CommentsVOICES - Drama, drama! There’s a shortage of toilet paper, of lumber, of second-hand cars.
Blame Biden! Blame the vaccine mandates! Blame the Chinese government!
Too many headlines, not enough understanding.
The Supply Chain
Supply chains are just as they sound – links of steps to bring a product from the natural resource(s) to your use. Simple example: you cut down a tree, chop it up and put the wood to burn in your fireplace.
A step more complicated: you dig a garden, plant tomato seeds, weed and water, and some months later you pick a fresh tomato.
Or you can go to the store and buy one.
But look at how the supply chain is now elongated by sourcing the tomatoes, negotiating with the growers who also have to negotiate with the workers, provide healthcare, repair machinery, outsource packing to an operator who purchases boxes, hires other workers, etc..
And then there is transport – more workers and ancillary costs) – refrigeration and various government-mandated health reports.
Your local grocery then has to display the tomatoes, dispose of damaged ones, have sufficient clerks to help shoppers and take their money, bank it, pay their workers, store lease and maintenance, insurance, etc. and more etc..
And that is just for you to buy a tomato.
Modern Times, Charlie Chaplin’s diatribe against the efficiencies of industrialization, demonstrates the dangers of interlocking systems. That was 85 years ago.
Today, we are no longer talking about one factory but interlocking multitudes of them spread over six continents linked by boats and planes, trucks and trains.
At issue is the supply chain’s length, its complexity, its reliance on subsistence-wage workers who are not returning to jobs after the pandemic, soaring energy prices China shutting down factories, and the dependence on cheap labor in countries that don’t have the vaccine.
The Pandemic
When the pandemic hit, companies cut back production to reduce costs, especially for discretionary goods that people would likely not purchase during a time of uncertainty. That included big-ticket items such as trucks and refrigerators which have disproportionately complex supply chains.
Projects were cancelled, rental businesses disposed of temporarily unneeded assets and, wherever they could, employers laid people off.
Shutdowns impacted shipping and storage along the supply routes.
Individuals stockpiled certain goods.
And the reaction was not a braking of the economy, but a train wreck with whole sectors of the supply chain broken.
Repairs would not be easy and each would be dependent on other supply chains that were similarly out-of-whack.
When pandemic relief and the Recovery Act money primed the economic pump, these actions had to be reversed. At the same time and quickly.
American capitalism has gloriously relied on the forces of supply and demand. Now that demand is returning post-pandemic, companies face a hodge-podge of shortages.
They can wait and lose their share of the money sloshing around the system, or they can pay more and pass those costs along to the consumer.
Market Manipulation
All this is further magnified due to political engineering by individuals and companies to artificially raise prices and generate higher profits.
This used to be considered a smart business move by the plutocracy called “cornering the market” with the “Robber Barons” of the late 1800s and their corporations entering into often quasi-(if not entirely) illegal, “trust” agreements or consolidations to exercise exclusive control over a specific product or industry.
This mentality is epitomized in the board game Monopoly where the sole goal is to drive other players into bankruptcy.
The Sherman Antitrust Act of 1890 (and as amended by the Clayton Act in 1914) is a federal statute that was enacted to prohibit such activities, specifically those that restrict competition in the marketplace including price-fixing, simultaneous actions that adversely impact consumers, and other actions that restrain trade.
Its mandate was to protect vital segments of the American economy. But how can the U.S. government today control a tightly woven web that spans the globe? One where cutting this Gordian knot would have multiple, often unforeseeable repercussions?
How much of the bottlenecks at American ports are due to labor for off-loading and transport and how much to retailers happy to store goods there, keeping prices high and creating more of a blockage?
Should we look at those companies which continue to generate huge profits in the face of all these “problems” – Procter & Gamble, WalMart, Amazon?
How much is due to employers refusing to pay laborers and drivers a living wage?
Do the neighborhoods adjacent to ports deserve 24/7 noise and diesel pollution?
The current system is unsustainable but it can’t be fixed overnight.
Change for the Better
The first step is to begin moving to a local-based economy so we can skip the ports and support local businesses and workers, starting with essential goods.
This is a concept that has been percolating through the economy for a while – locavorism, Buy American – and maybe now is the time to move it mainstream.
During the height of the pandemic, goods essential to recovery from Covid and the health of American medical staff were co-opted by the governments of the countries producing them. We need to take back the manufacturing not only of essential goods but all goods.
We need to be able to make the medicines and the masks, build the trucks and the trains, manufacture our own laptops and ladies wear, and put food on the table that hasn’t traveled a thousand miles or more.
If this feels like going backwards, from a focus on profits to family values – so be it. There is comfort in what one is used to but that doesn’t make it right. Or beneficial.
We need to stop supporting the money game and work on improving the quality of life for Americans.
We need to blow up monopolies to make the market competitive again. No company anywhere on the supply chain should be able to manipulate prices.
Producers should not be able to keep production flat to enable prices to soar so the only competition will be among the buyers – who is willing to pay top dollar?
Yes, there will continue to be a supply chain, only much shorter. And, with the advent of real competition, it will be far more nimble.
Shrinking the length of supply chains and reducing their potential for breaks will also have the added and very significant benefit of slashing intercontinental pollution and global warming.
And the oversupply of shipping containers can be repurposed into housing, not just for survivalists, but to allow HHH funds to put roofs over the heads of many more homeless Angelenos.
(Liz Amsden is an activist from Northeast Los Angeles with opinions on much of what goes on in our lives. She has written extensively on the City's budget and services as well as her many other interests and passions. In her real life she works on budgets for film and television where fiction can rarely be as strange as the truth of living in today's world.)
