the political editor of the brazil economy magazine will be with us. also the former fbi profilers. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] host: you are watching "washington journal." the president begins his vacation at martha's vineyard and the vice-president is that china, expressing confidence in the u.s. economy during vice president's joe biden's trip. the white house announced a change in the immigration policy to a case by case review of the legal status. and the white house is telling federal agencies to spend 5% to 20% less and the new budget.

a spokesman for john boehner says it is a good start but the white house still needs to get serious about making cuts in the entitlement programs. we will be talking about this and more -- later in the program we will talk about free economies that have doing well as western economies will be -- are struggling. the economies of china, brazil, and india. but we will start with an open phones friday. show -- so much news from the campaign trail and other places. we would like to hear from you and i session of open phones -- during this friday morning, we will have a real mix of things you can see what is in the papers but we would like to know what is on your mind today.

in addition to phone lines which are open on any topic -- and you can also join us by facebook and we will take topics by twitter and you can send us an e-mail. lots of ways to get involved with what ever is on your mind this morning. the economy is front and center and a lot of people's minds. "the chicago -- and" lead today -- let me move on to some of the business and economic stores. "the richmond times dispatch" -- and below that, good news for virginians, a surplus in the state. of the governor's says he is setting aside a portion of it to brace for federal budget cut spirit as we move on to be that -- other economic news, this is "of the tribune" reporting.

obama loses his all star team. but they say new experts have the right skills for the time. later ron, they say -- continuing in this business day -- regulators tried to calm the markets. beside that, we learn h-p is

spinning off its pc unit and exiting the market because of the slow economy. besides that, the money and investing page of "the wall street journal" -- treasury yields hitting historic lows and bank of america slashing workforce. open funds for your topics. let's hear from kentucky first this friday morning. dan, and independent. caller: i would like to know how much longer the government is going to be allowed to embezzle our social security money. i am 78 years old and we lost our house in florida and it is getting hard to live in this economy. there is no call love. the only kolo we can find is the supermarket -- there is no cola. the only cola you confined is the supermarket. everything, like food, is going up. host: after you lost your house

in florida, how did you end up in kentucky? caller: we moved out because we had to go bankrupt and we had it to an -- and a convicted us, one day late after seven years, they put end eviction on and we stayed there and we had to go bankrupt and everything at 78 years old. is this the way the country going to keep running? host: how is life in kentucky? are you in an apartment? caller: apartment. i can't afford a house is no more. i wouldn't buy another house for all the tea in china. host: ypsilanti, michigan, on open phones friday. in victoria, turn down your tv volume. all right, we will move on. gerald, a democrat, st. louis.

caller: i would like to talk about obama this morning. i voted for the president and i am very disappointed in his whole outlook and what he is doing. i don't know why the american people want to remove the federal reserve. the record has been dismal. our country is in debt up to our ears. and i don't understand what the federal reserve is doing. a and i wonder why we didn't go after the bankers -- and i wonder why we didn't go after the bankers who looted not just this country but the world and were rewarded. host: what were your expectations for the president? caller: i thought he would go after -- that he would use his attorney general, eric holder, and go after the bankers who committed the fraud and looting. that is what it was. we know the assets were toxic and those people should have been tried and put in jail. what is the difference of somebody going and taking

something from somebody else. in this case, wall street, not only did they not get charged with any crime but they were also paid for the fever recommitted of the american people, and i don't understand. host: i mentioned later on we will talk about the economy in china. china is our largest holder of you the best that. of the vice president making the case about the importance of the two economies. >> the two largest economies in the world, at the moment when the world economic circumstance is uneasy. i think we hold the key to gather -- together, for not only our own prosperity but to generate growth and jobs worldwide. host: affirmatively on twitter --

next, a telephone call from long beach, california. this is teaneck, a democrat. -- tina, a democrat. caller: i feel very sad that congress and the president can go on vacation for a month and not take care of business. and my business and what i see around me are people take a job -- it they should do a job. and they are not doing the job. i don't think they are earning their salaries, let alone their vacation. and multiple times, president obama has chosen to take his family to such an expensive place like martha's vineyard in all of their vacations and i don't see them solving their problems. i see them getting worse. host: a little bit later ron, can walsh of u.s. news -- later

on, ken walsh will talk about that. this is a tribune story about the super committee, the so- called super committee on the deficit. she writes later --

next call this morning is georgia. this is a spot on the independent line. good morning. caller: i just wanted to mention something about partisanship and how i just think there is in ability of democrats and republicans to acknowledge that the other party -- inability to acknowledge that the other party could have a good idea. and interview on "book tv", where someone said he is not concerned whether the cow came from the right or the left of the past year but whether or not the milk was sour. i think that is a good metaphor for dealing with partisanship and the world of ideas. >> how would you like to see washington function the next couple of months? >> people talk about compromise. i guess it is just realizing that you could have your

convictions as far as your ideas but it seems like there is going to have to be compromise. we heard that a lot. but each party is going to have to lose something in order for it to be a net gain, i guess. host: what do you do in georgia? caller: i teach college. i actually never have been full time but i keep part time. i lost one of my two jobs teaching. i love c-span, so thanks for all that you do to put something that some -- awesome on television. kudos to "book tv" and c-span. host: by far the favor lead story is on the immigration policy change from the white house. let me show you how it is playing. "washington times" gave it off- lead. let me read a little bit of this and then we will look at other

headlines. the justice department will review all ongoing cases to see who meets the new criteria. let us see how it plays and other papers. "houston chronicle" off-lead. it is front-page in "the boston

globe" this morning. the lead story. and moving on to "the atlanta journal." just a couple of more. "the los angeles times", this is the off-lead story. finally, "the denver post." that is "the new york times" story getting the lead position in "the denver post." a viewer writes --

the next phone call is from allentown. this is open phones, jim. what is on your mind? caller: haven't gotten through and a while. a great set way. i hate to be a one-nogai but immigration has affected my life. i was in a trade that was affected and me and my brother were pushed out of our trade 18- 20 years because of illegal immigration. host: what was it? caller: roofing and siding. in 1988-1997, after i got out of the military. i have been in another position -- is it is a little depressing. i am conservative. i am not going to sit around and wait for a college professor to create a job for me, but i am doing what my ancestors did -- packing up of the minivan and going to another region just trying to create something or find something. i have the ability to do that --

i have some money in the bank. i will not sit there and wait. but about immigration, what i wanted to say is, first of all, what i also want to say about the bus tour -- people were criticizing obama for not going into black neighborhoods. of course, he could not go in there because people do not see what is going on there. they have unemployment rate 16% and higher. i think blacks are the next group that will be displaced -- i think the democratic party will push toward hispanics. until there is 100 million until 2015 -- they openly say that. i never understand how democrats who talk on one side of the house about open space, environment, and global warming and at the other side the politician and leaders talking about an unending third-world immigration and fertility rates that will swell the world by 2015. how will we find the heating oil

and electricity -- by 2015. how will we find heating oil and electricity? host: we have gotten a twitter viewer reaction to your opening comments and me put it on the screen and see what you have to say. this is americanhero -- caller: [laughter] i love it. as a german americans -- our ancestors created most of the trades. the farming techniques and meatpacking plants built by the germans and anglo-saxons, long before the mexicans got here. i want to say one more thing -- 6 million germans ever allowed to come to america, there are 60 million today and they are completely assimilated. only 5 million italians were ever allowed to come to america, they halted migration to make sure the italians became americanized.

