Sunday, May 10, 2020

The Unequal Price Problem

There's a good piece over at ARD (public TV, Channel One) this morning, with Pete Altmaier (the CDU guy as Economics Minister).  I like Altmaier because he's a no-nonsense kind of person.....who is definitely not an intellectual or PhD-pretender. 

In an interview, Altmaier spoke up to the idea of getting German companies to go and produce masks, and lessen dependence on China. 

Grants from the government possible?  That's what Altmaier is pursuing.  You put the plan up....explain the cost, and his program would cover 30-percent of the situation....basically buying the machines on discount.

The chief problem with this?  If you say the mask product is X, and both China and Germany produce X.....then the cost factor for the Chinese X will be probably half the cost of the German-made X.  So here lies the structure problem for German leadership.  You'd have to go and tax Chinese-made masks, bringing the cost to an equal amount. 

The EU allowing that?  I'm guessing never in a thousand years.

The EU itself who ought to set up the tax?  Probably so, but they don't have those type of 'balls'.

So this pot of a billion or two Euro that Altmaier is discussing....is just wasted money?  More or less.  You'd have equalize cost, and put China at a disadvantage. 

And just for the discussion....this is the same problem that France has.....the UK has, and the US has.   Just something to think about.  Altmaier is right, but he can't resolve this problem of equalization. 

1 comment:

Daz said...

And thus why moving all the manufacturing was a stupid move that only benefited the owner class of baby boomers. Now, they don't want to sacrifice any elements of their lifestyle so everyone in future generations needs to suffer for them.

We're about to have the oldest president of the USA sworn into office later this year. Why can't they just all retire like they're supposed to and give some fresh ideas a chance. The same strategies that worked in the 70's don't tend to fare that well these days.