Milton Friedman argues that the government should not be involved in to health care market. Private sector should take full control. Market competition will drive the bad firms from the market. Good firms will stay. Good ending. But I disagree.
What I disagree is who will be willing to risk his life in this process. To find out who is bad, Someone has to be involved in the bad firms. By construction, he will not have good medical care, and as a result, suffers. What the possible outcomes are:
1. There are only a few medical providing firms that are able to establish thier reputations. New firms are hard to enter the market unless they charge sufficiently lower price to attract customers. This may lead to a naturel monopoly or oligopoly outcome. We need the government to handle that.
2. When new firm tries to enter the market, they have to charge low price, but under this oligopoly situation, it is highly likely those big firms may undercut the price whenever there is potential entry. This treat may prevent new firm at the beginning. We again need government to handle.
What I think is important is that the government should establish a min standard for qualification for the medical profession. Then develop a transparent system in rating from the users. It looks like many online sellers that they develop their reputation through customer ratings, but need to fullfil the min requirement outlined by the web platform.
I think in academica, it is natural to distinguish into the pro market or pro government camps. It is natural because this is the way to establish your stance. But in reality, we know both market and the government have important roles. It is a matter of under what situations.
Tuesday, January 30, 2007
Thursday, January 25, 2007
Global inflation
I always have a lot of questions. Here is one. The commodity price has been rising in the past years. There are in general two types of commodities. One is natural resources, the other is agricultural products. In the past years, they all rose. People also talk about global inflation from this price behavior. The question in my mind is will we get a global inflation because of that? In the long run, I am almost sure to say no. inflation is driven by money growth. That is it.
We learnt two important lessons in the past. One is the great depression in 1930s and the hyperinflation in the 1970s shows that money growth is the major reason for inflation/deflation. Two is the 1980 and 1990s shows that inflation can be driven by not only money growth, but also inflation expectation. These two lessons, may be together with globalization, leads to a stable inflation in the past years. If money growth is stable, and if central banks are able to stabilize inflation expectation, inflation should be low and stable as well.
Back to the commodity price story, the rise in natural resource like oil, copper, etc. should have a very different dynamic than agricultural products. Thanks for
What does that mean for a rising global demand? The hypothesis has been there for quite a while.
For agricultural product, with more flexibility, farmers should well establish the expectation of rising global agricultural demand for quite a long time. And because of this, their production layout should be smoothly adjusted accordingly. In particular, when the farmers know the demand for crop A is going to rise, they expect its price should rise in the future. They should save some of the output for a while, this leads to a rise in the current price. Or they just charge the price higher today, otherwise they will save for tomorrow. Even if the storage technology constrains them to save for long, they may already prepare to increase the capacity of production once the rising demand hits. What it means global demand for agricultural product may drive the price higher, but the duration should not be too long.
Of course, agricultural price is moving ups and downs all the times. As people argued, which I agree, is mostly driven by local conditions, not global.
Needless to say, the price can be driven by unexpected event like a hurricane or a trade sanction. But again, the former is a one time event. The central bank’s job is to stabilize inflation expectation, that is it. Once the expectation is anchored, inflation dynamic will be stabilized fairly quickly. The latter is more politic than economics, which will be left to politicians and interest groups to play out. The sad news is a recent Bloomberg article shows that:
41 percent [of Americans] agreed that free trade has hurt the economy, versus 28 percent who said it's helped....Public sentiment on trade has reversed from 10 years ago, when almost 4 in 10 Americans said it helped the economy and 3 in 10 said it hurt.
Wednesday, January 24, 2007
energy dependence
There are several ways to secure our energy supply. Not to mention the subsidies of biofuel production, one is to encourage import from our friendly trading partner such as Ethanol from Brazil. The other is establish a better relationship with the middleeast countries. Seems no one/at least not the administration mentioned.
Importing from Brazil is blocked by the interest group of our sugar industry. well...the interest group basically block almost all free trade proposal between the poor country and the US. There is no hope that our administration, which is monoplized by them, can do much. If the government wants to place a subsidy on domestic bio fuel production, why not use the money (in present value term) as a lump sum payment to this already rich farmers, in exchange for their give up for their lobbying. This one time payment will not distort the market. After the payment, free trade and import from the low cost bio fuel production countries. We are less dependent on oil.
