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Having 12 million human beings caught in a net of fear and apprehension, living life in the shadows, even in abad economy, no, especially in a bad economy, makes no sense, says the NYT editorial. These immigrants can become productive citizens, some of the most hard working who did the backbreaking work in factories and construction, who send money to keep families in Mexico and other parts of Latin Ameica from falling into poverty. In doing so and working on the books instead of off the books, they earn more, spend more, pay more taxes. and have the ability to ensure that there are fewer abuses in the workplace. This way they also get better education for themseves to improve job prospects, and better education for their children who can become part of the next generation of productive citizens. It also clears the path for focus on how to handle better border enforcement focussing resources on fighting crime, drugs, violence, and have a future flow of workers that is in line with the economy's needs. It createss decent workplaces, where people's workplace rights are not violated by unscruplous employers. In this case the fair thing to do, is also the most beneficial thing to do in the larger sense for the economy. In this context the agreement of labor unions, the AFL-CIO and the Change to Win (a rival federation that includes auto service employees, Teamsters and carpenters), to agree that an independent national commission would figure out the size of temporary workers depending on the needs of the economy, higher if it was growing, lower if it wasn't, basing it on conditions in the labor markets, is a good things says NYT. It takes necessary courage for unions, Obama to do the needed fight to protect these future citizens and build a better America with their help, rather than wish the impossible of putting them all on the boat back. ...

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This is an interview with Columbia University economic historian Adam Tooze about the international trade and economic issues brought about by globalization. The rapid emergence of China in manufacturing and overcapacity in steel has led to action on steel tariffs by president Trump. Tooze is typical of opinion that sees action by Trump not as limited action to level the playing field  as proposed by Trade Representative for the U.S., Robert Lighthizer, but as reckless move on trade.  Lyrarc.com shows articles from the WSJ and NYT showing how opinion got to this point in the U.S., on Robert Lighthizer's views that the U.S. was not facing a level playing field, and  on how trade has hurt communities across the U.S. a long distance away from Silicon Valley. President Trump's views reflect a different perspective that says the U.S. has to balance the favorable situation obtained by China and the European Union through moves of its own to protect U.S. interests. Political commentary that the U.S. was starting a trade war is not supported by the facts showing China's response as muted and a willingness by China to negotiate a balanced trading relationship as its trade surplus with the U.S. continues to grow. The trade surplus is so large that the Trump moves do not tell the real story. They are likely to be overshadowed by the increasing value of the U.S. dollar leading to a continued favorable situation for Chinese exports and a larger trade surplus in 2018, regardless of Mr. Trump's action.  Trump's moves are more significant in other areas- limiting China's access to advanced technologies, with the European Union also taking the same action. This is now the new field of competition for the major world economies. ...

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The new set of sanctions imposed by the United Nations on North Korea would mean the loss of about $1 billion from exports. China's support was won by delaying sanctions on Chinese banks that do business with North Korea. The sanctions prohibit all exports of iron ore, coal, and seafood. Exports of coal to China have come down from earlier efforts, the new restrictions will tighten the sanctions. Two areas that remain are the remittances of Korean workers overseas, for which a limit is set, and the Chinese crude oil exports to North Korea. Experts say this leaves some areas untouched. Chinese banks are critical to North Korea's access to foreign exchange, and oil imports from China are also critical.

 

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This WSJ editorial on the sliding scale with lower capital gains taxes for investments held for a longer time frame proposed by Hillary Clinton, says there is no economic theory that shows one or two year investments are worse than longer term investments, and says investors who invest in startups and cash in after a year or two can then invest in other startups increasing investment capital. It points out that new startups are fostered better in an environment where capital gains taxes do not promote holding investments for a longer term. Hillary Clinton is calling for higher capital gains taxes on shorter term investments. The current rate is similiar to the 20% rate under Bill Clinton. George Bush lowered it to 15%, and president Obama increased this to 20% for couples earning more than $484,851 a year, and added a surcharge of 3.8%. Under Reagan it was initally 20% in 1981 and in 1987 as part of tax reform cutting the top income tax rate to 28%, it was 28%. Hillary Clinton's plan is for it to be based on how long investors hold their investment discouraging 1-3 year investment horizons- Year 2- 43.4%, Year 3- 39.8%, Year 4- 35.8%, Year 6- 23.8% or the current rate for the highest income bracket. Investments in infrastructure and long term research projects leading to new technologies and products require a longer horizon encouraging such investments. The Clinton plan appears to be a response to the tech bubble with investments in small tech changes and software improvements that have led to surging investment in startups in social media and other areas which have not yielded the productivity gains needed to support increase in wages- resulting in low productivity and low wage gains in the last decade....

