Today on The BradCast, we tackle another small, totally easy to solve issue: Untangling the worldwide supply chain debacle. [Audio link to full show follows this summary.]
But, before that, at least a few stories seem to be resolving themselves today...
- Nine families of victims of the 2012 Sandy Hook Elementary School massacre settled their lawsuit with Remington, the manufacturer and marketer of the semi-automatic rifle used to kill their family members, for $73 million. The deal is noteworthy because federal law bans such suits against the gun industry, but Connecticut law does not. In this case, the U.S. Supreme Court rejected Remington's attempt to block the suit based on the protections in federal law.
- Prince Andrew settled a lawsuit filed against him by a woman who says she was 17-years old when she was sexually abused by Andrew, as coerced by the late financier and child sex trafficker Jeffrey Epstein. The settlement includes an undisclosed donation to the charity of the victim, Virginia Giuffre, and an acknowledgement by Andrew that she has suffered abuse as a victim It is unknown if Giuffre will personally receive any money as part of the agreement.
- Both a jury and a judge helped settle former Alaska Governor Sarah Palin's defamation lawsuit against the New York Times by rejecting it in no uncertain terms. On Tuesday, the jury in the civil trial brought by Palin found the Times' editorial board not guilty of libeling the former GOP Vice Presidential nominee. The paper had erroneously cited a "clear link" between a map published by a Palin campaign websites featuring a gun site on certain Congressional districts --- including then Democratic Rep. Gabby Giffords' --- and the 2013 mass shooting in Tuscon that killed six people and critically injured the Congresswoman. The jury's rejection of Palin's suit came the day after the judge, as the jury was still deliberating, declared that he planned to dismiss the case anyway after finding that Palin failed to prove the paper acted maliciously against her. For its part, the Times described the verdict as "reaffirmation of a fundamental tenet of American law: public figures should not be permitted to use libel suits to punish or intimidate news organizations that make, acknowledge and swiftly correct unintentional errors."
- And, in the weeks-long Russian/Ukraine military stand-off, there was a long-awaited easing of tensions as President Putin announced that Russia was ready for talks with the U.S. and NATO on a number of issues and that some Russian forces on the border with Ukraine would be withdrawing. President Biden, however, in remarks this afternoon at the White House, said the U.S. had "not yet verified" any troop withdraws and that a Russian invasion of Ukraine remained a possibility. The White House noted, however, that the U.S. remains opens to high-level diplomacy in hopes of avoiding military conflict in Europe.
On that news, Wall Street rallied after weeks of saber-rattling had weighed down the market and helped send oil and gas prices through the roof, serving as another reminder today of just one more way that our vulnerable supply chain can wreak havoc on an otherwise booming economy.
As it turns out, The American Prospect recently devoted an entire Special Issue for February to a very related topic: "The Supply Chain Debacle: How bad policy—outsourcing, financialization, monopolization, deregulation, and just-in-time logistics—broke our supply chains, raised costs and caused shortages."
We're joined today by The Prospect's Executive Editor and author David Dayen to help us untangle the mess that has been made over the past 40 or 50 years, under both political parties in this rare case, of a supply chain that has exposed its vulnerabilities with the onset of the COVID pandemic two years ago. But since then, it has continued to reveal its ill-designed brittleness and the very serious threat it poses to America's economic security.
Dayen walks us through how his Special Issue delves into the broad failures of the supply chain, largely put in place over the years by the Wall Street "free market" to maximize corporate profit at the expense of American jobs and national security...in exchange for cheap prices on goods! As Dayen details, the problems here are not one single failure across the chain, but as he breaks down, "multiple 'single points of failure'" across industry after industry all along the broken chain.
"We designed a system over the course of decades --- both parties --- that had lean inventories, that relied on offshore production, that relied on this concept of globalization," he explains. "That allowed the production facilities to become very concentrated. That allowed the spokes within the system to become concentrated. That deregulated everything to try to lower prices on shipping and transportation. And that allowed Wall Street to take the primary role in governing these efforts --- in other words, telling corporations 'Yes, you have to move your production offshore for cheap labor', and 'We have to deregulate these industries so that costs stay low,' and 'You have to have just-in-time production so that you don't have any inventory sitting around just wasting money, and we're spending too much money on warehouses.'"
With this precarious, profit-driven system in place, Dayen steps through The Prospect's full team coverage of how a virus breaking out in a manufacturing hub in China can shut down the entire system. Any sudden increase in a demand for goods --- say, during a pandemic --- ends up tying the giant, oligopolized over-seas container shipping system into knots and stranding massive cargo ships at sea while there is no room left for off-loading at U.S. ports. Once finally off-loaded, sometimes after months waiting in line off-shore, a U.S. rail system run by just a couple of companies and a trucking system that doesn't pay workers nearly enough for their efforts further bottlenecks the process. Then there's the vast lack of warehouse space for all those goods if they can ever get to where they need to be. All the while, these disruptions and failures work to the benefit of the largest distributors --- like Amazon and Walmart --- while cutting the knees out from under independent retailers and raising prices for everyone. So much for those low prices that consumers, at least, were supposed to get out of the deal.
But, as Dayen also explains, it doesn't take a pandemic. A cross-border bridge protest in Canada, saber-rattling in Eastern Europe or the Middle East and, perhaps even more crippling to the supply chain over the past year than anything else, climate change related disasters which promise to only get much more frequent and severe in the years ahead.
"The problem is the supply chain is run on these knife-edge principles that make it impossible for it to adjust to a shift up in demand. That is the entire problem," he argues. "So people who go on and say, 'No, this isn't a problem, it's just this shift. Everything will be fine.' They're missing the point. The point is that this lack of adjustment reflects problems with how the system is engineered."
And, yes, Dayen has advice on how to re-engineer the entire system. The good news, he also explains, is that both corporations and members of Congress --- from BOTH parties --- seem to finally be getting it. They are looking at and passing bills that encourage (and spend money on) the regionalization and onshoring of manufacturing back here in the U.S., and the Biden administration is investing heavily --- when Congress allows them --- into a number of long-overdue fixes.
It may all sound dry on paper, but it's actually a fascinating and very lively conversation on today's program that I hope you'll tune in for.
Finally --- and including a few related points --- Desi Doyen joins us for our latest Green News Report, on the crippling Western U.S. megadrought; the Biden Administration's roll-out of a national EV charging network; the spike in oil prices amid tensions in Russia-Ukraine; and the Super Bowl blitz by U.S. carmakers launching long overdue electric vehicle production lines...
(Snail mail support to "Brad Friedman, 7095 Hollywood Blvd., #594 Los Angeles, CA 90028" always welcome too!)