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Jose de Cordoba of the WSJ provides this excellent story on the nature of the migration crisis in the U.S. that is creating political divisions in the U.S. What is causing this surge in migration to the U.S.? Cordoba provides some useful insights to understand the nature of this problem. Nine out of ten migrants in Guatemala which sends most of the migrants from Central America are moving north from Guatemala through Mexico to the U.S. for financial reasons, it points out. Only 10% are because of violence in the region, the rest for financial reasons according to the United Nations International Organization for Migration The jump in apprehension of Guatemalans at the American border shows a surge from 15,000 in 2007 to 236,000 in 9 months of 2019, according to U.S. government data. The surge began in 2008 and jumped in 2014 after U.S. court rulings that first required migrant children to be allowed to join relatives in the U.S. followed by a ruling in 2015 that allowed a parent to join the children and allowed court proceedings to take place that takes years. The result was that smugglers advertised on radio and families sold small plots of land to join relatives in the U.S. who had gone before them. The migration is also specific to certain areas hit by damage to crops, including coffee crop from drought, or certain towns that simply sent more people simply for financial reasons advertised openly.  For 8 hours of work a migrant could make at $12 per hour amount of $96 per day, in Guatemala the daily wage would be about $5.  Overwhelmingly it is financial reasons or economic opportunity that sends migrants north. After it became known that kids could help migration the people in family groups apprehended at the border jumped from about 40,000 in 2015 to 390,000 in fiscal 2019. Smugglers charge $8600 per adult and half that for a child and an adult that can be dropped off at a checkpoint. The efforts of president Trump to close the border to this migration include having Mexico sign an agreement to police its southern border with Guatemala using its newly setup National Guard. As a result the migration has actually surged in 2019 with migrants seeing this as their one last opportunity to join relatives in the U.S. or to migrate to the U.S. The Trump administration tried separating families because of the loophole in the law that allows children to be not deported and parents to join their children. But this created a public outcry and the effort now is to close the loophole in the law. It is also strange that as many migrants are coming from one town Joyabaj  with population 100,000 as from Guatemala City the capital population 2.5 million. In fact the economy has grown by 3.4 % a year in Guatemala and efforts have been made to improve conditions with the help of donor countries in the West for several years, though the drought conditions exist. The situation is similar to that in Europe. If one looks at the violence by gangs in central American region after the end of the guerilla wars and compares it to the wars in Syria and Iraq, one can see how humanitarian concerns preceded what eventually turned out tobe a full blown migration for economic reasons. Initially chancellor Merkel adopted a humanitarian stance but failed to recognize that there was another side to his situation that would attract a wave of economic migrants from places as far apart as North Africa to Afghanistan. Poverty has existed in these regions for many many years before the current migration, with drought and lack of economic opportunity going far back in time. Merkel only recently recognized this problem and the new CDU leader Kambrauer has clearly recognized this. CDU policy shifted in 2018-2019 with curbs on economic migration that has reduced it to a trickle. This process is underway in the U.S. at its border with Mexico and for Mexico with its border with Guatemala. In the short run Europe and the U.S. are paying a price. Not just in the way it has divided each country with a far left and a far right eroding the centrist parties that existed before. In some cases centrist parties that were popular on the right and the left now hve leaders from a far right or a far left faction within the centrist ruling parties. Boris Johnson in Britain, Trump in the U.S., leaders in Italy, Austria and Hungary. Or as in Germany and Spain new far left or far right parties causing the centrist parties to dwindle in influence or as in Germany this combined with a shift to the Green Party in Germany and Liberals Party in Britain as a show of disapproval for how the migration issue has been tackled.  The Economist in a July 2019 issue also points out that the country's own citizens have fared worse with migration. It shows how the Conservative Party's austerity cuts for welfare budgets was popular in Britain as long as eastern European migration at high levels in Britain were allowed starting with the Labour party under Blair. This disproportionately hurt the middle class and the poor after the hit already taken from the faulty banking caused recession. With the drop in migration it is now felt by a majority in Britain that the austerity cuts have just gone too far and a mood is set in to restore many of the cuts and fund public services. Meantime some of the damage has been done and will take a decade to correct as the issues that mangled the centrist parties and led to fragmentation on views of what society should look like have taken place with Brexit and high levels of poverty, income inequality in Britain, lack of investment in infrastructure with overallocation to tech with declining productive benefit for every additional dollar spent. ...

