Dan Sutter: Supply chains and the shortage economy
America is experiencing extended shortages of goods without recent precedent. The global transportation system is heavily congested, with dozens of ocean freighters waiting off California to dock. Is America’s economy beginning to emulate the former Soviet Union? Consumer spending quickly recovered from a sharp decline during the COVID-19 pandemic. More significantly, the pandemic and the policy responses changed buying plans. Consumers shifted from dining out and entertainment to purchasing goods. Stay-at-home orders led to a demand for building supplies for DIY projects, while remote schooling led to huge purchases of Chromebooks. COVID stimulus checks encouraged additional purchases. Every economy features capacity constraints. Setting up new factories takes time; we can only ramp up production of lumber or computer chips modestly in the short run. The changes in the composition of consumer demand consequently created challenges. The labor shortages resulting from four million fewer workers have slowed efforts to expand production. Global supply chains employ ships, planes, trucks, and trains to move parts and products around the globe. Just-in-time production involves not holding large inventories of parts and materials, requiring reliable transportation. But capacity constraints also exist in transportation. And the goods consumers wanted to purchase are either imported or assembled using imported components. Demand for transportation has increase. Several disruptions of global shipping have compounded the strain on the system. In March, the Ever Given ran aground and blocked the Suez Canal for six days. Two of China’s leading ports have closed due to COVID-19 outbreaks among dock workers. Port congestion will spread across the rest of the system. Containers on ships waiting off Los Angeles, for instance, cannot transport other loads. And containers to be loaded on the ships waiting off the coast clog ports and warehouses. We consequently have seen substantial increases in transportation prices, like a doubling of the cost of shipping a standard container and equipment, like shipping containers and truck chassis. These price increases are a feature of markets, not a flaw. High prices help bring all used shipping containers into service. High shipping costs make customers think carefully about whether they can wait. Despite the “broken” characterizations, U.S. ports are projected to set all-time cargo handling records this year. Supply chains are struggling to meet increased demand, not failing to deliver what we normally buy. Our elected officials imagine that they can solve all our problems. Unsurprisingly President Joe Biden appointed a “port czar” in August and has said, “If the private sector doesn’t step up, we’re going to call them out and ask them to act.” Many experts suggest we need someone, presumably government, in charge. An authority quoted in the Washington Post said, “It’s like an orchestra with lots of first violins and no conductor. … No one’s really in charge.” Yet government control over supply chains would help make shortages permanent. Supply chains are too complex for anyone, including the managers of companies like Apple and Nike, to understand. Companies use suppliers and do not know all their suppliers’ logistics. The resulting economy is so interconnected that the lumber shortage has worsened transportation problems. How? As American Institute for Economic Research economist Peter Earle explains, shipping containers require wooden pallets. Beyond this, as economist Friedrich Hayek observed, production remains steady only because businesses daily make hundreds of small and large adjustments. Businesses have responded to transportation bottlenecks. Home Depot and Walmart, for instance, are chartering cargo ships and sending them to ports with shorter delays. Businesses adjust because they see the looming problems and potential solutions and have a profit incentive to do so. Unapproved changes, however, would disrupt government plans. A government supply chain czar would almost certainly require approval for adjustments. How long will shortages persist before bureaucrats decide to approve adjustments? Firms across the globe are working tirelessly to supply Americans with the things we want. Supply chains are not broken and are delivering more goods than ever. Politicians can help the most by cheering on these efforts. Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.