that is why i am a conservative, a republican. i believe in individual first and not hyphenated americanism. it is not just about -- it is about a common culture and unity and we will not have that unless we holt's migration and a full moratorium for all migration really for about 20 years until we bring down the unemployment rate to about 4%, and then bring in skilled people. host: thank you for your comments. this note about the president -- next is -- let me put this news story. saying we are a nation of grumps. this is from "new york daily news."

back to phone calls. orlando, louise, a democrat. caller: i would like to give two quick examples of hypocrisy from the right. republicans who support paul ryan's medicare voucher program, they say they don't want to this year -- destroy medicare and social security. but they really want to do is keep the programs alive long

enough so they can privatize them. who honestly believes that wall street and the insurance companies would be fair and balanced toward the poor seniors. republicans will say that if you tax or regulate the corporations you will force them to outsource our jobs. it is all about greed. a few years back there was a documentary on pbs that showed how walmart does business and how rubbermaid, the ceo went to walmart and one of them to sell their products in their stores. but wal-mart executives would not give rubbermaid a fair selling price. finally walmart told rubbermaid executives to produce their products in china. they actually encouraged rubbermaid to go to china, which they did. outsources is all about corporate greed. host: >> it is -- next is gary

duncan who tweets -- in "the washington times" this morning, about oklahoma opting out of the health care law. the actions, she said at the time, will allow states to

bypass the federal exchange by setting up a network governed by the private sector. that's from "the washington times" this morning. the front page of "usa today," the president is on the money trail.

next a phone call, this is from sarasota. judith, and independent. caller: i absolutely in michigan, the northern part of u.s. 41 and i am down here in sarasota vacationing in the southern part of u.s. 41. i am vacationing. i am actively seeking work. but i will tell you about that later. i was just listening to the george washington university education program, and you have a question about, do you want people to do certain things. i think people should do what they want and want what they do. i think secondary education is important for economic health, and higher education is important also. but i think where are most important area is, is in where

it is the formative years for children. that is when they are firstborn and even prenatal stage. you should read to your baby when they are carried in the womb because they can hear and they will make a difference when you start them off when they are very, very young, because that is when their brain is developing. so i believe education is very important and it starts at the bottom and goes all the way to the top. remember, secondary education is not just enough. your employers need to -- when you go to college, all they do is teach you how to think. your employer will tell you what they wanted to do. after all, i had a degree in biology with an option and freshwater ecology, and when i graduated i got a degree at union carbide and i was wading in water with hip boots taking

little worms for versa -- diversification tested it turned out that is not what i wanted to be when i grow up. and then i went to bloomingdale's and work their and i got to learn a little bit about sales auditing. and i ended up -- host: we've got a lot of calls on the line. where have you -- where are you going with this? caller: where am i going with this? let me get my points in order. host: sorry, we have a lot of folks who want to come in -- caller: government needs to help with paying for the higher education. i also think outsourcing is wrong and i encourage people to contact corporations that are incorporated in the united states and ask them while -- why they are outsourcing jobs. i think the opt out of health

care, and they should think twice. employers should entice with health benefits because i think it will retain good employees. host: i will jump in on that point. thanks, judith, for all of your comments. she talked about the importance of education. there was a major survey about the public's attitude toward education then it was done by gallup.

another way that education is in the news today -- obama's education chief of flunks. -- for months perry -- flunks perry -- kearney duncan was also our guest on "newsmakers."

it will air this sunday at 10:00 eastern time. our next call is from southport, virginia. jeffrey is a republican. caller: good morning. how are you doing? i am a republican. and my belief is that the justice department needs to be overhauled. there it is a lot of minorities, majorities, coming out of here and there is nothing for them in this country. they need a close look at this situation. this will be another way that the terrorists will come back to this country and do damage. host: how do you make that connection? caller: if they come out and not finding a job, and somebody convinces them that will give them a job -- what do you think

is going to happen? they get out and there is nothing for them. i know va, the republican governor, bob mcdonnell is doing a whole lot of programs. but when you go down to d.c., there is nothing like that of their. -- that thete. -- there. god forbid -- i love this country so much. they're not attacking the problem. i am just bringing my point that people should wake up and think about that and find a solution to this. host: thank you so much. southport, virginia. some email comments this morning.

a similar theme comes from bennett, who writes -- and this by e-mail, stephen, a democrat watching from kentucky. don't forget, we will be talking about china in about 10 minutes or so. first of three segments this morning looking at economies that have been fearing better than the western economies in this global downturn -- that have been faring better. 9/11, at 10th anniversary. many tributes planned around the country. here is one happening already.

david hill writes about a motorcycle ride commemorating 9/11. to your phone calls. beavercreek, ohio. good morning to don knapp, a democrat. caller: hello, can you hear me?

i would like to talk about ohio with the program that john k. 6 -- kasich developed. he started out saying he will run the administration with a two by four, and now he turned into a one-man ironhanded. and all ohioans got a look at the the movement coming through our country, and it is involving him. if they want to have the bush administration repeated, there is texas and florida and ohio and there are some other states starting this movement. we are going to go right back to where we started and it is going to become so crucial that we are going to go back -- ohio, like the minority, the black people, he didn't have one in his cabinet.

it is going back to the clue klutz clan -- klu klux cln. host: mike, independent. caller: i do believe congress should be called back to washington. i am not prejudiced. obama could be a purple man as far as i am concerned. we are in trouble. why is it every time we the american people get bad news, it is either on friday, the weekend, when we are busy, or during the holiday -- and then there is really bad news, congress is off doing something else. we have elections coming up. what we need to do is suspend everybody in washington and do a complete audit. the department of justice, when bush was in office, had $2.50 trillion coming up missing. we are bleeding. what we do?

