There’s an old one-liner: “We lose money on every sale but we’ll make it up in volume!” I don’t know how old it is but I suspect it’s well over a century old.
Is it my imagination or are we hearing that repeated with a straight face a lot these days?
I’ve often wondered if this is a bastardized recognition of operating leverage.
Off-topic. I thought this post is interesting view on where the experts are debating on policy towards China.
https://scholars-stage.blogspot.com/2019/07/give-no-heed-to-walking-dead.html?m=1
It even goes into the question whether the policy was about changing China or about American self-deception…
My observation is while the consensus (US policy with respect to China) is no longer a consensus, there is not a new consensus either. Whatever Trump has changed has not been vindicated by re-election, and so far is too “gut-instinct” for his successors to follow.
Trump may well be the anomaly (instead of a lasting change) and the foreign policy establishment will run things again in 2020.
I’ve been a fan of Scholar’s Stage’s work for a long time now. I would have added it to my blogroll if posting were more frequent. For me the key passage in the piece is:
Yes, it’s going to be painful but we don’t have a great deal of choice. The Chinese authorities are engaging in a pattern with respect to the United States I’m familiar with from business—they’re consigning the U. S. into a niche. They’ve cut us off at the low end and now they seek to cut us off from selling high end products, leaving us in the unprofitable middle. We can’t live with that.
One thing unmentioned in the piece: China has changed over the last 20 years, too. The “One Child Policy” has changed China in ways unforeseen by the leadership. I don’t believe that the Chinese people will meekly accept the sacrifices that leadership will need to impose on them to maintain their plan.
China’s neighbors understand the stakes for them as well.
One more point. Our problem was not simply Clinton’s ill-conceived policy with respect to China which Bush continued. In addition there was no Plan B and no efforts at risk mitigation or remediation of damage which is mostly on Bush. Yes, I realize he was preoccupied with fighting a war. Being president means you’ve got to be able to walk and chew gum at the same time. And for goodness sake cutting personal income tax rates was no risk mitigation. The numbers are really clear. The problem called for more business investment not more PCE. That’s where policy should have been focused. That’s where it should be focused.