Death threats, tweets jolt GOP infrastructure supporters
The last time Congress approved a major renewal of federal highway and other transportation programs, the votes were 359-65 in the House and 83-16 in the Senate. It was backed by nearly every Democrat and robust majorities of Republicans. This year’s $1 trillion infrastructure bill easily cleared the Senate 69-13 with GOP support but crawled through the House last week by 228-206 with just 13 Republican votes. Those defectors were savaged afterward by former President Donald Trump, hard-right Rep. Marjorie Taylor Greene, R-Ga., called them “traitors” while tweeting their names and office telephone numbers, and one of the 13 says he received a death threat. The votes, six years apart, and the harsh blowback against Republican mavericks illustrate a GOP in which conservative voices have grown louder and more militant, fanned by Trump’s bellicose four years in office. Growing numbers of progressives have made Democrats more liberal, too, with both shifts fueling a sharpening of partisanship in Washington. “This madness has to stop,” said Rep. Fred Upton, R-Mich., an 18-term moderate, who said his offices received dozens of threatening calls following his yes vote. That included one obscenity-laced rant that aides provided in which the caller repeatedly called Upton a “traitor” and expressed hope that the lawmaker, his family, and aides would die. Upton closed his two Michigan offices for a day and reopened them after increasing their security. This year’s bill, triple the size of the 2015 measure, is a keystone of President Joe Biden’s push to create jobs and build out the nation’s roads, water systems, broadband coverage, and other projects. A compromise between Senate Democrats and Republicans, it will send money into every state and is the kind of bill that politicians have loved promoting back home for decades. Biden plans to sign it Monday. Democrats say GOP opposition to the bill is indefensible on policy and political grounds. “It’s a sad statement of how the other party has lost its way,” said Rep. Sean Patrick Maloney, D-N.Y., who’s leading the House Democratic political arm into a 2022 campaign in which Republicans have solid chances of capturing congressional control. ”If you want our country to fail so you can say things are bad and win power for yourself, you act like the House Republicans are.” But for many Republicans, infrastructure projects — once an issue the two parties would reflexively work together on for mutual and national benefit — now offer a complex political calculation. “When it comes to policy these days, we’re basically divided into two tribes. And you stick with your tribe, and you don’t try to help the other tribe,” said Glen Bolger, a GOP pollster, and strategist. As president, Trump repeatedly promised his own massive infrastructure plan but never produced one, making the phrase “infrastructure week” a Washington synonym for “pipe dream.” But he opposes the current package, and his ability to rally his conservative supporters against those who cross him was a factor as GOP lawmakers decided how to vote. Even so, hard-right cries for retaliation against the 13 pro-infrastructure Republicans, largely moderates from the Northeast and Midwest, have prompted their own pushback. “This notion that we’re going to have people that are on the fringe, in terms of the Marjorie Taylor Greenes of the world and others, imposing some kind of a purity test on substance is lunacy,” said Rep. Liz Cheney, R-Wyo. Cheney has been at war with Trump and the party’s far-right ever since backing his impeachment early this year. Cheney opposed the bill, saying it contained clean energy and other provisions that would hurt Wyoming. She said the 13 Republicans who backed it are “among some of our very best members” who did it “because it was the right thing for their districts.” Senate Minority Leader Mitch McConnell, R-Ky., an unabashed partisan warrior, was among 19 Senate Republicans who voted for the bill in August. McConnell, who doesn’t have to worry about being re-elected until 2026, said this week he was “delighted” the measure was heading to Biden. A day earlier, McConnell had already drawn Trump’s wrath. Trump issued a statement denigrating GOP senators who’d backed the bill for “thinking that helping the Democrats is such a wonderful thing to do.” Those Republicans “should be ashamed of themselves, in particular Mitch McConnell,” Trump wrote. That was just the tip of the iceberg for the attacks. In an interview, the leader of the conservative House Freedom Caucus said GOP lawmakers should consider removing from their posts the 10 of the 13 defectors who are the senior Republicans on committees and subcommittees. “I respect their right to vote, their districts, and their conscience. But that doesn’t mean that they should get the privilege of