement savings. About 17% of households say they cannot pay all their monthly bills. About 40% of Americans say they do not have enough cash to cover an unexpected $400 expense, and would have to rely on credit cards balances or loans from family to make the payment. This survey by the Federal Reserve is done each year since 2013, after the financial crisis hit in 2009 it became more important. Still Americans are showing unusual resilience and upbeat spirit. About 75% say they were doing Ok or living comfortably up from 63% in 2013. And two out of three described lovcal economic conditions as "good" or "excellent."  This shows that the financial vulnerability resulting in the loss of jobs in the U.S. both from jobs lost in manufacturing going overseas,  jobs lost through automation or industrial decline in some sectors, and the hit from job loss during the financial crisis and its aftermath years of 2009-2014 is still leaving a lot of families financially vulnerable. Low interest rates and stagnant wages also meant savings growth for ordinary Americans was less than it should be in a healthy economy without booms and busts. This is also the environment in which the U.S. is tackling challenges to its technological leadership in 5G following a decline in sectors such as autos and electronics, with job losses to Japan and South Korea. New trade agreements are focussed on correcting the imbalance, first with Mexico, South Korea, and now with China. Focus is also on fair wages and labour overseas to raise American wages in key sectors. The damage done by a low interest rate to savings of ordinary Americans outside the stock markets is also being seen as a downside in the boom bust cycle, that includes loss of jobs for vulnerable American families. The rise of the tech sectors has diluted the traditional protections of working class Americans with the shifts and realignment of the major parties. ...

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This review of Acemoglu and Robinson in the MIT News is relevant to the situation faced today. The two professors at MIT and University of Chicago, have provided two books relevant to today's crises, the first "When Nations Fail" in 2012 about the need for inclusive nations, and the second "The Narrow Corridor" about the importance of the role of individual and society in sustaining democracy. Their point in the first book "When Nations Fail" in 2012 coming after the financial crisis caused by banking excesses stated that the nations fail when they are not inclusive.  In practice it is about " the system being rigged" to favor some groups as the Republican party and Mr. Trump say has happened. The banks and lobbyists, pharmaceutical industry and lobbyists, tech industry and lobbyists, leading to a system where individual and society are pushed into a corner. Social theorist and economists fail to look at things in practice such as profit seeking behaviours and unethical behaviour that goes unchecked, which continued after the financial crisis into the election of 2016, with charges of rigged systems.  This week Germany's DW.com oped pages covered New York with the statement that treatment in New York costs $15,000 for coronavirus infection illness yet many New York residents in the worst affected neighborhoods would find a $500 expense difficult to bear. Early closing of schools to control infection rate was resisted by Mayor De Blasio of New York because many parents depended on schools for lunches for their kids. The situation had been allowed to deteriorate to that level.  In their second book the MIT authors are saying that the role of the individual and society are important to check that of the state (for example if it is perceived as being rigged by the influence of lobbying of legislators and politicians as the Republican party and Mr. Trump have maintained). It is only when it is checked and there is some tension is there the possibility of democracy and democratic processes, say the two MIT authors. In the absence of this the states and elites of politicians and business interests supporting the leaders and their common behaviours, become a perpetual state, in effect a one party rule of two parties with similar behaviours and interests in the state. A situation that allowed the outshoring of American manufacturing and European manufacturing to China including critical infrastructure, essential infrastructure over 2 decades even over the protests of Mr. Lighthizer since 2010. As the twin crises evolved in Europe of austerity policies after banking excesses in Europe, and the migration crisis of migrants coming from North Africa and the wars in the Middle East, a similar situation began to develop in Europe as the political elites entrenched in Germany, France, and Spain faced new voices. The tensions that arose were constructive bringing in the role of society and individual that the MIT authors say are so necessary for the narrow corridor of democratic process to function. New parties emerged in France with Macron's La Republique En Marche, Podemos and Ciudadanos in Spain, and in Germany with the SPD and CDU shrinking till the revival of Merkel for her handling of the pandemic. Coming from an intuitive way born from experience in East Germany, Germany's recent president Joachim Gauck, civil rights activist  came up with the same ideas. He is a Lutheran pastor in former East Germany who struggled against the government of the German Democratic Republic (former communist East Germany) for a role for individual and society against the state. We profiled and quoted him in "The Way Forward"  column in Lyrarc.com. Gauck's point was that  having diverse groups in the conversation is important, not excluding others from outside in the conversation is important. Gauck called  debate "the oxygen of democracy,"  that needed to be maintained.  Genuine democratic process is hard to sustain, it happens only when the role of individual and society is given prominence, so that only a narrow corridor exists for democracy, a narrow space in which can be sustained only if the effort is there, the goodwill is there, and the grace of Divine Providence.  It is fragile and it is critical to sustain.   In this sense the sometimes heated debate in the U.S. and Europe, Asia and Latin America about words such as- austerity, community, solidarity, migration, New York Mayor De Blasio's choice between school lunches and infections, about infrastructure, pharmaceutical prices, infrastructure, outshoring, jobs sent overseas, manufacturing locally, made in USA or made in India or made in France, Atmannirbhar Bharat, misallocation of capital starving health and public services, are all relevant and essential for democracy. This includes the discussion to avoid use of the military in protests in American cities in the middle of a pandemic which just crossed the 2 million mark in cases in the U.S., that was taken up by Defense Secretary Esper. In it lies the hope for democracy and many voices. Der Spiegel recent look at the pandemic how it happened in China, closes with the line- you need more than one voice in society. A constant reminder that many voices be heard, counseling patience, but also that wise choices be made with divine providence.           ...

