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Not very convincing efforts to prevent corruption in China. Party officials do not have to declare their income or assets in China. The Corruption Bureau has not been set up and its unclear whether its being seriously considered. All corruption investigations are handled by CDIC (Central Disciplinary Inspection Commission) which gets its directions from the very top. A small change has been made by sending to the provinces CDIC officials from Beijing or from other provinces to ensure a proper investigation. In the past this was done thru provincial officials themselves. But provoncial officials still have to be informedbefore an investigation is begun. And the press cannot report corruption cases without official approval. All this and the temptations of corruption in a rapidly industrializing and fast growing economy without transparency and the education and institutional safeguards, and lacking a free press, make corruption a significant problem in China. How much this is costing China in the medium to long run, as well as how much environmental damage is costing China can only be underestimated as its covered up by the huge savings rate, investment and rapid growth today and in the immediate future....

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American companies on the Standard and Poors 500 stock index are sitting on a pile of cash-estimated at $960 billion. This includes undistributed foreign earnings that would incur 35% taxes if brought into the U.S. At the same time companies are hoarding this cash, using some of it for acquisitions, and only gradually increasing dividends. The dividend payout ratio- the percentage of earnings paid out as dividends- is at 28.9% for the past 4 quarters according to Standard & Poors. The dividend payout ratio was 46% for three decades since 1936, and 52% for the last two decades, according to Standard & Poors. Zweig cites Benjamin Graham who stated that companies should pay two thirds of dividends to shareholders. Why? Because shareholders can make better use of the money. With too much money companies tend not to make the best productive use of capital. One example is Microsofts's purchase of Skype at $8.5 billion, considered inflated by many analysts. Graham stated that when the companies are not making productive use of the capital it is appropriate to expect that it be returned to shareholders in the form of dividends. At the 50% ratio one dividend fund manager says companies could return $207 billion to investors. ...

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Somini Sengupta and Brian Frank provide this award winning quality of coverage in text and pictures of life in California's San Joaquin Valley, hit by wildfires and scorching heat in the middle of the pandemic. Shown are workers in the fields of one of America's largest agricultural regions fighting heat and the pandemic, struggling to survive on a precarious hourly wage in these conditions. During earlier periods from 1970 this was an almost picturebook place particularly in the cool and foggy winters, which stretched for miles with apricot, grape, almond and other fruit and vegetable fields. A dry valley using irrigation of fields with water from the surrounding Sierra Nevada mountains. Most affected are millions of workers of Hispanic origin originally from Mexico, who provide most of the labor for harvesting of crops. California with a good educational system and without the drought that hit the region, without the effects of Silicon Valley splitting the people of the state in opposite directions most on minimum wage with a concentration of wealth around major cities and spiralling property values, was a very different place in the 1960's and 1970's from what it is today. Increasing wealth concentrated in pockets and not spread out as it was in the early post war period after Truman and Eisenhower has impoverished large areas and segments of the population, creating what Dickens called in his day- "it was the best of times, it was the worst of times," depending on who and where you were. ...

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Repairing his sail near New Zealand gave Charlie Daniel the right mood to sail again. He wrote on the bulkhead on the cockpit- "Sail like yourself and enjoy it." Underlining yourself. From the coast of Brittany to the world sailing on the Vendee Globe race, solo, nonstop and unassisted, is one of the great achievements. Charlie Daniel made the trip to the Cape of Good Hope, to the coastline on the coast of South America, up to the Equator, and back up the French coast in 64 days. Here he is interviewed in Le Monde about key moments on that trip. Competing with fellow sailor Yoann Richhomme who he has known and sailed with for 20 years, Charlie Daniel was aware that mistakes could be costly. He stayed vigilant, analyzed every weather file until the very end, to take the best rout and not make errors. At times he felt Richhomme was overcanvassed and pushing too hard, in the Southern Ocean, Daniel doing 600 miles in 24 hours told his team that it was too intense that it was wearing down the boat with a long way to travel and he proved right. A crack in the hull was on the inner side which he fixed in New Zealand. At the time he had a negative mood that did not last. ...