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BBC News provides a look at the first proposals of the Boris Johnson minority government to the European Union. This includes replacing the Irish backstop. The Irish backstop is a way set up by the EU and the previous UK government of prime minister May in negotiated agreement to prevent a hard border in Ireland. It means Britain would remain in the customs union with the EU after December 2022 if no agreement for withdrawal is reached by then. Conservative Party hard liners oppose it because they say it leaves the UK indefinitely in the customs union. The EU insists on this to protect the interests of a member state Ireland. The moderates in May's Conservative government agreed to it to keep the peace accord in Ireland. Boris Johnson wants to get rid of it, and his proposals include customs checks between Northern Ireland and Ireland which removes the free flowing border between the two Irelands, a major achievement of the Irish peace accords.  Which is why the negotiations could end up going nowhere, with each side presenting the other as the side that wouldn't negotiate terms of withdrawal. The Liberal Democrats and the Scottish National Party, and the Labor Party except for its leader Corbyn's neutral stance, oppose leaving the European Union. And parliament opposes leaving without a negotiated agreement pitting Boris Johnson against parliament and the opposition.  Another referendum or a general election would settle the issue with Boris Johnson thinking he can flip former safe Labor seats in working class areas in the north of England to win the election. Labor party's McDonnell says he has miscalculated and Labor party is buying time to organize an effective election campaign to get back the working class vote lost under Blair with his confusing Third Way that lost workers on the way.   ...

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The head of the Germany Program at Institut Montaigne in Paris, France, Robinet Borgomano looks at the renewal of German society under the ideas of "respect" put forward by Olaf Scholz of the SPD party. What does Olaf Scholz see as the main issue of our time? - Borgomano says it is the disintegration of European and American societies under the combined effects of technological progress and globalization. Where does Scholz get his ideas of "respect" for workers and families? Isn't Mr. Biden sharing the same ideas in the US? The SPD party got its start at the Bad Godesberg Convention in 1959 when it embraced the idea of a social market economy as a party of the people. Wily Brandt as chancellor from 1969 to 1974, whose personal struggle against the Germany of World War II was based in the Nordic countries, embodies best this renewal aspect of the SPD. Scholz sees his role as renewal of Germany, Europe, hand in hand with Mr. Biden's renewal efforts in the US on the same basic ideas of respect of the dignity of the worker and families that in Germany were seen with Wily Brandt and in the US with Harry Truman who followed FDR. Scholz rejects the overemphasis on the of merit in German society, European society, or American society, in the way it has taken shape in the last fifty years. Scholz cites Michael Sandel's Essay "The Tyranny of Merit" rejcting it because it makes a case for inequality based on merit, on capital allocation on an implied idea of merit of free markets managed in damaging ways for personal interest. It is wrong because it robs the worker and families of the basic dignity that is the right of every individual and of every person. It is wrong because it makes a false justification for growing inequality, and makes those who do not succeed feel that it is their fault. Meritocratic elites have made the idea that those who work hard and play by the rules get all the benefits and wealth even if the rules were first set in a way that benefits them alone. When these rules become implicit they are rarely questioned as happened in the period after 2000. It is not just in Europe and America that this happens, and not just in the 20th century.  Strange but true- During the 1850's in the heyday of industrialization in Britain the Ethnological Society of Britain justified the inequality between the British and Indians in the British Empire by saying Indians were inferior in exams and did not have the motivation or the aptitude and energy to excel in the way British students did. Dadabhai Naoroji, the first Indian member of the British parliament in Mr. Gladstone's Liberals singlehandedly took up the job Sandel and Scholz and Mr. Biden are taking on today to restore the respect of workers, farmers, and families in America and Europe and in all parts of the world. Sandel goes on to say what Scholz has heard clearly- "the parties that made the offer of upward mobility to workers and families have missed the insult implicit in it to a large number of working people." In a way it is going back to the roots, to the founding fathers in America who said in the 18th century that "all men are created equal and they are endowed by their Creator with certain inalienable rights, and among these are life, liberty and the pursuit of happiness," -nothing less.   ...

