What causes China’s low prices?

aaronsw — Thu, 22 Mar 2007 03:51:39 +0000

The China Price Project tried to figure out what causes China’s low, low prices, the prices that have allowed it to capture “70% of the world’s market share for DVDs and toys, more than half for bikes, cameras, shoes, and telephones; and more than a third for air conditioners, color TVs, computer monitors, luggage, and microwave ovens.”

Their conclusions are that lower labor costs account for 39%, China’s clever practice of locating related factories near each other (which lowers shipping costs and makes it easier to coordinate) accounts for 16%, and the efficiencies permitted by the flood of investment into China account for 3%. As for more standard government policy issues, export subsidies account for 17%, undervalued currency for 11%, counterfeiting and piracy for 9%, lax environmental and safety standards for 5%.

Report of the China Price Project

America’s naïvete about money

pde — Thu, 01 Feb 2007 21:15:01 +0000

A fascinating survey was conducted by Time magazine for the 2000 U.S. election cycle (disected later in an op-ed piece by David Brooks in the New York Times). It’s rare that a few numbers say so much about a nation’s misunderstanding of itself.

When Americans were asked if they are in the wealtheist one percent of the population, 19% of them said “yes”. A further 20% of them said “no, but I will be at some point in my life”.

America’s foundational story is that anyone, however lowly, can get rich. This is the land of opportunity. But, according to the data, a poor child’s odds of striking it rich are better in Europe.

Science That Matters » Economics

What causes China’s low prices?

America’s naïvete about money