The world economy thing

It’s time I got a grip on this world economy thing, because it’s hitting close to home.

I think the theory goes something like this. You can have your consumer goods made anywhere in the world. Nature will find a way of having them made at the cheapest possible cost. It can’t be stopped by protective measures. Even if it could be, it shouldn’t, because it flows money to people who will become a new class of consumers, who in turn will create more wealth by their spending.

We’ll just pause for a moment while Milton Friedman rolls over in his grave.

So let’s take a look at everybody’s poster child for this proposition—China. My experience with everyday purchases suggests China is still only halfway to where it could be. They can make a pencil sharpener that sells for 99 cents, instead of the $1.50 I am used to paying. The only problem is, it doesn’t sharpen pencils—it just gives them a sort of blow dry rather than full haircut.

On the other hand, they seem to have nailed it in the world of guitars. The instrument of choice for finicky bluegrass musicians has always been the legendary Martin, made in Nazareth, Pennsylvania, which can easily cost you more than $2,000. The Chinese have succeeded in making a Martin clone—the Blueridge—that is every bit as solidly built; and that sounds as handsome but costs less than half as much. A lot of Martin owners would be happy to trade down.

On that evidence, you might suspect that Chinese consumers are well on their way to becoming a significant force as spenders. And this seems to be borne out by recent events.

According to press reports, Chinese consumers are going nuts—for pecans, to be precise. In the last five years, Chinese demand for U.S. pecans has risen twentyfold, from 5 million tons to 100 million tons, annually, taking about a quarter of U.S. production. Price increases and shortfalls are predicted.

This is where it begins to hit home. There is bound to be a run on pecan products at some point, possibly as early as the forthcoming round of County Christmas bake sales. I can just see the headline in this paper: “Pecan pies ruined in parish hall melee. Wellington man taken for questioning.” More likely than not, hoarding will begin: people will refuse to answer their door to their neighbours, fearful that they will come to ‘borrow half a cup of pecans.’

The County pecan pie lover will have some hard choices to make. Will he or she be content to move to the butter tart, or would it be more prudent to shift allegiance to the apple or lemon merengue pie? Or is a move toward pancake breakfasts or buttermilk chicken and biscuit church suppers in order? These are turbulent times.

Remember, this is just the scenario for one country’s demand for one commodity. Think what would happen if all those other countries the pundits talk about stepped up their demands. What if the Indians wanted walnuts; the Russians hazelnuts; and the Brazilians, well, Brazil nuts I suppose. If they had the means to buy them in large quantities, as they probably do, the world nut market would be plunged into chaos and the County consumer would likely have to learn to eat nutlessly.

Of course, with every economic sea change, there is a window of opportunity. We may very well wish that the Indians would do us a favour and take away 50 per cent of our total broccoli production, and that the Russians would corner the market on Kiss memorabilia.

And those who accurately foresaw the Chinese nut boom and invested in pecan futures would be rolling in macadamias round about now. Myself, I haven’t a clue what might catch on. I’ll leave the fortune seeking for others.

One trend I can watch is guitar sales. If the Chinese start buying Martins, we’ll know they’ve hit the jackpot and produced a serviceable $1.25 pencil sharpener. And if my local retailer says “this guitar’s from Indonesia: it’s just as good as a Blueridge, but half the price,” I’ll know the Chinese have peaked and it’s time to ride on the Indonesian economy.

In the meantime, I’m off for some early season pecan pie hunting. Don’t rush to join me.

Read David Simmonds’s previous columns and other humour writings at www.grubstreet.ca