Why do many middle east countries being hostile to the US? We learn trade is mutually beneifical. So, the conflict should not come from trade between two countries per se. It is more a political interest driven, which our administration current and in the past commited. The Iraq war is for oil or for liberation or for preventing the build up of weapon of mass destructions or simply a personal conflict between two presidents?
Importing from Brazil is blocked by the interest group of our sugar industry. well...the interest group basically block almost all free trade proposal between the poor country and the US. There is no hope that our administration, which is monoplized by them, can do much. If the government wants to place a subsidy on domestic bio fuel production, why not use the money (in present value term) as a lump sum payment to this already rich farmers, in exchange for their give up for their lobbying. This one time payment will not distort the market. After the payment, free trade and import from the low cost bio fuel production countries. We are less dependent on oil.
Why do many middle east countries being hostile to the US? We learn trade is mutually beneifical. So, the conflict should not come from trade between two countries per se. It is more a political interest driven, which our administration current and in the past commited. The Iraq war is for oil or for liberation or for preventing the build up of weapon of mass destructions or simply a personal conflict between two presidents?
Wednesday, January 17, 2007
USPS
I wass in the post office in the past days mailing stuffs. The experience was very unpleasant. The staffs are in general are friendly, but the waiting time is long. The reason, under economic theory, is simple. They charge too cheap. Why not charge higher to lower the quantity demand? The clear answer is the role of the state owned company is to service the community, not profit maximizing. That is also why the USPS keeps losing money and need the federal subsidies year over year.
The post office has been using some strategies to solve this problem. For example, they make the online postal service that we can purchase stamp or mail our packages on line. They also create the priority mail, flat rate priority mail, global priority mail, express mail, etc. The problem for the online service is that it is quite difficult to know how much the service cost, which depends on the package weight, size, and destination. This makes consumers give up the online service. The problem of other types of service mentioned above is that they only affect the delivery time, but not waiting time for the customers.
Here is a proposal. I suggest the post office creates an express line for anyone, by charging a higher price for postal service. At the same time, the current service continues as usual so the poor will still be taken care of. In the express line, I don't know how much they should charge, but should be govern by the invisble hand. They can charge $1 extra per letter/package first and see if it is the equilibrium and adjust accordingly. Furthermore, each post office should determine its own express line charge depending on the local demand and supply. Of course, the regular line which charges the same as today remains unchanged.
Some post office may actually charge less than the regular price. In that case, the regular is basically deadd. But I doublt there are not many of those post offices in the country.
In this proposal, both the poor, who usually has a relatively low time value, will continue to be served. At the same time, others with high time value, who are willing to pay a higher price, are happy to go to the express line. Absolutely, the dead-weigh loss will be smaller than the current setting.
Now, what are the incentive for each post office to search for the equilibrium price. I would suggest part or all the extra money the post office obtained will be allocated back to that post office (If it turns out losing money, they can return to the current setting). The extra money can be used in upgrading the equipment, hiring more mailman, etc. This at least generates some competition among different post offices.
hopefully, we are not going to wait another hour in the post office for a package again in the future.
The post office has been using some strategies to solve this problem. For example, they make the online postal service that we can purchase stamp or mail our packages on line. They also create the priority mail, flat rate priority mail, global priority mail, express mail, etc. The problem for the online service is that it is quite difficult to know how much the service cost, which depends on the package weight, size, and destination. This makes consumers give up the online service. The problem of other types of service mentioned above is that they only affect the delivery time, but not waiting time for the customers.
Here is a proposal. I suggest the post office creates an express line for anyone, by charging a higher price for postal service. At the same time, the current service continues as usual so the poor will still be taken care of. In the express line, I don't know how much they should charge, but should be govern by the invisble hand. They can charge $1 extra per letter/package first and see if it is the equilibrium and adjust accordingly. Furthermore, each post office should determine its own express line charge depending on the local demand and supply. Of course, the regular line which charges the same as today remains unchanged.
