Spill the Milk

Still more children falling sick from tainted milk here in China.

 The number of children in China sickened by dairy products tainted with the banned industrial chemical melamine has jumped to nearly 53,000, the government said Sunday as it vowed to crack down on those responsible for one of China‘s worst food safety scandals in years.

Turns out–not surprising–that the market is encouraging the contamination of milk. Melamine has been added to the milk, allowing watered down milk to pass as more protein-rich than it really is. Profits increase for the sellers, who probably did not know about the dangers. I suspect the government will deal harshly with those responsible.

Is there a better way to discourage contamination of foods and other products? Aside from thorough inpection which already exists, I can not think of proper incentives other than heavy fines and punishment.

Matchmaker’s Mistake?

It being a Friday afternoon, I thought I might share a most amazing photo, even if I can not quite justify it as an economic observation. Shortest man in the world together with the leggiest woman. 

He is Chinese, she from Russia. I wonder if they were able to converse at all.

Innovation

Here is an interesting article that argues the importance of innovation to economic growth and wealth.

In our national dream, we’re high-tech champions, but we forgot that the other countries are also competing, doing just what we once did to be the most innovative, productive, and competitive. Suddenly, the signs are all over, from Indian tech support to Finnish cellphones to Japanese hybrid cars.

The focus of the story is that the US is beginning to lose-out to many other countries–like China–because other countries are stressing math and science education more than the US, and the argument is that math and science education leads to innovation.

I am not at all sure about that. First, I don’t see people such as the Chinese as especially innovative people. In fact, my friends here who manage Chinese workers see them as especially poor innovators.

Second, I don’t think math and science are all that good for encouraging innovation. Good for solving problems, but that is a different skill altogether.

Innovation comes from creative thought, and creative thought is best encouraged by education that invites independent thinking and debate. Education that is focused on memorization and retention of information, that is the problem and is much more sensibly blamed for any deterioration of US competitiveness in world markets.

GDP vs. Welfare

An interesting debate has–finally–found its way into the American election–

“Two things,” [Obama] said… “One, just because I think it really captures where I was going with the whole issue of balancing market sensibilities with moral sentiment. One of my favorite quotes is — you know that famous Robert F. Kennedy quote about the measure of our G.D.P.?” … In it, Kennedy argues that a country’s health can’t be measured simply by its economic output. That output, he said, “counts special locks for our doors and the jails for those who break them” but not “the health of our children, the quality of their education or the joy of their play.”

Obama’s point is probably that public policy needs to focus on more than just increasing incomes, but the debate fans-out to include environmental concerns and cultural ethics.

Based on the collective wisdom of scientists, global warming really does seem to be different from any previous environmental crisis. For the first time on record, meanwhile, economic growth has not translated into better living standards for most Americans.

Again, I came across this on the Environmental Economics Blog. The comments are worth a good read.

Demand and Supply of Oil

From the WSJ’s Morning Brief:

Oil prices are trading higher this morning following OPEC members’ decision last night to cut production. Such premeditated decisions on either side of the supply-and-demand equation don’t always bring their intended effects. But even with demand now expected to slow this year any tightening of the OPEC spigot wouldn’t be good for the faltering global economy.

Then, from a comment on the Environmental Economics Blog–

BUT I heard on the radio this morning the head of OPEC himself claim that gasoline prices would come down despite the cuts in production.

Gosh…I wonder why he’d say that…I wonder…I wonnnnnnderrrrrr…

Of course falling prices are possible if demand drops more than supply does, though clearly the commenter believes it is only a political ploy. In any case, with less supply prices will be higher than they would be otherwise.

OPEC’s strategy? I am not sure and a bit surprised. I would be less surprised to see them increasing quotas, trying to reestablish some countries’ dependence on oil—to reverse recent trends toward more sustainable and greener energy sources.

What do you think?