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Andy Grove makes this passionate plea for the dignity of workers in America in 2010. It is worth reading in 2020 what this founder of Intel Corp and pioneering spirit of Silicon Valley has to say. Andy Grove of Intel says there is something seriously wrong when the unemployment rate in the Bay Area is higher than the 9.7% national average for the USA. American companies have added jobs like crazy in Asia, but things are sputtering back home. Hon Hai has 800,000 employees and makes most of the electronic and computer products for American companies. Grove says startups are not the answer, unless they scale up and create jobs the way Intel did starting back in 1968, with a $3 million capital infusion by investors. The move from the first production model to mass production is critical, as companies hire thousands of people. Innovation and scaling up have to go together. He makes his point clearly by pointing out that Apple has 25,000 employees. For every Apple employee there are 10 employees in China working on Apple iMacs, iPods, iPhones. And he adds that the same 10 to 1 relationship applies to other U.S. tech companies. And here Grove asks the tough question by first posing an answer. He says it sounds like- no big deal, we keep the high paying jobs, we keep most of the profits, but what kind of society are we going to have with highly paid professional workers and lots of people unemployed? And he doesn't mention that there are a lot more young people unemployed. He says the US has become very inefficient at creating tech jobs, and it would be a great mistake not to act decisively early on. And adds that the investments in such areas as solar power and electric car batteries have to be made early on to maintain leadership in these areas. Grove faults academics like Alan Blinder and others who say loss of manufacturing jobs and whole industries was no big deal. The U.S. has forgotten the value of manufacturing jobs. He wants to see America focus on jobs and rebuild its industrial base. And less of transferring engineering knowhow and new technologies overseas, technology that can help bring innovation and scaling up of factories at home. In his view individual companies doing their own thing, in a misguided fashion that jobs don't matter, is not the answer to the situation we face. The industrial economies of Asia, China at the present day, have focussed on jobs and technology, and scaled up. Grove reminds readers of the situation in America in 1932, when jobless veterans demonstrating outside the White House in large numbers were dispersed by soldiers with live ammunition and fixed bayonets. This makes him shudder at the very thought of it, and brings back memories of his early years in Hungary, as a young man in 1956. Are we listening? ...

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China's GDP growth for the second quarter of 2012 was 7.6% from the prior year. China set a target of 7.5% GDP growth in March 2012. About half of the GDP growth in 2011 was generated from investment spending. As part of a new Stimulus China is increasing bank lending and moving forward development projects in energy and infrastructure. Bank loans showed an increase from 793 billion yuan ($124 billion) in May 2012 to 920 billion yuan ($144 billion) in June 2012.

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This analysis of coal use using graphs shows a clear move away from coal in the world, except for two growth markets China and India which account for 60% of the increase in coal use since 2008. India has gone black in its shift to increasing use of coal. China has begun the shift away from coal to address the smog over large urban areas, poor air quality and health impact of coal use. Because China used five times the coal used by India in 2017, the overall impact in China and India is showing a shift away from coal to hydropower, other renewables including solar energy. It is likely that India will make the shift following China's example in the future. 

The trend is clear when one looks at the incremental terawatt hour and where it comes from. The shift is clear to renewables, hydropower, and non fossil uses in the rest of the World and China which account for most of the coal use in the world.

 

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This article in the Economist says the bad loans in the financial system threaten to derail India's rapid growth. It points out that about 17 percent of all loans are estimated to be non-performing. Government plans to set up a bad bank and have bad loans transferred at steep discounted rate to the bad bank are still at an early stage. India weathered the 2008 financial crisis with a financial system in better shape. Since then a surge in lending has led to an increase in the bad loans. Today both banks and corporate firms are facing this problem. The political system and dysfunctional governance with frequent changes for management at state controlled banks are part of the problem.