Some post office may actually charge less than the regular price. In that case, the regular is basically deadd. But I doublt there are not many of those post offices in the country.
In this proposal, both the poor, who usually has a relatively low time value, will continue to be served. At the same time, others with high time value, who are willing to pay a higher price, are happy to go to the express line. Absolutely, the dead-weigh loss will be smaller than the current setting.
Now, what are the incentive for each post office to search for the equilibrium price. I would suggest part or all the extra money the post office obtained will be allocated back to that post office (If it turns out losing money, they can return to the current setting). The extra money can be used in upgrading the equipment, hiring more mailman, etc. This at least generates some competition among different post offices.
hopefully, we are not going to wait another hour in the post office for a package again in the future.
Thursday, January 11, 2007
Buz cycle and bonus
One of my friends told me that the pay method in the US has been changing over the last decade. In the past, salary is the major portion of income, while bonus is just a small complement. Nowadays, bonus is getting more imporatnt as the source of income. This is particularly true. One survey shows that 2006 average bonus for a hedge fund portfolio manager is $2.5 million.
So, there are two questions in mind.
1. Since corporation now has a lower fixed cost relative to the past, does it mean that corporation is less likely to shut down, or getting easier to start up? If so, more competition is expected and a closer competitive outcome will be forseen.
2. Since bonus is a function of the company's profit, which to some extent, a function of the economy as a while. Good ecoomic year leads to a good bonus year, ehich leads to higher consumption? Do we have a life income hypothesis? or a Keynesian marginal propensity to consume?
Is lower business cycle volatilites in the past years an evidence of life income hypothesis?
So, there are two questions in mind.
1. Since corporation now has a lower fixed cost relative to the past, does it mean that corporation is less likely to shut down, or getting easier to start up? If so, more competition is expected and a closer competitive outcome will be forseen.
2. Since bonus is a function of the company's profit, which to some extent, a function of the economy as a while. Good ecoomic year leads to a good bonus year, ehich leads to higher consumption? Do we have a life income hypothesis? or a Keynesian marginal propensity to consume?
Is lower business cycle volatilites in the past years an evidence of life income hypothesis?
Anti-dumping duties
Arg has raised natural gas export price to Chile, who is a major importer from Argentina last year. This year, Chile put a antidumping tariff on Argentine wheat flour export, claiming that sector is heavily subsidized (in energy consumption) by the government. But of course the Chilean government said that the tariff is NOT a response on the natural gase price hike.
My question is: is it legitmate for the country to put an anti-dumping tariff on a heavily subsidied industry? It is partly legitmate, according to the US. The US government arguing Chinese government heavily subsidize its manufacturing sectors through currency manipulations. A 27.5% tariff may be the response. So, can Brazil do the same on the US that the US government puts a heavy subsidies on the US domestic sugar industry? Or US government puts a anti-dumping duty on Europe on its heavy support of European domestic argiculture sector? Finally, China erased income tax for all farmers permanently. Does that count as subsidizing? Will China face antidumping reaction from the rest of the world? Seems unlikely...
the answer is more politics, not economics.
My question is: is it legitmate for the country to put an anti-dumping tariff on a heavily subsidied industry? It is partly legitmate, according to the US. The US government arguing Chinese government heavily subsidize its manufacturing sectors through currency manipulations. A 27.5% tariff may be the response. So, can Brazil do the same on the US that the US government puts a heavy subsidies on the US domestic sugar industry? Or US government puts a anti-dumping duty on Europe on its heavy support of European domestic argiculture sector? Finally, China erased income tax for all farmers permanently. Does that count as subsidizing? Will China face antidumping reaction from the rest of the world? Seems unlikely...
the answer is more politics, not economics.
Tuesday, January 9, 2007
Tax rate competition
Many countries are trying to put forward their tax reforms. There are many motivations: to stimulate investment, to attract foreign investment, to comply with the agreement with the IMF, to limit the governemnt spending capacities, etc. Tax reforms include lowering corporate tax (for example, France's proposal, Colombia), boarden tax base (eg. Hong Kong), introducing flat tax (eg. Estonia, Russia and China's recent study), etc.