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The German people offer a warm welcome to refugees from Syria and North Africa suffering enormous hardships to make their way across seas and overland through Eastern Europe to Germany's borders. Germany of its own accord waived the right to deport Syrians back to the first European nation entered, and supported Syrian refugees right to stay with an 87% acceptance rate for Syrians seeking asylum. In August 2015 alone 100,000 refugees were accepted. Chancellor Merkel and Germany lead the European Union by example, and what an example it has been. Faiola of the Washington Post tells the story of Abed Almoen Alalie, a civil servant from Syria who fled with his family, and after being roughly treated in Budapest, Hungary, cannot believe his eyes seeing the welcoming crowds as he gets off the train in Munich. Never has a nation in such a short time made its way into the hearts of so many as Germany has done in 2015. The crisis found Germany, or Germany found the crisis, either way Germany embraced it and the people who came with it in a way hard to imagine. With chancellor Merkel leading the way using strong words and courage of her Lutheran convictions- "The fundamental right to asylum does not have a limitation. As a strong, economically healthy country, we have the strength to do what is necessary." Many Germans have responded in a degree and manner that is hard to imagine . They say this was Germany's effort at redemption after the war. In a poll by ARD released September 3, 2015, 88% of Germans said they would donate money or clothes to refugees or have done so, and 67% say they will volunteer to help. ...

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A Wall Street Journal Survey of how the credit ratings firms have performed in prediciting looming defaults. The Journal's Matt Wirz looked at 35 years of data. He found the ratings firms did not do an effective job with predicting defaults in the 12 month period before an actual default. Of the 15 government defaults since 1975 tracked by S&P, S&P's sovereign ratings division rated 12 of the countries single B or higher in the 12 months preceding the default. S&P says a single-B rating on sovereign debt signifies that the government has only a 2% average default rate in the next 12 months. For Moody's Investors Service the figures show that of the 13 governments rated by Moody's, 11 were rated B or higher one year before an actual default. By contrast the investment grade ratings of the credit ratings firms have worked better- as no government defaulted within 15 years of having a tripe-A, double-A, or a single-A rating. Ratings firms say that the ratings indicate a relative default risk for countries and not an actual default probability, a rank ordering for different countries and their relative risk. Research chiefs at investment management firms point out that once a crisis develops the ratings firms are not much help. They also say the ratings firms use static indicators like current account balances and other critical indicators for countries in emerging markets such as political sentiment and bank deposit flows get less attention. Historically bond yields have priced in higher risk premiums into government bonds before a default and investors look at the bond yields in assessing risk conditions, and not at the ratings which change only slowly. Brazil and Argentina both had a double B-minus rating in Jan. 2001. A year later Argentina had defaulted....

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Academy Heights Elementary, of Pinehurst, N. Carolina, is expected to close as part of the cost cutting efforts in North Carolina. The state is trying to close a budget deficit. Monroe County's superintendent proposed closing the school to save $500,000. The school has a 98% pass rate on state exams, an award winning math program. It is ranked the second best kindergarden to 5th grade schools in North Carolina. Parents and teachers point out that many of the students come from middle class families where both parents are working, and military families from Fort Bragg, and this is not just the demographics of being near Pinehurst resort; as higher income parents tend to send their children to private schools. They point to the way staff, parents and students work to create an environment that challenges children to learn. The questions here remain ones that are being taken up throughout the country- how to invest or disinvest in education in the face of budget deficits. Should education take cuts and how much? Another twist here is that Academy Heights is in a depressed black neighborhood of Tarrytown whose residents go to to other schools even though Academy Heights urges students from Tarrytown to apply. It is an elementary school and as elementary education has a special role to play in early childhood development, how much of these cuts should fall on elementary schools? Should the best schools be cut under any circumstances or should they be supported with sacrifices made elsewhere or do moderately higher taxes make sense in these situations? Does it make sense to preserve existing excellent schools even as the search for improvement in educational systems takes place -with investments like the $290 million the Gates foundation is committing to improving selected schools? produce excellence in other schools?...

