> The last amendment to the Shipping Act occurred in 1998 as the Ocean Shipping Reform Act of 1998, following a five-year study of the effect of the Shipping Act on maritime trade and commerce. The 1998 amendment allowed carriers and shippers to enter confidential rate agreements providing discounted rates in exchange for cargo volume commitments. In 2005, the FMC issued a regulatory ruling extending authority to non-vessel operating common carriers (NVOCCs) to enter such confidential rate agreements with shippers.
> After the 1998 amendment, the maritime industry experienced significant and widespread consolidation. In addition to carrier mergers and acquisitions concentrating the bulk of containership capacity in U.S. trades to fewer than a dozen large carriers, the formation of vessel carrier alliances caused further substantial consolidation. Currently, there are three major carrier alliances representing 80 percent of all container trade. Within the alliances, there has been further consolidation, e.g., the creation of Ocean Network Express (ONE) by the merger of Japanese carriers.
I relatively recently read a biography on John D. Rockefeller and this reminds me of some of the things Standard Oil did with rail companies to gain a market advantage.
I'm just going to point out that this is the world's second period of globalisation and we are maybe seeing the second collapse. The first period was roughly from 1870 to 1914 and was brought to its end by the shock of the first world war and the following flu pandemic which, as well as directly killing lots of people, also led to mass restrictions on travel and the breakdown of the supply chain in large portions of the world. I think there are some fairly obvious similarities to what is happening today. The decades following the collapse of the first age of globalisation were not good for a lot of people, to put it mildly.
It's worth quoting John Maynard Keynes about what the world was like prior to 1914 (if you were a rich westerner) and considering the parallels.
“The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole Earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep.
He could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share — without exertion or even trouble — in their prospective fruits and advantages.
Or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend.
He could secure forthwith, if he wished it, cheap and comfortable means of transit to any country or climate without passport or other formality.
He could dispatch his servant to the neighboring office of a bank for such supply of the precious metals as might seem convenient — and could then proceed abroad to foreign quarters, without knowledge of their religion, language or customs, bearing coined wealth upon his person.
He would consider himself greatly aggrieved and much surprised at the least interference.
But most important of all, he regarded this state of affairs as normal, certain and permanent — except in the direction of further improvement."
The question becomes, how can we avoid a 21st century equivalent to the inter war years and their culminating horrors if we are seeing a collapse of the second age of globalisation?
Given that through the entire pandemic I've been buying a steady stream of products from all over the world with only the briefest of delays in service...I don't see it.
The supply chain disruption has been US and UK specific, and has very obvious causes specific to those countries - no one else is really having issues.
I can certainly see some supply chain disruptions in Germany. For example, in the supermarket, there's always something out of stock that you need. But it's a minor inconvenience, nothing more than that. Just a few items. But I don't remember worrying about things being out of stock, ever.
In South Africa we've seen _some_ disruption too, but the immediate effects have been limited from a consumer perspective.
What I find most impressive is how resilient the overall system is in spite of the many disruptions.
I recently read a book (by Mark O'Connell) about how some groups predicted ever-imminent apocalypse and social collapse. The book was released shortly before the pandemic and tellingly one of the themes presented (not as the author's view, but as a view in some prepper communities) was that a global pandemic would lead a total collapse of the supply chain and then we would become feral and play out Mad Max etc.
While global supply chain issues have led to some shortages (some more serious than others and some more protracted than others) there is so much that is still working. That's something to celebrate IMHO.
I share your sentiment that the supply chain crisis seems somewhat exaggerated by media, however for some specific merchandise it exists. For example, it's been 9 months since I ordered a new mountain bike and it still hasn't arrived. Similar situation with new cars and motorcycles (0 stock, at least 3-6 months lead time). However, it doesn't seem plausible to me that parts shortages are due to decreased production from China. If the (Google/World bank) GDP graph is to be trusted, China's GDP only slowed down its growth rate, but never went down during the crisis (contrary to the US). So to me it looks like the supply chain crisis in the west was somewhat manufactured (even though I don't know by whom and for what reason).
It's not just parts (in fact I saw a claim in /r/cycling that the warehouses have plenty of stock), it's also shipping those parts to distributors/bike builders that's an issue. Plenty of stories about how the ports are absolutely backed up.
