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Otis Elevator is moving a plant based in Nogales, Mexico, back to the U.S. This plant was moved to Mexico in 1998 for cost reasons. Now Otis CEO, Didier Michaud-Daniel, says producing at a new South Carolina plant will cost less than Mexico. Logistics and freight costs are 17.3% less in the U.S. than Mexico, and an additional 20% in savings come from "efficiencies" gained by having all its white collar workers associated with elevator design and production. Most companies that manufacture in China and Mexico keep their design and engineering jobs in the the U.S. It is not clear to what extent American companies have considered all the costs of separating design and engineering from manufacturing, including the opportunities for close cooperation possible in one location that are lost when everything is so spread out. At Otis toolmakers in Dallas and engineers and designers located in Indiana and Arizona traveled to the Nogales, Mexico plant. This can be especially important when as in Otis's case the new plant in Florence, South Carolina, plans the launch of a new generation of elevator designs. In this case there is an added benefit by making it easier for customers to visit the plant and look at the product. The new plant will have more automation and use fewer workers on the factory floor. The new factory will employ 360 workers including white collar workers, the same as the Nogales, Mexico, plant with a lower number of factory floor workers. ...

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In the next 15 years approximately India will have a higher percentage of working age population to non-working age population than China, based on information from the UN and Morgan Stanley. The number of people over 64 and under 15 has declined from 69% to 56% in 2010, according to UN figures. By 2020 the working age population will increase by 136 million in India, compared to 23 million in China. From this it can be seen that a huge demographic change is playing out. As China's economy matures and with the one-child policy in place, China's working age population is expected to decline; just as India's working age population picks up. This should give India momentum in the next 15-20 years, and lead to an increasing growth rate in India, just as China's growth rate slows. India's weak areas are infrastructure, and education. Infrastructure development will accelerate nevertheless, with larger private investments and participation in projects; and India will move up the experience curve as more projects are completed. Education for the poorer classes and in public schools will remain a problem. Private schools are making up for the weakness in this area, and private schools now make up 20% of attendance even in the rural areas according to one estimate. The strong points are democratic structures and the rule of law, private enterprise and private companies, English speaking middle class, and smart initiatives by business to develop low cost products that are affordable for all segments of sciety in India. For instance a $35 laptop developed by the IIT and Indian Institute of Science researchers, and Tata Chemicals development of a filter for 30 rupees or 65 cents that would filter water for a month for a family of five. This will bring the benefits of development to all segments of society as development progresses, and is crucial for balanced development in the poorer parts of Asia. Tata Motors 1 lakh ruppees car concept and the Tata Nano as its tangible product, is another verson of this kind of development being pioneered in India. Being a democratic country makes some processes slower, yet at the same time the private initiative enabled by democratic processes -cultivated over a long period from British times -enables a creative sort of development that could be turned into a distinct advantage....

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Among the things that make the U.S. different from Britain, that Roberts does not mention, is the character of the U.S. as a nation of immigrants. As true today as it was for millions who came to these shores from Ellis Island at the turn of the century. This makes for a much more adaptable society with different strains of thinking. Another point that makes the U.S. different is that it has striven to be an anticolonial power in its policies- working to ease the transition to independence of countries in the former French and British empires. The U.S. business and economic system has worked to bring development and economic progress in all parts of the world, as a partner in contrast to a colonial power. In this sense the U.S. has a very different character and a different capability for renewal than the empires of an earlier period- and new basis for belief in itself renewable from period to period.

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Experts at Stanford Law School say the fewer IPO's expected in coming years will be a good thing as it reduces the boom and bust cycles in tech and internet IPO's of previous years. New technologies enable firms to reach breakeven at a much earlier stage with smaller investment- using founders money and capital from angel investors and less reliance on venture capital- so that companies can focus on the long term. The result will be fewer jobs created in investment banking and more in other places.