So, can we reach a perfect compeition situation finally on tax competitions among countries? In other words, will we reach a point that all countries charge the same tax as others and provide the same service to everyone. Investment is identical from tax consideration among all countries.
Think about product market under perfect competitions: many firms, many consumers, homogenous product, good firms stay, bad firms exit, profit drives to zero in the long run.
The one condition I am interested is the free entry and exit. What does it mean when we face a "inefficient" government? Under democratic institution, that means it will be replaced through election. But there are too many evidence that the government came to power under democracy is not for the people, but for the big interest groups. Put it in a board prospective, can we "import" a new government from a foreign country if our government is inefficient. Or can we import the service from a foreign government like national defense or social security? This seems not possible as well.
What it implies is that tax competition may not reach our perfect competition outcome both in local and global sense. At some point, when the competitions among countries are too severe, we should expect the loser countries will be in trouble. Even though the whole pie may increase, they get a smaller slice. They are not able to collect enough revenues from tax (as the investments moved to winner countries). They are not able to provide basic service to thier citizens (the citizens are unable to buy social security from the winner countries).
Of course, the winner countries will have a bigger pie, and a bigger slice of the pie. both the government and citizens are happy. Wealth/income inequality will rise unless we have more institional/political adjustment to allow more free entries and exits or more flexible imports.
So, can we reach a perfect compeition situation finally on tax competitions among countries? In other words, will we reach a point that all countries charge the same tax as others and provide the same service to everyone. Investment is identical from tax consideration among all countries.
Think about product market under perfect competitions: many firms, many consumers, homogenous product, good firms stay, bad firms exit, profit drives to zero in the long run.
The one condition I am interested is the free entry and exit. What does it mean when we face a "inefficient" government? Under democratic institution, that means it will be replaced through election. But there are too many evidence that the government came to power under democracy is not for the people, but for the big interest groups. Put it in a board prospective, can we "import" a new government from a foreign country if our government is inefficient. Or can we import the service from a foreign government like national defense or social security? This seems not possible as well.
What it implies is that tax competition may not reach our perfect competition outcome both in local and global sense. At some point, when the competitions among countries are too severe, we should expect the loser countries will be in trouble. Even though the whole pie may increase, they get a smaller slice. They are not able to collect enough revenues from tax (as the investments moved to winner countries). They are not able to provide basic service to thier citizens (the citizens are unable to buy social security from the winner countries).
Of course, the winner countries will have a bigger pie, and a bigger slice of the pie. both the government and citizens are happy. Wealth/income inequality will rise unless we have more institional/political adjustment to allow more free entries and exits or more flexible imports.
Monday, January 8, 2007
Insider
I have a freind who is in the finance industry for 20+ years. He said he knows many people, from politicians in Washington DC to professors in Ecuador or Brazil or Korea, you name it. He also claims he has a lot of inside information that put him in the best position in the financial market. I have two questions:
1. if that is true, and if those inside information are really "inside" for him only, he should be a billionaire for a long time, but seems so far he is not.
2. if that is true, and if those inside information are really "inside" for him only, he should start his own hedge fund, and he should be able to retire in a year or so. again, it is not the case...He somehow moved from the east to the west for his job, left behind his family in the east.
Why? may be he like to work as an employee in a firm, rather than being the boss in the hedge fund. May be he is a billionaire already but did not disclose his wealth yet.
May be the people he knows do not have much inside information after all, or did not disclose the infomation to him...
But I am sure he has a good network and has a lot of friends all around the world.
1. if that is true, and if those inside information are really "inside" for him only, he should be a billionaire for a long time, but seems so far he is not.
2. if that is true, and if those inside information are really "inside" for him only, he should start his own hedge fund, and he should be able to retire in a year or so. again, it is not the case...He somehow moved from the east to the west for his job, left behind his family in the east.
Why? may be he like to work as an employee in a firm, rather than being the boss in the hedge fund. May be he is a billionaire already but did not disclose his wealth yet.
May be the people he knows do not have much inside information after all, or did not disclose the infomation to him...
But I am sure he has a good network and has a lot of friends all around the world.
