Where are we going? To the new incentives that regulations create.
A Scotch egg can be hard or soft boiled, baked or deep-fried, surrounded by bread crumbs or a slice of sausage. Sort of like grabbing a sandwich before boarding a plane, the Scotch egg was created for 18th century coach travelers.
Suddenly now, after years of neglect, it has hit the headlines. The resurgence of the Scotch egg has been caused by coronavirus rules. After ending its lockdown, the U.K. mandated a series of Tier 2 restrictions on bars that could have prevented mass re-openings. Instead bar owners realized that by serving a meal with a drink, they could be in business again. The reasoning from regulators was that the food minimized drunkenness. When people were less tipsy, they were more likely to wear masks and social distance. But the meal had to be “substantial.”
The question though is whether a Scotch egg is sufficiently substantial. Most agree that fish and chips are a meal whereas a “packet of prawn cocktail crisps” is not. Because bars needed a meal that could be served without a kitchen, the Scotch egg idea was hatched and subsequently debated.
Displaying its complexity, a British politician sidesteps the Scotch egg issue:
Like coronavirus restrictions, tariffs also create incentives. For Apple, with new U.S. import taxes and regulatory constraints on Chinese-made electronics and components, Vietnam became more attractive. So Apple asked Foxconn, its China-based iPad and MacBook manufacturer, to open a plant in Vietnam’s Bac Giang province. Satisfying what 24 (or so) industrial parks will need, a six-lane thoroughfare will replace the one lane road that supported a rural region.
Because of regulatory incentives, U.S. imports from Vietnam have ascended:
Our Bottom Line: Regulatory Incentives
Whether looking at healthcare, trade or countless other activities, government regulations create incentives that have consequences. Like enabling bar crowds, the consequences could be unintended. Or, they could intentionally encourage supplychain diversification.
The one sure thing is that regulations will redirect the market’s invisible hand and connect eggs to Apples.