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Kessler in the WP corrects Obama's claim that he created 800,000 jobs. He says this is clever arithmetic as it takes a low point in Feb. 2010 following the financial crisis. Kessler points out that according to the Bureau of Labor Statistics, U.S. manufacturing jobs were 12.56 million in Jan. 2009 when Obama became president. In Nov. 2016, early estimates show there were 12.26 million manufacturing jobs, a loss of 300,000. This loss does not reflect the problems in the U.S. auto industry and older industries in the midwestern states as a result of trade and globalization that speeded up with the rapid industrialization of China. And led as Greg Ip pointed out in a recent WSJ report to a rapid acceleration of job losses in a decade that did not happen in the same scale during Japan's industrialization and urbanization in the sixties. This aggravated the situation in Michigan, Ohio, Wisconsin, Indiana, and Pennsylvania, and was met with a feeble response from Democrats. Even a economist like Krugman favoring the Obama administration's efforts came to the conclusion that TPP did not add much to gains from trade as most of the gains had already been realized. More of the gains went to tech and IT in California, at the expense of the auto industry based in the midwest. A report in WP show a president too close to IT in California and failing to grasp the situation in the midwest. Voters punish whoever is in power, regardless of being Conservative or Liberal, in Canada the hollowing out of manufacturing under Harper in Ontario and Quebec led to the win by Trudeau's Liberals.  ...

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In this WSJ report a top American Defense Department official before resigning says- "I have no problem with feeding China or trading with China. I have a problem with arming China." Advanced or sensitive manufacturing technology is still being approved for export to China says this report in WSJ, even as the US perceives this to be a national security threat. Experts say the Commerce Department report approval process needs overhaul and the US needs close coordination with the European Union on this process. Of the total US $124 billion in exports to China in 2020 only half of one percent needed a license Commerce Department data reviewed by WSJ shows. Of that small fraction of one half percent Commerce Department approved 2562  applications or 94%. This even includes array of semiconductors, aerospace components, artificial intelligence technologies that could be added to China's military. This means that even towards the end of the Trump administration with its talk about national security threats, through the four years 2016-2020, nothing much happened in this important field.  The difficulty that the Trump administration faced and America faces is putting company and business interests first or American security interests and retaining competitive technological advantage interests first. American administrations and business have consistently failed to follow what plain ordinary Americans understand by America first. Even when it is clearly evident that America is handing over sensitive advanced technologies with very little in return, and creating out of nowhere competition that poses serious risks for the national interest, business and administrations operate indifferent to the national interest. Even right into the period when this is making the world a riskier and more dangerous place.   This is the state of affairs today, and the situation is not about Congressmen visiting Taiwan or ships going through the seas in that region, or international law. All that is American policy  and is well known and well understood. What is missing is the right action and the right determination behind other action that is sending a different message at the same time -that the US is oblivious to its own interests. That administrations, even those such as the recent Republican one under Mr. Trump, see a higher priority in following American business wherever it goes in pursuit of individual company interests alone, even if it does not accord with the national interest. Lobbying groups distort what policy should be in the public interest and in the interest of both countries, leading to a breakdown in the whole process itself whenever governments surrender their role of protecting the public interest.  Outshoring manufacturing was bad economically at the level of communities across the US, leading to divisions that weakened the country in the last decade, it was also bad for the economy of the country with loss of the best manufacturing jobs, beyond what economists in their ignorance of the big picture sought to show was the consumer- often the same person who lost a job or stopped seeking work- paying less. It was bad also for China as it created the hyper growth that rapidly contaminated land, air and water and created an inherently unstable relationship in trade with destruction of jobs at a pace that America had not faced with Japan and with which it could not cope. Could a pace that worked for both nations have worked? At the root is the notion that business knows best even if it is in plain sight to every plain American that the country's most advanced technologies are being shipped out. Governments do not fulfill their responsibilities and fail when they fail to tell business what rules are in the public interest, as it was never in the first role of business to protect the public interest. That the European Union has simply followed the US in this has created a problem for both the US and the European Union of deviating from what plain Americans or Europeans see as abundantly clear.  Even in plain dollars and cents business and economists fail to grasp the true cost for the whole country or whole people compared to the benefit for an individual or an individual company. The cost of wars even small wars can be be trillions of dollars which are borne by the whole country or people, and most of it by the middle and less economically well off classes in a country. Creating a belligerent competitor in world affairs and the risk of conflict and war is to lose trillions of dollars when the benefit to an individual, groups, or individual companies is no more but a tiny fraction of that trillion dollar cost, not including what all the plain people pay in human lives. It is not that anyone benefits as the people in the belligerent competitor country follow the same pattern of loss that would happen in the US. One should ask is it not a loss for China also? The example of Imperialist Japan is not so far off in time for Americans or Asians including the Chinese and Japanese people who suffered so greatly to forget. Business remains oblivious to the public interest not just for America but for the world, individual companies do not see it as their role beyond that of pursuing individual company interest. Is it not then for the government to set the rules. Is it alright for government to not fulfill its responsibilities? Even when this pushes the world faster to into conflicts as technologies take the place of exercise of wisdom in conflict, and even when there are unmet challenges such as climate change that affect the whole planet.  ...