we are borrowing more money and digging ourselves deeper. we, the american people, need to take action. we need peaceful protests to let them know we are in trouble and we mean business. host: next is gainesville, florida, on open phones friday. robert, republican. yarmulkes -- caller: commenting about michele bachmann commenting about gas prices under $2. it might be a little optimistic, but gas affects all areas of our economy -- vacations, anything. if anything can be done about that, i think it would be a tremendous impact on our economy. people would be able to take more vacations, food prices would go down. everything would go down. will bang companies are making so much money now that even if they lowered -- oil companies are making some much money now that even if they low -- lord even a dollar. so much things the rich could

do and and and doing it. they live here, too. i don't know. it is really mind-boggling. host: robert mentions the elections. let's take a look at some of the campaign-related stories. ezra lein in "the washington post -- ezra klein. lots about the texas government. huntsman targets perry with tweets. also this -- what do you think about this tactic? did you have sex with this governor? help wanted launches attacks on

gop's rick perry -- in "the financial times" this morning. governor's claim of miracles. let us talk about our incumbent president who just left for vacation it at martha's

vineyard. we have the chief white house europe -- correspondent for "u.s. news and world report." looking back over of the history of this, it seems as though anybody the president takes a vacation it is the cause of discussion and some controversy. guest: you are completely right. this goes back a very long way in our history. many examples. president eisenhower, for example, back in the 1950's, was criticized for going to his gettysburg farm far too much and the chairman of the democratic national committee at the time said he was a part-time president because he was going away so much. this is very, no matter who is present, no matter the ideology or the personality. the opposition always jumps on the president for going on vacation. it is sort of a ritual in the summer. host: we do have a few numbers circulating about the number of days the president has taken. we are going to put them on the

screen. the president, after 31 months, 31 -- 61, george w. bush 180 and his ranch in texas moseley, bill clinton, 28, the lowest, and ron reagan at this point, 112 days. what are your comments? guest: i am familiar with the numbers. president obama it just illustrates he is in the middle. not really a frequent vacationer but he does go on his vacations. it is not like he is way up there and the numbers. as you say, look at the comparison to president reagan and president george w. bush. but i think the problem right now -- and i have written a book about president and vacations and their retreats -- but americans are pretty tolerant and understanding of the president's need to get away on vacation. just as people in their everyday lives know they need a break from work. they understand the president does, too.

right now the problem president obama has is with all of these economic problems we have with 14 million be bought out of work and a lot of people under employed, it is not just peaked -- going on vacation but where he goes. i think going to martha's vineyard, which is generally billed as a haven for rich folks and celebrities and someone, might not be the best optics, as they say. it might not look very good. i think that is the other problem here not just him going away on vacation, where he is going. there are a lot of other places presidents can go. but marketers -- martha's vineyard is a lovely place and i covered presidents there, but i think the idea that it is an exclusive of brake -- playground, it might be a bigger problem. host: we had one earlier caller who referenced martha's vineyard and here is a tweet from a viewer --

guest: that is the impression. i think president obama made it worse for himself image-wise when he called for shared sacrifice in dealing with the current economic problem and so one, and, yes, he is going to martha's vineyard. what can he do about it now? he is there with his family this morning, starting the vacation. i think the white house will try to limit photography or images of the president on the golf course, or maybe relaxing on the beach. and one thing from the president's perspective is good about the place he is going, 28- acre estate, is it is very private. so, they might be able to get sort of a limit on the images that are created and control those images. but once he leaves that compound -- go out to dinner, or the golf

course -- then the photographers will have their lenses trained on them so i am sure we will see some photographs or images of him at play. host: let me have you explain -- you mention he will stay at a 28-acre estate. how is it paid for and whose property is it? guest: president obama stayed at the same estate before -- i think it is called the blue heron farm. an associate of his. the white house has not said how much he is planning for this. but it's got swimming pools, apparently a lovely property. and one reason the president likes it is because the secret service can keep its secluded. but as i say, the amount of money president obama is plate -- paying is not known, although similar properties, i am told, go for about $40,000 to $50,000

a week. it is very expensive. not sure if the white house is paying that amount but the president is saying he is paying his expenses for leasing the property. of course, the taxpayers are paying for security and communications and flying up there and so on. so, there are expenses associated with the that the president is paying and others the president is not paying. host: ken walsh with a historical perspective. appreciate it. we will do one last call for open phones. walter who is a democrat in the cleveland. good morning. you are on. caller: good morning. if i could use president lincoln's analogy about a house divided against itself cannot stand and bring it into 2011 and a look at the economy -- well, unless the foundation, those people at the bottom, are strong, the foundation of the house is not strong, it will not stand.

at the top it's too fat, too big, and warren buffett had an excellent idea the other day about taxes for the rich. those that are in power with the wealth ought to be a little more generous. i think it will help of this country a whole heck of a lot to put those who are at the bottom, to prop them up, to make them more responsible, to understand, to make this nation stronger. i think it is very important. a house divided against itself cannot stand economically and i do believe that we would all be much better off if those with the means could help of those at the bottom and little bit. i don't think the tea party is doing anybody any good with their thoughts in this country. host: thanks very much. appreciate your calls. let's close out with a few facebook comments, because we have got an twitter message is an e-mails.

sam elliott -- catherine writes -- we are all stamped with a social security number like inmates without choice. how does japan that the economy impact our own recovery? finally -- i am tired of hearing about you the best economy as it were in a bubble. what is going to happen globally to stabilize the world? that is a good lean -- lead in because we are talking about a few countries that seem to be doing better. china, brazil, and india. we will begin with china. we will be right back. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> it's a country fraught with corruption, natural disasters, and islamic extremists. >> what was really shocking to me and many and pakistan was that these assassinations were welcome, were congratulated, by many pakistanis. these are not terrorists, not al qaeda, not taliban, but ordinary pakistanis who feel that their religion is threatened, that the country is becoming too secular, that the islamic values are under attack, and that blasphemy, which is anything that insult to the profit or islam, is something to be defended with your life. >> pamela constable, sunday night on c-span's "q&a."

>> for politics and public affairs, nonfiction books, and american history, it is the c- span networks. all available on television, radio, and online, and social media sites. the surge, watch, and share all of our programs anytime with c- span that a video library. and we are on the road with the digital bus and the local content vehicles, bringing our resources to local communities and showing events from around the country. it is washington your way. the c-span networks -- created by cable and provided as a public service. once more video of the candidates, seem what political reporters are saying, and track the latest campaign contributions with c-span's web site for campaign 2012 -- easy to use, it helps you navigate the political landscape with twitter fees and facebook updates from the campaign, candidate bios, and the latest polling data, plus links to c- span media partners in the early primary and caucus states. all at c-span.org/campaign2012.

