As H1N1 swine flu continues to worry China's leaders — who are rolling out a nationwide vaccine program — its people seek a more traditional remedy. Just as some Chinese turned to turnips to prevent the SARS virus in 2003, garlic has emerged as a swine flu fighter in 2009.Garlic prices have jumped so high in China that the crop has outperformed gold and stocks to be the country's best performing asset this year.Unlike some Chinese business booms, the garlic surge might help American businesses, at least in the short term. Garlic growers in the USA have long complained about their Chinese competition"Chinese garlic's major price bump is a boon for California growers looking to recoup business that has been lost to cheaper Chinese garlic," reads a blog post on the site of a major California grower.
This article relates to a few of Mankiw's Principles. First, it relates to principle five: "Trade can make everyone better off." Chinese garlic merchants, American garlic merchants, and garlic speculators in China are just a few examples of people who are benefiting from the spike in garlic prices. Because the price is increasing so much merchants are experiencing massive increases in revenue and profit, and therefore they will have more money to spend on other goods/services in the private sector.
It also relates to "people respond to incentives." In this case the incentive is false--that garlic is a remedy for the H1N1 virus--but people still respond to it as if it was true. This partly has to do with a lack of knowledge by Chinese consumers; one person states that "garlic kills bacteria, and [he] eat[s] at least half a bulb each day," but H1N1 is a virus, so garlic's alleged antibiotic properties would be useless in combating the virus. Regardless, people are purchasing garlic in higher numbers because they believe that the marginal cost--about 55 cents a pound in China--is worth the marginal benefits--safety and health.
I agree with the two connections to Mankiw's principles. It also amazes me how gullible some people can be when it comes to things such as H1N1.
ReplyDeleteI think such things happen a lot. When one product is in great demand, the price of it soars dramatically and those garlic sellers kind of take the predominant place in the market. And I believe it is the result of people's respond to incentives too.
ReplyDeleteWow, I was surprised to read this. I'd never have thought that garlic, of all things, is considered to be the H1N1 rememdy. I totally agree that this article demonstrates the principle that 'people respond to incentives.' I wonder why it is that garlic is thought to prevent the virus?
ReplyDeleteThis garlic story made me think about the conversation I had with my roomie like 2 days ago. We talked about some of the prices of those things, for defending H1N1, are kinda of rised.
ReplyDeleteit might relates to "people respond to incentives."
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The rise in the price of garlic seems to show that the prices of certain goods are sometimes far more expensive than what much of the world is willing to pay for. This story is a good example of the relative values people place on items. It goes back to the old saying, "One man's trash is another man's treasure." Although the Chinese are the only nation in which Garlic is being purchased in great amounts, the rise in prices throughout the world and the profits being gained by sellers of garlic in other countries shows just how connected world economies have become. A
ReplyDeleteI can understand why people would respond the way they have to this possible H1N1 cure. The incentive of staying healthy and possibly even staying alive is strong enough for people to try and buy anything that has been said to work. Having facts that help back up this possibility of a cure also helps the cause.
ReplyDeleteAs the old saying goes, "an ounce of prevention is worth a pound of cure." Even if garlic probably has no preventitive properties whatsoever when it comes to H1N1, it's understandable that people might jump on the small chance that it does. Even if the price of garlic is rising, it would be better to get it and hopefully prevent H1N1 than to "risk" the chance of getting H1N1 and having to deal with it. I can't help but wonder where exactly the idea of garlic preventing the flu came from, though. A
ReplyDeleteI agree that it is amazing how prices can change dramatically because of supply and demand but garlic does have tremendous medicinal value. I do not agree with the points made earlier that the Chinese are ignorant about H1N1 cure. For many people esp. in the rural areas, herbal medicines are their only remedies. In this case, garlic has been proven to help prevent the common cold, flu and the cough. Based on experience, I have used garlic medicine to treat the common cold and it is much more effective than some of the tablets and other manufactured cold treatments. I know that the cold is different from the H1N1 but... Who knows... maybe there is some properties of garlic that may help to prevent H1N1 too. Are there any researches that refutes the Chinese' view about garlic? Plants have countless answers to many of today's health problems.
ReplyDeleteI think the incentive for people believeing in garlic and willing to purchase it at such a high price is the reason why garlic prices have soared. The money to them is worth their health even though the prices are high.
ReplyDeleteThis really shows how connected the world market is, even for something like garlic. Since prices and demand have increased in China, Chinese growers are no longer selling at cheap prices here in the USA. This gives American garlic growers a change to reclaim some of the market.
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I agree with Caleb that this is certainly going to help American garlic growers. I also feel as though people are responding to the incentive that garlic will help them fight the H1N1 virus in a rational way. It's like the belief that chicken noodle soup will help fight a cold. A E
ReplyDeleteGreat example of supply and demand chain and scarcity!
ReplyDeleteI find it amazing how the entire world jumped to try and contain H1N1 as much as possible, as quickly as possible. I believe that, at the end of the day, it's just another strain of the flu.
ReplyDeleteThe name explains its cure or remedy: a virus. It is strange how sometimes, the solution is right in front of us, and somehow we seem to ignore or not see it. Garlic seemed to be the most tangible way of dealing with H1N1, so it was easy for people to jump to conclusions, even though they were not accurate or helpful.
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Well, this doesn't support the idea of people being all that rational, but it certainly supports the idea of incentives.
ReplyDeleteI agree with Caleb and Nick on the issue of it being good for American merchants. I feel however that where folklore remedies fall short, the Chinese government makes up for by controlling immigration and trade strictly, which in actuality has helped the Chinese population, although it is frowned upon by other nations in regards to human rights violations and so on.
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