Hello, and welcome to today’s book discussion. The book we’re going to explore is titled The Economics of Good Eating.
The author of this book is Zhang Xiaozhun, a British-Korean economist. Zhang Xiaozhun is a heavyweight figure in the field of development economics. He taught economics at the University of Cambridge for over 30 years and is currently a professor at the School of Oriental and African Studies (SOAS) at the University of London. His renowned work, which we previously discussed, is The Trap of Rich Nations, and we will touch on some of its content later. He has received numerous international academic awards for that book, and its insights have profoundly influenced notable Chinese economist Lin Yifu, who has frequently cited The Trap of Rich Nations in his representative work The Search for Prosperity. In addition to The Trap of Rich Nations, Zhang Xiaozhun has also written other well-received books like Economics for Everyone and The Truth of Capitalism.
Besides being a globally renowned development economist, Zhang Xiaozhun has another side: he is a food enthusiast who has savored cuisines from around the world. Through his exploration of both food and economics, he discovered that a meal, though seemingly inconspicuous, often provides insight into the rise and fall of enterprises, nations, and economies, revealing intricate connections between them. Thus, the English subtitle of this book is “A Hungry Economist Explains the World.”
This subtitle is quite fitting. When we look at the table of contents, we find it filled with food items: acorns, coconuts, anchovies, shrimp, noodles, beef, bananas, cola, rye, chicken, chili, strawberries, chocolate… Each chapter is titled after a specific food item, without a single extra word. Additionally, the content of each chapter vividly conveys Zhang Xiaozhun’s “hunger.” A friendly reminder: if you’re genuinely hungry, it’s best not to open this book. Zhang Xiaozhun often describes the colors, aromas, and flavors of various dishes, as well as the cooking processes, in such a captivating manner. One could say that this is the most delectable economics book I have read, leaving me both intrigued and hungry.
What role do these foods play in the book? In Zhang Xiaozhun’s words, they are “bait.” As we immerse ourselves in the delightful reading experience brought by food, we unknowingly get drawn into serious economic topics, much like frogs in warm water. Often, when you come back to your senses, you find yourself reading about industrial layout, limited liability systems, the impact of automation on employment, the protection of infant industries, trade fairness, and other topics you might usually have no interest in.
Furthermore, you can never predict the direction of each chapter. For example, in the chapter titled after anchovies, it begins with an introduction to the various cooking methods for anchovies around the world, making one’s mouth water. Then, the narrative takes a turn—“Besides offering different flavors, anchovies also brought abundant wealth.” You might think the next topic will be about seafood exports, but it’s not. Indeed, anchovies are at the root of Peru’s economic prosperity, but Peru does not export anchovies; instead, it exports guano (bird droppings), which is used to make gunpowder and fertilizers. These birds primarily feed on anchovies. However, the story doesn’t end there. This chapter ultimately aims to convey that Peru’s guano prosperity didn’t last long, as in 1909, a German scientist discovered a method to produce artificial fertilizers using just air. Historically, there have been many similar instances where technological innovations destroyed the economies of major commodity-exporting countries. Only at this point does the true protagonist of the chapter come into play.
Such intertwining of economic phenomena and food puzzles makes the reading of this book enjoyable. While reading, I often like to guess what Zhang Xiaozhun will discuss next after looking at the chapter title and introduction, but I always find it difficult to predict. Interested readers might want to challenge themselves in this way.
Now, let’s follow Zhang Xiaozhun’s “food bait” to explore some stories about enterprises, nations, and the future.
Let’s start by talking about the story of a company. This story begins with noodles.
Zhang Hanjun, who grew up in South Korea, first poked fun at Koreans’ love for noodles. According to statistics from the World Instant Noodle Association, South Koreans consume the most instant noodles per capita in the world, averaging nearly 80 servings per person each year. And that’s just instant noodles; South Korea has many other types of noodles—soft, hard, thick, thin, made from various raw materials.
Zhang Hanjun joked that just as Koreans turn all vegetables into kimchi, they can turn almost any carbohydrate-rich plant into noodles—sweet potatoes, potatoes, cassava, acorns, sweet corn, rice, barley, and so on.