Friday, January 5, 2007
Copper and oil
Copper price keeps falling. Overproduction in the past, together with the slow down of
Like the copper price, oil price is also falling. Are they in different dynamic? I am not an expert on commodity, but there are a number of research pieces arguing that our economy now are less dependent on oil than in the past. One news from the NY times said that “The energy used for each dollar of gross domestic product in 1980 was almost 70 percent greater than it is today”. This is probably the same in other developed countries. On the other hand, I don’t know if there is such improvement in copper efficiency, probably so, but in a smaller extent. I don’t know if we can use fewer coppers for the construction, but I would guess these two commodities should have different dynamics.
Thursday, January 4, 2007
Right of the parents
The biggest story today is about Ashley, the nine-year-old girl, who is "frozen in time". The debate is who has the right to determine the life of a children. When we think about economic, we think people/adult is in general rational, but not children. We are not facing not only a children, but a child with mental disability. Should the court or her parents exercise the right to determine her fate?
What is the pro to keep her small? According to her parent, controlling her size will make it easier for the parent to "move" her around, and let her enjoy more exposure with the community and family. It also improves her life quality by not facing the physical body change.
What is the cons? the obvious one is what happen when her parents pass away? Do her parents plan to do this for the coming 70 years, given that her should have a normal life expectancy? What happen if our medical advancement able to cure her in the future? Can she grow after many years of being "frozen"?
Of course, I don't know the answer.
Put this a bit more extreme, if the kid is now suffering, should the parents has the authority to end her life?
What is the pro to keep her small? According to her parent, controlling her size will make it easier for the parent to "move" her around, and let her enjoy more exposure with the community and family. It also improves her life quality by not facing the physical body change.
What is the cons? the obvious one is what happen when her parents pass away? Do her parents plan to do this for the coming 70 years, given that her should have a normal life expectancy? What happen if our medical advancement able to cure her in the future? Can she grow after many years of being "frozen"?
Of course, I don't know the answer.
Put this a bit more extreme, if the kid is now suffering, should the parents has the authority to end her life?
Tuesday, January 2, 2007
Happy New Year
2006 is over.
Today is the second day of 2007. I spend some time now to think about what mistake(s) I have done and what I should avoid.
The obvious mistake I have made is I am too impatient. I thought the world will move faster. At the beginning of 2006, I recalled I said 2006 is a critical year. Rebalance will start in a systematic and consistent way. Dollar will depreciate, global liquidity will evaporate. Emerging markets will be tested. Mexico will suffer from the trade linkage with the US. Brazil, with fundamental changes, will hold well relatively. Japan will start to play an important role in dollar rebalancing. Euro will not be as dynamic as the Asian currencies (including Yen), due to its internal problems. The results? Dollar continues to hold up, global liquidity continues to be high, Mexico is doing well and stable, its trade with the US maintains well. Yen did not appreciate, but Euro did.
I am too impatient. The world does not move fast enough to materialize the predictions (not sure if it will eventually). Japan’s growth and inflation dynamic is slowly evolving. Reserve diversification has not been strong enough to trigger the dollar collapse. The US housing market is slowing down quickly, but its ripple impact is insignificant so far. I should remind myself from time to time that the business cycle is a parabola, mostly likely without any kinks. So, the slow evolving in 2006 represents the movement from the peak. Looking forward, 2007 (again) is a critical year. The negative momentums have accumulated in 2006. The speed of global rebalancing should rise.
When I talked to a few academias in the past year, one common thing they found was that the market is over optimistic to the economy. I have to admit that they said the same thing in 2005 or even before, and there is a professional bias - you become famous if you can “predict” a crisis. The important lesson is that we really don’t know when (if any) the trigger will happen, but I think it is convincing enough it will happen as our baseline.
What I think about the theme in 2007.
Some people believe inflation in the US is the major risk. They also believe 2H 2007 will be a positive turning point for the US. I believe inflation is not the major risk. I believe 2H 2007 will not be the positive turning point for the US. Here is my reasoning. I believe the global economy is going to moderate. Oil price will not be as high as we saw in the past year. I believe protectionism may prevail, but the impacts on “import” inflation will not be high. I believe businessmen are clever enough to find their way out from protectionism. I believe they have the capacity and flexibility to switch their production fast enough from high cost countries to low cost countries. I believe the fed will stay neutral so that inflation from monetary stimulus will not be exaggerated.
