Brazil: Alternative path

It has been quite remarkable the way Brazil and its people is trying to overcome the deep crisis which it got involved in because of failure of their political leaders to avoid corruption.The trade off between state assistance pollcies to the poor,in exchange for a free ride with corruption did not work. The magnitude of the crisis was so strong, that any parameter of evaluation about political framework was distorted.What may be considered normal in a normal country, such as to fight violence on the street with tough measures, became a kind of an extreme approach out of proportion given the magnitude of violence in key cities of Brazil . The same apply to the role of the state.It is so often to consider its the role both necessary and irreplaceable , that very few realize that it is not normal to have a huge state, and any apporach to reduce its size,seem an extreme point of view,missing the point that what it counts about the state ,is its ability to be a reliable service provider, instead of protector of undesirable practices. Brazil has made its choice, and the expectation is about to be again in the right track , the one which should not had left.- The discussion about how much markets , and how less state , it is a matter for Brazilinas to solve with their neew leaders.No question that as long as it get closer to what create economic growth, wealth and better employment, will allow to become the engine latin america needs to pursue the transtion from being a raw material provider, to a good quality services supplier. The size of its market means opportunities for new business ventures, its expected economic policies will give a support to economic integration and the engagement in better trade deals .- There are bets about failure or success in this new stage for Brazil.Nobody may foresee the future using a crystal ball, but one thing is for sure Brazilians want to be again on the path of becoming a reliable partner , instead of being a permanent promise.-

Which are seed of the next economics recession?

Key economcis analists have warned about the risks of a new economic recession,somehow as a follow up of the one the wrold is remembering these days.Just a few day ago (septemeber,18th), a Global Outlook conference call organized by Roubini associatte team took place to analize the risk of the next global economics recession.Covering a variety sides of the economic perfomance of key economies as well as those in Emerging Europe, Asia and Latin America, ,the main lines of thought, goes on to keep attention on the year 2020 .- The year 20020, at least in the USA economcy seems to be the turning point from higher to lower economic expansion mainlly assuming that the fiscal boost in the USA economy would be close to fully exhausted its effect, while the Fed would have its normalizing monetary policy totally in place.This means that in that year and unless potential output expand throuhgout supply side gains (higher productivity, innovation ,lower regulation and so forth)) there would not be a counterfactor to overcome the contractionary effect of higher interest rate.For this matter the European Central Bank, would also be on the same track of normalizing .So, theses effects would be the first signal to watch in that year.- Besides the basics, there are other isssues which should also be in the surveillance area .On this regards , most of the focus is on the expected effect of the currrent trade adjustment policies between USA and China, as long as the current trade conditions impose the heavy losses of the monopsony powwer of one oversized consumer (China), which means welfare lost for those which are its trade partner.The consensus seems to be that this adjustmenet will no escalate to become a policy with most of the economices imposing tariff at its discretion to one another . Moreover , trade adjustment do not have a huge share(25%) on the chance of recession. Other variables goes on the microeocnomics foundations of markets.That is the case for the perception variables: Credibility,Trust and expectation.- Credibility on the quality of the economic policy implemented, Trust about its positve expected aoutcome, and expectations about what comes next once its impact is fully in place to support steady economic growth. Whether these variables goes on the upside mood , the virtuous cricle of growth may be in place for a longer period of time even beyond 2020. It follows that on top of the list for risking a new recession, are economic policy mistakes whether it comes either from the Central Banks and its tightening approach(faster than what market expect), or over expansion of public expenditure and total debt both public and prvate, beyond long run fundamentals) . In the latest case ,it leads the econoomy to the complex scenario in which there will not be too much of policy tools to chose from. So ,after controllling the risk of policy mistake, it arises the problem of lacking policy menus in case the econonmy moves toward a contractonary pace.This is what make more relevant the supply side oriented policies - On the strenght side, it is worth to consider that Private banks are in a better shape than some years ago.Inflation at the global economoy level does not seem to be on the path of being a factor for a recession. Finally, new trade agreeement under the new rules may also be an impulse for econoomic growth .- So, it is both a good and necessary idea to think about the risk of a new recession. Whether it take place in two or more years from now it is a matter of usual business cycles which macroeconomics policies are trying try hard to solve.-

2008:Ten years later after the crisis

Ten years ago, the global economy was under stress, with few analists in the path of anticipating properly what it was a few week away(September 15,2018).The fall of Lehman Brothers, ignited the beginning of the worse economcic recession so far in this century. Beyond the events which followed that day , it is interesting to take a limited review about some factors which may give a clue about the origin of such extraordinary policy failure, because markets do not act either on its own or, outside the legal framework.But what may be worth to take a look into? a.- Even considering the 2008 a policy failure, this conclusion does not come straight.This is so, because financial activities work on the basis of trust,reciprocity, and beliefs.For such a behavior, it is not only a matter of policy, but also about the underlying variables which influence the perception of uncertainty, which most of the financial activities work under. b.- Whether it was not a policy failure, what was it?.An hipothesis is the so called "Implicit Guarantee", which is equivalent to a Central Banks in the shadow, as a lender of last resort. It is not real , but it may be ready to provide help to financial instituions when troubles about out of control uncertainty arises. Where this "Implicit Guarantee" comes from? .The "Implicit Guarantee" approach of economic and financial agents, arises from past experience, (What Central Banks did in similar past events), CEO Central Bankers preference about neutrality (Whether the policy approach is to allow market adjustment mostly by itself through expectations). This two variables,at that time, were on the side of boosting financial risk, than otherwise. Thus there was an " Implicit guarantee" and a preference for neutrality, which was equivalent to give a green light to higher level of financial risk. But none of them, dealt with economic policy by rather about perception. Markets operators and Banks, percieved that there was no limitation to push risk higher in investment porfolio.In fact , Banlks borrowed USD 30-40 of debt, for every dollar they had as Capital.- c.- Regulation seems to be a critical variable to boost irrational exhuberance. However, regulation comes in place after the perception about the way the systenm cover further risk.In fact, the marketys operator , ask themselves how far the risk may go given a certain regulation which become a constraint whether it is low or high . Sure, lower regulation allow to go further on risk level, but the safety net to do that come from the "Implicit guarantee".Regulation allocate the kind of risk which are allow to perform within normal conditions of uncertainty, but not necessarily to solve the share of assets exposure to what economic agent percieved as uncertainty .One investor may invest in an heavy regulated investment funds , but if the market conditions get worse for all investors,their losses are not a regulation failure. In the 2008 crisis, the failure was more on the quaiity of the collateral to back up the face value of financial derivatives assets,after the economy start to adjust to the higher interest rates. It follows that , eventually a delay in such policy change, or a better coordination with the financial sector, may have gotten a different outcome .Regulation, seem to come next to those policy decisions.- d.- Finally, the wealth losses in the household assets, for the private owner was in the range of USD 9,1 billion in the USA economy case, which is equivalent to a USD 35000 per familiy, almost 20% of the average cost for a new home at that time. The higher level of losses were on Wal street (USD 7,0 trillion bail out), and in the economy activity as a Whole (USD 12,8 trillion).This numbers suggest that the social cost of the 2008 crisis, were higher than private ones, even considering the fall out of benchmarking Banks at thast time.The explanation for this outcome, deals with the fact that private citizens has lower transaction cost than society as a whole, to organize a legal strategy of protection and defense for unexpected events. Unemployment , output losses , a zombie financial sector unable to boost economic activity , were all part of the huge social cost society could not protect from on its own, just like in any other economic crisis. This does not mean that it is desirable to induce economic agent to push risk beyond the fundamental of ecoonomic stability, but when it comes to a economcic fall down, the worse prepared are those who regularly face lower levels of uncertainty , such that the probability of getting by surprise is higher.-