However, when it comes to shape, Korean noodles aren’t that diverse; they basically come in two forms: strands or sheets. So, when Zhang Hanjun traveled to Italy for the first time in the late 1980s, he was astonished to find that pasta came in so many shapes. There are tubular, ring-shaped, spiral, butterfly, ear-shaped, shell-shaped, rice-shaped, dumpling-shaped noodles, and many more indescribable shapes like wagon wheels, olive leaves, spinning tops, and even radiator shapes. In total, there are over 200 shapes of pasta.
Moreover, Italians are obsessed with designing even more innovative pasta shapes. In the 1980s, a renowned industrial designer, Giotto Giugiaro, was commissioned by a high-end pasta brand to design a beautiful, even somewhat futuristic noodle—wavy tubular pasta that reportedly retains sauce well without soaking it up excessively. The advertisement even claimed it was decorative and “architectural.”
Unfortunately, although this pasta was eye-catching, sales were dismal. It was difficult to cook evenly, which was a cardinal sin for Italians obsessed with pasta texture.
However, Giugiaro, who designed this unsuccessful pasta, didn’t take the failure to heart, because his main career wasn’t in pasta design—he was one of the most successful car designers in the world over the past half-century. Most people don’t know that this superstar designer from the pasta-loving country of Italy had early designs for a car called “Pony.”
Who commissioned the design of this car? It was the very company from the aforementioned noodle-crazy country, South Korea. The Pony was launched by South Korea’s Hyundai Motor Company in 1975. At that time, of course, Hyundai was still completely unknown.
Surprised, right? This story that begins with noodles actually centers around a car company. There’s such a hidden connection between Italy and South Korea, two countries obsessed with noodles.
So, how did the Pony car designed by this Italian designer fare in sales?
Very poorly. After its design, Hyundai received almost no overseas orders in its first year of production. Later, Ecuador bought five cars, which brought joy to the Koreans. At that time, South Korea’s exports were mainly cheap labor products, like wigs, clothes, and toys. These five cars signified that foreigners were actually willing to buy cars from South Korea.
Despite the poor start, Hyundai Motor experienced astonishing growth in the following years. By the turn of the 21st century, it had become one of the world’s top ten automakers. By 2009, Hyundai’s production surpassed Ford, and in 2015, it overtook General Motors.
This is an incredible story. If someone were to take a time machine back to 1976 and visit the impoverished developing country of South Korea, and tell the people that their country’s completely unknown auto repair shop would one day produce more cars than General Motors, they would certainly think that person was insane.
So, why did this incredible story happen? Free-market economists would argue that it was due to Hyundai having visionary entrepreneurs and capable employees.
Of course, we cannot deny the existence of these factors. However, Zhang Hanjun believes that if we look more closely, we will find that Hyundai’s success was primarily due to government support.
Before 1988, the South Korean government banned the import of all cars and, until 1998, prohibited the import of Japanese cars. This created space for Hyundai and other domestic automakers to grow. The logic behind this policy is what you might have heard of as “infant industry protection.”
The so-called “infant industry” refers to a newly emerging, strategic industry in a country that cannot withstand foreign competition during its initial stages. If appropriate protective policies can be implemented during this period, it may allow the industry to gradually grow and become competitive on the international stage, contributing to national economic development.
Returning to South Korea, in addition to the import restrictions mentioned earlier, until the early 1990s, South Korea ensured that Hyundai and other strategic high-tech companies could access high-subsidy credit. Without these protections, South Korean automakers would not have been able to survive and develop. Of course, South Korean consumers also made sacrifices, enduring subpar domestic cars for decades without being able to drive imported ones.
In addition to Hyundai Motor, many other South Korean companies achieved success in similar ways, such as the well-known Samsung and LG. Samsung originally engaged in sugar refining and textiles before becoming a world-leading semiconductor and mobile phone manufacturer. LG started selling cosmetics and toothpaste, later becoming a top player in the global display market. Many similar examples exist in other countries, such as Toyota and Mitsubishi in Japan, and Nokia in Finland. The transformation and growth of these companies relied not only on the personal brilliance of entrepreneurs and the companies’ efforts but also on the crucial support from the government and sacrifices from domestic consumers.
