Guest post by Bob Bishop
The G20 (comprising 19 countries and the European Union) met in Rome this past weekend to address the global supply chain crisis, international taxes, and climate change. Three of America’s largest importers China, Japan, and Mexico leaders, were absent.
President Biden held a press conference focusing on the fragility of the global supply chains. Biden’s Rome speech finished by channeling Italian Dictator Benito Mussolini by quoting the need for “the trains run on time.”
Then we have to prevent this from happening again, in the future. Now that we have seen how vulnerable these lines of global commerce can be, we cannot go back to business as usual. This last pandemic won’t be the last global health crisis we face.
Many of our supply chains are almost entirely owned and operated by the private sector. But government can play a key role identifying supply chain risks and bringing the different pieces and actors together to address these vulnerabilities.
To insure our supply chains are free from forced and child labor. Supporting the dignity and the voice of workers and are in line with our climate goals.
Last week in a futile attempt, Biden ordered the Los Angeles and Long Beach ports to work 24/7. Still, a shortage of rail workers and qualified professional truck drivers means continued bottlenecks. Also, there are punitive fines for container shipping delays. This Bureaucratic incompetency doesn’t inspire confidence.
Biden claims the Build Back Better spending bill will rescue the system by providing billions in funding to fix the private supply chains and provide monitoring and oversight.
Centralized Command Economy
Biden is moving towards an old-style Soviet Union command economy of issuing logistic regulations and objectives for producing, distributing, and consuming goods. Next on his agenda, we can anticipate a state planning committee to devise operational plans and destructive price controls to contain inflationary prices.
The Soviet Command economy created empty shop shelves and long waiting lines. Biden’s economy is now doing the same just in time for Christmas.
Vilification of Just-In-Time Supply Chains
The global just-in-time supply chain (JIT) is based on suppliers stripping out redundancies, streamlining efficiency, and eliminating waste resulting in lower-cost products for consumers. JIT manufactures and distributes products at the right time in the right amounts based on customer demand. Absent panic buying, JIT worked well for decades until the mandated pandemic lockdowns disrupted the supply chains.
Biden’s cure is to force the private sector to take on more costs by re-engineering logistics, creating redundancies and inventory stockpiles to overhaul the JIT supply chains. It will create further disruptions and much higher consumer prices.
Gallup Poll – ‘Government Has Too Much Power’
Last September, the Gallup Poll found that 52% of the public favor a more limited government role. There has been a shift where American’s believe that the government is regulating business too much. The public also prefers lower taxes and fewer government services. Most American’s realize government regulation creates a covert tax known as inflation. Biden could care less about public sentiment.
“I am from the Government, and I am here to help.”
President Ronald Reagan’s famous quote addresses the folly of progressive policymaking. Dogmatic mandates and regulations don’t make our lives easier.
Bob Bishop is a retired corporate CPA