Stefan Zweig in The World of Yesterday wrote about his first visit to the United States in the time before WWI:
“No one asked about my nationality, my religion, my origin, and what was more—an amazing thing to imagine in our modern world of fingerprints, visas and police permits—I had travelled without a passport. But there was work waiting for people to do it, and that was all that counted. Fabulous as it now seems, a contract could be instantly agreed without today’s inhibiting intervention of state formalities and trade unions.”
> a contract could be instantly agreed without today’s inhibiting intervention of state formalities and trade unions
Stefan Zweig was a novelist, poet and playwright, born of a wealthy family, so we can forgive him his lack of understanding of why state formalities and unions exist.
(People don't generally form unions if they're being well paid and well treated, as my first piece of evidence, look at the thorough lack of unionisation in software developers).
European countries had essentially eliminated passports prior to WW1. Then during the war they were reintroduced as a "temporary" national security measure. Does that justification sound familiar?
> The question becomes, how can we avoid a 21st century equivalent to the inter war years and their culminating horrors if we are seeing a collapse of the second age of globalisation?
I'm afraid we are past that stage and at the edge of World War 3:
- China is literally following Hitler's footsteps in eradicating Uyghur and Tibetan civilization and people, while saber-rattling to invade Taiwan, the world's most important semiconductor manufacturer. Their economic growth rate is being threatened, not just by the COVID consequences but also by other countries undercutting China on labor costs - which in turn threatens the CCP government as the informal deal of exchanging civil liberties with economic properties is breaking apart, and it doesn't help that under the regime of Xi Jinping the allowed ways of expressing discontent have been met with more and more repression.
- Russia is waging a disinformation and propaganda war against Europe and the US, with the clear goal of driving wedges into our societies. At the same time, the Russian economy is mostly built on oil and gas exports, both of which are threatened - the world is growing less reliant on oil, and Europe is all but forced to diversify its sources for gas. It is realistic that either Putin himself or whoever is going to win the succession fight when he dies (at least openly, Putin has not made any succession plans or named/groomed a candidate) will use the old and tried method of rallying a disgruntled population behind the war against a "common enemy" or a "national worthy cause" (i.e. taking back Ukraine).
- There will be yet-unseen waves of global mass migration caused by climate change and wars in Africa and by poverty and total government collapse in South America, and right now both the US and Europe stick their heads into the sand and build fortresses instead of thinking up a sustainable way on how to deal with a problem that is only growing to get bigger.
- the entire Arabian area is a clusterfuck, even if the Palestine-Israel conflict has been reduced in importance as Israel made formal or informal deals with many of its neighbors. Iran is still developing a nuclear bomb, Turkey's wannabe-dictator Erdogan is struggling against economic depression and political discontent while still aiming to be a regional superpower, the oil sheik countries face (like Russia) the decline of oil money that has historically been used for decades to placate a population wanting democracy or at least basic human rights, and the remnants of the IS are still more than capable to cause serious trouble. Additionally, the US and Israel are constantly running air strikes on terrorists and political enemies (e.g. the Soleimani case), and Iran is engaging in terrorist activities itself.
- speaking of nuclear bombs, no one including China has any idea what to do with North Korea, whose rockets and other arms are clearly capable of devastating destruction. Kim Jong-Un is likely in bad health and people including relatives of questionable loyalty have been purged, while Kim's own children are way too young to assume power.
- globally, the aftermath of COVID and the demands that combatting climate change will cause on societies are going to be yet another destabilizing force, threatening the stability of many societies.
Geopolitically, there are so many areas of tension and conflict that it is almost guaranteed to have major conflict break out in the next two decades. Remember, World War 1 was caused by a terrorist attack of a bunch of pretty much irrelevant Serbian nationalists.
>Remember, World War 1 was caused by a terrorist attack of a bunch of pretty much irrelevant Serbian nationalists.
There are people who don't remember it in that way. World War I was caused by a complex web of alliances and power struggles between major powers in Europe.
I guess that a simplified narrative is preferable to some people for various reasons? Perhaps because of some Cold War mentality, where perspectives of the "east" side are commonly brushed aside in contemporary Western history-writing?
It is often ignored that Austria was historically a much larger country, and that many of the smaller cultures found it a very negative experience to be subjected to Austrian domination. For example, before Czechoslovakia emerged, there were other parallel society-building movements within Austria such as Sokol, etc. Many of those that wanted to be free from Habsburg didn't think of themselves as "irrelevant", and they didn't have the ambition to create a global war.