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How information generated by Tesco's Clubcards can be used through rigorous information collection, analysis of mounds of data by computers based on a clear structure for the information and what they are looking for. And how the information insights can be used to quickly take action in what to stock and who to target with what is stocked through direct mail and coupons. Tesco uses information about what interests customers, who they are, for example: child care providing fathers who might want the beer as well as the baby stuff, South Asians in immigrant heavy communities in the U.K. tracking what they buy, and don't buy and where. 1. This information driven strategy of Tesco has been copied by other retailers. P&G, Coca Cola, Kimberly Clark and other consumer product companies buy analyses based on Tesco data. 2. This strategy has helped Tesco battle Walmart overseas. Walmart failed in the S. Korean market after 8 years selling its 16 outlets to a local competitor, while Tesco has 39 stores in S. Korea that are doing well. Tesco is also doing well in Central Europe where Walmart intends to open stores. In the UK which accounts for 45% of Walmart's international sales and 10% of its overall sales, Walmart's share of the British market is 16% for groceries compared to 31% for Tesco. Walmart entered the British market in 1999 through the acquisition of the Asda chain of stores. Tesco is growing and doing much better than Walmart in the UK. 3. Tesco's Clubcard based information driven strategy- 3-1. Uses a outside provider that is excellent in its field, can pioneer techniques that will work with Tesco strategy, and has the energy and dedication. Tesco uses Dunnhumby, a husband-wife consultancy that also works with Kroger in the US running its loyalty card program and analyzing customer data. The research firm is now majority owned by Tesco. 3-2 How it works. Each week Dunnhumby receives data on 15 million shopping baskets. Each product is scored on 50 dimensions such as price and the size of the package. The computer looks for customers whose shopping baskets have similiar combinations of scores. Dunnhumby has made 6 segments for Tesco. Finer Foods segment is made up of affluent time strapped customers who go upscale and Traditional segment comprises homemakers who buy ingredients to cook meals from scratch. 3-3 The clubcard works as follows. Introduced in 1995 by Mr Leahy, now CEO, the application asks for information about dietary preferences, size of household, ages of children . The plastic a card in the mail gives customers a point for every pound they spend after they reach $280. Each point is a penny off future purchases and it also can be converted into miles in frequentflier programs In addition large spenders get discount coupons every 3 months on particular products keyed to their buying profile in the database. Quarterly coupon package from Tesco would include 3 coupons for stuff they regularly buy and 3 for stuff Tesco would like them to try. While only 1-2% of coupons ever get redeemed about 15-20% of Tesco coupons get redeemed. The package also includes vouchers through which members can redeem points. $300 of purchases would generate a voucher for $3.00 off any purchase. Karen Masek, an actor and mother of two in London, says Tesco's mailings reflect her preference for fresh produce, environment-friendly cleaning products and organic meat. She says Tesco knows her buying habits and never sends anything that is way off the mark. 3-4 The way Tesco battled successfully with Walmart: Tesco searched its database and identified shoppers who buy the cheapest items available. About 300 items were identified for price conscious customers. Tesco lowered prices on these items such as Tesco Value Brand margarine so that these buyers would not defect to Walmart. 3-5 Examples of how the computer data is used. 1n 2001 Kimberly Clark introduced a premium version of its Andrex toilet paper in the UK infused with aloe vera. Through the Clubcard research data one could track who was buying this toilet paper and how consistently, and later tracked what other products these buyers were buying so that they could be targeted with incentives. It was found that they bought skincare products so Kimberly Clark sent direct mail to 500,000 customers offering free beauty treatments for purchasing the toilet paper twice....

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David Barboza of NYT describes the hidden subsidies China gives to Foxconn for its plant in Zhengzhou, in a poor region of China. The factory there makes about half a million iPhones a day. These subsidies include incentive packages, infrastructure building, local government help of about $1.5 billion. As a result Apple has high margins. For a 32 gigabyte iPhone 7 that costs $400 to make, the retail price is about $649 in the U.S.  The hidden subsidies is why Apple can maintain dominance as profits are reinvested. And the result is that with only 12% of the smartphone market Apple can take in 90% of the profit, according to Strategy Analytics. Barboza looks back at Apple before co-founder Steve Jobs left in 1985 as focussing on manufacturing at plants in Colorado and California. By 2001 with iPod sales soaring the move to China under Cook, who previously worked for Compaq, was underway. With the introduction of the iPhone in 2007, the move to China for manufacturing accelerated. The reason: only China offered the kind of subsidies, the speed of approval and building of infrastructure facilities, the local government support, the hundreds of thousands of workers, and the best tooling engineers, to produce in huge volumes with speed, and maintaining quality levels. Earlier plants including one in Colorado Springs that this Lyrarc editor was invited to visit just prior to Jobs rejoining Apple had many quality problems, so much so that Apple had a large part of the manufactured personal computers set aside for rework. The quality levels were dismal, defects were unbelievably high. This is the Apple manufacturing process and plant that Jobs must have seen when he returned, and which he hired Cook to fix. Not only were costs higher in the U.S., (subsidies in China came later) when Jobs looked at the manufacturing quality and the inability to get the quality he needed from American workers and engineers at that time in the 1990's, only then did he turn to China- and the more he saw what was possible to accomplish there he sensed an unusual opportunity to finally put the ghosts of memories from competition with Microsoft at rest, and to surpass everything that had been done in Silicon Valley. The result one of the most ingenious and large manufacturing networks in the world, huge profits for an American company, except for one thing- it would not do much for American workers. ...

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"The best port in the storm," is how officials in Brussels described Greek prime minister Samaras in October 2012, as Samaras negotiated terms with the EU/ECB/IMF team for the next instalment of funds from the EU.