If you have listened to the interpretations of Zhang Hanjun’s book “Kicking Away the Ladder,” you will know that such infant industry protection is not merely a catch-up strategy for latecomer countries. Developed countries like the UK and the US, which developed first, did not achieve industrialization and economic takeoff through the small government, laissez-faire industrial policies, and free trade they claim. On the contrary, it was through strong government promotion of infant industry protection, including high tariffs, industrial support, direct subsidies, and even direct involvement of national teams. Only after they firmly established their industrial advantages did they fully implement a free trade system.
For example, the UK was actually the first to practice infant industry protection. Until 1860, it used high tariffs, industrial support, and colonial pressure to protect its manufacturing industry. However, in 1860, it made a complete turnaround, significantly reducing tariffs and opening its doors to the free flow of foreign goods, forcing free trade policies with military might, and not allowing latecomer countries to use high tariffs to protect their industries. By this time, the UK had already established its industrial dominance, and trade protection no longer served its interests; only free trade could maximize its benefits.
Now let’s talk about the US. The first person to propose the theory of infant industry protection was an American—politician Alexander Hamilton. The US is also a master of infant industry protection. In the 19th and early 20th centuries, it protected its nascent companies from foreign competition, especially from the superior producers in Britain. After World War II, the US government invested heavily in developing foundational technologies for the information age, including computers, semiconductors, the internet, GPS systems, and touchscreens. These technologies were initially developed through the Pentagon and the US military’s “Defense Research Program.” Without these technologies, there would be no IBM, no Intel, no Apple, and no Silicon Valley.
Thus, the story we’ve narrated, starting with noodles and intertwining two noodle-obsessed countries, South Korea and Italy, reveals that in modern economies, entrepreneurship—whether it’s in starting companies or industries—is not merely an individual act but a collective effort. Moreover, in this effort, one should not place too much faith in the narratives promoted by early adopters. As the 19th-century German economist Friedrich List said, “After a person reaches the summit, a common clever act is to kick away the ladder they used to climb, so that others cannot follow.”
This is also why Zhang Hanjun’s book, “Kicking Away the Ladder,” conveys this notion. In today’s book, he extends the stories from “Kicking Away the Ladder” further in time and space.
Next, let’s start a story about a country from the perspective of chocolate.
Zhang Xiazhun admits that he is a “junkie” when it comes to chocolate. From the time he was a child who could barely walk, he was already addicted to this “illegal substance.” Why is it called an illegal substance? Because, at that time, chocolate was only available on the black market in South Korea, smuggled out from American military bases.
In South Korea back then, aside from machinery and raw materials directly needed for national industrialization, the import of other foreign goods was prohibited, including passenger cars, televisions, biscuits, chocolate, and even bananas. As a result, some people engaged in smuggling small commodities.
Among these small goods, one of the most popular products was chocolate, primarily M&M’s and Hershey’s Milk Chocolate bars. M&M’s were the young Zhang Xiazhun’s favorite. From that time onward, he said he spent 60 years battling his desires but always succumbed to the aroma of chocolate.
In his book, he can describe various types of chocolate in detail, from exquisite chocolate treats from high-end manufacturers to ordinary, practical chocolate bars, as well as nut chocolates, chocolate brownies, lava cakes, and so on—all of which he loves.
We know that chocolate is made from the seeds of the cacao tree and originated in Central America. In the 16th century, the Spanish brought chocolate back to their country after conquering the Aztec Empire, marking chocolate’s first appearance in Europe. At that time, people consumed chocolate mainly as a beverage, in a thick sauce-like form. It wasn’t until the mid-19th century that chocolate was made solid.
However, the chocolate of that time was not the delicious milk chocolate we commonly find today, but dark chocolate. Many attempts were made to add milk to chocolate, but they all failed because liquid milk led to mold growth. How was this problem eventually solved? It wasn’t until 1875 that two Swiss men abandoned the use of fresh milk and instead used milk powder to produce the first batches of milk chocolate bars. These two individuals later teamed up with others to establish what we now know as the food giant Nestlé. A few years later, another Swiss company, Lindt, invented a refining process that improved the texture and taste of chocolate through long-term mixing of ingredients, making Switzerland synonymous with high-quality chocolate.
Now, here comes the main character of this part: Switzerland.
When many people think of Swiss products, they typically think of chocolate or expensive watches. Consequently, Switzerland is commonly perceived as a country reliant on the service industry rather than manufacturing. Many attribute the concept of “post-industrial era” to Switzerland, considering it a model of “post-industrial” economy, with its prosperity based on services such as finance and high-end tourism, rather than manufacturing.
