Think Economically


Maximum understanding, minimum average total cost.

News and analysis: Tampa has more than its share of poverty; Space elevator group LiftPort is back in business; Apple v. Samsung, ugh.

Republican political types are gathering in Tampa, Florida for the Republican Convention, and most people are talking about either the election, or about Hurricane Isaac. Not so many are talking about Florida’s still-depressed housing and job markets, or about the 25% poverty rate.

Part of being a society is deciding how we solve the economic problem–the problem of scarcity, and a big part of that is who gets what.

I don’t claim any particular insight into how we ought to do this: some people focus on fairness of process, and some people focus on fairness of outcome. In a broad sense, people seem to think both are important. Maybe a process is acceptable until it produces an outcome that is not, or outcomes are acceptable until it becomes clear how unfair the process is. Societies have to decide how to distribute goods; the consequences are ultimately borne by the societies as well.

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News and analysis: Foxconn raises wages but keeps long hours, Nike sells $315 shoes, Herr’s makes 5-6 tons of chips/day

So FoxConn workers are making more than they used to. They’re still working 60-hour weeks in violation of government labor laws.

So the wages are going up, changing relative wages against both the U.S. and against other developing nations. What’s going to happen? Well, we should expect that some manufacturing jobs will move back to the U.S. We should also expect higher value items and higher value brands to be established as more important parts of China’s economy.

The downside: prices on consumer goods–which have been depressed for a long time due to the 2000s explosion of labor due to the expansion of western firms into China–are likely to rise.

The upside: China will start buying more stuff, particularly higher-value items, in which the U.S. has a comparative advantage, so U.S. wages–which have been depressed for a long time due to the same explosion–are also likely to rise.
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