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What can be guessed easily the less forunate or poorer sections of society are way more likely to be charged high interest rates or exorbitant interest rates by credit card companies is confiremed by a research report. Demos, a nonpartisan public policy research and advocacy group, says in areport, that low-uincome and lower-middle class income cardholders were about five times more likely than the wealthiest cardholders to pay more than 20% interest. It breaks down users into 4 categories, with the last two being late payers and people with revolving balances. If this graphed out the picture would show practically the entire profit of the credit card companies coming from these two. The reason being that the other two categories are those who have cards and don't use them so don't get billed, and those who pay before the due date so they pay no charges except what the credit card companies make from the business from whom the purchase is made. This means says Singletary of the WPost that the better off well to do sections of society are actually having their annual fees subsidized by the poorer sections of society, or the lower middle class. Singletary says to a online discussion person who though his cards without annual fees were free, they were never really free, and few people think of this. As a society its like hitting oneself in the foot, because by impacting students, minorities, the lower middle class and other sections of society- which form amajority of the people in the country- at a time when they are deeply in debt, is to make for another hurdle to economic recovery. Its going to impact consumption, foreclosures and worsen the cycle that creates more unemployment. ...

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Take time in retirement to do the things you love the most from exercize, cooking, talking to others and sharing activity, travel and hobbies. Now that you can do it in a leisurely way, do it by spending more time without any rush.

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Remote learning has not fared well during the pandemic in the U.S. as seen by teachers, administrators and students. It may surprise one to know that 20-25% of the homes of students in most southern states in the U.S. including Texas, the west including California, New York in the east, and Illinois in the midwest do not have a relaible internet connection.  Remote learning was used with the idea that young people are tech savy. Not so say experts because being a digital learner is not the same as being a digital consumer. The self discipline of digital learning is not the same as what goes into games and other stuff on the internet for young people. Teachers say they cannot be sensitive to students the way they are in a live class and detect when some students are falling behind. Many students did not turn up online, and homework was not done regularly. As a result preliminary research shows the 50 million students in this experiment in the U.S. will return to school in the fall with roughly 70% gain in reading compared to a typical school year and less than 50% for math (NWEA, Oregon). ...

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Prime minister Modi cites the successful Mars mission "Mangalayan" as showing India's technological capabilities and its ability to do things speedily at very low cost. For foreign investors India offers a stable politcal climate because his party has an absolute majority in parliament and controls many state governments, as well as being a democracy with a vibrant and internet connected young generation. A young population with 55% of the people under age 35 makes India the manufacturing powerhouse of the next two decades, said Modi. And the consumer base of over 1.2 billion people an attractive market. It was a rare combination of hands on salesmanship rarely seen ever on television from a prime minister. In one exceptional response about the condition of women, Modi said he personally led his ministers and legislators through Gujarat state's rural areas house to house in 45 degree centigrade summer heat on June 11-13 school opening days. He did this urging parents to send their daughters to school with the slogan "Send your daughter to school, Save a Girl." The result he said was 100% school enrollment in these rural areas for girls. A rare person at a special moment in India's history pushing the goals of development with uncommon tenacity....