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A survey of 414 National Association of Business Economics (NABE) economists shows Libertarian candidate Gary Johnson with 15%, overtaking Trump at 14% on who would best manage the economy. On protectionist views only 9% support this. 15% said they have no opinion and 55% said Hillary Clinton would do the best job of managing the economy. About 62% say the election uncertainty is holding back growth. Some aspects of Hillary Clinton's economic plan are the $275 billion infrastructure investment over 10 years, taking action against companies that ship jobs overseas, a capital gains tax paln that encourages long term investments, supporting $15 minimum wage, making upward mobility a top priority, providing government financed access to public colleges for working class and lower income groups. Donald Trump's plan has suffered form lack of specifics, shifting comments, lack of careful study, and excessive use of slogans. Both candidates oppose trade agreements that shift jobs overseas. Trump's plan also suffers from lack of credibility overseas as this is important in a global business structure, with fears of protectionism increasing. and reminding people of the protectionism under Smoot-Hawley that increased the damage from the depression of the thirties. ...

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The reckless behaviour of German elites in pursuing increased dependence on Russian oil and gas and ignoring American warnings is shown in this report in The Guardian. The first links to Russian oil and gas were started under chancellor Brandt in 1970. At that time the dependency on oil and gas supplies was much less than 10%. Dependence increased during the Schroeder and Merkel years to the extremes that exist today. Not much more even in the year of the fall of the Berlin Wall in 1989. It was the misconception of chancellor Schmidt of the SPD in his differences of opinion with presidents Carter and Reagan on the risks of increasing dependence on Russian energy that marked this period. Schmidt believed Germany was right in its conviction that increased trade would bring peaceful cooperation without realizing that economic dependency is never a good thing. Poland had a skeptical view- German elites including business elites were being corrupted. Cheap Russian energy was being used in the Schroeder and Merkel years as a competitive business advantage without considering the risks involved and the admonitions of American presidents of the dangers. With Steinmeier of the SPD there was the immense guilt of the millions of war dead from the German invasion of Russia in 1941 that acted as a brake on evaluating the increasing dependency for energy that reached over 35% by the time he was foreign minister. The fall of the Berlin Wall was seen not as a result of multiple factors including the positions taken by Carter and Reagan, the losses to the Russian economy from the war in Afghanistan, and the general decline of the Russian economy. German leaders saw this as coming from the new relationship being built with Russia. German business and Schroeder- Merkel even allowed not just new Nordstream pipelines under the Baltic Sea but also transferred ownership of reserves, the gas and oil storage inside Germany to Russia's Gazprom. German Economy minister Habeck says the storage tanks were emptied so that there would be added surge for oil and gas prices after the attacks on Ukraine. This Guardian report ends by saying that Mr. Steinmeier still needs to show why he pursued policy of cooperation with Russia with increasing dependency to the point that a cut off of Russian oil and gas supplies would lead to gas rationing in Germany in the event of a sudden cutoff. Was it a form of sensible cooperation taking dependency to such extremes. Similar questions remain for chancellor Merkel. With the added question for Merkel about the increase in trading ties with China even after the Trump administration had warned of the serious risks to US and European competitive advantage in technology and manufacturing, and the increased dependence on a supply chain that was fundamentally weak as shown clearly by the pandemic.     ...