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Krugman on taxes, Simpson Bowles and "low rates." He describes the U.S. under Dwight Eisenhower, a Republican president and war hero. A period which he describes in which unions had bargaining power, a third of workers were union members, and in contrast to to the 1920 business executives lived modestly and paid higher taxes. And yet the U.S. registered high rates of growth. There are several aspects to this period in contrast to the present that also need to be kept in mind. The post war booming economy after two decades of slow growth and war. Much of the present infrastructure in the U.S. was built during this period including the interstate highway system started under Eisenhower. The workers of developing countries of China, India and other parts of the world were not a part of the global labor force till the 1990's, with technology and transportation making global manufacturing a reality. The major factor in lowering wages and creating lower levels of unionized workers in the automobile as in other industries is the competition from lower wage labor in China and other Asian countries, and the presence of non unionized plants in the U.S. The choices made by economic decisionmakers of both parties in the last two decades, say experts including Fed chairman Bernanke, created a huge inflow of capital from Asia that led to housing and other bubbles, creating economic crises such as the one in 2008 and aggravating economic inequality. ...

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Apple released a report on working conditions at factories used by suppliers in China. Of these factories 108 facilities did not pay overtime wages. In 93 of the facilities records show over half of the workers worked for more than 60 hours per week. In 5 facilities there was use of underage workers. 112 facilities were not following proper practice in storing, moving and handling of hazardous chemicals. Apple CEO Cook says he will need to monitor these factories very, very carefully.

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The Japanese yen surged in value following the 2008 financial crisis as it was seen as a safe haven. As a result the Korean won declined by 42% against the Japanese yen. This continued till 2012. Japanese companies had to compete overseas at 80 yen to the dollar and shifted operations overseas. Now with the policy of monetary expansion of the Japanese central bank the situation is reversed in December 2014. The Korean won is up 40% against the Japanese yen since 2012. The Japanese yen is now down to 118 to the dollar in Dec. 2014. Abenomics gets a new mandate with the snap election in Dec. 2014. Aaron Back says Samsung may have gained ground in televisions and smartphones but other areas in electronics such as chips, displays and image sensors remain competitive and responsive to price. In autos Hyundai market share has declined to 4.4% by Dec. 2014 from 5.1% in 2011, according to MotorIntelligence.com. So far Japanese companies have used the currency advantage to improve profits and come up with better products. By using profits to invest in new technology and productivity Japanese companies can provide more features at the same price points to gain market share without having to cut price. After years of declining margins in electronics, autos and other markets this appears to be the current strategy. Another reason for this is that Japanese companies have already shifted production overseas, the shift being higher for Honda than for Toyota. Technological improvements from investments in R&D in Japan can be transferred to manufacturing operations overseas just as Apple is doing with smartphones manufacturing in China. The currency shift also improves Japan's position relative to American and European competitors in international markets....

