Chinese food exports have recently been tainted. I doubt that this is anything new….except it’s now being highlighted by the daily press.
Shall we just avoid Chinese produced food? This is probably not possible.
There is much more. This is a mere reflection of deeper social, economic and military problems.
Let’s go back several hundred years to see why. A social evolutionary experiment began then called “the industrial revolution”.
The idea was to take people from rural settings, move them to urban conditions and increase their productivity with technology. The technology was originally powered by water, then steam, later the internal combustion engine, the jet and finally computer and internet.
Most of all the revolution was fueled by poor farmers who found their standard of living improve by giving up the land and moving to the city.
Mankind has used this technological advance to live longer, travel further and consume much more. This has allowed more humans to exist and to have higher standards of life.
This is good. We all want our babies to live long lives. Not a bad ideal for personal use either. Plus everyone has more to consume. That’s good too.
Most people want to enjoy more. The industrial mentality is that bigger is better!
Yet this expansion creates numerous problems. First, the Western World (The US, Japan and Western Europe) ran out of poor farmers! These first nations to embrace industrialization through democratic capitalism (the social economic system that has worked best materialistically) used up all their poor people.
The US did not have much of a large population anyway so it grew by encouraging the “tired, poor, huddled masses yearning to breathe free.”
Eventually all the other successful nations began to import low cost labor as well.
Yet these successful countries did not prepare for the loss of local born low cost labor and failed to create systems to integrate, regulate or socially deal with sufficient waves of immigrants (poor farmers) from abroad to continue the manufacturing and work that was required.
However technology in transportation stepped in. These nations simply imported the products manufactured by poor farmers in other places. Low cost transportation made importing the products easier than importing the workers.
This globalization led to huge increases in everyone’s prosperity yet also created dilemmas of quality control. In the US, certain standards have evolved over the decades. In eras past, food standards were pretty low.
Lead was used in paint. Asbestos was placed in insulation, shingles and pipes. Snake oil was sold.
Over time, lessons were learned. Standards were raised and institutions (government and industry led) were created to monitor and protect those standards. National protectors governed national standards.
Then globalization came along. Agencies were created to check out standards of products as they were imported.
However the volume of globalization grew so fast that the check points are inadequate.
Harold Meyerson special editor to the Washington Post wrote an editorial about this in the China Post. We looked at a portion of this editorial in yesterday’s message ending with his comment:
“Now, you may have missed, in all those impassioned defenses of globalization, the part about uninspected and unregulated food from distant lands showing up, unannounced, for dinner. Yet this was always an implicit part of globalization — at least of the globalization we have today, structured of, by and for business and financial interests. For globalization was never merely about access to bigger markets than could be found at home. It was also about extending commerce beyond the bounds of regulation and unions and meddlesome meat inspectors.”
Consumers want low priced products and are willing to avoid looking too far beneath the surface if the price is right.
Meyerson goes on to say more. The balance of his editorial shows another reason why globalization presents a special problem of conflicting standards.
“The incidence of malignant meat imports reaching market can be diminished, I don’t doubt, by a greatly expanded FDA. But no one should be deluded that such last-minute interception is remotely equivalent to having our inspectors in the plants. Eating Chungking chicken, if it’s really from Chungking, requires a leap of faith that eating Iowa beef, if it’s really from Iowa, does not. As Ronald Reagan said of Soviet missiles, so we should say of Chungking chicken: Trust, but verify. The FDA, having no access to China, isn’t the best vehicle for verification, and the Chinese food-safety bureaucracy, based on the caliber of Chinese exports, leaves something to be desired, too.
“Which is to say, if we’re going to globalize the food we eat and wish to be safe, we need to get serious about globalization. The regulations we enacted under Theodore Roosevelt, who established the FDA (partly in response to the outcry Sinclair’s novel prompted), need to become part of the rules of the World Trade Organization, which in turn needs real inspectors to enforce those rules. Granted, this is a utopian proposal, but ultimately it is the only sensible response to the borderless business utopia we have now: a global economy devoid of the regulations nations once enacted to protect their citizens when their economies were merely national.
“It should come as no surprise if food-safety standards emerge — slowly — as some of the first real global regulations. The FDA was one of the earliest national regulatory agencies — partly because meat crossed state lines (Chicago, recall, was hog butcher to the world), partly because Sinclair’s novel made millions of Americans anxious about what they ate.
