Culling Improves the Herd

Culling is a well-known phenomenon in biology — the process of selective removal of weaker individuals from the breeding stock. Although not done deliberately, something similar happens in markets. Entities that are “weak” are selected out of the marketplace, and the health of the economy improves.

In a previous post, I wrote:

If an unprofitable firm fails, it is bad for the workers of the firm. But the failure of firms within an industry could be good for the health of the industry and for the larger economy. At the next level up, an entire industry could fail and cause misery for its workers, and yet that could be very good for the economy. Continue reading

Well, China, the Game is Up

Until a few months ago, China was doing spectacularly well in terms of economic growth, and the power and influence that the new wealth bought. But I think China’s goose is cooked, thanks to the Chinese virus that causes the Wuhan flu aka Covid-19. There’s going to be a backlash. OECD countries’ manufacturers who were off-shoring their production in China will pull out as fast they can. In all likelihood, electronics majors will cut their China-based supply chains.

This is not mere wishful thinking. It was economics that led to China becoming the global manufacturing destination. But the world has learned a lesson that will be hard to ignore — that putting all eggs in one basket is not a sound strategy. In any event, it was time for manufacturing to return to the OECD countries; the Wuhan flu just advanced the move a few years.

And one more thing. I think these institutions have to be given a quick burial: the FDA, the WHO and the UN. They are all evil. Continue reading