Great, But

The world's biggest passenger jet was confirmed to be grounded, after producing the pre-ordered 17 jets (14 for Emirates and 3 for ANA), the production line will be closed. To build such a massive passenger jet is a great achievement, it is such a pity for ground such incredible project. Moreover, there are other examples that good projects were abandoned. For example, the supersonic passenger jet, Concorde, was grounded. In addition, although the US has developed its latest fighter, F-35, F-22 which was developed during the Cold War period is still considered to be the best fighter at the moment, but F-22 has stopped production for decades already.

Why are these amazing products grouded? The reason is simple that the cost is too high. Providing additional high technology involves an increasing marginal costs, which means producing a product with one higher technology is much more costly than producing an ordinary product without the high technology. Therefore, even some products having the most advanced technology attracts much media and public attention, they do not meet an accpetable sales target that is able to make possible. Moreover, for the demand side, these high-tech functions seem amazing and fancy, but the reliability has not been proved, also the environment might not have been able to catch up with the latest technology, such as the USB-C port in the PC industry.

Overall, latest technologies seem fancy but because of the environment as well as the marginal cost of providing higher technology, the products with the latest technology are not really desirable in the market.

The Brexit drama

The UK Prime Minister, Theresa May, suffered another defeat in her Brexit battle in the Parliament on Thursday that her Brexit plan B was not popular that she lost by 303 to 258. This PM has suffered maybe too defeats on her Brexit plans, this is so bad that all people do not have any clue what the Brexit will be like eventually, this certainly increases the risk for the economy as well as the market.

Brexit has always been a very divisive topic that many people are having different views from different angles. The referendum already showed that people did not only have diverse opinions about whether the UK should stay in the EU or not, but also had very diverse opinions about how the UK should leave the EU. The 'Leave' campaign at the time had proposed many 'benefits' of leaving the EU; however, they did not propose these 'benefits' existing at the same time, but they would like to achieve many goals by leaving the EU. It is always difficult to achieve many goals at the same time, especially via one project. Moreover, these politicians are actually having opposite goals.

I was optimistic about the Brexit plan vote in the Parliament; however, as time goes by, the PM does not seem to have the power to control the Parliament, not even her own party, even after she has given up her leadership for the next general election.

The disagreement inside the EU

There are more uncertainties ahead of the European Union, despite the Brexit mess. There are three major powers in the European Union, the United Kingdom (which has not left the EU yet), Germany and France; and two of the three are in the Eurozone. However, the European Union have other voices others than these three countries'. The European Commission vetoed the merger between Siemens and Alstom, the German and French train manufacturers. Both Germany and France are unhappy about this decision made by the European Commission, and the French economy minister called this merger a creation of "European industrial champions".

France and Germany have the strongest industries in Europe and when these two countries start to cooperate with each other, including mergers, there will be much less room left for other European Union countries, because they are living in one single market. From the monopoly aspect, this merger should be blocked, because these two train manufacturers' merging will create a train manufacturer with the monopoly power. Other train manufacturers inside the EU simply do not the competitive power to compete with this giant while the train manufacturers outside the EU lose their competitiveness due to the tariffs imposed by the EU. However, from these two companies' aspects, they believe the merger is necessary and urgent. Yes, they probably have the monopoly power in the EU, but their main purpose of the merger is to strengthen their competitiveness in the global market when facing increasing competitions from other countries, especially China.

The disagreement of France and Germany with other European Union countries is that France and Germany want to cooperate with each other and strengthen themselves in order to be more competitive in the global  market but other EU countries do not want more powerful France or Germany as they are afraid of losing more European markets and benefits to France and Germany.

Some pessimistic thoughts on the Chinese New Year

This year’s Chinese New Year had a bad start that the New Year spending growth is the slowest since 2005, but it is not too bad since the spending was still growing. However, I have some pessimistic thoughts on the Chinese New Year from a general angle.

In China, people are still celebrating the Chinese New Year, and have got a “golden week” to spend with their family together. However, more and more people are now complaining about they do not enjoy the Chinese New Year as much as they used to. I think the reason for this is that the Chinese society has been changing rapidly in recent years, in terms of the population structure and the social collabration structure. I am really pessimistic about the future of the Lunar calendar.