leading” House Republicans, said Rep. Andy Biggs, R-Ariz. At a private Florida dinner Monday to bolster House GOP campaign prospects, Trump said he loves House Republicans but not the 13 who voted for the bill, according to an attendee who described Trump’s remarks on condition of anonymity. Earlier, House GOP leaders tweeted, and then deleted, that “Americans won’t forget” a vote for the “socialist” infrastructure bill. “Time to name names and hold these fake republicans accountable,” tweeted Rep. Lauren Boebert, R-Colo. Before last week’s vote, House Minority Leader Kevin McCarthy, R-Calif., said it would be “very difficult” for Republicans to promote backing the infrastructure bill during their campaigns because it is so closely linked to Democrats’ accompanying $1.85 trillion social and climate measure, which the GOP has solidly opposed. Rep. Jeff Van Drew, R-N.J., who switched parties in 2019, said he supported the infrastructure bill because his state would receive over $20 billion “we desperately need.” Van Drew, who said he had heard “some cranky things” from some people, scoffed at the notion that the bill would “catapult the president” politically. “If Marjorie Taylor Greene wants to be mean to me, that’s fine,” he said of the colleague who labeled him and 12 others traitors. “I love America very much. I would never ever do anything to hurt this country.” Republished
Court temporarily delays release of Donald Trump’s January 6 records
A federal appeals court on Thursday temporarily blocked the release of White House records sought by a U.S. House committee investigating the Jan. 6 insurrection, granting — for now — a request from former President Donald Trump. The administrative injunction issued by the U.S. Court of Appeals for the District of Columbia Circuit effectively bars until the end of this month the release of records that were to be turned over Friday. The appeals court set oral arguments in the case for Nov. 30. The stay gives the court time to consider arguments in a momentous clash between the former president, whose supporters stormed the Capitol on Jan. 6, and President Joe Biden and Congress, who have pushed for a thorough investigation of the riot. It delays the House committee from reviewing records that lawmakers say could shed light on the events leading up to the insurrection and Trump’s efforts to delegitimize an election he lost. The National Archives, which holds the documents, says they include call logs, handwritten notes, and a draft executive order on “election integrity.” Biden waived executive privilege on the documents. Trump then went to court, arguing that as a former president, he still had the right to exert privilege over the records, and releasing them would damage the presidency in the future. U.S. District Judge Tanya Chutkan on Tuesday rejected those arguments, noting in part, “Presidents are not kings, and Plaintiff is not President.” She again denied an emergency motion by Trump on Wednesday. In their emergency filing to the appeals court, Trump’s lawyers wrote that without a stay, Trump would “suffer irreparable harm through the effective denial of a constitutional and statutory right to be fully heard on a serious disagreement between the former and incumbent President.” The Nov. 30 arguments will take place before three judges nominated by Democratic presidents: Patricia Millett and Robert Wilkins, nominated by former President Barack Obama, and Ketanji Brown Jackson, an appointee of Biden. Given the case’s magnitude, whichever side loses before the circuit court is likely to eventually appeal to the U.S. Supreme Court. The White House on Thursday also notified a lawyer for Mark Meadows, Trump’s former chief of staff, that Biden would waive any executive privilege that would prevent Meadows from cooperating with the committee, according to a letter obtained by The Associated Press. The committee has subpoenaed Meadows and more than two dozen other people as part of its investigation. His lawyer, George Terwilliger, issued a statement in response saying Meadows “remains under the instructions of former President Trump to respect longstanding principles of executive privilege.” “It now appears the courts will have to resolve this conflict,” Terwilliger said. The committee late Thursday threatened to begin contempt proceedings against Meadows if he doesn’t change course and comply. “Simply put, there is no valid legal basis for Mr. Meadows’s continued resistance to the Select Committee’s subpoena,” the committee wrote to Terwilliger, saying it would view Meadows’ failure to turn over documents or appear at a scheduled deposition on Friday as “willful non-compliance.” The House has already referred former Trump adviser Steve Bannon to the Justice Department for potential criminal prosecution for contempt of Congress. Republished with the permission of the Associated Press.