Symbolic economics

Since the mid eighties, it has been usual to follow both economic news and its trend no just exclusively accordnig to the data available, but also by the opinions and evaluations of economic analists who make their own intepretation of economic data, shaping this way both the markets expectations and the investors mood which at the end get as an unexpected variable into the policy makers decision framework .So , what it comes to be at the core of any economic analysis is not necessarily the data itself, but either what his or her interpretation make of it.This is a source of power for all of those (analists , researchers and the like), who work within the scope of reaching public opinion about economics performance . It includes not only economic analists and their background, but also all those subjective subject related to the public percepcion, such as personal image, prestige, status,knowledge and culture attached to someone. All of these are symbols and its endowment have market value specially valuable when it comes to influence public perception.Thus, investors or for this matter ,public opinion will both listen and later follow what these people says upon the basis of their prestige, good image, knowledege, which are the envelope of the accuracy of their judgement.That is also the case of CEO of Central Banks. They talk, and market listen. The importance of these flow of analisis and expert opinions,is that it reduces transaction cost arising from uncertainty and information assymetry.Of course, this is the case when these analisis are precise and both market and policy makers really cares about the "opinion side" of economic performance.After all ,anyone may have its own ability to make their own decision instead of external advisers. It is well known in the case of economists, that when two of them try to solve a problem, it arise an aditional one. In other word,, two economists given their opinion abut the trend of any economcy,they may come to conclude either that it goes at different pace but the same direction , or even opposite direction whether they chose alternatives perspective (either investment or consumption)for the analisis. This does not means that economist are the less qualified to communicate what they understand better than others, but it is true that after 2008 many of them became under negative evaluation because they were unable to anticipate properly what was the underlying forces of that crisis. On july of 2008,some of them were certain that the economy was on the track of steady economic expansion. On the other side, just a few of them (two or maybe three), who correctly anticipated the crisis and in some cases were treated unfairly,did not get the attetion to their warnings. Some bankers, policy makers and researchers, wanted to believe what they thought it was worth to believe .The fact is that to cope with the effect of that crisis, the FED started what it was called the "Forward guidance policy" (2008-2017),which was the equivalent of the light in the darkness. So any analists opinion, depends both of the quality of her or his assesment, but they also crutially depend of investors and policy makers ready to listen what they are trying to communicate . However, in a world of uncertainty and complexity , with unreliable prediction models, expectations have a key role for decisions making , such that those analists who make thing easier to understand, have the advantage of being able to make the proper interpretation of what is the meaning of any economic variable performance. So, market will follow them.- Thus, the economy has two fields of performing, the effective arising from data, and the symbolic one arising from interpretation, and trend analisis. Both may be complementary to one another when the economy goes up, but either when it comes down or it is close to it, the situation become more difficult to evaluate because of the variety of factors taking place in such a scenario. So, Economists become like politicians , as Winston Churchill once said, they have to explain why things were in the opposite direction to the one they predicted. Both, the effective and the symbolic one, make what a successful economy look like. How come ?. Well it is not only of matter of being well, but also a matter of being percieved well, and even much better.- .-

Migration as a source of human capital

Perhaps one of the most conflicting issues of the global economy these days, based upon free flow of capital ,goods, services and labor, is the one related to migration. This is so, because as capital moves quickly to different places following the expectation of increasing profits, it requires both complementary services and labor skills to keep the economic return curve , as much as it is possible, on the rising side, otherwise capital will move to a new gains opportunity , leaving behind the adjustment cost of resources reallocation within sectors which loose capital , with those ones which gain capital flows. This mean that in terms of capital financial return in the destiny country, labor skills which matter the most, are the one above average. In other words , capital expected financial return, define the profile of labor migration needs,as much as those skills mean higher productivity. Of course, a different story is related to cost gains, but in this case it is capital which follow such a places.- So, any economy lacking sufficient domestic labor force skills, may import it from other countries.It is like importing either education or qualified human capital. This was the story of Brain migration in the sixties from underdevelopment countries to development ones.- However, Migration can be analyzed both from the demand(above), or the supply side. The supply side of migration depends upon expected wages gains, coupled with the expected probability of employment(Todaro ,1981). Both, the higher the expected wage, and the employment probability , the higher will be the qualified migrants flows from one place to another.In this case, Migration is also an Human capital investment, which increases the returns of education.In such scenario, the migrant market fit the requirement of capital increasing returns.However,there are in place two implicit assumtions : a.- From the productivity level that any competitive economy requires, the relevant migration flows are those endowed with high human capital levels, because even whether the probability of employment is low, such an important human capital endowment , allows their owners for higher flexibility, mobility and adaptation to different requirement arising in the labor search process.- b.- The only way human capital arising from migration, may be useful for productive purposes (both increasing return of capital and employment), is based on the clear definitions of its property right. This has two tier: b.1 Those propety rights, come from formal education and its certification granted to those who successfully get the finish line at whatever level.- b.2 Those property rights, are recognized by the legal system of both countries( the one from the origin, and the one of the destiny of any migrant), which means that any migrant, must follow the rules of the legal system. Thus, there is a formal markets of migrants, which like any markets may work well,adjusting its wage levels according to migrants flows. Given symmetric information, if expected wages are high because both , there is in the destiny country, strong economic growth and low unemployment level, it will increase the flow of legal migrants, which sooner than later will decrease the expectation wages and migrant flow wuill decline.To avoid such disturbing fluctuations, and its displacement consequences, Europe implemented a few years ago ,the "Guest worker program" which allowed Migrants to stay in the dstiny country for the period of time their labor contract allowed them to do so.- But, the problem starts with the fact that the demand and supply flows of migrant do not always match an equilibrium in which social(private) benefits and cost are equal, becasue there is simultaneously an informal markets. So, Migrant markets is a segmented one. with two categories:. a.- The first level has the best of high qualified migrant b.- The secondary level, has the lower qualified migrant which lacks of property rights,(not education certification), and do not have the incentive to get into the legal system, because it would valued it at zero .- This secondary market, is the one which deal with illegal migration, equivalent to importing (country of destiny)or, exporting poverty(country of origin ). At this point, arises negative externalities dealing with poor migrants and poverty exporting, such as human traficking, border services requirement(patrolling, cheking point and the likes), aditional shelter for those in the waiting list, judiciary courts to solve those issues concerning the rights of the migrants, better unfrastructure to cope with health, sanitary and foods demands. In this secondary market, social cost are higher than social benefits, while private cost(nothing left behind), are lower than expected private benefits(illegal jobs).So the outcome is that migrant flows are higher than what is socially needed.- What is the proper solution?.The economic analysis suggest that any informal markets do not add up to social welfare. Instead, it decreases social welfare of the country of destiny, and no welfare gains whatsoever, in the country of origin unless, there are laws which may deal this disequilibrium. The law solves what market forces, do not, just the same way as it happens with environment contamination , collusive behavior in oligopoly markets,public goods, and the likes.The aplication of the resources provided by the legal system, is a guarantee for the property right protection and the welfare levels, of the majority of migrants.- Economic analysis (Coase Theorme),also suggest that in some cases, there is a chance of political solutions based upon negotiations .But the Coase Theorem also make clear that such a solution, requires low transaction cost, and clear definitions of property right.However, none of theses condtions, apply to illegal migrants.- So there are currently hard times for the global economy, because its global markets (goods, services, capital and labor) no always work the way it should. It seems that it is needed an up dated in the global economy institutional framework, dealing with the way markets provide even better outcomes than the ones which are already known.-