The most widely used calendar is the Gregorian calender that most people around the world are working and living based on this calender. In the past, the Chinese people used the Lunar calender; however, in the moder era, the Chinese people has adopted to the Gregorian calender. Other Asian countries which used to use the Lunar calender, such as Korea and Japan, have all adopted to the Gregorian calender. When China participates in more and more global businesses and politics, the importance of adapting to the Gregorian calender becomes more crucial. The most simple example is that if the Chinese companies want to serve their global clients directly, they cannot have a vacation while their clients are not. When a Chinese based financial institution wants to involve a project in the US financial market which is still open during the Lunar New Year, the institution cannot close during the Lunar New Year, otherwise it will lose competitiveness to its foreign competitors.

Though I do not think the Chinese New Year will disappear in the near future, I think that the magic of the Chinese New Year will perish shortly and it will become a pure cultural symbol eventually.  

The tax on the super wealthy

In the US, the Democratic party is planning to tax the super wealthy because of the widening inequality in the US society. The total wealth of the top three wealthiest men in the US equals the total wealth of the bottom half of the US population. The Democratic party plans a 70% tax on the super wealthy people and the wealthy people have publicly opposed this plan, including Michael Bloomberg and Howard Schultz.

The main argument of the opposition side against the plan is that this tax plan would push the US to a socialism path. This argument might have had a good market during the Cold War; however, at the moment, such argument may not gain the ground given over 70% of the US population support this tax plan. Heavy progressive taxation usually has one negative impact which is it reduces people's incentives to work harder. However, the tax plan of the Democratic party focuses the super wealthy, such negative impact will not be applied to the majority of the population, apart from the top 5 to 10 per cent of the population. Would this affect those people who want to have great innovations and inventions in order to earn enormous money, maybe and maybe not. People may be affected by the tax plan because they are likely to not earn as much as they expect, but the money they earn from great innovation and invention is still going to be enormous. Moreover, it is possible for the government to make some amendment to the tax plan to make the tax more pro-innovation.

Overall, I think such progressive tax plan can actually be accepted and passed, and it is likely for the US to become a more European like country whose government has a much more progressive tax system and spends enormous expenditures on forming the welfare state.

Why doesn't price work for education?

The number of 18 years old young men who apply for higher education is at a record level, and the growth rate published does not indicate this number would potentially decline in the near future. The demand for higher education in the UK is increasing, despite the £9250 annual tuition fee.

English students used to enjoy free higher education in the past; however, because of the increasing government expenditure caused by the increasing number of English undergraduate students, the government reintroduced the tuition fees and increased the tuition fees several times. The government also pushes apprenticeships and other alternatives to higher education. So far, based on the observation, the government efforts to reduce the demand for higher education have failed. Usually, when we increases one good's price and introduce its substitutes, the demand for this good should drop; however, in the higher education case, this does not work.

Higher education has its uniqueness that makes it impossible to be substituted. Education is a method to break class barriers; moreover, receiving higher educaation has more alternative career paths afterwards including achieving higher in the academic field. Moreover, even if anyone wants to switch to other fields, they can still do so after receiving higher education; however, the other way is relatively more difficult and requires greater efforts. In addition, the current system allows students to borrow student loans to pay their tuition fees, so the increase in the price may not have a very significant impact, especially they are only going to pay back their student loans once their incomes reach a certain level.

Overall, the increase in tuition fees does not create a significant cost increase and higher education is better than other alternatives.

Apple, Google and Facebook

Apple sees itself as a protector of its users’ privacy and blocks the applications which tend to collect users’ private information, including Facebook Research and Google’s Screenwise Meter. Google later announced that it started to work with Apple to protect users’ privacy. Such action could be seen as a compromise by Google. Both Facebook and Google run their businesses largely based on data collection, they use the data collected from their users and use the analysis to improve the effectiveness of their advertising in irder to gain more advertisement businesses. Is it possible for Facebook and Google to continue their previous activities and force Apple to withdraw its privacy protection ambition?

Well, this is possible but has greater potential risk. Although Apple’s iPhone sales were not very impressive, this is caused by more and more people are just using their iPhones for longer and do not upgrade their iPhones as frequently as previously. This means that there are still a significant number of iPhones users existing in the market. If Apple stops providing Google’s and Facebook’s services and applications, these two companies can face the risk of losing their market shares; of course, Apple also has similar risk. However, working with Apple may reduce the effectiveness of these two companies’ data Coll’s ration, but does not the risk of losing market shares. Moreover, though they may not be able to collect their users’ data effectively on iPhones, their users also use other devices other than Apple’s products, they can still effectively collect their users’ data from other devices. Moreover, without collecting very private information, these two companies already gain access to many very crucial data, including social networks and hobbies, which can ensure their positions in the advertising industry.

Overall, from all aspects, fighting with Apple on the privacy issue is not a wide. It will damage their companies’ images, and face potential risk of losing maker shares.