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When Manmohan Singh and Wen of India and China said in Beijing that the people of both countries were united in their aspirations for the future this was very real and sincerely stated. Geopolitics is somebody's game who does not know his own country, people and history in these long neglected parts of Asia. Here in India or China in different ways its these aspirations that matter. India is desperately trying now to improve schooling after years of neglect for the country's rural poor, where the quality of government schools is startlingly poor. The figures are dismal. In general only 1 in 10 college age Indians go to college. But its worst at the lower poorer parts of society. Among the poorest 20% of Indian men half are illiterate and only about 2% graduate from high school. For the top 20% of Indian people only 2% are illiterate and 50% are high school graduates. The problems even as the government pans to triple spending in the next 5 years run deep. There is no motivation among school teachers because for years the schools have been neglected and there is no education culture in poor villages, teachers are poorly trained if at all, they are late or absent and there islittle discipline and education ethic. Parents are very poor and do not understand the value of education and want to pull children out of school to earn wages for the family as migrant labor. The parents are illiterate or poorly educated so there is very little help at home. And there is corruption as some of the money to be invested in school buildings, equipment, lunches, teachers, etc is stolen or goes to bribes. There are some dedicated people but they get washed out in the midst of so much apathy, lack of conviction, corruption and lack of motivation among teachers parents and village officials....

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The Labor Department reports that there is no U.S. productivity growth in the 4th quarter of 2014 over the prior year. U.S. productivity growth is about 1.3% for the period since 2009, showing a weak expansion. Job gains of 295,000 in February 2015 show an improving jobs picture, yet wage gains are tepid. This is partly due to slack in the labor market not reflected in the official unemployment rate of 5.5% for Feb. 2015, with a large number of part time workers who do not have full time work. The low productivity growth is another reason for low wage gains in this economic recovery. Economic growth is also weak with economists estimating GDP growth for the 1st quarter 2015 at 1.5% annualized. GDP growth is in the 2-2.5% growth range since 2009. Hourly wages are up less than 2% since 2009, with hourly wage growth in Feb. 2015 at 2% over the prior year. Weak business investment is part of the reason for the sluggish economic growth. Macroeconomic Advisors estimates the capital investment for equipment software and buildings is seeing growth of only 0.3% in the last decade, much lower than in the last forty years. With most of the gains from the internet technology advances already made there is less prospect of a sudden increase in productivity....

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Janice Turner writes about all those empty calories that are being taken without a thought. For children obesity starts with cereals such as Frosted Sugar Flakes with extremely high sugar content, and other cereals that have high sugar content with fancy names, says this report of how people unconsciously take in so many empty calories. Sugar content that can range to as high as 37%. This builds up disease in our bodies, and obesity. Obesity acts during this time of coronavirus to create a wild fire.

 

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Julie Jargon's interview with Green Mountain Coffee's CEO Larry Blanford. Green Mountain has grown rapidly after it acquired the Keurig brand of single serve coffee makers in 2006. He says K-Cups and single serve coffee is popular because of the broad choice it offers users to have different types of coffee during different times of the day without having to open three or four different bags of coffe that would go stale. On the threat posed by Starbucks single serve coffee machines to be introduced in fall 2012, Blanford says it is basically a espresso single-serve system and does not compete directly with the filtered coffee products from Green Mountain. Espresso is a small part of the U.S. coffee business. He sees growth moderating to 15-20% from the 70% in recent years.

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Some political experts such as David Plouffe, campaign manager of Obama's 2008 campaign for president, do not take a Hillary win over Donald Trump as a given. They cite the average of negatives for Trump at 63%, but Clinton's are high too at 54%, and this campaign season has shown Clinton has vulnerabilities in the way she has lost in some of the primaries to Bernie Sanders. Sanders like Trump is leading a voter protest against establishment candidates.

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Madeleine Brennan is the principal of a junior high school in Brooklyn Heights, New York. She is the oldest principal in the U.S., and has been a teacher since 1946. Her philosophy on education: have consistent rules and consequences, a full school calendar, and having to love the children you teach to really be able to work with them. Her thoughts on retiring and working age- its all about loving what you do and doing it for a lifetime.

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John Donovan, chief technology officer at AT&T, says he has an aversion to seeing people shower credit on leaders. He is focussed on the team and on the result. Growing up in a family of 11 kids taught him not to look for compliments. He likes to see one of his team do a job better than he could. He likes to deflect praise and concentrate on the result which is what excites his imagination.