Women´s Labor force participation

When it comes to consider women in the labor force , the outcome is clear. There is a widespread dispersion between countries with high and those with low women ´s labor participation force. It is high in the lowest and highest income countries alike , and it is low in those countries in the middle income levels. The reasons to explain this situation goes as far as cultural factors, educational levels, wage discrimination and lack of a proper legal status to protect women on the job,specially when they have families to care which led them to informal labor market,and weak labor conditions.- The labor force participation rate, is the proportion of the population age 15+ who is economically active The trend ,since 1980 ,has been an increase in the women´s labor force participation rate ,although at a different pace , getting in the range of 50-60% in countries like USA, Germany Canada ,UK. and Spain. Latin America and the Caribean is also in the range of 50%.- From the economic stand point, most women need relative higher wage rate to get into the labor force than men,because her marginal disutility of working ( to delay maternity for instance), is higher such that they need a better and higher compensation, but at the same time, their time span expectation of staying within the labor force, is shorter than men, which imply a downward pressure on their wage level over time which measn that their net wage trend leave them earning less than mens .It follows that for many women part time jobs , adaptable schedules or net working , fit quite well with their preferences, Of course the real issue should deal with their abilities and skills for jobs performance, but the empirical evidence do not seems to take these variables aside from the ones mentioned above.The case of Denmark is an example where women earn less because of having children no matter their age (Ortiz-Ospina & Tzvetkova, Working Women Key facts and trends in femmale labor force participation ,2017).- Beyond the causes , determinants and explanations, the change in female labor force participation have quite important side effect: a.-It foster the development of the services sector.- b.-It facilitates new alternatives for net working c.-It support adaptable labor schedules, which improve flexibility conditions on the labor force d.-In some specific sectors ( driving heavy machinery equipment in mining activities ) are more productive than men,measured by the period of time keeping the working operation of the equippoment, which is longer than the case of men.- e.- In other areas women have better comunication skills specially suitable in the for movil phone calls areas to promote commercial packs .- f.- Women CEO, make a difference when it comes to use intuiton, emotional connection(closeness) to drive a team toward its goals Thus, there are a lot of reasons to expect more women into the labor force in the years to come.More so, when some emprirical evidence (World Bank, 2018). indicates that there are productivity gains associated to women on the economic activities. Public programs designed to support women on maternity age, and firms policies to protect women on the job , are more than compensated by the gains in value added and productivity for the economy as a whole.-

Is Latin America turning to the right?

It has been the case that the latest Presidential election in Latin America, has concluded with new elected Governments which had a political platform based upon ideas like free market, freedom of enterprise, better state to cope with social disequilibriums,specially those related to inequality, poverty and discrimination.- The underlying foundation of these outcomes, deal with the fact that there is strong disapointment with the Government failure to provide what the new middle class expect,(good quality jobs, services, education and health ),and skepticism about its ability to make a turn around such as to be a partner for the expectations of the majority of citizens.Instead , the politcal spectrum has been involved in scandals of a variety of situations, the most devastating of them all, have been the corruption charges against those who had become leaders, to consolidate the social achievements.- What are the implications of this movement to the right ,and may it last? a.- First of all, it is important to make clear that the citizens are looking for different solutions to new problems.This means , there is no way that old solutions will work .So it is the time of change and transformation. Change because of shifting roles from Government to both firms , and the civil society empowered by social networks.Transformation because economic growth has some limitations to deal with.Strong institutions are the key to make economic development an achievable goal.Both better instituions and the proper incentives to economic growth, are the golden mix to follow through.- b.- The private firms has made a contribution throughout the Latin America economies, to validate the role of markets to provide jobs, commercial credit to make afordable more durable goods, and by extension better standard of leaving.Besides, the initiatives of integration has made clear the relevance of private investment when it comes to give opportunities of new jobs, and take advantage of markets expansion.There is not doubt that the consolidation of private firms as the real partner of progress and well being of latin american citizens, is also a key explanation of voters to prefer market solutions.- c.- Trust is an asset hard to get, but easy to lose. Unfortunately , there is not many institution to trust in Latin America , with the exeption of those linked to citizens´ s own interest ,such as some NGO, and Networks with the skills to be the echo of those issues the society care the most. It is a surpiring fact that the state and society has moved away from each other, because those whose role is to be the intermediaries (political organizations), also failured to be up to the job. In the last fifteen years or so,political organizations turned out to be on the state side,to protect its failures, instead of focusing on how to solve society expetations .They were part of a machine not to serve the citizens ´s interest, but to serve their owns. For this purpose, the state was captured by small groups strong enough to change the course from where it should belong and stay.- d.- From the above it follows that freedom it is not a slogan, but a real chance of living up to its possibilities and opportunities.It is a better chance than Government promises which make fool of those who believe them.The new middle class is keen to realize that to improving steadily its living standard , falses promises are not what they expect and deserve. More so, freedom has become a more realiable alternative than government to provide justice and social equilibriums.Those countries in Latin America based upon the value of freedom are better off than those which still believe in Government.- Finally. is it possible that this change will it last?.After all, there are still political elections under way on the landscape, which may be a set back for all theses arguments.There is no easy answer.Each political process has its own profile which make it hard to extrapolate mechanically to any political event, and even to all up coming elections. What matter the most, is the trend and its underlying forces, it may take more or less time for the majority of countries in Latin America to be on the line of shared prosperity,integrated to the global economy as a reliable partner, but the seed is already in place.From now on,It is more the responsibility of those leaders from the right to follow the best path to achieve those goal .-