This narrative of the post-industrial era originated in the 1970s. The premise of this narrative is that as people become wealthier, their needs change, leading them to desire better and more refined products. Once people’s basic needs are met, they will seek more everyday items like clothing and furniture. After those needs are satisfied, they will turn to more complex consumer goods like electronics and cars, which represents the process of industrialization. When people have more industrial goods, they will seek more services, such as dining out, watching movies, attending musicals, traveling, and financial services. Thus, the service industry replaces manufacturing as the dominant economic sector, marking the advent of the post-industrial era.
This perspective gained traction in the 1990s, as almost all affluent economies experienced a decline in the importance of manufacturing and an increase in the importance of services. This trend was reflected not only in output share but also in employment share. Many scholars refer to this process as “deindustrialization.” Supporters of the post-industrial narrative argue that manufacturing has become something low-tech, low-wage countries do, while affluent nations should focus on high-end services such as finance, IT services, and business consulting.
Proponents of this post-industrial narrative particularly like to use Switzerland and Singapore as evidence, claiming that countries can maintain a high standard of living solely through service industries. Under the influence of this perspective, some developing countries, like Indonesia and Rwanda, have attempted to bypass industrialization by exclusively exporting high-end services to grow their economies.
But is the post-industrial narrative correct? Zhang Xiazhun disagrees. He warns us that those who use Switzerland and Singapore as examples of service economies are fundamentally mistaken, much like using Nordic countries to promote sun-and-beach vacations.
Why is this wrong? Because Switzerland and Singapore are actually the first and second highest industrialized economies in the world—their per capita manufacturing output ranks at the top globally.
So why do we perceive fewer Swiss or Singaporean manufactured products? Much of this is due to the small size of these countries, resulting in low total output. Additionally, much of their manufactured goods consist of machinery, precision equipment, and industrial chemicals, which are not typically encountered by ordinary consumers.
This means that the classic examples favored by post-industrial advocates are incorrect. But are their viewpoints wrong? Zhang Xiazhun also disagrees. He argues that the proponents of the post-industrial narrative claim that the shift in economic structure from heavy agriculture to heavy manufacturing and then to heavy services is driven by changing consumer demands. Zhang Xiazhun contends that this change is primarily driven by shifts in productivity rather than demand. His reasoning is as follows.
When discussing changes in economic structure, we often observe indicators like employment and output shifts. So why is there an increasing proportion of people employed in the service industry? It is because, due to changes in productivity, the manufacturing process has become increasingly mechanized, reducing the need for workers. Regarding output, why has the share of manufacturing output declined while the share of service output increased? This isn’t because, as proponents of the post-industrial narrative suggest, people’s demand for services has surged, but rather because manufactured goods have become cheaper compared to services. Consider items like computers, smartphones, and household appliances—haven’t they become more affordable and accessible over the past few decades? In contrast, prices for basic services like haircuts and dining out, or high-end services like consulting or finance, have mostly increased.
According to Zhang Xiazhun’s research, if we account for these relative price changes, the share of manufacturing in the national output of most wealthy countries has only slightly decreased over the past few decades; in some countries, it has even increased, like Switzerland, Sweden, and Finland.
Moreover, manufacturing continues to be a primary source of technological innovation even today. Even in countries like the United States and the United Kingdom, where manufacturing accounts for only about 10% of economic output, 60% to 70% of research and development is conducted by the manufacturing sector. In more manufacturing-focused economies, such as Germany or South Korea, this proportion can reach 80% to 90%.
So, why does Zhang Xiazhun take the time to refute the post-industrial narrative? Because an over-reliance on this narrative can harm a country.
For example, he believes that the United States and the United Kingdom have been negatively affected by this narrative. Since the 1980s, especially in the UK, there has been a persistent neglect of manufacturing, with a belief that the decline of manufacturing was a positive signal indicating a transition from an industrial to a “post-industrial” economy. This perspective has also provided policymakers with a convenient excuse to avoid taking action on the decline of manufacturing.