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Inflation in China and rising wages are pushing up costs for American manufacturers. The pressure on China, most recently in Congress, is helping to push up the value of the yuan. This combined trend is making it attractive for some manufacturers to bring factories home to the U.S. A trend in the U.S. towards non-unionized labor and the new trend to a two-tier wage level- with lower wages for entry level workers- and the shedding of legacy health care costs, is creating a more cost competitive labor force in the U.S. This extends from older industries such as furniture and auto components to newer industries and technology. The new factories setup in the U.S. use technologies that require a smaller number of workers, in most cases less than half the number of workers that were employed earlier. This adds another element in cost efficiency, though it means fewer jobs are created with new plants.

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Moore points out that there are twice as many people working for the government in the U.S. (22.5 million) than in manufacturing (11.5 million). In 1960, the situation was quite different, there were 15 million workers in manufacturing and 8.7 million working for the government. More workers in the U.S. work for the government than in construction, farming, fishing, forestry, manufacturing, mining and utilites put together. Every state in the U.S. has more people working for the government- except for Indiana and Wisconsin- than people in manufacturing industrial goods. And California has 2.4 million government workers, which is twice the number in manufacturing in that state. New York and Florida have a 3:1 ratio, and New Jersey a 2.5:1 ratio of government workers to workers making industrial goods. Part of the reason for this is the huge increase in productivity and the advances in technology that make it possible to have higher production with fewer workers. This kind of productivity is missing in the government sector. And efforts to improve productivity tend to be blocked by the unions who favor the status quo....

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This editorial in the NYT says Bill Clinton moved the Democratic Party to the centre in 1992. In 2016 about 25 years later, after the removal of the Glass Steagall Act led to the 2008 global financial crisis and a deep recession, after the trade relations with China led to loss of U.S. manufacturing jobs over two decades and the hollowing out of industry in the midwest, things have changed. The revolution led by Bernie Sanders, a shrinking middle class, smaller access to college education for the middle and working class, and wide disparities in income, are putting the Democratic Party closer to its roots and the days of FDR. The Democratic Party platform calls for a 21st century Glass Steagall Act to separate normal banking from investment banking, opposes the TPP to prevent any further export of jobs overseas, and goes for a $15 minimum wage. This was also evident at the opening day of the Democratic National Convention when Sanders told the gathering in Philadelphia that even though he was not the candidate, these are the planks of the platform that Hillary Clinton will be pushing for in her presidency. What the editorial does not point out is that the Republican economic platform also calls for reinstatement of Glass Steagall Act, opposes TPP and opposes any loss of American jobs to overseas locations. It differs on the minimum wage leaving it to the states, and it is likely to skew tax cuts towards the wealthy, but also possibly removing the lower income brackets from taxes as Britain has done under the Conservative Party. Both parties today are looking for support from the middle and working class and have directed their appeal to these two groups which are in upheaval. The election of Trudeau in Canada recently also followed this trend, after the hollowing out of Canadian industry in Ontario and Quebec in a similiar pattern as in the midwestern U.S.  ...

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A shakeout for manufacturers in the solar industry is developing in 2011-2012, as prices of solar components drop sharply. There is slowing growth for solar products in 2012. Seven solar power manufacturers have filed for bankruptcy or insolvency in 2011, including two German companies Solar Millenium and Solon SE, and Solyndra LLC of the U.S. Debt exceeds market capitalization for the 10 largest publicly traded solar companies. A major reason is the subsidies offered by governments in Europe, the U.S. and China, which resulted in a glut in manufacturing capacity and falling prices. Chinese banks encouraged by the Chinese government have given $43 billion in credit facilities to Chinese renewable energy companies, according to Bloomberg Energy Finance. Prices of solar panels at $1.60 per megawatt in 2010, dropped to 90 cents per megawatt in 2011. Another problem is slowing demand. In Europe banks are reducing funding. Installations doubled for solar energy in Germany in 2010, and dropped 29% in 2011, according to Jefferies. Germany is the largest market for solar energy in the world....