august 16 marks the 34th anniversary of elvis presley's death and this week and on american history tv on c-span 3, elvis a eight and confidante talks about the king and his meeting with president nixon. and now vernon, new discoveries shedding new light on george washington the gardener, warrior, statesman, a painter. susan eisenhower talked about her grandfather dwight d. eisenhower, has acquired love for painting and his 1952 portrait of his wife may need. get the complete we can schedule at c-span.org/history. >> "washington journal" continues. host: our look at the first of three economies around the globe doing better in this global economy, the first is focusing on china. our guest is yukon huang, a

senior associate at the carnegie endowment asia program. he will be with us for the next 20 or 25 minutes. we will get you involved in this discussion about china possibly economy. this week when the vice president joe biden is there to help shore up the economic relations between our two countries. it was a snapshot. what is the state of china's economy? guest: it country growing at 10% a year worries more about inflation than doubled it recession. rather than dealing with high unemployment, it actually cannot find enough workers because the economy is booming, exports surging. the real concern is how to maintain double-digit growth for the next decade. host: where is the investment money coming from? guest: they generate a lot of savings from households. households save about 30% of their income and americans say about 4%, or 5%. the government surplus is used

for investment. the corporations generate a lot of internal profits which are reinvestment. the consequence is china invest about 45% of gdp. compared to the united states, investing about 20%. so twice as much as a share of the economy of the united states. it leads to very high productivity growth and profits. host: let me just show you some headlines. this is from "international business news." the head line -- "china's big economic bubble." five reasons it is sure to burst. guest: people are concerned about the property bubble. prices increasing about 10% to 50% for the past five years -- every year for the past five years. residential property, which seems to be empty. the government is concerned about overbuilding of the high end and they are trying to encourage more low-cost housing.

there is a legitimate concern about the housing bubble, just like america here worried about a housing bubble four or five years ago. host: headline in "the atlanta." the new five-year plan focuses on rebalancing and investment driven economy. the need to create more consumers. guest: this is the great irony. here in the united states we are concerned about overconsumption and not investing enough, and when people look at china, they say here is an economy that does not seem to be consuming as much and seems to be investing too much. from a chinese perspective, they are a little skeptical about this argument because what they see in the west is they got into a lot of problems by trying to encourage consumption and they did not invest enough. here in china they are consuming relatively speaking to little and perhaps investing too much. what is the right balance? i think that the domestic consumption needs to increase. if an happen -- if it happens,

it will moderate investment and they will probably need to. with recession in the western world, exports become more limited and in which case not a need to invest as much as in the past. host: phone lines are open and you can send us a message by email and also a twitter message, a tweet. chinese economy, especially how it compares to hours and the allies in the west. let me ask you -- an early -- in order to create consumers, one needs the middle-class. what is happening to the population? 1.3t: china's population, billion people, because of the one-child policy, population growth has slowed. that is one reason why the labor force is not growing and they are running out of labor. nevertheless, because of rising incomes, the double-digit growth for three decades, get an emerging middle class, essentially from nothing to about -- another fiber 10

years, it may be 500 million people. that is a huge market. that is why firms are investing heavily. in asia -- large rise in the middle class with a large consumption needs. host: here is an example of that. this story here suggests that the chairman and chief executive of coke says it plans $4 billion of new spending in china the next three years, the biggest investment by multinational food and beverage group targeting the world's number two economy. he says the money will be used to add bottling plants, expand facilities, fund distribution and marketing and development of new drinks -- the third largest global market growing in double digits. not on the agenda is acquisitions. it is no longer on the radar screen because we are seeing so much potential for organic growth. those are the kinds of stores people want to read about in this country. so, the population there is

ready to consume? what is keeping them back? guest: like any former developing country, you have to realize that per-capita income is about $4,000, and united states it is over $40,000. but if you are growing at 10% a year, you would be upper-middle- class economy in five years and by then you would have a very large middle income class. this has become a very urban economy. a 10 or 15 years ago, 75% in the rural areas, and then a few years and now they will be in the cities. they are drinking coffee, moving away from t. buying cards, basically buying more televisions. so, this is a huge consuming class and you see retail sales growth of 15% to 20% a year and in the united states we are hopeful we can get sales growth of 3% to 4% a year. for american companies, this is what we see is a huge business

opportunity. host: manufacturing and exports -- export sector. we hear about china that a lack of trade and copyright law. in fact, the risk of the products being copied and manufactured at a cheaper price and no redress in chinese courts. can you talk about that trade? guest: i think this is a big issue. the chinese economy and society is not used to legal protection, intellectual property rights. there is a lot of infringement and illegal copying. there is piracy of software and records and bbb disks throughout china. there are copies of western purses, designs, fashions. the other day there was huge publicity surrounding the fact that there are fake apple distribution retail stores and merging in china. the whole store is a fake store. they will sell your legitimate

apple products but the store itself is an illegal store. this is the issue. this is what i call an aspect of what you see in terms of a developing country. they don't have the institutional structures, the legal framework. host: do they have the incentive to created? guest: it will. because at some point in time it will be chinese doing chinese. if years ago 99% of the lawsuits were foreigners the sewing chinese company and now today it is 50-50 because chinese companies are becoming established and they are worried about piracy. you give it another five or 10 years, you will see the bulk suing are chinese firms suing other chinese firms. at that point, i would say the politics will change dramatically. host: i want to get to calls. one question more before we do that. of the three -- three countries we are profiling, china is the only one with a communist government, central planning. how does it make it different

from other emerging countries with good economies? guest: they can make decisions frankly democracies cannot. win xiaoping -- he needed decision to channel investment and production along the coastal areas because he saw that as the greatest potential. this is why china is so productive. in the united states or europe, before you took the policies and i will concentrate my resources or capacity and opportunity is greatest, you had this huge outcry about what about the neglected areas, hinterlands, central and middle america. once they lose out? and china, what they said it is those people need to move. 300 people move from the central portion of china's along the coast -- china along the coast. there are rules against people relocating to other places. that is why have the migrant workers, single people, they let their families behind. the families now are slowly

being allowed to join them. this is the big difference. you can do something credit be quickly. but there is a cause. high-speed trains -- they are able to do this in a short span but they sacrificed some kind of regulatory safety considerations. so there is a cost to this kind of speed and forceful decision making. host: one story related to that -- high-speed rail crash that killed 20 people. this also goes back to the centralized planning part of the government. it is an "the new york times" today. fiat of -- fired official gets a new post.

guest: i don't think what you would call public accountability in china. host: isn't it changing with the internet? guest: in the past the person would not have been fired, he would be wrong -- relocated -- now there is a necessity. why is given something else? he actually felt a was responding to what the government wanted. he was working for a ministry whose sole responsibility is to build a high-speed railroad as quickly as possible. the consequence being safety and regulations were ignored. now that's the public realizes the problem, the realize they have to do something about it. they would say he was following the government's objectives in some way and therefore he should not be penalized and he will probably show up in another job.