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Japan's Premier Hatoyama admitted that he failed to win popular support for moving the American base off Okinawa. He said that it was hard to do it during my time, as the presence of China and N. Korea has made public opinion leery of making changes to the alliance with the U.S. However there remain questions about Obama's treatment of Hatoyama during the negotiations, by keeping Hatoyama at arms-length and refusing to compromise on the Okinawa issue.

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Considering that weak consumer protection laws exacerbated the economic crisis by worsening the subprime crisis and weakening asset prices on the books of the banks, banks do not appear to have an understanding of where there deeper interests lie. Banking makes its best profits when it engages in prmoting the industrial activity, investment and growth of a country, and worst when it engages in the kind of mortgage activites that were common during the bubble in real estate.

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The transition for forming Great Britain Railways after three decades of privatization and failed results is now taking shape under Labour. 

The aim is stated in the transition team's messsage-“make the railway simpler and better for everyone”. The GBR website reads: “We are focused on supporting organisations across track and train to work better together to start creating a railway that is easier and better to use; lower cost to taxpayers; better at supporting local and national ambitions; and a simpler sector to work in and do business with.”

The privatization was a mess with failed franchises, delays, and industrial disputes.

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With the hype around AI and the propagandizing by people like Altman, Microsoft, and others AI got to the point where it made up 34% of the S&P 500 capitalization, and all time high for 7 of the large companies since 1980. Nvidia who makes the chips for AI  making up about 6.8% of the S&P 500, contributing to a quarter of the total return on the S&P 500 index in 2024.

Till someone in China figured out a way to do it at 5.6% of what it costs in the US for the high flying AI companies in the US. 

 

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Writing your own narrative when it comes to failures at work is suggested by experts. In the second of a series of Podcasts on How we Work the WSJ looks at failures at work and how they are processed in people's minds. Failures can be seen as experiences that teach, lessons that can be learned from failures so that one can do better next time. In this podcast WSJ gives an interview with Minh Lee, author of Pachinko. The first line of the book is "History has failed us. It doesn't matter." Asked to explain she says the way history is written it simply has winners and losers, but for ordinary people this does not matter as they go on with their lives and try to make the best of things. She also talks about recognition and how important it is. Minh says leaning into ones competence is an easy way to become impervious to failures. It is only when one goes out of one's competence does one experience what is called failure but is really an effort, one effort in a series of efforts, an effort that teaches one lessons that one can apply in the next effort which puts one in a position to gain better results. It is a process of continuous improvement in which one is readily trying new things. Now compare this with one leaning into one's competence and not experiencing what is called failure, yet at the same time not having tried anything new and exciting or feeling the thrill of adventure. Just to take Minh Lee's line one step further. Civilizations fail. How? When a people or society is losing its sense of adventure and severely censors and restricts trying new things you have the absence of a Renaissance. The Renaissance in Europe put it way ahead of Asia, with observation and experimenting above theory and textbooks, and set it up for the Industrial Revolution which started in England. By this time civilizations that never adventured on the seas, never adventured out of their little line of known competence, the civilizations on the Ganges in India and the Yangste in China failed and collapsed. So there are larger lessons to be learned and this also tells us that a lot more is at stake than one's own individual so called failures and so called successes at Work, and in the adventure of life. One ignores so called failure in first efforts because this is what the Renaissance and the Industrial Revolution has taught us to keep trying new things till they work, and to patiently work through these efforts which may take some time, as all good work is arduous and filled with endeavours. In the oceanic adventures of Spain and Britain that discovered  America and Australia there were were difficult voyages that set the path open to those that followed. Captain Cook discovered Australia in his ship "Endeavour" in this way, opening the way to the settlement of a continent. He led the scientific mission for the British Navy on a voyage that lasted 3 years 1770 to 1773 when he returned to Dover from Botany Bay on the Australian mainland.   ...