On the other hand, as I mentioned momentum has established in 2006. I expect the market will move faster in 2007. The economy in the US will continue to slow down. Some ripple effect from housing will be felt in other sectors. Once we reach this point, one the market convinces that fed will not raise the rate, dollar will react.
I believe many EM, especially Asia will be able to decouple from the moderation of the US. As mentioned in the previous blog, many emerging economies are able to put their houses in shape in the past years. Now, external risks are lower than before. They worry more FX appreciation than depreciation. They worry too much capital inflows more than capital outflows. They worry too much international reserve more than too little international reserve. They worry the crisis from the slow down of US economy than from their own economies.
I believe many EMs will be able to hold up their own economies by increasing their government expenditure and domestic investment. I believe indeed, it is a good time/opportunity for them to take advantage the US moderation to gear up their domestic consumption capacities. Furthermore, with trade globalization, I believe consumption substitution effect will be taken place as well. BMW and Mercedes imports will be substituted by Toyota and Hyundai. Boomingdale’s consumption will be substituted by JC Penny, etc. The impact on low cost Asia countries should not be as bad as many investors’ expected.
Cross fingers and be patient.
Happy new year
Side note:
One of my friends just got birth to a new born baby. I went to Walmart and Target, shopping for some little clothes for the baby. What is interesting to see is those clothes are all made in non-US countries. More importantly, they are quite diversified from China, India, Pakistan, Costa Rica, Vietnam, etc. Unless we have a global protectionism, businessmen are flexible enough to get us a good deal.
Today is the second day of 2007. I spend some time now to think about what mistake(s) I have done and what I should avoid.
The obvious mistake I have made is I am too impatient. I thought the world will move faster. At the beginning of 2006, I recalled I said 2006 is a critical year. Rebalance will start in a systematic and consistent way. Dollar will depreciate, global liquidity will evaporate. Emerging markets will be tested. Mexico will suffer from the trade linkage with the US. Brazil, with fundamental changes, will hold well relatively. Japan will start to play an important role in dollar rebalancing. Euro will not be as dynamic as the Asian currencies (including Yen), due to its internal problems. The results? Dollar continues to hold up, global liquidity continues to be high, Mexico is doing well and stable, its trade with the US maintains well. Yen did not appreciate, but Euro did.
I am too impatient. The world does not move fast enough to materialize the predictions (not sure if it will eventually). Japan’s growth and inflation dynamic is slowly evolving. Reserve diversification has not been strong enough to trigger the dollar collapse. The US housing market is slowing down quickly, but its ripple impact is insignificant so far. I should remind myself from time to time that the business cycle is a parabola, mostly likely without any kinks. So, the slow evolving in 2006 represents the movement from the peak. Looking forward, 2007 (again) is a critical year. The negative momentums have accumulated in 2006. The speed of global rebalancing should rise.
When I talked to a few academias in the past year, one common thing they found was that the market is over optimistic to the economy. I have to admit that they said the same thing in 2005 or even before, and there is a professional bias - you become famous if you can “predict” a crisis. The important lesson is that we really don’t know when (if any) the trigger will happen, but I think it is convincing enough it will happen as our baseline.
What I think about the theme in 2007.
Some people believe inflation in the US is the major risk. They also believe 2H 2007 will be a positive turning point for the US. I believe inflation is not the major risk. I believe 2H 2007 will not be the positive turning point for the US. Here is my reasoning. I believe the global economy is going to moderate. Oil price will not be as high as we saw in the past year. I believe protectionism may prevail, but the impacts on “import” inflation will not be high. I believe businessmen are clever enough to find their way out from protectionism. I believe they have the capacity and flexibility to switch their production fast enough from high cost countries to low cost countries. I believe the fed will stay neutral so that inflation from monetary stimulus will not be exaggerated.
On the other hand, as I mentioned momentum has established in 2006. I expect the market will move faster in 2007. The economy in the US will continue to slow down. Some ripple effect from housing will be felt in other sectors. Once we reach this point, one the market convinces that fed will not raise the rate, dollar will react.