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Spiegel Online provides a inside look at the leader of the Law and Justice Party which was elected to power in 2015. The liberal opposition that was in power since the fall of communism has seen its popularity decline in the rural areas of Poland, especially in the east. The urban-rural divide seen in other countries such as France is acutely present in Poland and other parts of Eastern Europe, with poor governance and a tendency for economic gains made under capitalism following the fall of communism to go to more educated people in the large cities. The party's leaders are Lech and Jaroslav Kaczynski who were president and prime minister from 2005 to 2007. At the time they were seen as outsiders lacking the sophistication and experience in government of the liberal opposition under Donald Tusk, who now is head of the EU Council since 2014. Tusk was prime minister of Poland from 2007 to 2014. Lech Kaczynski was killed in a plane crash in 2010. Jaroslav Kaczynski appoints members of his party to key positions in government including prime minister Duda. Kaczynski is strident about the manner in which the gains since Poland joined the European Union have gone only to certain groups able to benefit from capitalism. At a recent party congress near Warsaw he is quoted here as saying: "We are here to ensure that everyone in Poland has the same opportunities, regardless of where they live, in the cities or the country." Kaczynski's appeal is in offering a generous welfare state for the middle classes- small businessmen in villages and towns across Poland, common people, with subsidies to tackle the cost of living. His focus is on the "pathological" consequences of economic liberalism after the fall of the Iron Curtain, privatization that benefitted a few, including Kaczynski says former communists and dissidents. Small businessmen felt the inroads of large private retail chains, and families felt the problems of lack of investment in schools and kindergartens. The liberal opposition can only offer the hope that being a reliable EU ally will ensure prosperity, which does not go well with the eastern part of Poland. As a result the Kaczynski government is moving away from the ideas that anchor the European Union. It sees the rule of law and independence of the judiciary as something that can be changed to where the president appoints members of the Supreme Court and the judiciary. Protests in Warsaw and the large cities are taking place against these moves. Der Spiegel says this could end up the way it happened in Britain where it simply stumbled into leaving the EU just by accident. This is the situation in 2017. It could be a temporary process that is a response to the excesses of capitalism. As Kaczynski says to create a level playing field for all parts of Polish society by smoothing out some of the harsh effects of rampant capitalism. Or as Spiegel Online points out a shaky period in which the EU and Poland are at odds- ironically with Donald Tusk as the head of the EU confronting both Theresa May and Kaczynski.  ...

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The Conservative Party under David Cameron won 330 seats in the British parliament, securing a majority in the 2015 general elections. The Labor party won 232 seats, losing 26 seats compared to the 2010 election. The Conservatives gained 24 seats. The Labor party lost very badly in Scotland, winning only 1 seat. The Scottish National Party won 56 of 59 seats in Scotland. Opinion polls underestimated the strength of the Conservatives whose campaign theme was jobs created under the Cameron administration. Austerity was a theme for the Scottish National Party and Labor, yet as Greg Ip reported in his column on the British economic recovery the Cameron administration adroitly managed this by relaxing deficit targets after 2012 forecasts on the deficit cutting could not be met with lower revenues. Labor was hit by the sense that the Tony Blair type liberal economics had failed to reverse the decline in real wages and jobs for working class people, and the Conservatives were taking on a tough situation with the deficit and the 2008-2009 recession that started under Labor. This hurt Labor in Scotland and in the rest of Britain. Labor leader Ed Balls lost his seat. The UK Independence Party fared badly winning only one seat and its leader Nigel Farage lost his seat. Prime minister Cameron promised a EU referendum for 2017 during the election, and he will now have to manage this issue as his party favors membership in the EU with some changes. The improvement in jobs was a strong point for the Conservatives, yet Britain faces wage stagnation with low productivity gains which will be a challenge for the new administration....