host: mesa, arizona. anthony is on the air. we will move on to woodbridge, virginia. marcella, independent. guest: i was wondering to ask your guest -- in 1972 when president nixon opened up trade with china, everybody was excited because they said we would sell 1 billion toothbrushes to the chinese. now it seems like the tables have actually turned and they are selling 1 billion toothbrushes to us. we import more than we export to china. also, i wondered how is health care administered in a country with such a large population? thank you for the time. host: thank you for the question. guest: i think we need to put the trade, which is a highly emotional issue, into proper

context. actually the eu and the u.s. is china that the biggest export markets but china is also america's biggest export market. there is a huge deficit in terms of u.s. trade, as it is shows up as a huge surplus in terms of time a's trade. but china's trade is unique. it accident doesn't produce much of the stuff exported to the united states. if you take the ipod, $150, exported to the united states. of that, $5 actually goes to china for chinese labor. $80 actually goes to apple, copyright, marketing, distribution. the other $65 comes from components made in hong kong, singapore, taiwan, south korea. the big irony, the $150 exports from china is not actually really a chinese products. many parts made -- products made

in china, a lot produced elsewhere and a large part -- proportion produced in the united states, so the exporting is exporting to itself actually three china. it is complicated. host: what policy governs the relationship? guest: trade policy negotiations are being complicated by the fact that really trade is carried out by companies, not countries. multinational companies. 50% of if it% are managed by u.s. companies. all the computers are made over there, and they get the malt -- the bulk of the money. this generates jobs in terms of marketers, accountants, lawyers. effected turned to the question about health, china has -- if i

could turn to the question about health, when they move from a socialist economy to a market economy, all of the rural people lost health insurance. in the urban area, they all still -- also lost health insurance. now, china is as that which in urban and rural health insurance programs. host: corpus christi, texas. arthur, a republican. good morning. caller: good morning. your guest seems like a very good person to ask my question. do you think that this global economy is just too complicated for human beings to manage? guest: nobody is managing the global economy. it manages itself in ways said no one knows how what will

happen. 20, 30 years ago, when you have a financial crisis in one country, the crisis was pretty much restricted to one country. now, a problem in europe effects everyone but when the interest rate goes up in china, it effects the stock market in new york. there is no such thing as an american company or a chinese company, for a european company. take general motors. they get most of their profits from china. is that good for the united states? in no way, it is, because that allows them to retool in the united states, -- in a way, it is, because it allows them to be told in the united states. host: called the telegraph co- called in london had a story -- "the telegraph" had a story this

morning that suggests the future is difficult to call because of a looming clashes between china and america. the easy thing to assume -- continued slow growth in america juxtaposed with rapid growth in china. it's hot -- it hardly seems like equilibrium. america's patients is wearing thin. he thinks it will end up with a trade battle. guest: if you go to any big shopping mall in china, you'll be struck by the fact that everything is imported. people find the sirenic. -- find this ironic. 95% of the goods are european. there's hardly anything from the united states the europeans have

figured it out. they have to cater to a chinese market that wants high-and quality goods, and they're concerned with designed. host: what are we doing? guest: what is the number one category? the first category is aircraft. boeing airplanes, understandable. the second largest category is scrap materials. then you get food products, rice, soybeans. then when you get to category four and five, you get to things like electronics and machinery. this is the opposite of europe. the real issue is can we get into this market and can these low-cost mass-consumer items,

can i get into the high-end materials and machinery? kenneth starr exporting services? -- can i start exporting services? how much of this is being used to sell to foreigners? one of the foreigners actually doing? they are trying to set up health services in their own country and bring the americans there. i find this an example of a great irony. host: is it a challenge to the manufacture high-and goods when they are manufactured in europe as well? guest: why have the europeans chosen that and? they are a collection of wealthy, small countries, so they have to go for specialized lines. one of the great strengths of

these -- of this country is technology. indeed a high-level investment. how do we gear up? how we make education institutions more effective, and increase production capacity in the high-tech, innovative product lines? host: let's take a call from pennsylvania. joseph, a democrat. caller: thank you. in the harrisburg paper this morning there is an article about the state-department sponsored exchange program from china. it turns out that they have employed at the hershey chocolate co. in a warehouse

that -- warehouse that is operated by an ohio-based company, and the staffing is done by a third company, and they're now protest in, saying they should belong to local, american workers. why are we being held as slaves here? the state department is investigating. it is the irony of the american economy, and in my opinion, underneath it all is the drive to maximize the bottom line for the stockholders that has corrupted the entire economy. they do not care where they have to go to make it cheaper to max out stock values. host: i read that article, and i read that the students were protesting that they had come for an american experience and were doing menial labor. caller: there is a direct

quote the says why are we taking these jobs from american workers? guest: i think the challenge for america and for china is not so much jobs, cut jobs that pay a reasonable wage. -- but jobs that pay a reasonable wage. when people say we should be manufacturing more, they should realize that most manufacturing jobs and not paid that much. they are automated. the question is how do we know generate high-value jobs? they tend to be services, but there are different levels. this is the same in china. they do not want to foster a more service-oriented economy, but an economy that generates higher-value positions. host: thank you for being here. it is a complex problem. thank you. as we continue to look at

developing countries that have experienced this global meltdown, our next look is that india, and we are joined by arvind panagariya, who is an economics professor at columbia business school. give us a snapshot of how the economy of india stands today? guest: indiana is far below which an apparent -- far below china. average income is $1,300 per capita, but it has grown rapidly. it is grown about 8%-9% in the next 10 years. the rupee has been appreciating in real terms. the economy has grown in the last eight years at about 15%.

host: we would like to hear that story in the united states. what has been the source of that growth? guest: a lot economic reforms started in 1991, and continued imminent -- into the 1990's, until 2000, which included the end of the light -- import licensing, opening up to four investment, privatization in the communications sector, and so forth. so, lots and lots of economic reforms took place. they finally came together. they began to escalate a little bit in the 1980's, and roll back up in the 1990's, but it took off after the reforms were in place starting in 2004. it is really a good example of where good policies have

actually resulted in very substantial escalation of growth alongside major reductions in poverty. host: can you tell us what important policies governing u.s.-india trade? guest: on the trade side, india manufacturing dynamo, like china is. they can export services. on the manufacturing size, it is more capital-intensive, so you see engineering goods. and pharmaceuticals, is doing well. software, i mentioned, and those other types of products. the u.s. imports largely

machinery. u.s. services, of course. beijing services coming in, insurance services -- banking services coming in, insurance services. there is another sector where u.s. companies are active within india. host: we will invite our viewers telephone calls, twitter messages, and e-mail about the u.s. and india trade, and the state of india put the economy. we have heard growth numbers, and are envious. our guest, mr. arvind panagariya is here to take your telephone calls. let me ask you about the consumer class in india. as you just heard, in the chinese economy they're trying

to convert to more consumption. give us a look at the indian population, and how it has changed in this growing economy. new guest: as in china, the middle class is growing very rapidly. you can see the impact within india in the last four or five years. indian cities are populated by these mega-malls. some of these in bombay look more impressive than the ones here in the united states. about 200 or 300 million consumers. a lot of these are very young. one of the things about india is the population is extremely young. i should also mention of what

will have important implications --. demographics are there -- the demographics are there. the population in the age group 24-49 will rise by 100 million. it is my prediction that in a less -- next 15 years we will see a lot more indians. sometimes i'd joke that if you see to many people like me around here, wait 15 years, and you'll see many more. as in china, the western goods are in demand. a lot of people have the iphone in india before i had it. host: if you go into the shopping malls and pick up

products, where did they mostly come from? guest: they come from all over, including from within india as well. there are also a lot of chinese products. there's a little bit of fear in india as well [unintelligible] they tell me when they go and open up with indian counterparts, the reaction from the other side is often why are you asking for it because it is awfully the chinese will take over the market. -- likely the chinese will take over the market. the u.s. major auto companies are very much present.