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Greece passed what prime minister Samaras called the last of the austerity cuts in November 2012 and called for action by lenders in the EU. The EU's Rehn says it is time to dispel the notion that Greece has not made progress in making the economic changes needed. Finance ministers of the eurozone meeting in Brussels agreed to give Greece two more years to reach deficit reduction targets. The cost of this to the eurozone will be 32.6 billion euros. A $40 billion payment to Greece is still on hold till Nov. 20, 2012. The cuts passed in parliament in November 2012 by the Samaras government will raise 17 billion euros over 4 years. The 2013 budget passed in parliament has cuts of 9.4 billion euros to salaries pensions and benefits, and raises the retirement age from 65 to 67. As of Nov. 2012 the bailout packages to Greece from the eurozone countries are at $240 billion.

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The new coalition government of prime minister, Antonis Samaras, will ask for a two year extension for meeting deficit targets from the March 2012 deal with the IMF, EC and ECB. The new coalition will also not make any large layoffs and only reduce the size of the public sector by attrition and retirements, a key condition of the Democratic Left partner in the coalition. This is one of the demands as part of the loan package to Greece. Since the beginning of the crisis the public sector has declined by 10% in Greece to 700,000. By 2015 the public sector is expected to lose another 150,000 workers by attrition.

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Yannis Stournaras, macroeconomics professor at the University of Athens, takes over as finance minister in Greece in June 2012 in the new administration of Antonis Samaras. He brings vast expertise and fresh ideas.

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This Journal editorial points to a Philadelphia Fed study showing that students in the middle class with higher student debt are reluctant to start small business. The Fed study shows new firms with five employees declined by 17% on average for 2000-2010 in counties where relative student debt was up by 2.7%. The average student loan customer owes $28,000. Student debt has doubled from $547 billion in 2007 to over $1 trillion in 2015. As small business makes up about half of the private economy and generates 6 of 10 new jobs, the effects on small business show the damage being done rising student loan debt.

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Honda plans to move more of its manufacturing to the U.S. as the value of the yen drops below 80 to the dollar in 2011. Honda faces problems from parts shortages after floods in Thailand, and U.S. market share down 1.5 percentage points to 9% in 2011. Honda's profit declined by more than 50% for the third quarter of 2011. The yen trading at 77 to the dollar in Dec 2011 is making it impossible for Honda to make a profit from vehicles made in Japan and sold in the U.S. Honda plans to double the capacity of the Civic plant in Greensburg, Indiana, increase capacity at its other assembly plants. It will build a new plant in Celaya, Mexico, in 2014, to manufacture the Fit subcompact. This will raise North American production from 1.29 million vehicles to close to 2 million. About 200,000 to 300,000 of these vehicles will be exported to other international markets. Profits on small subcompacts are small, making manufacture of the Fit more economical in North America than in Japan. In 2011 Honda manufactured between 30-40% of vehicles in Japan, the new plans are to reduce this to 10-20% in the next 10 years, a major shift....

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S. Korea and the U.S. propose limiting trade imbalances to 4% of each country's GDP by 2015. S. Korea is the host of the current G-20 meeting. Germany and Japan oppose this move, arguing that their governments cannot engineer such outcomes, as it was determined by economic activity in the private sector. Japan's representative, Finance Minister Yoshihiko Noda, said that while he was dubious about the idea of setting strict numerical goals, it would be acceptable to use them as reference numbers. Germany has traditionally opposed the idea. Germany wants to be counted as part of the European Union, rather than as a single nation, in any such reference goal. China has not commented on the target. S. Korea has presented the idea as a way to use more than currency exchange rates to achieve a global rebalancing. And People's Bank of China Deputy Gov. Yi Gang said Oct 10, that China is planning policies that could result in its surplus falling below 4% of GDP in 3 to 5 years, from about 5.8% in 2009....

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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 WSJ points out the dangers to the Republican party in taking the stand on immigraton along the lines suggested by Donald Trump in August 2015- deportation for all illegal immigrants, no birthright citizenship for children of illegal immigrants, and no remittances allowed for illegal immigrants to their home countries. It points out that remittances actually improve the economies of the countries south of the U.S. border in Latin America and reduce illegal immigration. There is a need for seasonal workers in farm areas where there is a severe shortage of workers even at $17 an hour. Reducing immigration is better accomplished by more guest worker programs. A likely result would be the move of farms and factories to regions with low cost labor in Latin America or other countries. For the Republican Party this type of policy would bring back the period of the 1920's, says the WSJ, when Irish and Italian immigration was opposed by the party, alienating the two ethnic groups till they were won back in the Reagan period- a sure way to lose in 2016....