There is a theory in economics of international trade called comparative advantage. The idea is there are others to whom you can farm out work better done (in part defined as at cheaper cost) than you would do.
For example, you might be very well able to paint your own house, but since you can earn $20,000 in the time it would take you to paint the house, you are better off paying a painter $10,000 to do it. Your house is painted and you are money ahead. Everyone gains.
The theory should be suspect once the question of "int’l" is introduced, since “international” is merely a concept, a convention, with no constants that can be assumed. Borders change, making "int'l" a squishy basis upon which to think..
The other part is politics within changing borders change. And one part of politicws is regulations and taxes, in which every case there is a winer and a loser. And finally, comparative advantage is widely cited in any effort to deny workers just compensation for their work.
But politics alone make it impossible to calculate costs and potential, since there are no constants.
To deal with this reality, chaos must be managed through testing. In science, one tests by taking out variables, and breaking down components to testable parts. One big varialbe is state interference. Eliminate the state interference as a variable, and get down to what happens in a free market. From there, you can build a hypothesis more easily, and test a cleaner hypothesis. In this way you can formulate ideas to test, and make progress in business planning in spite of the chaos that is introduced by the state.
Hong Kong is showing what is possible when the state intervention of the wine market is eliminated. It is proving to be a delightfully clean test of how things would work. It provides for many new hypotheses, and opportunity to test them.
One reason peole are having such a hard time selling wine into China, I think, is the market distortion, misallocation of resources, giving rise to unreliable economic data. Better to think with those parts taken out, what would work?
You get better results with less effort in business if you are an anarchist.
0 comments:
Post a Comment