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How we broke the supply chain

prospect.org

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Re: How we broke the supply chain

#21

Post by PhileinSophia »

standardUser wrote: post #12
xiphias2 wrote: post #10

Inflation (money printing) is the cause of increased demand in goods, not the result of supply problems. If the government sends checks of money to people, they will compete for the same amount of produced goods, and realize that they have to spend the money faster if they want it to preserve its value better.

During the Great Recession, a vast increase in the money supply had no apparent impact in inflation. The idea that printing money is a primary driver of inflation may be outdated. I also think you're ignoring the dramatic and unexpected changes in demand (and some constraint in supply) caused by the pandemic.

No post body was provided.

Re: How we broke the supply chain

#22

Post by munk-a »

Sophistifunk wrote: post #20
royaltheartist wrote: post #13

Earlier quoted context omitted.

Ahh ha, this is like when I say a Scotsman was rude to me and someone else informs me that it must not have been a true Scotsman, then

It's the exact same as when some pimply-faced first year uni student tells you "nobody's really tried proper communism"

I guess it's also the same as when some CEO of a multi-national corporation says "nobody's really tried proper communism" but I'm failing to see what the pimply faced first year uni student really yields to this argument - since both of those theoretical people definitely exist. Some people do use really bad arguments - people who bring random unrelated characteristics in to color an attack are definitely in that crowd.

Re: How we broke the supply chain

#23

Post by ivalm »

roenxi wrote: post #5

> Only deviating from free-market fundamentalism—giving everyone health care, for example—could lead to shortages This is true, the symptoms the article is looking at are strong signals of non-free-market policies. Under capitalism, the failure mode is going to be very high prices. If the failure mode isn't high prices then the market probably isn't being run as a free market. Like when there is a crisis and the gove…

But the prices ARE increasing, and those most affected are most increasing!

Re: How we broke the supply chain

#24

Post by titzer »

standardUser wrote: post #12
xiphias2 wrote: post #10

Inflation (money printing) is the cause of increased demand in goods, not the result of supply problems. If the government sends checks of money to people, they will compete for the same amount of produced goods, and realize that they have to spend the money faster if they want it to preserve its value better.

During the Great Recession, a vast increase in the money supply had no apparent impact in inflation. The idea that printing money is a primary driver of inflation may be outdated. I also think you're ignoring the dramatic and unexpected changes in demand (and some constraint in supply) caused by the pandemic.

> had no apparent impact in inflation.

It sure inflated the stock market and (re-)inflated the housing market.

Re: How we broke the supply chain

#25

Post by asf9b8hqw4n »

I appreciate most of the arguments here, but take strong exception to the validity of blaming "just-in-time logistics". Consider grocery store A that uses Just-in-Time and grocery store B that does not:

Grocery store A (with JIT) has much less inventory, which has a variety of benefits. It needs fewer square feet, which reduces rent/heating/lighting/cleaning costs and therefore reduces prices; this also means more residential space for actual residents. It has less food waste, because most inventory is only on a shelf for a hours or days rather than weeks. Paradoxically, it is actually easier to keep goods in stock, because there are 10x fewer goods to count.

By contrast, Grocery store B (without JIT) has much more inventory, which has a variety of costs. It needs more square feet, which increases rent/heating/lighting/cleaning costs and therefore increases prices; this also means less residential space for actual residents. It has more food waste, because inventory is sitting there for weeks or months to prevent a shortage. Individual items go out of stock all the time, because the staff can't effectively count this much inventory.

Similar arguments hold for stocks of parts at factories, with the additional problems of obsolescence, things getting lost, risk of fire or shelving collapses etc. Carrying enough inventory to weather a shortage like recent COVID shortages would require months and months of inventory; imagine the obsolescence costs if the factory needs to make any change at all!

We need to stop blaming just-in-time logistics for shortages. Outsourcing, deregulation, anticompetitive behaviors are all valid, but just-in-time logistics makes businesses much more efficient which helps everyone. The thought of having stockpiles large enough to prevent issues like recent ones is completely absurdist.

Re: How we broke the supply chain

#26

Post by xunn0026 »

standardUser wrote: post #12
xiphias2 wrote: post #10

Inflation (money printing) is the cause of increased demand in goods, not the result of supply problems. If the government sends checks of money to people, they will compete for the same amount of produced goods, and realize that they have to spend the money faster if they want it to preserve its value better.

During the Great Recession, a vast increase in the money supply had no apparent impact in inflation. The idea that printing money is a primary driver of inflation may be outdated. I also think you're ignoring the dramatic and unexpected changes in demand (and some constraint in supply) caused by the pandemic.

Please do provide some explanation if you have any.

I find it amazing that people have said from the beginning the money printer will cause inflation. When it finally arrives it was "transitory" and now, lo and behold, it's a great concern of the Fed.

I still think it was the money printing. People are not scrambling to buy iPhones and factories can't keep up. Everything is more expensive!

Re: How we broke the supply chain

#27

Post by titzer »

There's nothing in this article that I haven't read elsewhere. But it still only gets things half right. Sure, outsourcing and offshoring to China caused supply shocks for things from Asia, but...potatoes? cooking oil? These things are not shipped from China. There's more going on than international problems. America has plenty internal supply chain problems, too. The causes might be similar, smaller scale, intra-national rather than international, but it's the elephant in the room is that things aren't functioning here.

Re: How we broke the supply chain

#28

Post by [deleted] »

asf9b8hqw4n wrote: post #25

I appreciate most of the arguments here, but take strong exception to the validity of blaming "just-in-time logistics". Consider grocery store A that uses Just-in-Time and grocery store B that does not: Grocery store A (with JIT) has much less inventory, which has a variety of benefits. It needs fewer square feet, which reduces rent/heating/lighting/cleaning costs and therefore reduces prices; this also means more re…

[deleted]

Re: How we broke the supply chain

#29

Post by nine_k »

skybrian wrote: post #17

A little bit of central planning can go a long way. Nobody was in charge of figuring out how to gracefully shed load at capacity, so when demand went up by 20%, the system overloaded and latency went through the roof. Market fundamentalism (we don't need to plan, the market will do it) obviously screwed up here, but it doesn't follow that everything that the American Prospect hates is actually bad.

The problem with central planning is that the incentives of the planners are skewed by their position. They are not the ones whose business would be affected by the plans they make, or by failure of these plans.

Look at the history of the Soviet Union which pioneered the practice; eventually they developed very intricate workarounds. Look at China with its empty cities built through central planning. Look at the efficiency of the US military spending which goes in a large part through some kind of central planning by DoD.

Markets are far from ideal, but alternatives are often even further.

Re: How we broke the supply chain

#30

Post by hourislate »

Concerning all the ships loitering off the coast of California. I figure it will get cleaned up over the next few weeks because China is shutting down for Chinese New Year (for at least 2-3 weeks). This should ease some of the congestion since there will be little shipping until March.
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