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Krugman questions Bair's idea of the aggregator bank buying up toxic assets of the banks because the government may be assuming these huge liabilities at taxpayer expense to shore up shareholders. He questions whether these banks will not continue to be the zombie banks, that they are today, if the so called toxic asets are priced in today's market. The idea that today's market prevents these assets being priced at fair value may be deceiving he says. As the economy deteriorates, these banks even after the government at great expense buys up "toxic" assets, may still be losing money and remain that way for years, essentially zombie banks. Better he says for the government to face up to reality and nationalize these banks and then do what the Resolution Trust Corporation did with the savings and loans in the 1980's, which is clean up these banks and sell them after fixing them to new owners. The government might end up with amuddle headed approach that looks like the Resolution Trust type of action but without taking over the banks end up with something else. All because nationalization is thought of among Republicans, Democrats and Obama's people as some kind of dreaded word, when these banks are already dependent on the government for survival....

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This leader in The Economist magazine says a hard Brexit of the sort announced by Theresa May at a Conservative Party conference is clearly bad for Britain. It also point out that half of British people voted to remain. It is not clear that voters have voted for a hard Brexit, a soft Brexit, or voter alienation with elites and effects of years of austerity since the financial crisis have helped tilt the vote to Brexit. It points out that the rhetoric may be damaging Britain's chance of negotiating a Brexit that limits damage to GDP, which the Treasury estimates to be nearly twice the loss in GDP if a member of a single market as compared to leaving it. British government leaders may be overestimating the willingness of leaders of France, Germany and other countries to make concessions. By talking up to their party base politicians such as May may be putting German and French leaders to also toughen their positions on free movement as an integral principle of the European Union, and consequently of membership in a single market. ...

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An independent parliamentary panel in Japan described the Fukushima nuclear plant disaster as a "profoundly man-made disaster." It was sharply critical of TEPCO, the company running the plant, and the Japanese government's response. The investigation chairman Kiyoshi Kurokawa said in the report: "What must be admitted- very painfully- is that this was a disaster 'Made in Japan,' its fundamental causes are to be found in the ingrained conventions of Japanese culture: our reflexive obedience; our reluctance to question authority; our devotion to 'sticking with the program'; our groupism; and our insularity." This comes as a report by TEPCO shifted public attention to "a tsunami beyond our imagination," creating a large credibility gap with the Japanese people, because the public is skeptical about TEPCO's attention to safety during the period leading to the accident. The parliamentary report calls attention to safety factors that were ignored so that companies would be required to take further steps including costly modifications of plant equipment. A critical flaw was the lack of a independent safety agency that could enforce safety measures that TEPCO might be reluctant to make because of cost considerations. Astonishing as this may sound, the Nuclear and Industrial Safety Agency (NISA) in Japan is part of the same government ministry that promotes nuclear power, creating a sort of "nuclear bloc," which before the accident connected the safety agency to the bloc. Because of this the panel report says, NISA did not require TEPCO to prepare for a full station blackout- the loss of main and backup power- because the "probability was small." Other factors that need to be addressed are the breakdown in communication and cooperation between the people operating the plant and the people responsible for Japan's nuclear safety. The prime minister's office waited too long before declaring a state of emergency. To come up with the conclusions the panel made 1000 intervews and conducted 900 hours of hearings. The questions left behind by the nuclear accident in Japan are whether Japan should continue with the same level of dependence on nuclear power, whether it should shift out of nuclear power on a gradual basis as Germany is doing ironically after the Fukushima accident while Japan is reactivating its nuclear plants to meet energy needs. If Japan continues with a smaller reliance on nuclear power what changes have to take place for an effective safety agency completely outside the "nuclear bloc," and the series of other changes that have to take place in the nuclear power industry's handling of safety. Public opposition continues to focus on this because of distrust of the nuclear power industry after the accident....