(and yes, I know it was technically Austria-Hungary, but Austria was the de facto dominant part)
> There are people who don't remember it in that way. World War I was caused by a complex web of alliances and power struggles between major powers in Europe.
Sure it was, but the actual trigger that caused the house of cards to collapse was said assassination. My point is: we have a lot of high-tension conflicts and issues that can explode openly (all the things I listed up, plus more like unresolved post-colonial ethnic conflicts in Africa).
And the amount of potential triggers is just as shockingly large as they are all trivial. Let's say some North Korean hackers manage to deal a devastating cyber attack on Ukraine while successfully masquerading as Russian hackers, some remnant-IS terrorists blowing up a Saudi oil facility while appearing to be Iranian operatives, Taliban acquiring a Pakistani nuclear device and blowing it up on the Indian border, a tired Taiwanese air defense operator mistaking a Chinese provocation flight for an actual invasion, or Trump becoming the next US President and deciding to help out Netanyahu's reelection campaign by droning some Iranian general to pieces again.
All of this can very easily and unpredictably happen, and the international attitude for cooperation is at a pretty low point.
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.
I think the problem stems from that reducing redundancy and squeezing your labor is the easiest way to reduce costs. Then, when things 'blow up' you get to jack up prices and pocket the money for fixing the problem you created.
With the amount of consolidation we currently have, you can't switch to a vendor that does not do this as the easiest way to rise to senior management is to do this.
Probably the most comprehensive way to fix this is to tie a significant portion of managements compensation to how well the company does over 20 years. You would also have to make it so if you have a significant stake in a company, you can only exit that stake over a 20 year period to keep shareholders/VCs from forcing the company to have a few amazing paper quarters so they can exit big before the company implodes.
I don't see this happening though, and it would be hard to keep existing players from adding loopholes (eg: 'loaning' their holdings out) that remove their accountability.
I think "stems from" is complicated in this instance by how much changed and how fast. Systems can take only so much change in a set period of time, and we've had a hell of a lot of change in under 2 years.
Populations movements (COVID), combined with personal spending habit changes (things over experiences), combined with who spends money (office -> work from home contributed to the toilet paper shortages), combined with labour market changes, combined with immigration changes (hospitality in Sydney is weird without foreign students and backpackers), combined with a lack of slack in the system (JIT etc), combined with probably hundreds of small law changes played a part in what is happening. That all these happened at once only makes it all the worse.
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.
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.
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.
What percentage of a grocery store's inventory is perishable? There's plenty that has a pretty long shelf life. E.g. canned goods, paper towels, bathroom tissue, bottled goods, vacuum-sealed items, etc.
Probably a lot as a percentage of sales. The fresh section of my grocery store might be 20% of space, but there's usually two restockers working compared to one elsewhere in the store.
> just-in-time logistics makes businesses much more efficient
Where is it written that "efficient" is the be-all-end-all for businesses?
If a business can only extract money but can't serve society when required, perhaps that business should be replaced by something that can?
This is the whole "smoking ban" thing once again. Smokers were so much more profitable that businesses that gave them up simply couldn't compete against those who didn't. At some point, we, as a society, decided that the downsides of such businesses finally outweighed the benefits, and we changed the laws to force those businesses to change.
> 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!
However, we also had situations like toilet paper where the factories had capacity in the industrial sector to make toilet paper, but we couldn't transfer that to the consumer sector because every step was so hyper-optimized (rolls are larger, no ability to individually package, only able to ship pallets, etc.).
So, the demand shock rippled through consumer and the supply chain had no ability to adjust upwards because they had no extra capacity. And the industrial chain that had extra capacity was so hyper-optimized that it couldn't pivot to serve the demand shock.
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.
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.
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.
What’s the moral framework here? Globalization, financialization, and deregulation got you all this good cheap stuff to buy in the first place.
If you’re a de—growth proponent it should never have been available. The supply chain crisis is one of the best things that’s ever happened.
But if you think it’s actually bad, what’s the argument here? It would be better to have always lived as if in the jaws of a disaster, to avoid the hedonic adjustment when one actually strikes?
That's the weird part. The argument seems to be that any temporal failure of a system means we need to change the system wholesale. There is no argument for why a different system would be better, merely the belief that the current system has flaws, therefore...
This part confused me:
> bad public policy coupled with decades of corporate greed.