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Witte, Booth and Adam of the Washington Post describe the situation Britain's prime minister Theresa May finds herself in after calling a snap election. A badly run campaign by May focusses on Brexit, and leads to election losses to Labor. Without the support of voters in Scotland who voted tactically to prevent Scotland from breaking away, the Conservatives would have no chance of forming a government. May now needs the 10 seats of the Democratic Unionist Party in Scotland to have a 3 seat majority. Labor leader Corbyn despite a barrage of negative publicity from British tabloids, maintained his cool and composure. His focus on the austerity politics of the Conservatives under Cameron and now May, enabled Labor to get 40% of the vote compared to the Conservatives 43%, with the Scottish National Party getting 3% and the Liberal Democrats 7.4%. Giving the parties that have never seen Brexit as a priority for Britain over 50% of the vote. The Democratic Unionist is a small party with less than 1% of the vote (0.9%), which in some countries makes it ineligible to take seats in the legislature. In the mixed up out of focus nature of British politics today this party is the kingmaker. The UK Independence party or UKIP party that started the whole affair of Brexit- that prime minister Cameron responded to to gain votes for the Conservatives by promising the referendum on Brexit- won just 1.8% of the votes cast, in a election where 69% of voters went to the polls, winning zero seats, down from 10.8% in the 2015 election. This is the state of British politics today  following the failure of political leaders, as Theresa May acts as if the election results are not sending a message about Brexit, say Witte, Booth and Adams.   ...

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Jeremy Corbyn is reelected leader of the Labor Party with the support of young people. He is seen here from the European viewpoint as a disaster for Britain. The parliamentary group of the Labor Party opposes Corbyn, and is critical of him for not supporting the Brexit no vote the way he should have. Corbyn did not come out strongly in favor of staying in the EU, giving it a 7.5 out of 10 score when asked how he would rate the EU. Only a fifth of British voters support the idea of Corbyn as prime minister. He is good at bringing people's concerns for attention at prime minister's questions, rides a bicycle to work, and is honest about his convictions. Yet this is not enough to be effective as a leader of the opposition who lacks the support of his party's members in parliament. Corbyn has also dropped people with different opinions from the leadership in the Labor party in a nasty fight with people who disagree with him, which is bad for the Labor Party. This has weakened Labor to the point where it cannot function as an effective Opposition Party, especially now that Britain enters Brexit negotiations and needs an opposition to act as a check on the government's policies. The Economist magazine in London shares these concerns in an editorial. ...

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The move by George Osborne, and the new British government, to eliminate a structural deficit by 2015- the difference between what the government takes in and its spending which is increasing- with large spending cuts and new taxes, was announced with the new budget. It will in total by 2015 amount to about 8% of GDP, and is the largest effort to reverse increases in public spending since the days of Margaret Thatcher. After a decade of Labor governments public spending now adds up to about 50% of the economy. About 77% of the effort to cut the deficit comes from spending cuts, the rest from taxes.

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New York Yimes editorial calls the Conservative party coalition government's austerity budget (the plan to cut 500,000 public sector jobs and terminate unemployment benefits after 12 months), as a gamble on an improbable theory that the private sector can make up for $130 billion in cuts. The editorial says these budget cuts could suffocate a feeble recovery.

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This editorial in the Economist says Britain's economic recovery will not be complete until interest rates are well above zero and productivity growth is established. Without productivity growth and growth in wages, both lacking in the economic recovery since 2009, tax revenues will not be enough to reduce the deficit, requiring more spending cuts. That means the Bank of England will not raise interest rates, keeping a situation of no rate changes prevailing since March 2009 when the central bank cut rates by 0.5%. In the current situation the Bank of England is not expected to raise rates till 2016, only after the U.S. Federal Reserve increases rates to avoid appreciation in the pound and further deflationary pressure, according to Goldman Sachs. With inflation currently at zero, following the drop in oil prices, and 10% appreciation in the pound since mid 2013 making imports cheaper, there is little pressure to increase interest rates. In 2011 inflation with rising food and energy prices reached 5.2% , but the Bank of England did not raise rates because of the eurozone economic crisis affecting growth. Only since 2013 has economic growth picked up with 1.2 million jobs created since the beginning of 2013, bringing unemployment down from a high of 8.5% in 2011 to 5.6% in May 2015. Throughout the recovery productivity growth is falling behind- 2014 productivity measured by output per hour worked was 1.3% lower than in 2011, and 14% below the pre-crisis trend, according to the Economist....