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Prime minister Matteo Renzi focussed on some critical aspects of how other Europeans see the negotiations in the Greece bailout in June 2015. Considering that the EU had relaxed conditions for the surplus, a critical condition for reducing austerity programs in Greece and focussing on reforms, and considering the high unemployment not insisted on further cuts to the public sector employees, the conditions put forward focussing on reforms such as collection of taxes are seen as essental by other eurozone countries, including Spain, Portugal, Ireland and Italy. Renzi told II Sole 24 Ore- "The point is that Greece may get different conditions, but it has to abide by the rules. It's not the case that we have taken early retiremnt pensions away from the people of Italy just to allow the Greeks to have them! We have brought in labor reform, but it is not the case that, with our money, a number of Greek shipowners can continue not to pay taxes.. I could go on." If he went on he would cite the tax collection laws and methods in Italy which were changed under prime minister Monti to tackle tax evasion in Italy, with no effort to collect the $11 billion in estimated taxes that are not collected in Greece. Italy banned cash payment above 1000 euros and started a cross referencing initiative to tackle tax evasion under premier Monti. Greece took up tax evasion legislation in 2010 in parliament but opposition from many groups led to no action. In 2012 Labor minister Elsa Fornero broke down in tears as she described raising the retirement age for women to 66 in the private sector from 60, saying this was to prevent "collective impoverishment." Italy lacks childcare and older women help with childcare for grandchildren. Renzi was probably thinking of these changes in Italy. He went on to say- " If there is a mass get-out clause over the rules, what will happen in Spain in October? And in France in a year and half? It is one thing to ask for flexibility amid abidance by the rules. It is another thing to think that one is the craftiest of them all, in other words to be the that does not abide by the rules. We want them to save Greece. But the people of Greece also have to want that." On tax evasion and other issues for long term financial health Greece is seen as not following basic financial rules for sustaining the euro....

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Tata has a couple of things going for it to make a car at a price under $2500- a different vision behind it and a longer term idea of the market and its opportunities for Tata Motors. This is a personal vision of Ratan Tata, the last in the series of Tata family members who have run a company that was at the leading edge of industrialization in India since British times in the closing years of the 19th century. He sees this as a way to bring a car that is affordable to millions of Indians, the average Indian, just as his father and great grand father were pioneers in India's early steps towards industrialization. This also will serve another purpose. It will provide momentum to India's manufacturing base by putting India's auto industry on its way to sell cars by the millions in the next ten years. The cost was a challenge to Indian engineers ingenuity. It would help them develop something from scratch from a clean slate, and as he hoped reinvent the car if possible. The cost also was doable in India because of the wages paid to Indian engineers and workers are different. The entire cost structure with suppliers like Bosch providing the engine also and internet purchases of parts coming under a completely different way of doing business, again a reinvent of things. And the skimping on a lot of basics like a radio is possible in the Indian context where the inital target market is the scooter family of which in India there are millions. People who would simply be waiting for such a bare bones car, not see it as such because it is a great advance over a scooter even in terms of safety. What most people who have never been to India would not be able to grasp is that a whole family of four can be seen riding on a scooter or motorbike in India on weekends in Indian urban areas. Tata's idea of the market potential is the way it can ride the next stages of increasing incomes in India. Once it has come up with this car it can come up with enhanced versions with an airconditioning and radio and so on, and still price it way below competitors with Tata's quality and brand name and innovative design. As long as Tata can sell all the cars it makes it can expand production rapidly. Tata's costs for engineering a top selling model may be only 20% of the $350 million it costs western companies, according to Alix Partners, with savings of $300 to $1000 per car right there. Labor costs are about $1.20 per hour in India, less than what auto workers make in China, this provides more cost savings. Tata plans to supply kits to dealers who will do the final assembly in small workshops. This distribution strategy will save Tata another chunk of costs, as about 20% of the car's cost is in distribution in the USA. ...