with harlan,egin indiana, carroll is a democrat there. good morning. caller: i noticed the quality. u.s. consumers pay attention to the quality of what they are presented with, and i have noticed most china, and i do not know about india so much -- one thing i would like to understand is i think a lot of medications are made in india, where a lot of textiles and such are made in china. are there manufacturers -- are the manufacturers through multinationals, do they set the standard of how things are made and the quality? we have had a big drywall thing where people cannot even live in houses where these things have been made in china.

some have invested a lot of money, and some cannot afford to replace it. the same way with textiles. i have had things, and i got things that the u.s. made, and there are quality. i washed them thousands of times. yet stuff like bedding and competitors, they just fall apart within a couple of years. host: let's jump in. the quality of manufactured products? new guest: when developing countries start, they're bigger advantage is the cost, and they are able to provide low-cost product. when i was growing up, chinese

products were very low quality. i think we have seen the quality improved dramatically over the last 20 years. the u.s. is a high-end market, and a much higher-wage market, so you will see that commitment in the quality. there is no question, and that is really the u.s. strength, but a lot of people are looking for bargains, and that is where the imports help out. h., a question about indian consumers -- host: a question about indian consumers demanding more wages. that is the natural cycle of things. how does that effect india's competitiveness, and it creates, i mentioned to more consumers? guest: which is to drive the

competitiveness down. in ways where india has been the exporter, and might china, india has been in the software services and called centers and so forth, but skilled labor has been in short supply. you're not seen reports where companies are same -- seen reports were companies are saying that the cost differences have been reduced. they say there is no way 10% difference in the costs between indian labor and corresponding u.s. labor. you're beginning to see that, and part of that is the failure of the indian high education system. on the supply side, the creation of additional skill sets has been much slower than demand. in the indian market, for skilled labor, uc wages rising

faster than almost anyowhere else. on the demand side, that is leading to a rising middle class. h., if there is on it and% differential -- host: if there is some a 10% differential, might they have exported their cost center jobs? might they start coming back to the united states? guest: i think ultimately they will go away from india also. in the u.s., the wages are too high. [unintelligible] by the time the indians started getting the call centers jobs. a lot of the jobs here are

actually taken by machines. press one, pressed to the below. it is mechanization, -- press two. it is mechanization. when -- will the jobs come back? maybe some, but not a lot. host: the next caller is from lake charles, indiana. ernie, an independent. ernie, are you there? he is listening to the program and not ready to be done, so we will move on to jimmy, a democrat in chicago. caller: one issue we continue to debate is health-care costs, and i'm hoping people that are against the obama administration attempts to have universal health care understand that one of the reasons why companies are leaving the united states is because of our health-care costs. so what we are trying to do is

take away that cost from private companies, and putting more towards the government, which would to a certain degree may keep some jobs here. professor, i like you to comment on that. it continues to be a debate, but we cannot compete with wages and unless we cut waste. we cannot compete with health- care costs without taking the burden off of companies. if you do not want jobs overseas, i understand, 01 of the reasons they leave it is because of the rise of health care costs, the one the government tries to take that away, we fight back. i am hoping we do not -- we understand it. these growing economies offer universal health care, and they take that away from private corporations. can you comment on that? guest: this is a complicated

question. i am a trade economist. from a social perspective, you ought to have universal coverage, and i support that, but from a trade perspective, if we try to equalize everything, i think we get into a very difficult problem, right? everyone would say that wages are higher in one place, therefore if they're to be equalized, capitalized [unintelligible] prices of electricity differ across countries. the moment we get into this equalization game, that is really ultimately cutting out the sources of competitive advantage. we are able to trade beneficially because of these cost differences that exist.

ultimately, these differences, exchanges take care of. if we have a competitive advantage, that is just telling you the u.s. dollar ought to appreciate and compensate for that difference, rather than going item-by item. host: the next caller is also from chicago, michael, an independent there. good morning. caller: good morning. i wanted to talk about one of the things facing the indian economy. there is a big movement against all of the corruption going on in all of the different sectors of the indian economy, and all over the place. one of the big concerns is they want to send a bill with a

loophole regulating the corruption in the indian parliament. my concern is how do they know it will not become another bureaucratic, corrupted sort of institution itself, rather than focusing on abolishing institutions to create the most corrupt -- corruption? guest: this is an issue. if you actually go through the route of appointment, there would have to be a mechanism in place that insures it is above suspicion, completely. even given the number of very large corruption cases that we care about in india, and there

aren't very many of them that have come to the fore in the black -- and there are very many of them that i've come to the four in the last 10 years -- that have come to the fore in the last 10 years. there are lots of people with integrity, people who are respected everywhere for their of brightness, honesty, and integrity. those are the kind of people that we have to appoint. issueer, they're also says the key issues of justices in supreme courts and high court's. you have to ensure they are honest people and people of integrity. it is not always happen, but by and large supreme court judges are honest. there are exceptions. the bigger question is really

precisely on what kind of ability to you have within the purview [unintelligible] that is where the current struggle is going on. the parliament wants control of that, and this is a movement coming out of society, so there are issues in a democracy where there is a parliament, there ought to be supreme. sometimes a civil society seizes control. that is a struggle going on in india. host: related to the struggle, this profile on the front page of "the new york times." he writes that he has emerged as the on likely face of an impassioned people's movement in india, that is cost around fighting corruption and tax into deeper anxieties in a society

buffeted by change. do you have any comments on "a society buffeted by change?" gee, i think this is a healthy moment. : i think this is athi health a moment. and there are some echoes of the golden age, and hopefully some cleansing will happen. i did not think corruption is about to disappear. the incomes will rise quite a bit before corruption since the beginning begins to disappear. when people see opportunities a lower levels of income, and the economy is growing rapidly, people see ways to make fast money, and that is by expanding corruption, which is what we

have observed. at the same time, as they rise, i think there is good scope, and the use of technology becomes easier corresponding to education. the movement itself is a fairy welcome -- a very welcome. host: we're talking about the indian economy. "the economic times" has this story -- and it could be a $5.60 trillion dollar economy. our next call, lake charles, louisiana, bernie, an independent. caller: it is evelyn. host: i'm sorry about that. caller: i'm calling from phoenix, ariz., and i have a hard time accepting that our

