Tim Worstall

Chinese Lead Toys

Melanie McDonagh asks:

Do we buy Chinese toys for next to nothing knowing that
Chinese workers are paid a pittance to produce them?

Yes. Chinese manufacturing wages have been rising 14% year on year for the past decade. It is precisely our buying toys and the like which has lead to such wages more than tripling in that short period of time.

This has been another edition of simple answers to simple questions.

(BTW, my maths is seriously terrible. What is a 14% rise each year as a total figure over 10 years?)

In

10 responses

  1. Chris Harper Avatar
    Chris Harper

    1.14^10 = 3.707221
    ie 3.7 times the original value.
    Are you serious? Are you really admitting you are innumerate?
    Tim adds: Sufficiently innumerate that at this early hour I couldn’t work out how to make a calculator do it (without actually entering 1.14×1.14×1.14 etc)

    Reply
  2. dearieme Avatar
    dearieme

    Lost your log tables, Tim?

    Reply
  3. Jasmin Kemm Avatar
    Jasmin Kemm

    Although it’s not safe to put oneself in another’s position on all matters, this one’s easy. I would rather be earning a pittance than nothing at all.
    Again, if the lead paint problem persists, market forces will deal with it.
    An odd sort of article for the Times, I thought.

    Reply
  4. gene berman Avatar
    gene berman

    Tim:
    Hadn’t you heard about the three constipated mathematicians?
    One used his slide rule.
    The second used pencil and paper.
    The last worked it out with logs.

    Reply
  5. Mark Wadsworth Avatar
    Mark Wadsworth

    Tim, for rough calculations of teh effect of compouding, use “The Rule of 70”.
    For example, if something increases at 14% a year, it doubles after five years (70 divided by 14 is 5). So after ten years it’s quadrupled (give or take).
    If something increases at 6% a year, then it will double after 11 or 12 years (70 divided by 6 is 11 and two-thirds).
    And so on.
    (You can do check this on a spreadsheet, it is surprisingly accurate)
    Tim adds: Ah…spreadsheets. Definitely something I don’t know how to use.

    Reply
  6. Philip Thomas Avatar
    Philip Thomas

    Cheers for the tip, Mark, should help ease on brainstrain.

    Reply
  7. Recusant Avatar
    Recusant

    Mark
    Quite right, that is by far the easiest way of working these things out, although one must remember, of course, that the actual figure is 71.3.
    Pedantic as well as recusant, that’s me.

    Reply
  8. Mark Wadsworth Avatar
    Mark Wadsworth

    Recusant, wrong, the number of periods it takes to double for an interest rate of X is of course not as simple as “70 ÷ X”, it is actually log(2)÷log(1+X).
    But if you can do that in your head your can probably work out compound interest in your head.
    If you want to be a bit more sophisticated, you can use higher figures than “70” for higher interest rates, as a slightly less rough guide:
    1% – 16% interest – use 70
    17% – 48% interest – use 80
    49% to 92% interest – use 90
    92% to 100% interest – use 100

    Reply
  9. Tom Fuller Avatar
    Tom Fuller

    As a CAGR, 14.87% produces doubling every 5 years. There are a good dozen calculators on the web: http://www.investopedia.com/calculator/CAGR.aspx is one.

    Reply
  10. x-ray fluorescence Avatar
    x-ray fluorescence

    Hi,
    it’s not safe to put oneself in another’s position on all matters, this one’s easy.
    If the lead paint problem persists, market forces will deal with it.

    Reply

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