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The U.S. Labor Department reports 204,000 nonfarm jobs were created in October 2013. Upward revisions of prior months lead to a level of about 202,000 jobs created in the three months July to October 2013. The unemployment rate goes up from 7.2% to 7.3% in the household survey, with furloughed government employees counted after the temporary government shutdown. The negative part of the picture is that 720,000 persons dropped out of the labor force, a high and puzzling number, and the labor participation rate drops to a 35 year low of 62.8%. This has been a problem since the 2008 crisis as more discouraged workers drop out of the work force, go to school or stay home and care for children, and increasing numbers retire. Some economists now see the Fed waiting till the unemployment rate drops to 6% before withdrawing from the bond buying program in place of the earlier announced 6.5%.

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Wages remain stagnant, labor participation rate declines, and U-6 at 11.8%, as unemployment rate declines to 5.9% in U.S. labor market.

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How a major global readjustment may be taking place right before our eyes, not visible all at once but gradually taking place as growth in Europe and Asia outpaces that in the US and consumption overseas grows while the it falls off in the US from the levels seen for a decade. The weaker dollar will reduce imports increase exports and shrink the trade deficit with other countries. More expensive imports will add to the inflation in the US. The weaker dollar will lead to American companies gaining market share with higher exports and a more competitive position versus other countries. German and other European companies will complain about the higher euro. Vis a vis China and India this rebalancing will take place slowly because of the billion people in these countries rural areas that are just now becoming part of the larger global economy.

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NATO's new guiding document and security concept now includes China for the first time as a shared security challenge. In the past there were concerns about China yet Germany and France continued economic engagement with China as before. The clearly worded statement by Xi Jinping and Putin expressing strong disapproval of a world in which the US and the EU play a prominent leadership role, made just before Russia launched its attack on Ukraine, has changed the sentiment in Europe. It is now becoming clear to Germany that the world has changed.Under Merkel Germany expanded trade ties with Russia on energy and with China as a major trading partner. The first steps are now being taken to decouple the trading relationship with China and restructure Germany's trade away from China towards other parts of the world including India, Vietnam and other Asian countries. Mr Scholz pointed to this needed shift during the Trade Fair in Hannover. As part of this shift NATO now sees cooperation with Indo-Pacific partners Australia, Japan, and South Korea and India essential for meeting the challenge of Russia today and of China over the long term. The NATO document says about China that "its stated ambitions and coercive policies, challenge our interests, security and values." Here are some of the ways the world has changed today. There are new administrations and newly elected leaders in the US, Japan, South Korea, and Germany. The new administrations are led by leaders in Japan and South Korea that are keen on working hand in hand with the US to meet the challenge from China. In the US president Biden seems determined to build up America's strength to meet any challenges China can pose. In Germany the administration is run by the SPD socialists with the Greens and the Free Democrats coalition. The Greens led by Robert Habeck and Annalena Baerbock have taken a strong position to face up to Russia's invasion in Ukraine, and Mr. Scholz is following step by step and has distanced himself from old SPD and CDU policies of  Angela Merkel of close commercial ties with Russia and China.  Indian prime minster Modi was a close partner at the G7 conference in Munich, Germany. The leaders of Japan and South Korea attended the NATO summit in Madrid and met with president Biden as shown here.   ...

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The Republican party (GOP) chances with Trump as the candidate in 2024 are seen with much skepticism by Karl Rove in the WSJ. Republicans need to keep the presidential field of candidates not too crowded for too long, as pluralities in primaries led to Trump winning a large share of delegates even with about one third of the vote in the early primaries for the 2020 election. Another challenge is the work of Trump supporting leaders in states such as Michigan who want to select delegates by convention and not through primaries. Ron de Santis, Governor of Florida, is seeking the Republican nomination, and faces a strong challenge from the former president. De Santis, 44 years, is from Dunedin, Florida, His mother was a nurse and his father installed Nielsen TV rating boxes, with great-great grandparents immigrating from Italy Benevento, Avellino) in 1904. He studied history at Yale and went to Harvard Law School, Navy Justice School after joining the Navy. De Santis was elected to the US Congress in 2014 and 2016 where he served as the chariman of the sub committee on National Security. He founded the Freedom Caucus in these years. In 2018 he ran for Governor of Florida winning by 0.4%, running again in 2022 he won by about 20 percentage points. ...

