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How we broke the supply chain

prospect.org

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Re: How we broke the supply chain

#31

Post by SuoDuanDao »

royaltheartist wrote: post #13
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…

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 more similar to someone saying "That behaviour isn't rude in Scotland".

The store isn't running out of bread, bread-eaters are running out of money.

Re: How we broke the supply chain

#32

Post by nine_k »

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 The idea that printing money is a primary driver of inflation may be outdated.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.

I'd say that the inflation mostly went not into the price of groceries, but into the price of realty, the stock market, the cost of education.

Re: How we broke the supply chain

#33

Post by cplusplusfellow »

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…

Just about every smaller grocery store I’ve seen places themselves into some of the highest priced real estate in the city.

This far negates the overall cost under most scenarios by my calculations.

Re: How we broke the supply chain

#34

Post by lmm »

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.

One could argue that if we actually committed to market fundamentalism it would work, but price-gouging laws prevent the market from addressing this kind of risk.

Re: How we broke the supply chain

#35

Post by Retric »

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…

JIT doesn’t really apply to grocery stores as food rots, it’s a very different supply chain vs microwaves.

JIT only saves meaningful amounts of money when you had significant amounts of inventory sitting around. The difference between 2 days and 3 days of parts at a factory simply doesn’t matter. The difference between 3 days and 3 months worth of parts is a big deal.

That said, the entire reason companies used to have months worth of parts on hand is because shutting down factories is expensive. Missing a 20c part to build a 20,000$ car using a 200 million dollar factory is a big deal. JIT was about minimizing risks such that you didn’t need to keep as many parts on hand, that failed with COVID to the point where factories are once again trying to stock up with months worth of parts because the same basic economic rules apply.

You can argue around why and how the assumptions built into JIT failed, and if mitigating them would have been worth the investment. But that’s a different story.

Re: How we broke the supply chain

#36

Post by xiphias2 »

nine_k wrote: post #32
standardUser wrote: post #12

Earlier quoted context omitted.

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.

I'd say that the inflation mostly went not into the price of groceries, but into the price of realty, the stock market, the cost of education.

Most of the inflation is created by expanding credit, and the interest rate of credit controls where it happens. The assets you write are the easiest to get loan for, so it makes sense that price inflation happens in those assets / services.

Re: How we broke the supply chain

#37

Post by wearsshoes »

titzer wrote: post #27

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-nat…

Could you recommend a more in depth reading list?

Re: How we broke the supply chain

#38

Post by pessimizer »

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…

> to weather a shortage like recent COVID shortages

It's been 2 years.

Re: How we broke the supply chain

#39

Post by pessimizer »

lmm wrote: post #34
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.

One could argue that if we actually committed to market fundamentalism it would work, but price-gouging laws prevent the market from addressing this kind of risk.

Raising the prices of what has been stocked won't feed any more people, it'll just guarantee that the wealthiest won't go without.

If you're talking about raising demand in order to raise supply, that implies that the virus will react to that and retreat accordingly. Or that regulations will be relaxed. Or that people will be paid enough to show up to work sick.

Re: How we broke the supply chain

#40

Post by munk-a »

pessimizer wrote: post #38
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…

> to weather a shortage like recent COVID shortages It's been 2 years.

It has been yes, and it isn't over yet. We've had significant issues mobilizing the public to address the issue so we've possibly been saddled with a longer recovery time than we'd otherwise have but traditional environmental shortage events (droughts and flooding) could effect areas for decades.

And this did occasionally happen on a global scale as well - see the winter of 536[1] or the Krakatoa explosion of 1883[2] - occasionally the world gets dealt a really rough hand, we're better at responding to global issues like that now but we're still not great.

1. https://en.wikipedia.org/wiki/Volcanic_winter_of_536

2. https://en.wikipedia.org/wiki/1883_eruption_of_Krakatoa

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