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China's new foreign policy team under the Jinping-Keqiang administration. Foreign minister Yang Jiechi, becomes state councilor, and senior official on the team. The new foreign minister Wang Yi, was China's ambassador to Japan 2004-2007. The new ambassador to the U.S. is Cui Tiankai, a diplomat who graduated from the Johns Hopkins School of Advanced International Studies in the U.S. Cui was ambassador to Japan 2007-2009. Managing the China-Japan and China-U.S. relationships is critical for China because China depends on U.S. and Japanese companies for investment and new technology, for continued economic progress. The relationship has been affected by the territorial disputes with Japan in the East China Sea. Germany as an advanced technology manufacturer and commodity exporters Australia, Canada, Argentina and Brazil depend on the Chinese market for exports, creating an interwoven economic dynamic that is likely to be the dominant factor in relations. This is also the perception of Li Keqiang who told a press conference in Beijing that the competition with the U.S. has been overemphasized, that he "does not believe conflicts between great powers are inevitable." Foreign affairs remains subordinate to domestic policy and priorities in China, as China tackles the problem of reorienting its economy to give an important place to the private sector and consumers. Itself not an easy task, as prime minister Keqiang pointed out at his first press conference: "Talking the talk is not as good as walking the walk." One of Keqiang's main allies in this effort is Robert Zoellick, former president of the World Bank, who helped put together with China's DRC, the report "China: 2030," outlining these priorities....

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An export rebound is not matching the growth in imports. Imports went up 31% since May 2009, while exports went up 27%. The result is that the trade deficit is growing, primarily because of imports from China and imports of costlier oil. The trade deficit is expected to reach $40 billion in December 2010, compared to $25 billion in May 2009.

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China's trade surplus increased to $18.4 billion in April from $5.4 billion in March. Exports were up 4.9%, slower than expected and down from 8.9% in March. But imports went up by only 0.3%, much lower than March's 5.3% increase. The hopes for improving the trade balance in recent months may be dashed because of slowing imports for infrastructure development, as economic growth slows in China, even as export growth declines from its earlier high levels.

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This report by Martin in the NYT points out that Ohio no longer plays a critical role in U.S. presidential elections. It was critical for a Bush win over Gore, and president Obama carried it by 2 points against Romney in 2012. It is critical for Trump to win. For Hillary Clinton other states are gaining importance as they better reflect the demographic changes in the U.S. and the mix with minorities- states such as Georgia, N. Carolina, Colorado and Florida. Ohio has not seen an influx of Hispanics as other states, and is now more white, more evangelical voters, and reflects a mix that was prevalent earlier. 

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Galston of the Brookings Institution says globalization has hurt workers in manufacturing with job losses and declining incomes. It has produced outcomes that have favored some industries such as tech, and not others such as automobiles which in the past helped create the broad middle class by offering good paying jobs to people with less than a college education. Immigration has created an issue that political leaders outside of the main parties have appealed to in France, the U.S. and Britain. The result is a polarization in the voters that has rarely been seen to this extent before. The middle class in the period from the 1950's to the 1980's is not the middle class that we see today in Europe and the U.S. The 2008 financial crisis added to the problems with the slow and uncertain recovery for some groups such as white men, the less educated, students, and people on minimum wage. 