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The new South Korean government proposes a resumption of military dialogue with North Korea in an effort to bring down tensions in the region. A military hotline existed between North Korea and South Korea till early in 2016. North Korea cut off the hotline after relations with the South Korean government of President Park Geun-hye deteriorated following a missile test in January 2016 by North Korea. By May 2016 the North Korean leader, Kim Jong-un proposed military dialogue and talks, an offer rejected by the Park government. With the impeachment of president Park the newly elected government of president Moon proposed improving relations. The recent series of North Korea missile tests was a setback for that effort. With China the new U.S.missile defense system called THADD that was installed in 2016 for South Korea was seen as a setback for China-South Korea relations. As a result the tensions are high in the region. The rhetoric and tone deteriorated after the Trump administration took office in the U.S. in early 2017. After the last missile test the South Korean government of president Moon is now reaching out to the North especially for restoring the hotline that connects the two governments in the event of a crisis, so that a disaster can be avoided on both sides. ...

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Prof. Calomiris of Columbia University, says the U.S. Federal Reserve should increase the cash reserve requirement for U.S. banks to prevent a surge in inflation. He points out that excesss reserves at banks stand at about $1.5 trillion. He suggests the Fed should take early action to prevent a jump in lending and credit creation- a pattern seen in the past after several years of dampened credit and lending.

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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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Michael Porter who is an authority on competitiveness and national strategy, is a Professor at Harvard University. He last servedin a national economic strategy advisor capacity in 1983, as a member of the President's Commission on Industrial Competitiveness. His view is that the USA badly needs an economic strategy. And the political system of the USA discourages developing such a strategy. The political dialogue also discourages the discussion from focussing on the key aspects of a strategy and because of the ideological slant the discussion between Republicans and Democrats tends to cancel each other out leaving the important work undone. What is an economic strategy? Its thinking clearly what are the advantages or strengths America as a nation has and how best to preserve these advantages in the future? And its thinking clearly about the weaknesses, and how to address the weaknesses, and where money and other resources should be allocated and what actions need to be takento get results. As strategy is a long term thing, it requires patient and perseverent effort and allocation of resources. The strengths he goes on to list are, an unparalleled environment for starting new companies and the science and technology, and the regional universities and clusters of high tech workers and resources in different regions of the country,the educational institutions for higher education, and the committment to competition and free markets, efficient and deep capital markets, and the acceptance of the uncertainty and cost in the huge job churn (restructuring of industry that destroys millions of jobs per year with net positive job creation). The problems that have arisen with these advantages have compromised some of them. Free markets are not really free as anti-trust enforcement has been lax resulting in mergers dominating markets and weakening compeititon. Many times the "free market' talk has become rhetoric and distorted for individual purposes. And regulatory oversight has been weakened in the name of "free markets", as if the market system could be run with no government regulation at all. The weaknesses are: remaining an energy inefficient nation even as countries like Japan have become increasingly and way more energy efficient, and doing nothing about it, not having any policies to fix this and assign a big priority to it. In the area of access to education, which is critically important to national competitiveness, the US ranks poorly in the number of college graduates and in the opportunties for access to college across the middle and working classes. Says Porter, the US ranks 12th in the college or higher educational attainment for 25-34 year olds. And the US he says has made no progress in this area for 30 years. This is a disturbing trend in a economy that must have the education and skills to justify its high wages, and how will Americans compete for jobs that can be moved elsewhere in these circumstances he asks. Strategy requires honesty with ourselves in identifying and addressing the strengths to be preserved and the weaknesses to be fixed. Solutions have to go to the heart of the problem, with the patient effort needed for longer term solutions, when problems have become embedded in the system, and in the habits, culture, and way of doing things, that will produce disaster down the road. Wen it comes to spending on priority investments, Porter prefers to tax rebates the spending that goes into educational assistance and into logistical infrastructure. ...