13 July 2007

International News

Just a few bits of economic happenings in the world.

First: A US health food company recently announced they are going to start labeling their stuff "China Free," largely in response to the recent events involving poisoned / tainted / awful stuff from China, from toothpaste to dogfood to toy trains. Imagine the impact if "China Free" catches on in label-conscious America... particularly if China doesn't respond quickly. Some other country (India?) has the potential to sweep in and eat China's lunch if they can offer assurances of quality, purity, etc.

Next: Iran sits on top of approximately 10% of the world's oil reserves - second only to Russia, according to the Washington Post. They are one of the world's largest producers of crude oil, but on the radio today I heard Iran has to import something like 40% of their gasoline, because they simply can't refine enough. I wonder what Iran will do when (not if, but when) the west decides we don't need quite so much crude oil anymore.

What do these have in common? Both are instances of an economic structure based on low-skill, low-wage, commodity-level production of material and goods for which the future demand is likely to decrease. Not today. Not tomorrow. But probably not too long from now. If China wants to remain viable as a manufacturing power, they need to seriously look at quality control and improvement. If Iran wants to remain viable as an oil power, they should probably get a copy of "Oil Refining For Dummies" and start making their own gasoline or, better yet, figure out how to do something other than suck crude out of the ground.

And both are examples of "least-effort" approaches to economic security (can I use the word "lazy"?). Go ahead, use the less-expensive lead paint, or the less-expensive poison ingredients for toothpaste. You'll get away with it (until "China Free" becomes popular). Go ahead, keep relying on crude oil. It'll never run out (until it does... or until solar/hydro/whatever takes over).

Of course, the only way the situation is going to change is if American appetites change... any chance that'll happen?


Dave Rinaldi said...

You never cease to amaze me with how many things you juggle at one time (literally and figuratively)! I enjoyed your boomer interview on NCPR and I love following your blog. Thanks for inspiration, the laughs, and the thoughts that make me go hmmm. Thank you for sharing your life with me.
Dave Rinaldi

Dan said...

Thanks, Dave! I'm so glad you're stopping by and reading this crazy, eclectic little blog. I love getting comments (it's nice to know people are reading this stuff - and double nice to know who).


Kim said...

HI Dave Rinaldi!!! :)

Gabe said...

I remember a visiting Proffesor at AFIT who talked about the next precious commodity in the Middle East.....water! As you say, when nobody wants their oil anymore, they have nothing....nothing to keep them economically viable. So water will become the precious commodity that they trade and who ever rules over it will become the super power.