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China's current account surplus has declined to 2.8% of GDP for 2011 from about 10% in 2007, and will be around 2.3% of GDP in 2012, according to IMF estimates. The U.S. current account deficit is down to 3.1% of GDP from 5.1%. By controlling the exchange rate China was able to keep the competitiveness of its exports, resulting in a five fold increase in exports from 2000 to 2010, according to the IMF. The decline could be temporary say experts, as the the recession in Europe and the U.S. resulted in slowing exports, with its infrastructure buildup sucking in imports of machinery and other goods from the western countries at an accelerated pace with its 2009 stimulus measures. Another reason is that in the last decade China has developed its own high tech and other companies which will now increase exports. IMF forecasts show a pickup in China's trade surplus to 4.25% by 2017. This could be lower if the renminbi is allowed to appreciate. Estimates of appreciation of the renminbi are 8 percent in nominal terms since June 2010 against the dollar. Including inflation, which is higher in China, the renminbi has appreciated by 13% since June 2010. ...

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A transcript of remarks by Ben Benrnake as Fed Governor on Dec. 9, 2003, at meeting of the Federal Open Market Comittee which makes monetary policy in the USA. Bernanke is teling his colleagues here that it would be amistake to choke off growth unnecessarily by raising rates, that critics who say inflation is a threat are not well informed, and that the Open Market Comittee should remain patient. Here he points out that the large decline in the share of the population that is working -with one survey showing household employment at 2.9 million jobs below normal at that time- suggesting that employment could rise significantly before seeing pressure on wages and unit labor costs. With the underutilization of labor, the withdrawal of people from the full time labor force, and increase in parttime employment, there are todfay anumber of changes ocurring in the labor markets that build additional slack into the system from what the unemployment rate of 9% today would suggest. A similiar case could be made today with factory capacity utilization at 68% and dropping, and manufacturing hard hit and seeing a permanent downsizing in industries like automobiles. What about raw materials prices? Bernanke shows agraph of historical data, that suggest convincingly he says, even very large movements of raw materials prices appear to have muted effects on intermediate goods prices and no discernible effects on final goods inflation. The reason for this is that raw materials prices are only asmall portion oftotal costs, and unit labor costs are a far larger factor in inflation determination that raw materials prices. And at that time as is happening today wage growth is slow or negative. What about the dollar falling in value making imports more expensive, which we face today? Here Bernanke says that asimilar anlysis applies to the dollar. Large movements of the dollar he says, translate into smaller movements against the U.S. trade-weighted basket of currencies, and into smaller effects on import prices because of imperfect pass-throughs. And he goes on to say that the nonoil import prices, in turn, are are a relatively modest part of the overall price index, making the ultimate effects quite small. This analysis by Bernanke of the impact of rising raw materials prices and falling dollar having a muted effect, and the important role slack and underutilization of labor in the labor markets play in inflation, helps respond to critics like Laffer and others who say inflation is a threat and call for changes in the policy course the Fed has set....

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A bill in the U.S. Senate in October 2011, which has bipartisan support, would push for China to correct an unfair trade advantage from keeping the value of the yuan low. The bill requires retaliatory tariffs for countries that have "misaligned" currency. This makes it possible for the U.S. Treasury Department to take action even if it finds no currency manipulation by China. This is a new approach as the U.S. Congress struggles to restore a level playing field in international trade.

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The U.S. Senate voted 63 to 35 passing legislation that forces the U.S. government to seek tariffs and other action against countries with "misaligned" currencies."

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Krugman says China's inflation is raising labor costs in China, and in this way gradually reducing the undervaluation of the yuan vs the dollar. But he cautions this would take a long time, 4-5 years. The U.S. faces the costs of high unemployment close to 10% today, and this requires serious efforts now to reduce the undervaluation. It alone will not solve America's problems. It is one of a number of actions that need to be taken and not put off again.

