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How we broke the supply chain

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Re: How we broke the supply chain

#51

Post by syshum »

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…

In a capitalist economy you may sometimes have a breadline, however in a centrally planned economy you sometimes have bread

Re: How we broke the supply chain

#52

Post by bee_rider »

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…

True capitalism has never been tried, we must just try again comrades.

Re: How we broke the supply chain

#53

Post by smartbit »

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…

The article The World's Most Profitable Traffic Jam [0] is linked somewhere in this article and explains very clear why America has internal supply chain problems. IHMO a better read. It was submitted 3 times here on HN since dec 21 last year but never got much traction.

[0] https://mattstoller.substack.com/p/the-worlds-most-profitabl...

Re: How we broke the supply chain

#55

Post by throwawayboise »

pessimizer wrote: post #39
lmm wrote: post #34

Earlier quoted context omitted.

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.

It will work against hoarding, such as buying 3 cases of paper towels when you only need 4 rolls.

Re: How we broke the supply chain

#56

Post by thephyber »

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.

Since the first outbreaks, sure. COVID was not a 2 week event.

A complicated car probably has 10k parts. Imagine if parts suppliers randomly have enough worker shortages to reduce their productivity so the assembly plants start running out of parts. You can’t finish building cars with only 99% of the parts, so the line stops.

Same with ports. When longshoremen bring COVID into the workplace, it spreads and the port slows. Consumer behavior still hasn’t returned to pre-Covid, so demand for goods is still high while production isn’t quite 100% restored.

Re: How we broke the supply chain

#57

Post by thephyber »

lmm wrote: post #46
pessimizer wrote: post #39

Earlier quoted context omitted.

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.

> 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. But making it profitable to be the one with stock on hand in an emergency would encourage holding bigger buffers during the good times. > Or that regulations will be relaxed. Or that people will be paid enough to show up to work sick. Or healthy employees will get paid enough where it's…

> But making it profitable to be the one with stock on hand in an emergency would encourage holding bigger buffers during the good times.

This isn’t always true. It is only the case if the long term incentives outweigh the short term incentives.

If the good has a long shelf life and it is a good use of the retailer’s capital, sure. Those are not certain conditions. Also, goods can go obsolete. Would it have been a good investment for CircuitCity to keep an extra 1000 units of Microsoft Zune in stock in case there was a pandemic?

Re: How we broke the supply chain

#58

Post by lmm »

thephyber wrote: post #57
lmm wrote: post #46

Earlier quoted context omitted.

> 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. But making it profitable to be the one with stock on hand in an emergency would encourage holding bigger buffers during the good times. > Or that regulations will be relaxed. Or that people will be paid enough to show up to work sick. Or healthy employees will get paid enough where it's…

> But making it profitable to be the one with stock on hand in an emergency would encourage holding bigger buffers during the good times. This isn’t always true. It is only the case if the long term incentives outweigh the short term incentives. If the good has a long shelf life and it is a good use of the retailer’s capital, sure. Those are not certain conditions. Also, goods can go obsolete. Would it have been a go…

> If the good has a long shelf life and it is a good use of the retailer’s capital, sure. Those are not certain conditions. Also, goods can go obsolete. Would it have been a good investment for CircuitCity to keep an extra 1000 units of Microsoft Zune in stock in case there was a pandemic?

Those are the kind of questions that markets are great at figuring out, if it wasn't illegal to sell at an actual market-clearing price.

Re: How we broke the supply chain

#59

Post by _trampeltier »

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…

The logisic is different now. Before a store ordered one big package with 100 items in china. Now 100 people ordere 100 packages. This does need much much more space on the transport.

Re: How we broke the supply chain

#60

Post by thephyber »

titzer wrote: post #24
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.

> had no apparent impact in inflation. It sure inflated the stock market and (re-)inflated the housing market.

Neither of which is captured in the CPI, which is what most people say when they talk about “inflation”.
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