Industrial revolution 4.0

Since 2010 the global economy, has been working steadily to implement more advanced stages of digitalization.The digital productive process started to be an issue which to give attention , in some business in Germany when they were looking ten years ahead and realized that internet would not be just an information -Knowledge device.The internet of thing (IOT), and the artificial intelligence as a powerful complement to manage information, were on the path to become key variables to support new approaches to production process , chain value creation , customer relation management and big data processing, all of which create a new environment for CEO decisions making process, global connectivity ,automatization ,and the ability to get deeper into costumer feelings (Biometrics analysis).- However, this revolution, the so called 4.0 one, begun more than 35 years ago when the japanese started to work with more advanced computer (intelligent computer) which set the first step for robotization and later to "human like- robots", which make the whole necessary scenario for the firm fully robotized to become a reality sooner than expected.- So, business Management is under a new challenge, the one which arise from the possibility that the whole productive, process may be done by intelligent machines able to learn by themselves, to make fast corrections and data evaluation.CEO will have to work harder in the data analysis phase of the productive chain, improving its qualification to take advantage of their different sources of capital , arising from networks, big data accumulation , and talented people, to cope with the faster adjustment demands aimed to more sophisticated consumers.The value creation will also be revisited as long as integration will include not only specific productive process of one firm , but also different but connected firms such Banks, insurance firms, different components in the auto industry and so on.- Latin America is not away from this revolution .There are some research which indicates that by 2021 , 40% of its GDP will be in a digital format, and 40% of those more important business , will have a complete technological platform.- The next question is how Government will handle this change?.How will it impact on its own nature?.Is it possible a digital government?, If it is so, what are the implications about a Government with limited human control?, or a Government which become just another part of digital business?.It seems that few traditional government services, will survive the digitalization era, such that those which may actually be done by internet(all kind of certificates, tax payment, and the like), and only the real new needs will be justified, among these (cyberspace security,and data protection ).Welfare level will depend more on the business ability to get higher productivity, than traditional government based on a service supply role.-

The global economy adjustment path

The global economy is on its way to get "normal".This means all prices become fully in charge of every markets.Interest rate like others prices (Wage,exchange rate, and goods) are increasingly reflecting the effect of the so far steady economic global economic expansion. There are risks along the way such as overheating, asset overprices and market volatility, as prices start to moving to its long term path. The economic cycle at a global scale is in motion. As economic growth get traction, it stress up labor market and wages, which add up to the firms cost, and so to its good prices. Thus the expected inflation increases and the Central Banks comes along to get in charge of the prices adjustment, to make it as soft as it is possible. This is the conventional approach. However, the global economcy and its broad and deep links both real and financial ones, make things a bit more complicated. a.- The missing variable :Productivity, may be higher than conventional statistical measures (out per man/ hour) are considering. Information and ideas flows, conectivity speed, faster data processing, plus knowledge sharing, and global innovation chains, make productivity higher than its limited quantitative measure. It also has a qualitative component.In other words , value become as an important part of productivity gains.- b.- It follow that wages may goes up, but as long as the whole productivity also goes up, inflation may be more stable than expected even whether agregate demand keep its upward trend. Alternativeky, inflation may take more time to get its targeted level (2%), and overheating in the short run may have a lower probability. c.-The financial side, is the other variable in the global economy expansion. Given its fundamental, asset prices may be higher than its real value, fostering private debts level to the higher risk zone, both in case of a sharp downward movement in agregate demand, and with the increasing probability of downward price correction, along the reinforced market anxiety related to it. Exchange rates take its share of the portfolio adjustment , some currency moving downward ,while others moving upward. Expectations may deteriorate and all of the sudden the global economy moves from expansion to a "stand by" mode, if not contraction, while the adjustment take place. It follows that interest rate has two transmission channels: both the real(consumption and investment levels), and the financial one(asset prices and portfolio allocation).- Current data are not conclusive about the global inflation trends.It is close to its target level (USA), and half its target (Euro zone), but it is still not a fact that the target is about to be surpassed, given that december ,january and february ,are usual months with higher demand for energy intensive goods and services, the ones with more prices increases in december 2017. So what may be expected?.Interest rate will be the latest prices to be adjusted along this year, following a path suitable to the new developments on the real side, (higher productivity than the one which is measured),and the deeper global financial links which make the financial transmission channels to work faster.