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The recent appointment of fast food executive Andrew Puzder as Labor Secretary has caused great concern among union leaders. Puzder supports a $9 minimum wage compared to $15 supported by Democrats. Unions now represent 7% of the labor force, down from a high of 20% during Reagan's time when Reagan appointed a construction company executive as Labor Secretary and cut regulations.  Globalization has thinned the ranks of workers in unions. And the failure of Democratic administrations to stem the shift of factories overseas to China, Mexico and other places, as part of global supply chains focussed on cost, has weakened Democratic support among workers since the period of Bill Clinton. It eroded to the point where Obama won 65% of support among unions and Hillary Clinton won 56% in 2016. Interestingly the Republican Romney gained 33% versus 37% for Trump, showing voters were more inclined to move away from Democrats and only a smaller number willing to support Republicans, but the shift enough to give Republicans a win in 2016 for the presidency. The figures are from a Election Day survey of trade union AFL-CIO, and a larger proportion in midwestern states showed disaffection with policies from Clinton to Obama. In fact Obama spent years promoting another free trade agreement TPP that favored tech more than auto and older industries, just as Bill Clinton had promoted NAFTA, without giving thought to what this was doing to its worker base of support. A similar situation happened with Social Democrats in Germany as a SPD administration moved to the centre and handed Christian Democrats led by Merkel a win in parliamentary elections. As Democrats such as former Labor Secretary Reich, a professor at UC Berkeley who served under Bill Clinton, describe the problems of working class people their is less reflection on the impact of the changes from globalization and how Democrats handled or mishandled it, and more on the politics between the two parties.   ...

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Over 50% of respondents in the 2012 Gallup poll view Japan as the U.S.'s most important partner in Asia, compared to 39% for China. The shift in how Americans view China is pronounced in the last 3 years. In 2010 the two countries were tied 44%-44%. In 2011 China was 39% to Japan's 31%. In 2011 India, S. Korea and Australia were added to the poll as partners. Among "opinion leaders" such as business executives, government officials, academics and journalists, China gets 54% to Japan's 40%. The poll is conducted by Gallup for the Ministry of Foreign Affairs of Japan since the 1960's. The analysis shows that respondents picked China for economic reasons not for political reasons. A survey of the general population shows 84% view Japan as a dependable ally, up 2% froom 2011, with similiar trend for opinion leaders.

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This New York Times editorial after the Senate passed a bill in October 2011 calling for action on the misaligned Chinese currency, points to ways a misaligned currrency is damaging for China. It cites the Peterson Institute for International Economics estimate that this is costing China $240 billion a year. This is a result of accumulating huge dollar reserves that have a declining value against the renminbi. Higher import prices lead to higher inflation. And low interest rates on savings, to the point that they are lower than the inflation rate, hurt the vast majority of Chinese and reduce domestic consumption. And perversely this leads to money pouring into speculative uses such as real estate, creating unsustainable bubbles in housing. The Times editorial says China is not generating jobs from this strategy, as the export strategy is relying on use of advanced technology in manufacturing and not creating many jobs. It cites a statistic showing employment has increased by only 1 percent a year from 2004 even with GDP growth above 10%. China is beginning to realize the cost of this strategy, and is planning a shift in its five year economic plan. But this rebalancing has many obstacles. The current system dominated by state run companies, banks, local and federal government, is biassed in favor of the old export led strategy, and experts are pessimistic about the possibilities for change. The Times suggests China may be falling back on the export led strategy as the global economy is slowing. The whole system would have to change after three decades of this kind of development, and would require new leadership and major changes....

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After a 90 minute meeting with Putin in Hangzhou, China, president Obama wonders aloud whether Putin " is willing to live with constant, low-grade conflict." Richard Haas of the Council of Foreign Relations, says its affirmative, that low grade conflict is Putin's thing. Other experts say Putin's intention is largely to build up his image at home at a time when the Russian economy is facing problems, and to create confusion through cyberattacks. In the case of cyber intrusions into voter rolls of Arizona and Illinois, FBI Director Comey says it  may be intended to just sow seeds of doubt on the whole election process."