I would edit that to read "a scary disaster area".
We devoted most of this year to designing an entirely new product line for a new startup I am launching. It got delayed due to the pandemic. We decided to restart it around March of this year. We have gone through many prototypes and are now ready to start manufacturing, with the aim of delivering products during Q1 (we have serious orders).
Well, this week I am having meetings with component suppliers to figure out what we have to do in terms of design changes and ready-to-go variants in order to deal with supply chain issues. The variants have to be there in order to be able to deliver product if key components become unavailable.
The approach is requiring us to design something like three versions of each product. Each of these has to go through full UL/TUV/CSA and other regulatory testing. That's why I say "disaster area" doesn't quite cover it. I have lived through massive manufacturing supply chain upsets in the past. This one is different in that it is far more widespread, with multiple product lines suffering shortages and delivery issues for different reasons.
If this pandemic does not teach nations, governments and people why it is so important to have short local and capable supply chains, I don't know what will.
I doubt it will. I order a lot of construction materials, so I've been exposed to most of the supply chain issues. Some of the worst and most unexpected delays have been from the local suppliers. Presumedly because they are also constrained on some parts, and they don't prioritize me simply because I'm local. So going forward, I certainly don't see why I would pay a premium for local suppliers..
A lot of what we are seeing is rooted in failed economic and foreign policies spanning at least five decades.
To add to my prior statement:
If this doesn't teach people that our politicians are incompetent and selfish, I am not sure what will.
Note I do not make political party distinctions. We have allowed ambulance chasers run our country for decades. The realities of the next few decades are entirely on the voters who never woke up to understand that incompetent, selfish, power-hungry people never produce good outcomes.
I can't think of many politicians I would hire to run a mid size cooking baking operation. That's how bad it is.
https://www.macrotrends.net/countries/USA/united-states/manu...
No, we don't. We assemble a lot of stuff and somehow manage to call it "US made". Let's not fool ourselves.
Most "Made in USA" product is nearly 100% comprised of components and assemblies made in China (mostly) and other places. I know entire companies that operate this way.
If you read through the ISIC divisions 15-37 categories it is very easy to see that there are entire categories of items could not be made even with 25% US-made content.
https://unstats.un.org/unsd/publication/seriesm/seriesm_4rev...
Start on page 44.
Divisions, 17, 18, 19, 25, 26, 28, 29, 30, 31, 32, 33 and 36 are almost certainly either made outside the US or assembled in the US with nearly 100% non-US materials. Take Ikea as an example. Or, for that matter, almost any piece of furniture you can buy from Walmart or most furniture stores.
The other classifications run a range between genuinely US-made, assembled in the US from foreign materials and 100% non-US.
To be clear, I am not proposing that we should have a 100% inshored supply line. That cat is out of the bag. There are entire industries that will never come back. Ever.
We could do better though. Yet this, at a minimum, requires unity and a solid commitment to actually focus on things that really matter. We have not demonstrated being able to do this for quite some time.
A real analysis would require detailed data per ISIC division along with an analysis of the products and their actual US-made content. Having been in manufacturing for some four decades, I can tell you, without a shadow of a doubt, that there are very few things we can truly call "Made in USA", even if the criteria is 75% domestically manufactured content.
A few hours browsing the Alibaba website should give anyone a good sense of where we are. Pick an item. Go find a manufacturer on Alibaba. You are likely to find hundreds of them in China. Now go find manufacturers of the same item in the US or Europe. Good luck.
If I send out for a quote for a part or assembly in China, I'll get 10 to 50 quotes overnight. If I do the same thing in the US I would consider myself lucky if I get one quote in two to four weeks. And when I do finally get it, it costs 2x to 5x more and takes five times longer to get it done. It's that bad. In a lot of cases the US companies are just middle men who get the products made in China.
And then there are real questions about these numbers. Simple example: Are Apple iPhone sales counted as US manufacturing output?
Should it teach that to nations and governments? I get people who want to have access to things they can buy. But did the supply issues affect nations and governments in any way that's larger than annoyance/delay? This is a serious questions - did any country fail some large project with impact larger than the risk of "we're fine, as soon as the supply chain recovers we won't have to deal with this problem for many decades"?
I don't think a single billionaire or bureaucrat is gonna bat an eyelash. Inflation doesn't affect them. Deflation does. That's why they stripped every single mean from the lower classes being capable of doing so.
The revisions show the real picture, and it is not pretty.
See https://alhambrapartners.com/2021/07/30/inflation-estimates-...
And the bio of the author doesn't engender much confidence: "He is not an economist, which is probably why he's been able to develop a working model of the global monetary system. His research is unique and informative in ways an economist would never consider."
* An example of a condition where it might not apply is if everyone were already perfectly sorted into their preferred jobs and there was no remaining pool to encourage new people to become workers from. Then raising wages wouldn't affect the sorting of the economy other than to transfer money from capital to labor (which is a good thing anyway in our age of inequality). I highly doubt we are there.
The problem being if you get into a circle raise -> more new money -> goto 1 it may be hard to slow it down.
In reality nobody wants money. They want houses, food, education, children, ... each of those also represent a relatively constant fraction of the money supply of an economy. So you can only get a raise by actually doing more work, or in the case of the government jobs, having more hostages/threats (if you fire me X will happen, X being somewhere between a fight over who replaces you, to new elections, to I guess revolution in some extreme cases).
This is not very visible because plumber wages DO change, for example with the number of plumbers available. House prices do change, for example with migration. But wages do not change, in real terms, because of inflation. A raise is a necessity, merely for you to maintain whatever position you have in society. It is not nice, in that it improves your position in society. A house, ownership, maybe stocks and of course innovation improves your position. Raises and inflation are a smokescreen.
I use the term "new money" because "parked money" does not matter. Only money that was involved in some transaction in the recent past actually matters. We can argue about what measure is the best for this, and economists constantly do that, but other than that it's not simply total money, it is not necessary to have an answer for this point.
People are saying no to dead end jobs that cannot afford the people working them a reasonable quality of living. The solution for the workers is to demand enough pay to realize a dignified lifestyle. The solution for the employer is to do whatever scummy things are necessary to fill the roles, long term consequences be dammed. The solution for government is to cool the housing market, implement single payer healthcare, and fix the systemic issues facing underserved communities with massive capital investments that also happen to be great jobs programs.
We're going to have to transition to whatever the new normal is very soon. There is only so much money printing the fed can do to cover up structural problems in the economy. Given the inflation we're seeing, I think we're getting near the end of that rope. We're now, I think, seeing diminishing returns on the helicopter money and artificially suppressed interest rates.
Manufacturing and trade and industrial production? The supply chain's a disaster area right now. And real personal income is going to be down because inflation is up (the transfer payments we've been making are of course excluded). Employment numbers are steady, at least.