Transcript Oil Fish or Cod Fish? - University of Hong Kong

Introduction
January 29, 2007
Once upon a time
....Most goods that we consume
are farmed/produced within
50kms from our home….
The Oilfish incident
• Oilfish contains indigestible wax elements that
cause diarrhoea for some
• Banned in Japan and Italy.
• ParknShop mislabeled oilfish as codfish, and
withdrew it from sale after reports of 14
sickness cases (SCMP, 24 Jan 2007)
• Reports of stomach upsets after eating
“Japanese cod fish” in a well known fast food
restaurant (C2, SCMP, 27 Jan 2007)
• Welcome admitted selling oilfish as codfish
(SCMP, 27 Jan 2007)
Fake products in the mainland
• Fake products
– milk powder, cosmetic product, medicine
– food with antibiotics/pesticide
• hairy crab, alleged to be treated with antibiotics to
make them healthy
• “shinny, unusually red” orange
• Bottom line: A good’s quality is not known
by buyers; some role of government
Two solutions
• Government agency:
– Government failure: lack of incentive,
expertise, law, or resource
• Private sector monitoring:
– It takes time
– “Market will improve itself” (faith or science?)
– Rajan & Zingales: “Saving Capitalism from the
Capitalists”
“The Chicago school”
– Steven Levitt (author of Freakonomics ，Clark award
recipient): http://www.econ.hku.hk/video/index.html
– “…It is great to believe in free market, but it is bad to
have an ideology when you come to research…It is
just dangerous to have an ideology when you come to
a field like economics… If there is anything in the
future… the new generation of Chicago price theorists
should not be ideological in the same way that the old
generation is…The tools are just good at studying
market failure…”
There are more problems …
• What does it mean that China
liberalizes its water supply?
• Natural Disaster
– Many fish have extinguished or been
decimated; we now eat species that we
didn’t
– Global warming
Globalization
• A contradictory process
– Goods are getting cheaper and cheaper
– Jobs are getting less and less secure (plus other
problems…)
• Thomas Friedman (in his “World is Flat”):
– When I was a kid and I didn’t eat, my parents said:
“Please eat it. Children in China and India don’t have
enough food to eat.”
– When my daughter does not eat, I say: “Please eat it.
Children in China and India are already eating your
food!”
What is next?
• One-factor Ricardian Model (gain from
trade)
• Two-sector Model (income distribution)
• Imperfect Competition Model
(intraindustrial trade, strategic trade)
• Trade Policy, rules in WTO
• Newer theories that criticize and refine
these trade theories