Watching Molly Scott Cato critique economics

Is as with Dr Johnson and the preacher.

As is typical of theoretical economists, his model makes gross assumptions, including the idea that consumers have no preference, for example, between a US computer and one made in Taiwan, and that the distance goods travel to market is irrelevant.

Preference is as preference is, our trade rules should allow people to express them, exactly what free trade does and restricted trade does not. But there are no computers made in the US these days of course (assembled, maybe, but not really made). Further given container shipping lines distance doesn’t matter in this sense either. We do not buy out iPhones nor logiciels from France because it’s right next door, do we?

23 thoughts on “Watching Molly Scott Cato critique economics”

  1. “Molly Scott Cato is the Green party speaker on economy and finance and spokeswoman for EU relations.” and therefore uniquely qualified to indulge in casuistry with an eminent theoretical economist.

  2. I believe Apple use air freight for all of its products. This must add to the cost, but it does not appear to stop people from buying them.

  3. If you work in software, language has more friction than shipping or WTO tariffs.

    No, not if you are Sage perhaps, but for your 10-20 software team, which is most, that is the case. You’ll spend thousands translating your website, extra costs on translators etc.

    And now and more ‘software’ in a broader sense is what we export. Dyson vacuums. Nothing physical comes out of Malmesbury. It’s engineering and support. ARM, the small microprocessor companies, F1 teams, banking, advertising, the CG work at Framestore in Soho, architecture, Rolls Royce engines. Ok, an engine has some shipping, but it isn’t like the impact on exporting carcasses of beef.

    I work on hybrid hardware/software solutions and the things we sell cost thousands and cost about £20 to ship to the USA.

  4. “including the idea that consumers have no preference, for example, between a US computer and one made in Taiwan, and that the distance goods travel to market is irrelevant.”

    Except that to the vast majority of people around the world, there is no preference for domestic over foreign produced goods and the distance traveled to market *is* irrelevant.

    What matters is total price.

  5. This is an interesting little one. Air shipment for Apple is cheaper than sea freight. iPhones are expensive, $700 for 500 grammes sorta expensive. $3 on air freight or whatever (I’m sure it’s lower than that given volumes) is cheaper than 30 days of cash flow tied up in a sea voyage. Especially when you add in likely 1 % per week depreciation–pretty standard in the electronic bits business.

    The reverse is why that Foxconn screen plant in Wisconsin. Cheaper to build in the US with robots than to do so in China with people then pay shipping, you can’t afford air freight for 60 inch screens.

  6. Ah, I did not know that about air freight. I was taught the Apple air freight fact when I did APICS CPIM and CSCP qualifications and I just assumed it was a time to market thing for Apple.
    I would not have thought that in the case of certain premium products, that air freight can save money.

  7. @Agamemnon

    “including the idea that consumers have no preference, for example, between a US computer and one made in Taiwan, and that the distance goods travel to market is irrelevant.”

    Actually, I cannot think of any significant instances where people even think about the country of origin.

    Price is important, but I suspect marketing and brand preference makes it less significant fairly frequently.

    Country of origin (outside crazy people who like to avoid buying Israeli goods, because the joos is evil) isn’t relevant to anyone anymore. Its not so much unimportant as not even thought about.

  8. The comments section on the article was glorious. For the most part pure ad hominem, there is one interaction when somebody pointed to the repeal of the Corn Laws as a prime example of unilateral removal of tariff barriers. Cue a heated response on the disaster that ensued from this. To which the short response was “Would you really not have repealed the Corn Laws?”.
    And here we are again, imposing tariffs on foodstuff from Africa… and defending it!

  9. Actually, I cannot think of any significant instances where people even think about the country of origin.

    Unless it’s from Israel and hasn’t yet been relabled “Product of Lebanon”.

  10. ” iPhones are expensive, $700 for 500 grammes sorta expensive. $3 on air freight or whatever (I’m sure it’s lower than that given volumes) is cheaper than 30 days of cash flow tied up in a sea voyage.”