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Long term changes in voting patterns, with voters shifting allegiance to third parties in larger numbers led to the need for a coailtion government. The Liberals with 23% of the votes won 57 seats. In this election 35% of the vote went to third parties, the highest proportion since 1918, and these patterns are seen as likely to remain. Far smaller number of seats now are close Tory and Labor contested elections, and the Conservatives win their constituencies with large majorities, as a result some of the Tory votes does not register in the way of seats. With a seven point lead over Labor Margaret Thatcher won an overall majority of 44, now Cameron struggled all the way and fell short.

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Britain's Treasury chief Osborne faces a difficult period as the economy shows flat growth for 2012 and 2013. The targets he set for eliminating the structural deficit or budget gap by April 2017 may need to be shifted to 2018. The target for net debt to decline as a percentage of GDP by 2015 may also be unachievable if growth is flat in the coming year. An accounting change in how profit from the Bank of England's bond buying program are shown is designed to reduce Treasury's borrowing and bring Britain closer to this target. Osborne says Britain's actions for austerity measures, spending cuts and increasing taxes have helped keep interest rates low to pay off debt.

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Adam Davidson of the NYT's interview with American economist Posen, a member of the Monetary Policy Committee of the Bank of England. Posen says austerity measures have a negative effect on the British economy with high unemployment and lack of economic growth.

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Boris Johnson, Mayor of London, is critical of the British government's cuts in annual rent subsidies by 8%, or $3.2 billon, by 2014-15. London Councils, the umbrella group for London's 33 local authorites, says that 82,000 households in London will become homeless as a result of these cuts. Johnson told the BBC that the cuts will push renters to the suburbs- as has happened in Paris- and he will not tolerate a Kosovo-style cleansing of London. A labor party lawmaker in Leeds says that 15,000 families in Leeds will be affected by rising rents.

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The Vickers commission, has been appointed by the Cameron government to look into the British banking system and the largest banks. Ringfencing to protect retail deposits from the bank's other investment activities has been suggested. The focus is on increasing capital requirements as critical to protecting British taxpayers and the banking system. This means going beyond the Basel 3 requirements to build an extra safety buffer for the types of situations the British government was faced with in HBOS, where losses were even greater than average. Determining this should be coordinated with EU and Basel regulators.

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According to preliminary estimates of the UK Office for National Statistics, gross domestic product fell 0.5% in October through December 2010, after expanding 0.7% in the third quarter of 2010. The UK inflation rate increased to 3.7%. At the same time the money the UK needed to borrow in December 2010 came in at 16.8 billion pounds, down from the 21 billion pounds in December 2009, showing an improvement in public finances. The two main drivers of UK growth are now set to slow down. Consumption spending down because of higher unemployment and inflation, and tax increases equivalent to 8% of GDP over 4 years. And government spending cuts leading to a reduction in spending for the 2011 fiscal year of 23 billion pounds. UK economic growth is 2010 is 1.4%, after contractions of 4.9% in 2009 and 0.1% in 2008. The UK Treasury chief George Osborne said the government will "not be blown off course by bad weather." Central bank governor Mervyn King pointed to the choppy recovery. Referring to the austerity policies King said, "the right course has been set and it is important to maintain it."...

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The Center for Economics and Business Research in London estimates GDP growth for the UK of 0.4% in 2012. According to Britain's Office of National Statistics the UK economy contracted by 0.3% in the fourth quarter of 2011 compared to the third quarter.