The article mentions a cascading set of changes that move from minor inconvenience (bicycle parts) to minor but more serious inconvenience (french fries being, however tangentially, "food"). Even then, there is no claim that the "have no potatoes" was for all ingredients, and no one went hungry did they? Unless I'm mistaken, no one in the west has yet starved as a result of all this. Happy to be corrected.
A restaurant I go to has variously been out of Lamb, Chicken and Sweet potatoes. I mean, the horror of being forced to eat normal potato wedges over sweet potato wedges was too much for me, but AFAICT I'm still alive.
So it seems like, as you point out, the system has failed to produce the outcome people claim not to want - huge choice variety and abundance - but has instead produced slightly less than huge choice variety at some moments in time. I'm not sold that's a disaster.
The first derivative of food supply disruption is clearly positive. The exact value of the second is debatable, but I feel confident saying it is at least not clearly substantially negative. Slightly negative at best and I can't give a lot of evidence for that.
The sum total of that disruption has not yet burned through our buffer, though it has caused a noticeable rise in prices. However, it is not wise to wait for our buffer to be entirely gone before being willing to identify the problem.
This "article" looks at a problem and tries to guess what the causes are. This without actually checking if those guesses are correct, or knowing too much about why the US is so much more troublesome than anywhere else.
e.g. it completely skips over the reliance on chassis to do anything on a US terminal. Anywhere else in the world and the terminal setup is quite different. Another issue is that most other places in the world work 24/7, unlike US terminals. This is coupled with a really strong but strange union (preventing any changes) on the US terminal side, while trucks are more or less abused.
It complains about things (globalization) that on its own aren't bad. What's bad is that various governments did nothing to prevent that only a few benefitted from that globalization in e.g. US/Northern Europe.
Then it points towards some law that's a US law and not global. It's a bit strange to ignore China->Europe trade.
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.
> 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 government steps in to ration or fix prices and a breadline forms - that breadline isn't a capitalist problem! Capitalism was suspended because the government didn't like what would happen under capitalism (which, I think we all agree, would have been high prices to the point where there was still bread on the shelf that people could buy). The capitalist outcome isn't a utopia, and isn't even pleasant, but it also isn't a breadline.
If someone lives in Brazil, was born in Brazil and speaks Spanish though there is a reasonable chance that they are in fact not a Scotsman.
If there are consistent breadlines, that means someone is giving away a resource at below its value - free markets sort that out very quickly. They turn up for a few days then go away as prices adjust. Persistent problems only crop up when something regulatory is keeping prices down because the seller has huge incentives to raise them until people go away.
I'm not arguing the situation would be rosy, but breadlines just are not how free markets deal with the situation. Markets use price signals to allocate, not long queues. Not a controversial fact, although people do sometimes get very unhappy about it.
You miss the point. No one is saying capitalism will literally cause breadlines. They are saying capitalism has made breadlines needed in some circumstances. These are different things but related.
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.
I suggest that we stop looking at "the government" as some entity that is separate from capitalism and/or markets. Unregulated capitalism/free markets are unstable systems that eventually produce regulators one way or another; a democratic government is just one form that this takes, but it could just as easily result in a cyberpunk megacorp or a military junta making all the rules. Markets always trend towards the consolidation of power, as a result of economies of scale; any "free" market will result in a winner who eventually uses their power to set the rules to make sure they stay on top.
When capitalism fails and something else steps in to fix it, the fact that the fix is happening at the same time as something bad means it must be responsible.
Governments broke the supply chain by literally banning many people from working at all and almost shutting down travel in some cases. That's not a failure of capitalism.
When I first opened the site, I wondered if it was a more technical/wonkish dive, or whether it was a political take.
Looking at the root site prospect.org made it clear it's the latter.
Don't get me wrong, their thesis can still be right and their fact presented are still valuable, but this is like reading about "is free trade good" in the Economist. I would take away the facts, not the conclusion.
FWIW I read TFA and came to much the same conclusion. I would have appreciated a lot less subjective “X is bad” type content and a lot more objective explanation.
Strongly disagree with shifting the blame from "we" to "they".
To mentally distance ourselves is a cop-out as we are all willing participant (if not actively enabling the problem) so it is incredibly important that people don't compartmentalise away these type of issues.
We are seeing a shock to a system we have all contributed to and handsomely benefited from. Of course, some people are more to blame than others, however in many case the root causes are boring small decisions that are good for the individuals but have negative long term consequence for everyone. i.e. Whether "poor" or "rich", very few people are willing to sacrifice themselves for the collective good. ("Tyranny of small decisions").