    Nothing to do with it. The only reason anyone uses airfreight to ship anything is security. A while ago I had a job involving computer assembly, and it saw weekly intake of computer parts from the usual sources, nearly all Asian and nearly all airfreighted.

    And yet, said airfreight wasn’t exactly quick as the whole lot was routed via Dubai. Emirates, Qatar airways etc and took a whole week. Presumably much of which was spent waiting in the bonded area at Coqsakir al-fuzziwuzzi international airport, due to the vagaries of airline scheduling. Some of it it even came the “wrong way” as it were, travelling via Japan and North America, presumably again due to scheduling and airline hold space constraints.

    There is no cash “saving” because all of the competition do this as well, it is simply an expense anyone must pay in order to do business.

    The packages are always heavily anonymous, for good reason, when you consider that a package containing say, the current spec Titan X graphics card is shipped in boxes with twenty each at one thousand pound per card – you can maybe see that speed is not the issue given that pilferage is still possible just like in the days when ships bound for Liverpool could rely upon the scallies taking their cut.

    Partly because of the Lockerbie bombing, you now need all sorts of security and background checks to package things for dispatch upon planes. You are not paying for speed except under very unusual circumstances involving completely unique or low volume items, and computer parts are valuable, but hardly low volume.

  11. “The only reason anyone uses airfreight to ship anything is security.”

    That “anyone” isn’t true. A counterexample; a while back I worked for a firm that created documents in London (and sometimes, Korea), that were then printed and distributed to clients, the vast majority of who were in London, with a smaller chunk in New York, and handfuls dotted around the Americas and SE Asia.

    The documents could be printed in London, HK, and sometimes NY or Singapore.

    It could be cheaper and more importantly, quicker, to print in HK, airfreight to London, than just print in London. Cost and timeliness can be very important.

  12. Tim

    It’s worth remembering that the Green economic model is heavily based on North Korea (not that they say so explicitly but it is the only country I can think of even close to the level of controls their agenda would require) therefore from her perspective having limited trade is not intrinsically an issue as the state would take over the complete direction of all aspects of economic life. Additionally, goods from far away would have sufficient duties levied on them to make them uneconomic so her position, while appalling does have a perverse logic to it..

  13. Bloke in North Dorset

    I’ll bet she not so dismissive of the equally, if not more, theoretical global warming models.

  14. Chester Draws,

    Why does cheese matter? It’s a process based on milk. I’ve tasted Somerset brie that’s as good as the French stuff.

    And wine is long gone. It’s not countries or regions, but producers that matter. People are more and more getting this, although some mugs pay the premium for low end AOC Burgundy.

  15. I’ve tasted Somerset brie that’s as good as the French stuff

    A common enough view these days, and I recently noticed that one of our local supermarkets had Somerset Brie as Premium, with French relegated to Value.

    There’s something a bit moribund and 70’s Britain about France these days.

  16. NewRemainiac–Dung Facepainter?

    We have been importing that for years in the form of your scummy EU mates.

    What a shame that is done now and soon home-expelled London Bubble shite like you will be the only stench fouling Britain’s sweet air.

  17. Jack C–France still remains a hopeful territory for soap salesmen tho’.

    There must be a breakthrough over there on the stench front sometime–surely??

  18. @ John Square & Tim Newman
    The Milk Marketing Board tried to close down the Hawes Cremery and market so-called Wensleydale manufactured in Lancashire. Tesco sells so-called Wensleydale made in Wiltshire. They don’t taste right – because the water that the cows drink tastes different as the underlying rock formations differ.
    The County of origin does actually matter.

  19. @ Bloke on the M4
    You are welcome to your “Somerset Brie” as long as you don’t ask me to eat orange-coloured “Canadian Cheddar”

  20. @ Bloke on the M4
    However I agree with your comment on wine – 30-odd years ago I bought some decent Bulgarian wine for a supper party and most of the guests thought that it was French

Leave a Reply

Your email address will not be published. Required fields are marked *