ceo's our outsourcing jobs that could be given to americans to give to china, india, brazil, or any other country. i'll tell you my personal experiences. they have taken over the telemarketing business, and when i call and have a problem at my bank, i get somebody in that does not speak english well, does not care whether you can understand them or not, and these men hang up on women traditionally, a lot, because they did not respect them. why are we giving money to these countries when we are bleeding? we are hurting for these jobs kept on the other end, -- jobs. on the other end, i am for entitlements. if you need them they should be available. there are a lot of americans that could be put to work, and

certain jobs they could do partially. everyone should work if they can't. then the government subsidizes the rest. there is so much corruption within the entitlement programs. i am on social security disability. i can not waste your time in talking to you, because you're talking about other countries, but there corruption comes from -- they are stealing money from apple when they do lookalikes, or whatever they call them, and try to sell them off as the real thing. that hurts america. host: evelyn, thank you. dr. arvind panagariya, anything for evelyn and her concern about outsourcing jobs americans can do? guest: those jobs are there because the wages there are lower, and it is really the services that evelyn has described the there is no reason

to doubt. i think eventually those called centers will get shot down. there are firms that have shoddy products. as consumers, if we refuse to buy their products, they get shut down, and the same goes for call centers. we should have some sense of numbers. the entire software industry in india is not too large in terms of numbers. it is a little over 2 million people. when we talk of jobs, it is not so large, but the numbers are not as large as we think. it has a lot to do with the technology changes. that does lead to a lot of lost jobs. host: let's close by putting numbers about india on the

screen. there unemployment rate is currently 10.8%, higher than the united states, and the major industries and textiles, food, and steel. arvind panagariya, thank you for being with us to help us learn more about a big, complex society, and its economy. >> my pleasure. guest: my pleasure. we'll continue our discussion about economists. will meet the political editor of" the brazilian economy magazine." joão de castro neves, thank you for being here.

tell us about brazil's economy today. guest: brazil has been known for having an unstable economy during the 1970's and 1980's '80s with one of the largest of inflation and -- with one of the largest inflation rates in the world. there is no plan of macro- economic stabilization that has been successful, and in the last seven or eight years the economy has grown consistently. the economy is very dynamic. it is the eighth or seventh largest in the world, and the brics acronym are not considered the emerging economies. in the case of brazil specifically, there is also a great importance on agriculture. if you take the most important crops like sugar, corn, brazil is the top producer and exporter of these products.

host: give us a sense of the civilian population, and what has been happening to them. guest: because of sustainable economic growth and stability, in the sunset inflation is under control, there has been -- and in that inflation is under control, the largest class in brazil is the middle class. for the first time in history, brazil is an unequal society, and the middle class is the most represented in brazil. that is a positive sign for brazil. if you go to brazil, and compare it to date to 10 years ago, it is a much better brazilian the political sense, political stability, and it is a market economy. there are many challenges, but

there's a general sense the country is moving forward. host: the brazilian president is instituting a series of austerity measures in the country right now. given all of the robust reporting, what are the concerns? guest: the general concern is curious because brazil has been accustomed to dealing with a lack of resources, economic problems, inflation, as i mentioned before, and the lack of resources to invest in the government, mainly. now, we have enjoyed the stable economic environment not only inside of brazil, but also outside brazil before the economic crisis of 2008, so brazil has learned to deal with an abundance of resources. we have put in place checks and balances in order to fight corruption, and increase production.

the challenges facing this and administration are those facing many other emerging economies -- transparency, corruption. when you talk about emerging economies, there is a sense of its dynamic, and you have to take it with a grain of salt. there are still considerations in absence of this rise parity in the case of brazil, these -- rise. in the case of brazil, there is a constant need for economic reforms. so, the main problem is to try to not only maintain stabilization, not only keep the reasonable and sound economic policies in place, but also that deal with the political scenarios, the political manse -- landscape there is in brazil. is a multi-party system, and the governing coalition is composed of 15 parties. there are a lot of political challenges, and the economic

challenges that face any emerging economy. brazil is a major exporter of primary goods, and with a downturn in the global economy, the resistance brazil could be hurt, and their main partners today is china. brazil depends on china. there is a plus side to that, and there is also a negative side, which is this something goes wrong with the chinese economy, its seven-to impact. host: here is a look at brazil by the numbers. host: 20% agriculture, 66% in services. host: that is interesting on the cement front. u.s. exports to brazil totaled

about $35.4 billion. the top exports from the united states to brazil -- machinery, aircraft, electrical machinery, mineral, fuel, organic chemicals. commercial services exports $12.7 million. what trade agreements govern a u.s.-brazilian trade? guest: brazil and the u.s. are the main economies in canada and the western hemisphere -- and canada, also, are the main economies in the western hemisphere. there are always challenges of intent to have a trade deal. in the 1990's, they try to put a free-trade agreement with the americas, which was basically an extension of the north american free trade agreement that includes canada and mexico, and

a united states now has a bundle of agreements with chile, and columbia, which i think congress is supposed to ratify. with brazil, there is a different scenario because it is part of a customs union, the common market of the south along with argentina, paraguay, and hear a glide along with -- year ago why, along with venezuela. it is somewhat similar to the european union. they do not have specific trade deals. they have an issue-by-issue our arrangement with the united states appeared in the case of brazil, there is -- . united states. in the case of brazil, there is intense trade, but in terms of a major comprehensive trade deal, there is not one. but, it has been one of the

major priorities in the u.s. and brazil's administration during the 1990's, a hemispheric trade deal that would include all 34 countries of the americas together. that did not succeed well. as a result, the united states has its own trade deals with the region, and brazil exits on trade deals with a region, but if you look major economies, did not have a comprehensive trade bill in place. host: let's go to your telephone calls beginning with one from georgia, john, a democrat. go ahead. caller: good morning. brazil is a gorgeous country, and i enjoy visiting. i think some of the viewers would be interested in hearing some of the differences between brazilian workers and american workers, such as how many paid holidays brazilian workers get,

and if i were to open a company and i wanted to order -- hire 50 people, but brought in all hundred to keep the best 50, how much left to pay the 50 that i dropped? guest: one of the challenges brazil still faces is labor reform. it is very expensive for you to open a business in brazil today. there is bureaucracy there are many faces of government you have to deal with, state, federal, municipal. i do not know the exact numbers, but brazil is one of the slowest countries when you want to open a business parity will take a year or so to do so. -- businesses.

it will take a year or so to do so. the average price for labor is cheap when you compare to the united states in general, but compared to other developed economies, there are many other .exaaxes it is very complicated. there are many similarities between brazil and the united states in the economic sense, a set of a dynamic agricultural sector, and industry, but also in the sense that they share many values -- many cultural traits, including people from all over the world that went to brazil as emigrants 100 or two hundred years ago. it is a democracy. when you compare the two, many of the problems that the u.s.