So, where has the neglect of manufacturing led the UK and the US? Zhang Xiazhun argues that in recent decades, their economies have been driven by an over-expansion of the financial sector, ultimately collapsing during the 2008 global financial crisis. Since then, the so-called gradual recovery has merely relied on unprecedented low interest rates and central bank-led quantitative easing policies. These measures have further detached the financial markets in the UK and the US from the real economy. A popular saying in the United States recently has been: “Wall Street has nothing to do with Main Street.” Here, “Main Street” refers to the main commercial street and symbolizes the American middle class.
In summary, this economic story that begins with chocolate aims to convey Zhang Xiazhun’s message: Even if the only “Swiss-made” product you’ve ever purchased is chocolate, don’t be misled by this surface-level impression into believing that Switzerland’s manufacturing sector is weak. The secret to Switzerland’s success lies precisely in its strong manufacturing industry, not what we typically think of as banking and high-end tourism. Within the post-industrial narrative, Switzerland has been misrepresented as a model. At best, it’s misleading; at worst, it could harm the real economy. If we believe in the post-industrial narrative, we must be prepared to bear the risks.
Now, let’s talk about Zhang Xiaozhun’s views on the future, starting with a strawberry.
Strawberries are often mistakenly classified as “berries,” but they should actually be classified as “aggregate fruits.” People use strawberries to make all sorts of beautiful desserts, like cakes and pies. Many people also enjoy eating strawberry jam. Zhang Xiaozhun’s favorite way to eat strawberry jam is by spreading it on scones and adding some cream.
Today, strawberries are easily accessible and abundantly supplied. However, the supply of so many fresh strawberries requires a significant amount of human labor.
Strawberries are a labor-intensive crop. Especially during harvest, they are often hidden among the leaves and sometimes deeply buried, requiring time to find them; they are also very soft, necessitating careful handling during picking.
Many wealthy countries hire cheap immigrant labor to reduce the high labor costs associated with strawberry harvesting. For instance, in California, the largest agricultural state in the U.S., the cheap labor for strawberry fields mainly comes from Mexico. Mexican immigrant workers refer to strawberries as “the devil’s fruit” because picking strawberries is one of the lowest-paying and most labor-intensive agricultural jobs in California. The plants are very low, so you have to keep bending down to pick them for 10 to 12 hours a day, which can lead to extreme physical pain or even disability. Moreover, the wages for these workers are low, the working conditions are harsh, and many face mistreatment.
To many, this might not seem like something that happens in an era of highly mechanized agriculture. However, the truth is that, so far, strawberry picking has remained the opposite of mechanization. This is because harvesting strawberries requires personalized judgment; not only do you need to locate where the fruits are hidden, but you also need to determine if they are ripe enough for picking. Furthermore, this task is very delicate; as mentioned earlier, a careless move can easily damage the fruit. Thus, some have called strawberry picking the “last frontier” in overcoming agricultural automation.
However, changes are occurring in this last frontier. At the time Zhang Xiaozhun was writing this book, some companies were already developing robotic harvesters capable of locating and assessing the ripeness of strawberries, allowing them to pick without damaging the fruit. Although these robots cannot yet fully replace humans, they are continually improving, and we may soon see strawberries, raspberries, tomatoes, and lettuce—fruits and vegetables that are difficult to harvest—picked by robots.
But this also means that the jobs of pickers are under threat from automation.
Yes, this is the story initiated by strawberries, with its true protagonist being automation. Zhang Xiaozhun places the recent AI wave within the broader historical context of automation.
We know that the advancements in AI technology in recent years have intensified people’s fears about future unemployment. Many experts and scholars have already shared their views on this topic. Zhang Xiaozhun’s perspective is not particularly groundbreaking, but it is worth listening to, as it offers some comfort.
Zhang Xiaozhun first offers a somewhat sharp critique of the media’s recent portrayal of automation anxiety. He poses a question: For at least the past two and a half centuries, the continuous development of automation has indeed led to job losses. But why has this anxiety suddenly been exaggerated and discussed so extensively by journalists, economists, and business commentators in recent years?
Zhang Xiaozhun senses a whiff of “hypocrisy” in this situation. When the critic class believed their jobs were not impacted by automation, they could easily condemn blue-collar workers resisting technology and label them “Luddites.” The Luddites were British textile workers in the early 19th century who led the movement to smash textile machines. Back then, critics thought such actions hindered social progress. However, now that automation has begun to affect the white-collar jobs held by these critics and their friends—jobs in journalism, medicine, law, accounting, finance, education, and so on—they have begun to panic and spread fear in the dominant narrative.