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What will the E-Book do to bookstoreslike Barnes & Noble? This is a question that investors like Burkle, who owns 20% of Barnes & Noble, and Mr. Riggio who owns 31%, are facing. Apple's IPad is expected to sell 5.5 million units in 2010, Amazon's Kindle 3 million, and Barnes and Noble's Nook 1 million units. Barnes & Noble invested early on in a handheld device called the Rocket eBook reader with its investment in NuvoMedia in 1998. But pulled out of the eBook business in 2003. The problem at the time was the lack of enough titles to arouse reader interest and the high prices-$20 per eBook vs $25 for a hardbook. This move proved costly when Amazon launched its Kindle in 2007. Amazon now has 70-80% of the eBook buisness, with Sony, Kobo, and Barnes and Noble competing for the remaining share. Riggio bought the first store for Barnes & Noble on New York's Fifth Avenue in 1971. He promoted superstores with huge selections (over 100,000 titles) and built up a chain of 719 stores in ensuing decades. Now he faces a new reality in the arithmetic of eBooks which could remake this business. Apple set a new method for pricing eBooks that affects booksellers. Publishers and Apple set up a model that gives the publisher 70% of the eBook digital price. EBook sellers act as agents in this approach, and they get 30%. Best sellers sell for $9.99 but other books can be $12.99 or $14.99. Now the digital bookseller gets 30% of $12.99. And as it hasn't paid anything its more advantageous and profitable. This works for publishers and digital booksellers but Barnes and Noble was used to getting much more than $3.90 when it sold a $25 hardcover book. If eBook sales climb to become a quarter or more of total book sales by 2012 then it will lead to a decline in sales revenues for Barnes & Noble. With eBooks costing half of the hardcover prices in brick and mortar retailers the trend is irreversible. To address this trend Barnes & Noble has hired a digital expert Mr Lynch as CEO, and the strategy is to combine the retail presence and customer physical contact in brick-and-mortar stores with eBook retailing, to come up with an answer to this tidal wave of change in book retailing. ...

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Gregory Mankiw would like to see the Fed's Ben Bernanke and his colleagues and staff do the job they are doing and not see Congress intervene with fiscal stimulus or other intervention. The Fed and the ECB are led by a good team of economic risk managers and they should be allowed to take care of the economy as it enters 2008 through rate cuts and other moves to help restore growth and overcome the housing and mortgage crisis.See the link to December 6, 2007, BW for an interview with Martin Feldstein. Feldstein thinks a tax cut may be necessary in 2008 and takes a much more serious view of the current situation.

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This WSJ editorial says the U.S. Federal Reserve needs a chairman who is politically independent, especially since the Fed has not been politically independent since 2008. It calls Ben Bernanke a political sidekick of Timothy Geithner at Treasury since 2008. A Summers Fed would have become too much influenced by the White House, which would not serve the country well, as new policies will be needed to wind down the loose monetary and fiscal policies, says the editorial.

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Alan Meltzer would like to see the Fed reverse its quantitative easing, and lower excess reserves gradually starting now. By this he hopes to see the Fed avoid the mistake of making a big shift from excessive ease to severe contraction further down the road. He also warns agains excessive deficit spending. He says a weak economy is not the time to cut spending or raise taxes, and he is not talking of draconian immediate steps. He would like to see a multiyear program to increase fiscal probity and reduce deficits size and frequency. As it stands now he takes both parties to task for lack of fiscal discipline and honest accounting. About $1 trillion in deficits each year on average for next 10 years is in the works, and is an underestimate because the savings of $200-$300 billion in medicare spending have still to be realized, and states do not have funds for increased Medicaid spending, and payments to doctors have still to go down by 25%. Chinese government purchases of half our debt will postpone the day of reckoning says Meltzer, but far better for us to strike at the problem now, before we blow a hole in the dollar and start a downturn. See the separate report on the shrinking UK economy....

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Former Fed Governor Kevin Warsh's views on the need for greater transparency and disclosure from the large U.S. banks and the risks to the financial system from "too-big-to-fail" banks in 2012-2013. He says the U.S. should not be dependent on the Basel standards for capital requirements and use its own system of stricter requirements similiar to the UK and Switzerland. His views are that the Dodd-Frank law puts too much dependence on regulators doing the right thing, information transparency is lacking for markets to impose discipline, and delegates too much to Basel standards which are not rigorous enough for protecting the U.S. economy.

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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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Guerrera describes the vital role that FDIC chairman Gruenberg's plan for unwinding failing financial institutions will play in tackling the "too-big-to-fail" problem facing the U.S. He points to the increasing importance of this after the failure of risk management systems at JP Morgan Chase bank.

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U.S. president Obama says at a rally in Philadelphia that Donald Trump is a fradulent champion of the working class, saying that Trump is simply exploiting the populist mood, that for 70 years he has shown no concern for working class people. Obama told the crowd he understood the public's mood for change and that he himself had benefitted from it. Yet he said that it did not add up. Obama said: "This guy is suddenly going to be your champion? I mean, he spent most of his life trying to stay as far away from working people as he could, and now this guy is going to be the champion of the working people. Huh." "I mean he wasn't going to let you in his golf course. He wasn't going to let you buy in his condo. And now suddenly this guy is going to be your champion."