faces in dealing with its economy and unemployment, brazil also faces. it is very similar. the challenge for brazil today is trying to make it a better place for people to do business. the size of brazil's government, the state, is very large. the state has a dominant presence in the economy in brazil, and that is seen with concern. taxes in brazil are sky-high, and the government does not give many public services in exchange. there are many challenges, so much to the united states. host: next call and question comes from richard, watching us in new york city. caller: good morning. i have a question about the effect of the imf on brazil,

argentina. before that, i have a brief comment. you had three countries there are rising economies -- china, india, and now brazil. i do not fault their governments for outsourcing or anything of that kind. i mean, they are basically looking out for the best interests of their citizens. i wish our government would do the same thing. as these countries are rising, our country is falling, and their root cause of this is in washington, d.c., and they're both democrats and republicans. now, what effect is the imf have been on brazil, and especially argentina? in argentina, i know the country is in a mess. i know these imf loans are just ruinous. host: thank you, richard.

guest: imf has been an important part of brazil's economic history, and in the 1990's, and early-2000's, brazil was going through the stabilization, and developed -- and dependent on the imf and other multilateral institutions to gain support of the international community to put in place its own domestic plan that changes brazil's currency. brazil had two or three imf loans in the past 15 years, but as i mentioned in the beginning of the program, in the past six or seven years, the environment has been so favorable that brazil does not have any deal with the imf. quite the contrary. its share of imf is bundling.

it is a favorable situation between brazil and the imf. argentina's economy still inspires some degree of concern, but the situation today is much better than it was 5 for 10 years ago. host: more on the brazilian economy. consul, alabama. ned. good morning. caller: you said in the 1990's there were efforts to make it like a european union for the americas, and it did not succeed. first of all, who is they? who started the motion for that? second, why did not succeed? guest: there are many -- the sense of having trade deals in the americas, there are many countries in the region that

once you have trade deals. the differences what kind of trade deal you put in place. there is a european union model that is a more comprehensive model of a common market, and a common currency, even. simplee more, let's say, or superficial trade deal said simply cut tariffs down. there are 34 in the hemisphere, 35 if you count cuba, and each has their idea of what an ideal trade would be in the region. there were many initiatives in bush990's, but the administration in 1991 lunch in the initiative of the americas and debt -- that launched this

idea of a free-trade from alaska. what came of it, basically, was only nafta, the north american free trade agreement. it stopped in mexico. in 2000, with the second bush administration, they united deals tcap on signing with some south american countries. why did the 34 countries and not a range this major free trade deal with america? there were 34 different formulas, and in the case of brazil, they did not like what the u.s. put on the table to negotiate. keep in mind, bilateral, or

even regional trade deals are not the only trade deals that exist. simultaneously, you negotiate trade in the world trade organization, a multilateral level. when some negotiations fail, bilateral negotiations between two countries or regional negotiations, sometimes they fell, and you try to take them to negotiate with all countries of the world. it is hard to pinpoint a reason why they failed, but the important thing is that these economies are more dynamic today than they were 10 or 15 years ago. host: here are a couple of different headlines captured in the brazilian economy. this is from a local brazilian and financial news." below that, reuters.

this one, from "the economist." host: finally, brazil contel president crisis message -- do not spend. host: when you study -- guest: when you study international relations, every decade or so there is a rise of countries, in the 1970's, or 1980's, in japan, and afterwards there are newly- developed countries in south

asia, and now brazil, russia, india, china, and south africa. it is important to take with a grain of salt that this rise is not necessarily inevitable. it might be reversed depending on what happens in the global economy. in the early-1970's, brazil was growing at a pace of 10% a year in gdp, and then came along the oil crisis in the middle east, and basically everyone stopped talking about rising brazil. when you read the papers, when you read official speeches in brazil in the early-1970's, you see that rise in brazil, the term "emerging power" you begin to see that in a official rhetoric.

20 years after that, there was not talk about emerging brazil. it is always important to take it with a grain of salt. the situation is much better than it was 20 years ago for many reasons. political stability, democracy, stabilization on the economic front, and the social the mention, in terms of poverty. that is a very important issue for priscilla and major in emerging economies. it is an overall sense -- and for major emerging economies. when you look at what is happening in the global economic crisis and problems in the united states economy and the european economy, it is a concern because all of these economies are linked. it is not a matter of competition between brazil and

the united states or india and the united states. it is a more complex interaction. in the long run, if one of these major economies toth down, it will effected the others. -- go down, it will effect the others. host: good morning, rowdy. -- robbie. caller: i noticed your collar -- your guest skirted around the question of if a country had to hire 50 people, took in 100, and had to get rid of 50, how much would they pay both? guest: in brazil, the market operates by similar rules that operates here. it is expensive to hire legally because as i mentioned, there

are many causes, many social causes and labor contracts in brazil that give workers a lot power. labor unions have considerable power as well. for example, for you to hire someone, you pay a specific salary for them, and you have to pay the same amount in taxes and benefits for that person. there are contracts where you can have a temporary labor. i do not have the exact numbers of how much you have to pay, but there are challenges in brazil's labor market for you to make it more flexible. the problem is that part of the unemployment has to do with the fact of the labor market in brazil is -- and out-dated. labor unions are concerned, and

skeptical of legislation, and that will lead to unemployment, and more exploration of a labor by the private sector. host: here is a question from twitter. guest: brazil is one of the major producers and exporters of sugar. today, brazil's sugar producers actually have two options -- either producing and exporting sugar, or ethanol. brazil's ethanol is different from u.s. ethanol. brazil's is made from sugar cane. most exports are ethanol and sugar, but for the past year or so, ethanol has been consumed in

brazil. it buys everything it produces. but, sugar, brazil exports sugar to the whole world. i did not know if mexico is the main market. part of the european union is an important market. if you look a trade relations with the world, brazil is very balanced -- 80% of mexico's trade is with the united states. brazil has 20% within united states, 20% with the european union, 20% with china. it is very balanced. there is not a big issue. trade with one specific country is not an issue that causes concern with brazil, as it does in the case of mexico with the united states. although, china became brazil, the major trading partner, but that does become an area of concern.

brazil and mexico do not have a free-trade agreement. host: let's get a couple of comments from our twitter community. host: let's take our last call on this topic of the brazilian economy and its relation to the u.s.. west know, andy jersey. good morning to helen. caller: i was wondering if the gentleman could comment on what entity decided to cut the world into economic blocs? all of these trade agreements have been disasters for our our economy. i think he would look into

having brazil uses many resources to become independent, and strong, and tout its own citizens. guest: the idea of free trade began in the united states. the country that put in place multilateral institutions was the united states. it was an agreement that established not only the creation of the world bank, and the imf, the international monetary fund, but also an idea of an organization that would deal with trade in the sense of liberalizing trade all over the world. bad idea with a jen -- at that idea was a general agreement on iffs. if you want to find a source of free-trade