Closing 2017: A brief review

I.-The year 2017, will probably be registered as the year which signal the beginning of the transition to a different world order. There has been an intense discussion about what lies ahead in this post globalization era. Some key developments about this issue havwe been: a.- The review about the foundations of globalization went beyond economics, as long as a global society also mean a lack of identity, or a weaker link with those values which make us all to feel either that we belong to something, or that we have those unique cultural values which every one may count on as their back up when it comes to move forward into the avenues of this century.- b.-International organizations were under keen scrutiny, and its effectiveness was questioned, as they have been unable to cope with key threats currently unsolved, such as massive inmigration, unfair trade, cyberspace weakness,climate change challenges, effectiveness of control about the nuclear proliferation risk programs .- c.- There are additional sources of global leaderships. This mean a multydimensional approach to every global issue, which allow more diversity,better human capital endowment but at the same time, it requires more flexibility to go along with global goals such as peace, better globalization, and protection of what it is left out of environment , based upon different perspectives each one as legitimate on its own, as the anothers ones.- d.- The real meaning of incoming Globalization 4.0 , is still confuse, but some guidelines are become increasingly clear: The Global economy requires countries with its laws, institutional framework and effective Government policies at home as a preliminary condition to go global.So, globalization it is not only about global markets, it is also about effective laws, institutions and policies proved to be effective, before exporting them to a global scale. e.- Consumers are the drivers of the incoming globalization, but the supply side response make the whole difference to adapt productive process to new demands.Virtual organizations such as "Amazon", "Google", or good producers such as "Zara", "Mercedes Benz", or services providers such as "Walmart" , "Facebooks", "Twiter" to mention a few ;are moving ahead to reshape markets to provide faster responses to consumers preferences, in such a way that producers and consumers mix together in a new business unit called"prosumer". f.- Global markets became better coordinated to sustain join economic growth advances. Key economics are within the area of monetary normalization process. II.- Other relevants issues in 2017 were: a.-The consequences of climate change are well ahead of any agreement already in place. This mean that the next one, is better than anyone already signed. So, the issue is not how to cope with controlling climate change,(reducing global temperatures), but how to deal with its consequences even as catasthrophic these seem appears to be. It follows that Climate change has become out of range of Governmenet actions . b.- The faster the change in productive process already in motion ,the better. New tecnologies, have made additional progress to boost the speed of such transformation which make private firms the key drivers of mitigating climate change consequences. c.- Europe as a whole (Germany, United Kingdom,Spain,Poland, Hungary, Italy and Austria), face the stress of its European Union project becoming under further scrutiny, following the current fragile situation of its main leaderships.- III,. Latin America a.- The economic growth came back as long as the global economy recovery became stronger. After an economic contraction last year, 2017 look with positive numbers in terms of economics growth (1,5% on average).- b.- The time of reforms is not over in key economies in this region. New conditions on global markets, and the past experience about the cost of not keeping the pace with its development, has made clear that the path to improve economic development, goes hand by hand with more flexible markets and better institutions.-

Market Power

When it comes to get an approach about the real value of art pieces, there is no easy answer. Most of the time it is a matter of both imagination and perception, and usually goes beyond that, as long as they represent a moment of inspiration by an artist which has no Price because it is scarce. They are public goods. So, that is the reason because most of these pieces, are better valued at museums ,where its intrinsic value, get higher while increasing amount of people admired them. However, like any public good (parks),whether there is not any protection policy,it may be on the contrary. The local authorities in charge of The Fontana di Trevi in Rome, had to change the tourist preferences for throwing coins at it, because it did not make any good to preserve its value.So, like most of public good, art pieces depends upon local authorities policies to preserve them. But what about if someone try to buy a piece of art?.In such case, it is when prices come along, and with it the market power. There is private market for art pieces,because these are profitable alternative for long run investment .The expected benefit of these investments, may be more stable than financial assets whose market value is affected by both market fluctuations and cycles,either up or down depending on how every financial assets fit with the outcome of such a fluctuations. Some of them , may not survive because its value evaporate as the business activities which are based on , do not longer stay on after after the economic fluctuations are over. Art pieces instead, are somehow above time, because they are not tied to anything by itself. This means that at time goes by, its value will go higher, because it become more relevant the scarcity of the talented necessary to create it .If such a talents were widely available, prices of art pieces will be easier to set by customer interested to buy them. It follows that anyone who may be looking for investment alternatives, the arts pieces are a good ones. That was the historic case for the Da Vinci´s "Salvatori Mundi", which was sold by more tan USD 400 million (USD 450 million), 400% higher than its previous Price.This Price came about after the latest two or three buyers pushed it higher .These are the situations what markets are for. Let asume that throughout social networks ,arise the question of who would like to have such a valuable piece of art, and what potential customers would be willing to do such as to get the painting.Probably thousands if not millions would be ready to go for it at any cost.But how to solve the problem that there is only one piece of such art piece?.The Market provide the solution by setting a Price.Of course only one customer could afford the Price, but the allocation process went smoothly, and nobody who was left out, would complain foul. That represent the social value of markets. Its ability to provide solutions which otherwise it would be hard to come by without high costs.As long as markets are the driven force of the allocation process, the outcomes will match societu expectations about its welfare preferences. However, it is well known that markets not always work prefectly. a.- No all customers may pay all the prices.Some are left out and then it is when eficient public policies comes along.Health and human capital decisions (education), are the usual examples . b. Markets can fail to solve the allocation problem.That is the case of common and public goods.In this case, it is also necessary to have efficient public policies, and strong institutional frameworks (laws). Thus, markets provide the first best solutions for the allocation of resources, which can not be matched by the State.However, because of price restrictions,efficient public policies must do the remaining task of making sure that society get the benefit of it.-

Taxes and Government (II)

The discussion about taxes and the deficit ,assumes that all government expenditures serve a necessity whose priority nodoby would dare to challenge. But what about wasted resources because of ill designed Government policies?. For instance after 2010 , most of the the Euro zone countries run increasing deficit in some cases well beyond the 3% range accepted by EU institutionality. It was not only because the private sector was still trapped in the follow up of the 2008 crisis.If that was the case the fiscal expansion would has been a compensatory one. Instead , it went well beyond that compensation because the Euro currency gave support to moral hazard behaviour on the side of Government expenditure to pursue on its own. The problem arose when those deficit had to be cut down, there was no way other than to cut governmenet expenditures .Latin america economies experience is full of over government expenditures. Thus, it seems more plausible that Government expenditures rather than taxes, matter more when it comes to keep the deficit under control.- So, tax cut does not mean higher deficit if expenditures are in line with the resources the economy is capable of producing. Under optimal condition it should be feasible that the efficient Government expenditures would be lower than the resources the ecomomy generates through taxes. How come?: Government should be focus where its social welfare impact is higher, which means it should be focused on few activites with such a profile(health ,education).Other expenditures, aside from those necessary for both internal , and external defense such as infraestructure, can be carried out by the private sector. There is not need to have high taxes , unless that the value of the services governmemt can provides means higher impact on social welfare.This has limitations, as long as private sector, create wealth while government does not.- By the same reason, taxes are negative for economic growth .W McBride, of The Tax Foundation made in 2012 a survey of 26 research about the impact of taxes on economic growth.In 23 of those articles, found that the impact was negative. Evidence on the contrary, may also be possible as long as the economy is less flexible and has lower resource mobility or high regulations standard, such that resources ara stick to a pattern with few alternatives. In such a case taxes , may be neutral or do not affect economic growth.The main conclusion would be that those economies which has a more dynamic performance, are probably the ones which get the worst impact of taxes.-

Taxes and Government (I)