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VW sales including Audi were up 34% in 2012. BMW sales were up 14%, and Daimler sales were up 15%. The growth rates for the German automakers surpassed growth in China. By manufacturing in the U.S. German automakers are better able to compete with the Detroit and Japanese carmakers in pricing. A third of BMW vehicles and a fourth of VW and Mercedes vehicles are now made in the U.S., according to LMC Automotive. VW has invested about $4 billion in the U.S. since 2008, including investment at a plant in Chattanooga, Tennessee. The German carmakers are now going for mass appeal with the VW Passat. Lower priced Mercedes models now sell for under $30,000. German exports to the U.S. increased by 24% in October 2012, compared to 18% for the eurozone overall. About 40% of German exports to the U.S are autos. Eurozone exports to the U.S. were up 18% in Oct 2012, and Britain's exports increased by 11%. British exports in Oct 2012 of 4 billion euros were second only to Germany at 8 billion euros....

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Eventually China's stimulus efforts and efforts to build up its reserves of commodities like its Strategic Petroleum Reserve, may not boost demand for oil, iron ore and other commodities enough to offset the recessionary impact on the industrialized economies. And China's demand is large but not that large that it can tilt prices one way or the other. In the first quarter China accounted for 9% of global oil demand, compared with 55% for the largely recession impacted industrialized world. Stockpiling of resources is a temporary factor. Sanford Bernstein estimates the first phase of China's Strategic Petroleum Reserve may have boosted imports by 400,000 barrels a day in March and April. Another factor is consumption. Stimulus dollars pushed fixed asset investment by one third in the first quarter, yet consumer spending went up less than 10%. Consumption will remain weak. Ultimately China's stimulus efforts may act as a brake on sudden falls in commodities prices, and not support continual upward pressure on commodities prices right smack in the face of a deep recession and large underutilization of manufacturing capacity in the industrialized world....

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Honda Motor Company will have one bright spot as sales of motor bikes increase from 13.9 million to 14.9 million for 2009. Honda two wheelers sell briskly in Asia and South America, where they are considered low-price necessities. On the other hand Honda's auto sales will drop by 400,000 to 3.5 million for the fiscal year ending in March 2009. Honda will post a profit of $860 million or 80 million yen for this fiscal year, down 87%, by contrast Toyota will post a loss of 350 billion yen, and Nissan a loss of 265 billion yen. Honda is seeing huge growth in markets like Indonesia where $50 can be a down payment on a motorcycle., Honda sold 2.8 million motorbikes there up 34%.. Now sales are predicted by Honda Motor to drop to somewhere between 2.1 and 2.5 million bikes. Honda markets heavily to people under 25 in Indonesia, who make up half the population of 240 million people. Honda is also working on lowering costs of manufacturing by focussing on production in India, China, Thailand and Vietnam. ...

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The influence of business executives who helped shape president Trump's views on Mexico, China, Export Import Bank, and other issues is covered by Stokols and Bender of WSJ. On Mexico the departure of Mike Flynn helped moderate views, Wilbur Ross, the Commerce Secretary also provided a moderating influence. The plans are now to change NAFTA but not entirely redo the agreement. On the Export Import Bank the views of Boeing CEO Muilenburg, who explained to Trump why the Bank supported U.S. exports and how other countries had similar banks, led to the president filling the bank vacancies. On China the influence of NEC head, Gary Cohn, former president of Goldman Sachs, and other business executives, led to a less confrontational position. The president once called NATO obsolete during the campaign but he met this week with NATO secretary general Stoltenberg this week and expressed strong support for NATO after rising tensions with Russia.