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.
The Soviet Union and China aren't "a little bit of central planning" though. They're entirely centrally planned, with little to no market influence.
Having the markets captured by private actors winds up badly too - that's why "a little bit of a central planning" goes a long way - it can take the rough edges off of Capitalism and structure markets to result in fair, distributed outcomes.
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.
> 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 worth working double shifts, selling back holiday, delaying retirement... very few people work as hard as they possibly can all the time (and why should they?), if there's truly a desperate need then a correspondingly desperate price can unlock all sorts of capacity.
>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 strategy only works if companies can accurately predict the likelihood of future supply/demand mismatches. This isn't possible for most industries, and it's not sane to hold out for hundred year events.
There's also something like a reverse prisoner's dilemma: if all companies in an industry keep a buffer, they're all worse off (no price spikes = less profit, years of unused capacity = less profit). Only small players can really win from spare capacity, and only if they have a huge excess, and only if their timing is right. They lose if they guess wrong and go broke before the price spike, which is made even more likely by the inefficiency of running with tons of spare capacity.
> 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?
> 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.
I don't know if this is empirically true in most situations, but you can at least conceive of a situation in which higher prices result in the poor (as a group) having a better chance of obtaining something.
In the limiting case where something costs 1p and you can buy an unlimited amount, someone wealthy can just swoop in and buy literally all of it and throw it in the bin.
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.
>>The idea that printing money is a primary driver of inflation may be outdated.
No it is not
>>During the Great Recession, a vast increase in the money supply had no apparent impact in inflation
Ohh but it did, you just are not looking in the correct market, the money printed in that time was going into institutions, not individuals so the inflation was not in consumer goods but in stocks, real estate and other hard investments
If you look at a chart of stimulus pending over time, and the stock market you see and almost exact parallel.,
COVID spending on the other hand was more direct, with increase unemployment payments, check sent to everyone, child tax credits etc etc etc
This round this more directly impacted the consumer market
Why? It removes the the stocks from business and finance fundamentals, into more speculative (aka gambling) transactions that create huge BOOMS, and even largest BUSTS in the market, taking out peoples retirements, and financial security
One truism that I have always believed in, it is better overall for an investment to increase predictably @ 5%, then for it to Spike 20% then retract by 10%. Overall for the economy the person may end up with a higher gain with more volatility, but perception and human emotions would focus on the 10% loss, shaking confidence and causing other problems.
I am a "steady as she goes" person, I like clam waters... I do not like chaos which is what money printing causes
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!
As mentioned in the comment you're replying to, check the expansion of the money supply after 2008, and check the inflation since; check how long it took to get anywhere near 2%. For shits and giggles, check out the predictions of the same people you're listening to now, then.
I'm not listening to anybody. I've been talking about the pending inflation every since the US went overdrive with money printing and started handing you money to the entire working population. Maybe I guessed it by mistake but I don't buy that the two (money printing and inflation) somehow overlapped.
Again, if it were a supply issue you would see it in niches. We have inflation on energy, food, everything. The supply and demand for energy and food is about the same. There was no shock there.
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.
Rabbitholed a tiny bit on this part:
> Big companies got the law changed to enable ocean carriers to offer secret discounts in exchange for volume guarantees.
To an article linked in the first article: https://www.hklaw.com/en/insights/publications/2018/12/congr...
> The last amendment to the Shipping Act occurred in 1998 as the Ocean Shipping Reform Act of 1998, following a five-year study of the effect of the Shipping Act on maritime trade and commerce. The 1998 amendment allowed carriers and shippers to enter confidential rate agreements providing discounted rates in exchange for cargo volume commitments. In 2005, the FMC issued a regulatory ruling extending authority to non-vessel operating common carriers (NVOCCs) to enter such confidential rate agreements with shippers.
> After the 1998 amendment, the maritime industry experienced significant and widespread consolidation. In addition to carrier mergers and acquisitions concentrating the bulk of containership capacity in U.S. trades to fewer than a dozen large carriers, the formation of vessel carrier alliances caused further substantial consolidation. Currently, there are three major carrier alliances representing 80 percent of all container trade. Within the alliances, there has been further consolidation, e.g., the creation of Ocean Network Express (ONE) by the merger of Japanese carriers.
Damn.