Good Advice

Reason: Don’t ask politicians to fix the supply chain crisis they created

The trade associations fret over serious worldwide supply chain issues often represented by backlogs at ports, but also involving the inability to source both components needed for production and finished goods. Some of the international disconnect between supply and demand can be attributed to specific policies, such as lockdowns that make it difficult for factories to satisfy customers.

"Governments have struggled to secure doses [of vaccine] and have imposed costly lockdowns that have left many factories without workers," Reuters reported in August of manufacturing woes in Asia.

Likewise, Britain's dearth of truck drivers has been laid at the feet of the border barriers imposed by Brexit, which certainly didn't help. But neither did the suspension of the approval process for commercial drivers or lockdowns that idled workers.

"Covid has had an impact and the most obvious Covid impact is that normally about 35,000—40,000 tests are done a year for HGV [heavy goods vehicle] drivers and had to be suspended quite rightly for Covid, and there's a backlog of tests," the head of a dairy co-op told the Yorkshire Post.

"Foreign labour was not scared out of Britain due to an abstract legal change; it was driven out by the Government's lockdown policies in response to the pandemic, which shuffled many from their jobs onto a souped-up dole," charges British economist Philip Pilkington, who points out that Ireland, which remains in the EU, also has a driver shortage. "Many realised that the dole is better where they came from on the continent, especially relative to the cost of living, and so they left." Pilkington also points to the delay in testing drivers as contributing to the shortage.

Lockdowns also changed people's lives, closing offices and factories and confining people at home. That resulted in massive and unpredictable shifts in demand and unreliable supply. Do you remember the disappearance from supermarkets of flour and yeast early in the pandemic? Who knew that people with time on their hands would discover their inner bakers (at least for the time being)?

"The period of contagion, self-isolation and economic uncertainty will change the way consumers behave, in some cases for years to come," observes the consulting firm McKinsey & Company. "The new consumer behaviors span all areas of life, from how we work to how we shop to how we entertain ourselves. These rapid shifts have important implications for retailers and consumer-packaged-goods companies."

How many of these changes will be permanent, and which will revert to old patterns after restrictions on normal life disappear? Businesses planning for the future have to guess, with their survival at stake.

The money quote, which we knew and predicted, and which politicians and Leftists denied:

"The idea that an economy could be indiscriminately shut down and turned back on without far-reaching consequences, as if a light switch or lawn mower, is utterly damnable," charges economist Peter C. Earle. "It could only come from the mind of an individual, or body of individuals, with no understanding of or consideration for the extraordinary interdependence of the productive sector."

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The danger is that people see economic problems caused by earlier fiddling and then demand even more government intervention. The semiconductor shortage, for instance, can be attributed to production curtailed by lockdowns as demand for computers soared among populations compelled to work and study from home. But the trade-group white paper that asked the Biden administration for tariff relief also begged it to "Ensure that semiconductor supply is fairly and transparently allocated across industry sectors and that the Administration does not—explicitly or implicitly—favor any one sector."

The groups don't elaborate on what a semiconductor policy should look like. But if the government were to further meddle in the market to allocate products made scarce by earlier actions, it's hard to see how the result wouldn't be anything other than increased supply chain chaos.