Sinclair had intended his tale of life in a slaughterhouse to spark outrage about the indignities inflicted on meatpackers, but readers couldn’t get past his descriptions of the meat. ‘I aimed for the nation’s heart,’
Sinclair said, ‘and hit its stomach’. As then, so now: The stomach remains the soft underbelly of the reign of laissez faire.”
What Meyerson suggests is an expansion of the European Union concept, food standards that everyone accepts in the world. He is correct that this is sensible but also “Utopian”. If we have equal standards then we have to have equal operating conditions, equal pay, equal pensions, equal measurements, equal social systems, equal retirement, equal medical health, equal currencies, etc.
The European Union has worked for decades to achieve these goals. This small union of nations has even made a little progress on this. Yet the EUs efforts have also provided enough lessons that we can safely predict “Impossible in our lifetimes”, is a more accurate description than “Utopian”.
This is one tension that will continue to dominate investing and business for decades to come.the desire for the upsides of globalization conflicting with the unwillingness to pay for its downsides.
There are many more serious aspects about this tension for us to consider and we will in upcoming messages. For now let’s look at an opportunity that can come from this conflict.
Look at the “Three PPPs” whenever you consider any business or investing opportunity.Problem.Person.Promise. What is the problem? Who has it? What is the solution?
The problem here is a desire for low prices and high standards.
Who has this problem? Most consumers anywhere in the world.
One solution is to find better sources of the same or similar products at a similar price.
Let’s look at fish and seafood as an example. This is one sector that will quickly suffer negative reactions to scandal because as Meyerson points out in his editorial, food is one item that is quick to capture the public’s attention. When people die or become seriously ill because they put something in their mouth, their neighbors react!
The most recent fuss over Chinese products has been tainted fish. The FDA has stopped the import of huge amounts of fish from China due to this. This creates great opportunity for many other large importers of fish into the Western world such as Canada, Thailand, China, Vietnam, Chile and Ecuador.
Look for areas of opportunity in these other large importers of fish to the West.
One reason we love Ecuador is its huge variety of really excellent food.
Ecuador has a hug variety of fresh wild, seafood. You can see pictures of this at https://www.garyascott.com/international_investments/222.html
There is also already an established industry farming trout, shrimp and tilapia.
See more about food in Ecuador at https://www.garyascott.com/international_investments/297.html
Here is our schedule of Ecuadorian courses for the balance of 2007.
July 17 – July 22, Tues. – Sun. Import-Export Course.
Sept. 26 – 30, Weds. – Sun. Condensed Super Thinking + Spanish with Free Oct 1 – Mon. Andes Extension & Real Estate Tour.
Nov. 9 – 11, Fri. – Sun. International Business & Investing Made EZ.
Nov. 12 – 14, Mon. – Weds. Andes Extension & Real Estate Tour.
Nov. 16 – 18, Fri. – Sun. Andean Shamanic Tour.
Attend all three November courses in Ecuador and save $398! See https://www.garyascott.com/catalog/save5/
Every time China or any other importing nation has an export scandal, instead of thinking oops, think opps (for opportunity). Look for alternatives to production of a product that may become unwanted due to low standards.
This is a tactic that will bear fruit for many years.
Another trend that will have legs is investing green. This is no longer a fad. This is one of society’s most urgent problems and its importance is now recognized.
Take for example the five multi currency portfolios we created and have tracked since November 1, 2006 (eight months).
All five portfolios have performed remarkably well. Yet see how much better the green portfolio, which is invested in shares of companies that are involved in environmental issues, has performed.
Don’t miss tomorrow’s message that looks at more import opportunities.
Until then, may every person and problem bring a promise of wealth through service to you.
We hope to serve you at one of our upcoming courses or correspondence courses.
International Business & Investing Made EZ in North Carolina.
International Business & Investing Made EZ in Ecuador.
Andean Real Estate Tour.
Andean Shamanic Tour.
Self Fulfilled – How to write and Publish for Income, Freedom and Fun.
Self Fulfilled Publishing Correspondence Course.
International Currencies Correspondence Course.
Ecuador Travel and Living eletter
International Business Made EZ Correspondence Course