It is well known that within free market economy ,government has a complementary role to what market can not solve.Therefore , Government is in charge of public policies concerning health,education,social infrastructure(schools,hospitals,rural roads and the like),asides from those policy issues related to economic rules,institutional framework, and those linked to national and external security as well.So, it is hard to complain about these tasks, unless private sector can do it on its own.The problem is that the role of private sector is different from that of the Government , mainly it is to create wealth. Government instead deals with the issue of wealth distribution, which imply that first and above all ,there has to be a level of wealth available to distribute, otherwise it distributes poverty.It follows that government need those which provide it the means to do its distributive task. The second side of the story, is that Government does not use its own money for doing its distributive task.It is other`s people money.That it is when the trouble begins.- The ethics value of supporting the weaker and more vulnerable within society, is in a conflict with the ethic of using external sources of money (taxes) for doing so, which may has at the same time, other uses.Whether Government had its own money, it would not has this constraints, or if it is efficient and effective to allocate that money, government can somehow solve the ethics conflict.But unfortunately it is not that easy. Government has no control procedures capable enough, to make sure that from the social cost perspective , there is not any difference whether either one dollar or euro, is spent by either the government or the private sector, such that social cost would be compensated by the social benefit.-Reality shows that corruption,waste of resources,oversized of government offices, make impossible for that compensation to take place. There are studies already done about government management, which suggest that it goes far beyond its duty when it comes to spend .- The other side of the constraint for taxes , is on the economics field.Taxes are an outflows from the economic activity which means that it reduce the ability of the private sector to create wealth .Higher taxes impose a burden to the private initiative, such that it creates the incentive to evade it reducing tax collection and affecting government ability to do its task : it has fewer resources than those which needs.On the other side lower taxes avoids this problems because given government careless approach to money spending, it fit what seems a fair share to help those in need.Besides , in the global economy, the competition for financial resources facilitates a convergence toward lower taxes, otherwise arise a loss of competitiveness.- So, the discussion about reducing taxes ;it is more about the ethics approach of helping others, looking for the best approach possible.In fact ,aside of Government there are other alternatives such as private donations,NGO`s,which can become a strong support if they have the proper incentives.

Service sector : an alternative path for Latin America economies

When the commodities prices (metals, agriculture and energy) felt ;( 2012 - 2016) , Latin America economies had its own self- inflicted crisis. Most of these economies, were not that much well prepared, as they were for the crisis in in 2008-2009.So external debt increased, fiscal deficit get higher, and economic growth lose its momentum.- It was less than obvious to realize, how far these economics have reached on the development of the services sector. In the first five years of this century (2000-2005), services sector in Latin American economies started out to be more relevant for aggregate value process, which became more deeply active since 2010.So in the year 2011, services sector accounted for 64% of the value added ,in Latin American economies (including those of the Central America), and in 2015, 69% of the labor force; had a job in the service sector, up from 62% in the year 2010.Besides the leading area of services; are the ones which employ higher skilled human capital .Up to 20% of the best qualified human capital in these economies, have an employment in the services sector. ECLAC (2014) This structural change, is not by chance or supported in a transitory situation, like the one to replace job losses in other sector .Instead it looks to follow the usual path, associated to higher stage of economic development. (Levy, E. y Pienknagura, S. (2014)). The implications are wide and promising, given the increasing integration to global markets: a.- In the near future, Latin America economies, can reduce its vulnerability to commodity prices fluctuations.- b.- Latin America economies may be part of the Global value creation, either on its vertical (Retail management development),or the horizontal dimension(Business process outsourcing. knowledge process outsourcing)

Fuente: Latin america´s emergence in global services: a new driver of structural changes in the región? .ECLAC 2014

The value of ideas: Individuals above the state

France has started out a new Government. But it is not the usual "in " and "out" kind of replacement , which take place regularly in that country.As far as the latest news report, both the traditional left and somehow the traditional right, lose huge amount of votes and legislators, to make them both a secondary forces within the political landscape.A whole new set of ideas has arrived to the Elysee Palace. France like most of the key European countries, has been known for its particular approach to the welfare state solution.More so, in the case of France at the time of the unique currency , the Euro which depend upon market flexibility and a complementary public policies to support both as much as social needs, as business framework at the same time, to get gains in productivity and competitiveness,which no country in the euro zone can progress without. Germany understood this in 2003, when Chancellor Gerard Schroeder was in charge of Government and implemented key reforms, heavily critized at that time, but making a turning point away from the welfare state approach, which have been fully validated years later with the lowest unemployment Germany has in 2017.Thus, unemployment in Germany; (with a decreasing trend between 2010-2015), given the refugee demand for labor,seems to be less than a problem (5,7% unemployment rate in may 2017,half the rate of that one in 2005), keeping in mind the skill of Current Government to stay the course which is working to get full employment in 2025.- Although in different moments in time, the value of that reform(2003), such as those one years earlier , of both former President of Spain Adolf Suarez (Moncloa pact, 1976) ,and Felipe Gonzalez in the eighties, while getting his country ready to become a member of the European economic community (1993)); were that those came about from leaders who made their way up to government, with skepticism about the effect of market flexibility and its ability to solve welfare issues . Markets strenght and free Enterprise to créate wealth, are not a new idea, but it is that european countries embrace it to keep the pace of prosperity. France has arrived just in the right time, to join such a formidable force already in march .- But what are the real new ideas to count on?.The world is moving toward the technology age, side by side with knowledge , wide spread information to make decisions, and different requirement for human capital to have more flexible labor skills. The multipurpose labor force requirement ,cames out directly from the incresing role of automatization, robotics and fast changes in market conditions, which do not left too much time to look for ways to keep in balance innovation driven cost. Innovation, creativity, value added do not come out from the state anymore, nor from its protectorate status.They comes out from motivated individuals, who believe in what the can look for, because opportunites are available as long as they seek for them, given their talent endowment . The rule seems to be to adjust the State to open up the path of opportunities,which otherwise are hiden from being taken by talented people.- What it is new, is the more active role individuals have in their personal lifes.Social network has increased connectivity ;such as to make old Government programs and policies to be part not only of the constraints for the economy to be more competitive, but also for individual to be themselves.- How come that in Latinamerica, we are still on the wrong side of the history concerning the role of the State?.How come that with such aan old and outdated idea about the big State as the solution, some latinoamericans are at risk of losing their liberties?. Actually there are different problems which requires different solutions, which neither government nor the state, are capable of solving them on its own.

