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Why Chicken Feet Matter to Business News

Friday, 18 Sep 2009 | 11:29 AM ET

A website followed by many in the cable news industry questions why Sue Herera and I were discussing the size of American chicken feet and chicken breasts at the end of Power Lunch yesterday.

And being a blog, it does so in a snarky way: “Don't ask, apparently that's an important business story.” Click here to read it.

Yes it is. And although we explained very clearly why it mattered as a business story, I’ll do it again for our general-media brethren who often fail to understand basic economics and business news.

The Chinese population loves chicken feet, and particularly American chicken feet, because they are plumper. Quite literally, the Chinese put their money where their mouths are, paying more for American chicken feet than any other country in the world.

How did American chicken feet get so plump and juicy? Because American chickens are bred to have large breasts, in order to satisfy Americans’ taste which favors white meat. A consequence of breeding chickens with big breasts is that they end up having big, plump feet as well. You can read the whole NY Times article here.

Now to the question at hand. Why does this matter to business? Because the same article makes the case that the Chinese obsession with American chicken feet could actually prevent a trade war.

President Obama recently slapped tariffs on Chinese tires. China responded by saying they might do the same to American auto-parts and poultry products. Here in the US, the whole episode sparked fears of a trade war. ALL AMERICANS SHOULD FEAR A TRADE WAR. Trade wars, and tariffs for that matter, make recession worse.

The Smoot-Hawley Tarriff Act, passed in 1930, increased tariffs on goods imported into the US by 50%. There isn’t an economist out there who doesn’t believe the Act exacerbated the depression turning it into the Great Depression. If you want to learn more about it and laugh at the same time, you can watch Ben Stein lecture about it in Ferris Bueller’s Day Off here.

But the Chinese love of American chicken feet may be a key reason why the Chinese may be willing to do more negotiation on the matter. The Chinese government is keenly aware of the need to keep their population happy as they try to grow their economy and eliminate poverty.

What I love more about the story than anything else, is how it highlights the crucial role of consumer choice in business and finance. It is those very details which make business news so exciting and interesting.

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