However, Zhang Xiaozhun believes we should not be overwhelmed by this panic. Looking at the data, one can see that although automation has accompanied us for the past 250 years, from looms to computers, we have not witnessed large-scale destruction of jobs. This is also Zhang Xiaozhun’s prediction for the future.
Firstly, the time it takes for a technology to go from invention to widespread replacement of human laborers far exceeds our imagination.
For instance, the world’s first washing machine was invented in 1858, causing many laundry workers to worry about losing their jobs. But in reality, the number of laundry workers in the U.S. continued to rise for the next 50 years. Why? The technology was not mature enough and was expensive. It wasn’t until the 1920s that washing machines became widespread, and the number of laundry workers began to decline.
Moreover, even when automation technology becomes widespread and reduces labor demand per unit of output, it is also possible that automation will lower the cost of products, thereby increasing demand for those products and consequently increasing labor demand. For example, research shows that 19th-century automation in the U.S. reduced the labor needed for cotton fabric production by 98%, yet the number of textile workers did not decrease as much; in fact, it increased fourfold. The reason was that as the price of cotton fabric decreased, the demand for it surged significantly.
Additionally, automation does not merely destroy some jobs; it also creates jobs. For instance, while robots may replace human strawberry pickers, they will also generate demand for robotic engineers, as well as workers involved in manufacturing robots and their components. Automation can also lead to indirect job opportunities. For example, the advent of computers and the internet may have eliminated many travel agency jobs as people started booking trips online, but it also created numerous other jobs in the tourism industry, such as employees working for companies like Trip.com or in the online rental business, and so on. Finally, advancements in automation signify increased productivity, which in turn raises per capita income, leading to heightened demand for new goods and services. Consequently, new job opportunities will emerge to meet people’s diverse and higher living needs.
Zhang Xiaozhun believes that all these forces will influence employment in different ways, acting in unpredictable manners, and will continue to exert their effects over a long period.
Therefore, the story initiated by strawberries aims to tell us: Just as strawberries are often mistakenly classified as “berries,” automation is frequently viewed as a destroyer of jobs, but it is not. Throughout the ongoing automation process over the past 250 years, the overall trend has been continuous progress in productivity, with various new job roles constantly emerging, while most people in society are still able to find work. This fact indicates that, so far, the overall impact of automation on jobs has not been negative. Only by considering such historical facts can we overcome the “technological phobia” or hopelessness that is beginning to trouble the world.
Alright, that’s it for today’s discussion on “Delicious Economics.” In addition to what we talked about today, the book also mentions other foods and the economic stories behind them. For instance, okra and the rise of capitalist America, who benefits from the free trade of beef, the alliance between rye and steel that created the first welfare state, and more. Interested friends can click on the e-book link at the end of the transcript for further reading.
Finally, I find a particularly interesting part of the book is Zhang Xiaozhun’s suggestion that, as someone who enjoys studying the economics of food, anyone interested in economics can also follow some dietary recommendations to fully enjoy the flavor and nourishment of economics:
First, a diverse diet is important. For the same economic issue, it’s best to understand multiple economic schools of thought or at least the different perspectives of several economists. This is similar to eating a rich and varied diet, allowing for a more balanced and healthy intake of nutrients.
Second, one should maintain an open attitude towards trying new things. Even if you already have a favorite or supported economic theory, you should keep an open mind and enthusiasm for learning about other economic theories. Just as the British once clung to their traditional diets, they found that life could be better when they embraced the cuisines of other countries.
Third, one should carefully examine the factual basis behind an economic viewpoint before accepting it, just as one checks cooking ingredients before cooking. Because if a given economic analysis uses false facts or biased statements about reality, it will certainly not yield meaningful results. As the saying goes: “Garbage in, garbage out.”
Fourth, one should dare to use their imagination and form their own economic insights, just like those who challenge traditional cuisines and cooking practices—this is what makes a good chef. This advice applies not only to economists but also to everyone concerned with economic operations. In fact, anyone can engage in imaginative cooking in economics, as long as we are willing.
Alright, that’s it for today’s discussion of this book.