2008: its lasting consequences

While the financial crisis of 2008 is closer to be a close chapter , its both economics and political consequences are still in place and an open path for further development. The economics and financial consequences have made quite clear its implications: a.- Slower economic growth b.- More regulations for global Banks c.- Restrictions to a deeper globalization approach d.- Free trade in a transition to become Fair( better) trade e.- Central Banks focused on deflatonary risk All of these effects, have political implications.Some of them : a.- New risks testing the stability of the European Unión Project b.- The political dimensión of globalization, has become a constraint. Geography matter more than financial integration. c.- European Central Bank has become an unexpected power to deal with.- d.- Skepticism about the capabilites of European unión, to solve the current challenges arising from refugees flows.- e.- New threats to replace the focus from globalization on its own, to a more secure boundary for all what matters the most for it( Trade, data exchange, networks facilities, travel screening and the like) So, the world has become both more dangerous and fragile at the same time .The real issues are different global threats in the landscape, not just related to a global economic recession, but to the whole global stability. Just to mention the more urgent ones: Nuclear risk, terrorism, cyberspace war.- A sense of urgency on some of these issues , perhaps in all of them for the international community , have changed the political scenario and priorities for politicians and world leaders. Unfortunately, Latin America is not in the position to be a global political partner. Somehow it is also within the risk zone ,specially in those countries in which democracy is not longer dependent from the people will .Instead, it has become the rule of a few whose concerns are far away from the ones related to those voters who elected them. At the time that the economic consequences of the financial crisis of 2008 are closer to be overcome, with the USA economy growth on a steady track, the european unión on the path of recovery, and emerging economies, better than expected, there are pressing threats which requires coordinated solutions.-

One Hundred days later:An economic focus

Once a Presidential election is done,It has been usual to ask both by the public opinión and the news media, about the first one hundred days in office for new Presidents.In fact, these days, there is an important attention to one in particular: The Mr Trump Presidency.- But what about the inertia any country has in real time?. What about its institutions?,What about its values and hopes?.After all winning any election is a matter of who fulfill better the voters hopes and expectations about the future and uncertainty : The one who better outline its key boundaries, and also shows the willingness to be in charge of each one respectively, becomes the leader. In such case, the more pressing issue for a new President, is about the change which is able to get 100 day later, in term of leaderships to keep the voters mood supportive for what may come next :The remaining of both Government program and its proposal. Besides, it is not an easy task to change a country in 100 days.However, this does not means that either different leaderships style ,or strategic focus, can not be set in 100 days. It follows that the achievement of any President in his first one hundred day in office, deal more than anything else, with the way leadership may change the course of a nation, for the sake of its economics progress,internal security, and stand in both the global economy and global affairs.Moreover, leadership imply to keep followers,a necessary condition to improve the support to a broader base . It does also matter whether it is a politician or a business man who is in charge of such task:Politicans has better connection with the formality of political process.They have at their disposal a whole set of resources beyond the legislative área, which includes ,lobbies, analist, journalist, think tank and the like, which reduce their transaction cost to learn about how to fit with institutions and the framework sorrounding government, such as special interest, and public opinion polls .- After the new leadership has been settled,to govern a country deeper into the following days, months and so on,requires valuable time to get the first outcomes done.Thus,aside from its historical base (USA), the first so called one hundred days ,becomes more of the draft of what becomes later the legacy, which is what really counts more. So,from an independent perspective, The Trump Presidency so far ,seems to fit properly to what it may become an enduring legacy. From the Latin America point of view instead, is more difficult to say anything while the judiciary process affecting most of their Governments, is in place, because in such a case ,the scope of working issues is more limited.- This year, the same question is about to be asked in Europe.Next week (May 7),is the turn of France. Then in september ,Germany and along 2017 other european countries as well. For every country, such a question has both different scope and relevance.However, In Europe, the issue to be settled this year, it is not a regular one,is about the future of the European Unión.So, in the coming months, and one hundred days later into his or her Government,French President and the New Chancellor in Germany, will face the same inquiry.Given the inertia and the French institutions, how come that the France and later Germany, will both have a leadership to make it better off in the years ahead?. For the economic stand point, these questions clarify policies and focus concerning either more or less government and the regulatory status in the economy. More government intervention mean more regulations, and less space for private sector and its wealth creation process.On the contrary, less government intervention means less regulation and better space for private sector to créate wealth. There is no way an economy may improve the standard of living without a sense of leadership.Leadership in economics, means where it is headed.During the south east asian economies crisis(1997), lack of leadership was a key restriction to make it broader early on, and later at some point , out of control.- Thus, in any case ,a hundred years later is still too early to call for definitive results in a new Government, more so when it faces the tough scrutiny of history.-

The Rome Treaty: The begining of European Union

Sixty years ago, while the ashes of the war were still on the air, six countries,(Germany, Netherland, Italy, France,Belgium and Luxemburg),signed the Rome Treaty which set the begining of the current European Union. It was thought to be a reaction to years of devastating wars,as much as a path to get and sustain peace and integration among different countries. Economic development was the driven force to acomplish such a goal.Economics ties arising from financial,capital and goods markets would be strong enough to keep the integration Project alive and as a guiding light to get the promise land : prosperity and a leading role on world affairs . . Sixty years later, the outcome looks more than promising. While nationalism strugle to get through, there is still a sense of common destiny which arise from the complexity of geopolitics, the expanding boundaries for further economic growth coming out from its human capital, technology endowment and the unique strenght of its diversity .So far, the European Union still hold up to its founding spirit , very much so in a uncertain and challenging world no less so than the one it faced 60 year ago. With more than 500 million of inhabitants, USd 38000 income per capita,(2015)and the second world economy following the USA, the European Union has actually set the road for other integration experiences, if not for the global economy as a whole. An european Central Bank, political outlines based on the European council,a common currency(euro),and a shared geopolitics stands to become the bridge between east and west.- Latin america economies in particular, has always looked the European Union as its model for economic integration.In fact a few years later after the Rome treaty, it was proposed in the sixties the so called the "Andean Pact", which included all of the west coast latin american economies. Although it did not consolidate further on, it has become an starting reference case, to avoid the mistake done by its founders members. How this integration experience can be sucessful ?. Traditionally it was thought that government should has a leading role to get the economic progress as the inspired factor for staying together.The eighties external debt problem, changed that paradigm.Private firms were also a leading force for integration. The expansion of retail, insurance, transportation,banking firms and even education organizations, in the nineties made clear that employment , investment,and welfare were not only a matter of government policies, but also of wealth creation.So, there are leading Latin America economies seeking to increase its integration beyond regional trade ,(Ocean Pacific Alliance), widening its scope to financial services integration .On the east side, the "Common South Market"(Mercosur),has fostered not only capital flow, but also human capital free movement among its members.So the seeds are in place,the trend is still toward more and stronger integration. As long as the European Union goes into the path of the next ten years, there are a lot to learn.-