I believe many EM, especially Asia will be able to decouple from the moderation of the US. As mentioned in the previous blog, many emerging economies are able to put their houses in shape in the past years. Now, external risks are lower than before. They worry more FX appreciation than depreciation. They worry too much capital inflows more than capital outflows. They worry too much international reserve more than too little international reserve. They worry the crisis from the slow down of US economy than from their own economies.
I believe many EMs will be able to hold up their own economies by increasing their government expenditure and domestic investment. I believe indeed, it is a good time/opportunity for them to take advantage the US moderation to gear up their domestic consumption capacities. Furthermore, with trade globalization, I believe consumption substitution effect will be taken place as well. BMW and Mercedes imports will be substituted by Toyota and Hyundai. Boomingdale’s consumption will be substituted by JC Penny, etc. The impact on low cost Asia countries should not be as bad as many investors’ expected.
Cross fingers and be patient.
Happy new year
Side note:
One of my friends just got birth to a new born baby. I went to Walmart and Target, shopping for some little clothes for the baby. What is interesting to see is those clothes are all made in non-US countries. More importantly, they are quite diversified from China, India, Pakistan, Costa Rica, Vietnam, etc. Unless we have a global protectionism, businessmen are flexible enough to get us a good deal.
Saddam Hussein
Brazil president Lula is not sure the execution of Saddam is justice or revenge. It is so obvious we know the answer, but not dare enough to spell out.
Monday, January 1, 2007
2 good products in 2006
Reviewing 2006, there are two consumer goods that I found are very interesting, and reflecting the talent of businessman in exploring the market.
One, when I was in China/Hong Kong in the past, one thing is very amazing is the popularity of massage market. Labor there are cheap. having a 2 hour massage cost as low as US$15, comparing to the US about $1/minute. Of course, labor mobility is highly restrictive between the two countries, but not capital! Visiting the department stores here, all varieties of massage equipments are on sale, from chair massage pad to neck massage pollow, etc. Of course, most of them are made in China, and made by low cost Chinese labor. This is so amazing to me that businessmen almost always find their way to get the product to the market where there is demand. They are just way more cleverer than our politicians. Massage is now tradable! Consumers win again!
Two is the digital picture frame. It sounds to me a very simple idea, and the technology should not be too advance. We have the flash drive for a long time. We have the slideshow in our laptop for a long time. But putting these two together in a simple frame seems not getting popular until this year. I find it very attractive especially for the older generations. Older generation usually find themselves scared with technology. This digital picture frame is handy, easy to use, and more important, will bring many pictures/memories under one frame. Sounds the marginal benefit is way higher than the marginal cost. I am almost sure my mom will love it. The only constriant is that the price of this "new" product is still quite expensive, averageing more than $100. Undoubtedly, the price will drop, and I suspect it will drop fast. By then, I will have one to my mom.
Happy new year!
One, when I was in China/Hong Kong in the past, one thing is very amazing is the popularity of massage market. Labor there are cheap. having a 2 hour massage cost as low as US$15, comparing to the US about $1/minute. Of course, labor mobility is highly restrictive between the two countries, but not capital! Visiting the department stores here, all varieties of massage equipments are on sale, from chair massage pad to neck massage pollow, etc. Of course, most of them are made in China, and made by low cost Chinese labor. This is so amazing to me that businessmen almost always find their way to get the product to the market where there is demand. They are just way more cleverer than our politicians. Massage is now tradable! Consumers win again!
Two is the digital picture frame. It sounds to me a very simple idea, and the technology should not be too advance. We have the flash drive for a long time. We have the slideshow in our laptop for a long time. But putting these two together in a simple frame seems not getting popular until this year. I find it very attractive especially for the older generations. Older generation usually find themselves scared with technology. This digital picture frame is handy, easy to use, and more important, will bring many pictures/memories under one frame. Sounds the marginal benefit is way higher than the marginal cost. I am almost sure my mom will love it. The only constriant is that the price of this "new" product is still quite expensive, averageing more than $100. Undoubtedly, the price will drop, and I suspect it will drop fast. By then, I will have one to my mom.
Happy new year!
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