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Biden has put forward a new initiative to strengthen democracy by getting increased commitments to key features for democratic processes in the world. The idea is not to limit partnerships with other countries says Anthony Blinken, Mr. Biden's main adviser and secretary of state. This means India a key partner in both democracy and the Indo-Pacific can for defending its thousands of miles of border in the high Himalayas with enroachment of China into border areas such as Tibet, maintain its good legacy relationships with Russia as happened in last weeks Modi-Putin meeting.  The idea says Blinken is- "The US does not want to limit your partnerships with other countries. We want to make your partnerships with us even stronger." This means the Philippines, Indonesia, Malaysia, Sri Lanka, can maintain economic and development related ties with China which contribute to their economy, and build stronger relationships of culture and democratic processes with the US, India, European Union and Japan. For this reason the White House has emphasized that this is not about the US giving stamp of approval or disapproval of which country is a democracy and which is not. Too much of that happened under previous governments including Reagan, Carter, Bush, Obama.  The situation of Turkey relates to independence of judiciary and the unwillingness to take another look at problems. There is also the issue of technology is to be used so that citizens are protected from undue surveillance. Mistakes can be made but judiciary acts as an independent branch under the arrangements of checks and balances in American, British and now European frameworks of democracy built over centuries of struggle between monarchies and the people dating back to the Magna Carta in Britain. Neglect of workers and families also is an issue for democracies as for instance the effort now taking place in Germany under Scholz to "respect" workers and families. Lack of this led to the movements in US and European democracies giving room to vent that could ultimately lead to subverting democracies in the homeplace of democracies in the US or Britain. Why such a large gathering of 100 countries? Biden understands that the processes of democracy are always being improved and are a work for each new generation. For this reason there is no perfect scorecard- an ever renewing effort to make the process work in the best interests of the people of the country one generation at a time, to improve the quality of life and do this by preserving the right of peoples to choose their governments.  Why exclude China and Russia, till recently China had a consultative arrangement to run the country and Russia has elections? On this question the response of the Biden administration is that countries commit to the process and back initiatives to "counter authoritarianism. combat corruption, and promote respect for human rights."   Pakistan because it struggles with a long legacy of shortfall in the area of education after the collapse of Mughal rule that was seen under the British, and the general poverty of the Indian subcontinent that is striving to preserve the practice of elections, judiciary, and other democratic processes that were introduced in the Punjab and Sind provinces, and elsewhere since 1900. This is true for much of Africa, and also in parts of India, where aspirations of the people are for democratic process but faced with difficulties, corruption and poverty. In India the efforts of Naoroji, Gokhale, Gandhi, Nehru and Rajagopachari, Govind Pant, almost all leaders of the period since the 1850's, and able well meaning administrators since Lord Mayo in 1868 were to let democratic processes gradually find deep roots. Biden see aspirational in the face of difficulties as acceptable, even truly remarkable, with a willingness to learn from other countries to strengthen its own processes for democracy. It is no longer an Anglo-Saxon model alone as Germany and Europe are part of this process to be renewed by each generation. So are India and Japan. India after a century of elections since 1900 gradually expanding voters from one million to 5 million in the 1930's and to 900 million in 2019, with independent judiciary in a system of checks and balances as in the US.    ...

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To understand the way DJT has selected key people- it follows a traditional Republican pattern getting the best qualified Republicans on board. Some of them may not be as good as the ones they replace but some may be better administrators with good judgement. Sheila Bair of Wichita, Kansas, ran the FDIC from 2006-2011 and was one of the finest at FDIC who also contributed to solve the 2009 financial crisis.  Gary Gensler was slow in acting on cryptocurrency and other regulatory matters. He is one of the first to go in the new DJT administration. At the SEC a former SEC commissioner now legal officer at Robin Hood, or law partner at Sullivan and Cromwell. At CFPB a law professor at George Mason University or a previous Comptroller of the Currency. To understand where DJT is headed there are opposing ideas cap credit card interest rates at 10% that no Democratic administration ever brought up, and discarding a rule challenged in courts that caps credit card late fees. The VP Vance's instincts also come into play as he has also fought to lighten the burden on consumers. The Comptroller of the Currency- A law partner at Jones Day, who was Deputy Comptroller of the Currency in the past. The five member FDIC can only have maximum of 3 members from one political party. For the FDIC to replace Martin Gruenberg who had to resign for not taking enough action to correct a toxic workplace that was unfriendly to women, DJT will consider the Republican Vice chairman of the FDIC, or one of the Republicans board members on the FDIC  ran an investigation into the FDIC.  ...