Fake news and economics

Recently, it has been usual to know about the publication of "fake news".Perhaps even worst, there is a new concept concerning news, which is called the "post (follow up) Thruth".Is there any relationships between these two way to inform people?.What does economics may say about it?. The post thruth, deals with the quality of the messenger to qualify any message as truth or ultimately false. It is not the quality of the message, but the quality of the messenger which make the falsehood of the message, instead of the facts which either sustain or not the thruth about the messsage.Thus, any one who say for instance that government should stay away from the economy for the purposes of well being, may be presented as an out of touch individual (either man or woman),such that to make such an argument become a complete nonsense. It follows that, any suggestion of limited government becomes such an insult for society as a whole, that only crazy individuals can believe in.So, limited government as a source of wealth become a falsehood. The outcome is to create a fake reality, which individuals have to live in ,one which excludes unconvenient truth, as much as it support convenient falsehoods, specially with those issues concerning individual responsibility, government intervention in the economy and the like.The variey goes to a wide range of topics.Like the Gresham law which explain how bad money replace the good one through inflation, "fake news" replace good private values (honesty,ethic), for public bads ones(lies,disqualification), the ones which may lead you from trusting someone, toward those who leads you not to trust anyone. In economics ,this is called adverse selection, and it implies welfare losses.- Economic analisys has a branch called the adverse selection problem, which happens when either good or services markets do not have perfect imformation about all available options ,such that consumer chose the remaining lower quality alternative . This is the case of used cars, insurance programs, where reliable participants are left out, because markets do not qualify them at their real economic value, or what it is the same , markets disqualify them as partners because it does not trust them about their own valuation. The outcome is that average quality of used cars is lower, because all good used cars are left out from the market.Nobody want to sell his or her good used car below a certain price which includes not only the mechanical aspect of it, but also the emotional ones .In the insurance case, good clients(healthier ones), are not ready to pay the more expensive charge of the average less healthy ones, leading to higher cost of insurance policies for everyone,which imply that some people may not afford an insurance policy at all.- The difference is that adverse selection, comes out from the market which is neutral about the characteristics of all of those who are in for making transaction, and as such nobody have control of its outcome.It just happens because of institucional failures, which means that institutional correction may solve the problem.In the examples above mechanical test (used cars), or hihger deductible charge to disincentive less healthy clients to get in, keeping average fee lower.This way, it is possible to correct the losses of welfare arising from adverse selection. Fake news and the follow up (post)thruth instead, means a net loss for the welfare level of society, either hard to recover or to mitigate.Besides from the economic stand point, the issue of "fake news", has nothing to do with the massive access to virtual netwotk,cell phones and the like, because it deals with the preferences of those capable of shaping massive preferences given the abstratc nature of the service(news), which becomes a public good. In the case of private good and services markets, nobody can shape simultaneously the preferences of everyone, while there are millions of customers interacting according their (own) individual preferences even with advertising along the way.-

New premises about globalization

The world is facing new definitions and premises about globalization. Since early nineties, globalization was a kind of follow up of the “End of history” assessment, very popular at that time. Democracy and fee markets stands up, as the key inputs for endless economic progress, peace and stability. There was not too much to discuss about it. Democracy spread out, such that more governments around the world (Latin America, Africa, East Europe) fit in with history. By the same token, free markets policies became the new orthodox to solve not only economic growth, but also social issues (poverty, inequality, unemployment).A few years later, it was clear that economic growth alone was not enough without complementary policies . Free trade agreement, came along as the next step to move deeper into global markets, and so the economy became global.- This process lasted almost twenty years. Its outcome was mixed. On the one side (positive one), it meant better living conditions for millions of people, who were capable of getting out of poverty, increasing the share of middle income segments. Besides, the open access to knowledge throughout internet, and low prices of computers and communication technologies, created the virtual markets, a huge space for creativity, innovations, entrepreneurship and new ways to do business, increasing the social value of global networks. On the other side (the negative one), it became clear its weakness. The most significant one, was the financial crisis of 2008, and the subsequent perception that despite free markets efficiency, there was no way to avoid its failures at a global scale .Moral hazard, information asymmetry advantages, firms collusive actions, and reckless corporative behavior, which given the policy tools to deal with it, and without a global institutional framework, made the global economy unstable and much riskier on the long run. Regulations on its own, was not sufficient to cope with global markets either. For the sake of the argument, Central Banks (USA, European Union, Japan) had to fight hard (2008-2017), to get back the fundamental of macroeconomics. From the political and geopolitical side, globalization did not make the world safer and a more peaceful place. Unconventional wars, local rivalries and short term nationalisms, killed more people in the last decade of the XX century, (United Nations, estimates 5 million people), than in the previous 25 years(1975-1990).Besides ,the gap between developed and underdeveloped countries did not close .It became wider as the winners displace the losers, which force them to act politically, no matter the economy cost . The insufficient global Governance, was out paced by events seemed unexpected, although they should have taken into account in advance. Thus, it seems that the current status of globalization and global economy, are suitable for new premises. So, Donald Trump became President of the USA, and the Brexit is already on schedule. Moreover, this year there are elections in key countries in Europe. Who can anticipate the outcome?. Uncertainty, is another unexpected outcome of globalization weakness. The pressing question in Davos (2017), was: what come next?. Is Mr Trump´s Presidency willing to leave globalization, while others countries are eager to take its leadership?. An alternative question could have been: What about the new conditions for the USA economy, a commercial blocs by itself, to be part of the globalization the way it is in 2017? . After all, the terms of negotiations about it have changed, (outdated free trade agreement, E-commerce grows, weak property rights protection, dislocation of workers, and the like).Therefore, politics have something to say about it. Furthermore like any negotiation, mutually convenient deals (globalization is a deal), are the ones which are flexible, to make them more suitable to new developments. It follows from he above that Globalization need a resetting, a new set of premises concerning the importance of stable economic growth, better (fair) trade policies, effective global governance, and more efficient way to solve social disequilibrium between the affluent and those who are left behind. The other question at Davos(2017), was about the risk of moving back the history clock, concerning the survival of globalization. The real advantage and strength of Globalization, is in its ability to cope with new challenges, the way other alternatives (closed economies, dictatorships), can not do.Moreover, a different globalization,based on the new premises, may be the beginning of an up dated world(global) order.- .-