Infrastructure bill to support Alabama broadband, road repair; Congressional Republicans rip ‘reckless’ spending
Alabama will receive $5.2 billion in federal highway funding and $225 million for bridge replacement and repairs under the Infrastructure Investment and Jobs Act, according to a news release from U.S. Rep. Terri Sewell of Birmingham. The state’s Republican Congressional delegation criticized the measure for spending more on Democratic wish lists than actual infrastructure. The state will also receive $100 million to improve the state’s broadband coverage. “Broadband internet is necessary for Alabamians to do their jobs, participate equally in school learning, health care, and to stay connected,” Sewell said in the news release. “Yet 18% of Alabama households do not have an internet subscription, and 11.5% of Alabama residents live in areas where, under the FCC’s benchmark, there is no broadband infrastructure.” Alabama will receive $400 million over the next five years for public transportation projects. About a fourth of transit vehicles in the state are “past useful life,” according to Sewell. Sewell said Alabama’s infrastructure “has been falling behind for far too long.” “I fought to ensure that equity is a central focus of this bill, and I’m proud that it will uplift hard-working Alabamians from our biggest cities to our most rural communities,” Sewell said. Alabama will also receive: $782 million for water infrastructure improvements. $140 million to improve the state’s airports $23 million for wildfire protection. $19 million for protection against cyberattacks. The bill passed the House by a vote of 228 to 206. Republican Rep. Gary Palmer of Vestavia Hills voted against the bill. “Our economy is struggling, and our national debt already presents a serious national security threat, but the Democrats have shown they are willing to recklessly push through a bill that costs over a trillion dollars with only about 10 percent going to roads and bridges,” Palmer said in a news release. “I fully support funding for infrastructure that is focused on national priorities rather than wasting hundreds of billions of dollars on a Green New Deal wish list and programs under the guise of human infrastructure that simply expands government control of our lives.” The nonpartisan Congressional Budget Office said the infrastructure bill will increase the federal budget deficit by $256 billion over 10 years. U.S. Rep. Jerry Carl, a Republican from Mobile, said in a tweet over the weekend that he opposed the bill as well. “Late last night, I voted no on the Pelosi/Biden ‘infrastructure’ bill because less than 10% of this massive bill will go toward actual infrastructure projects like roads, bridges, ports, and waterways,” Carl said. “It’s time to get serious about real investments in our infrastructure.” By Kim Jarrett | The Center Square contributor
Long-running Veterans Day parade resumes after COVID halt
A red, white, and blue procession billed as the nation’s longest-running Veterans Day parade rolled once again Thursday despite dousing rain and gusty winds after taking a year off because of the coronavirus pandemic. Reduced to an online-only event in 2020 because of COVID-19 safety precautions, the National Veterans Day Parade stretched through downtown Birmingham in a traditional format that included military units, ROTC groups, floats, veterans organizations, high school bands, and lots of waving flags. The crowd was not huge, possibly because of the blustery weather, but Clarence Turner brought his two young grandsons and an umbrella. “I’m not a veteran. Actually, I was supposed to be at work today. I just took off to bring them down here so they can learn about the importance of the military and the veterans,” Turner said as the brothers, 8-year-old Terrence Todd and 9-year-old Lamar Todd, waved to marchers. Retired Marine Maj. Donald D. Brooks, who retired in 1977 after 40 years in the service and then taught ROTC, was happy the parade had resumed but concerned about participants. “I’m worried about my Marine color guard. They’re going to get all wet,” said Brooks, who lives in Tuscaloosa County, before the start. “I going to get in the car behind us.” More than 100 groups signed up to participate, down about 20 from most years, but Mark Ryan, president of the National Veterans Day Foundation, said organizers hoped tens of thousands will come out. “Our goal is to show our veterans our special they are to us, not only individually but collectively,” he said. Sgt. Maj. of the Army Michael A. Grinston, an Alabama native, served as grand marshal, riding in a covered vehicle to stay dry. Thousands turned out for a parade in Mobile despite overcast skies, and Huntsville’s parade stepped off earlier than planned because of the chance of storms. Birmingham isn’t the only place to claim its celebration of veterans is the nation’s oldest. Leavenworth County, Kansas, dates its festivities back to the year after World War I ended, 1918, or nearly 30 years before the Birmingham event was established. And Emporia, Kansas, has been recognized as having the first Veterans Day event in 1953. But the Veterans Administration credits Birmingham with having the first celebration to use the term “Veterans Day” in its title after World War II veteran Raymond Weeks organized “National Veterans Day” in 1947. President Dwight D. Eisenhower signed legislation changing the federal holiday from Armistice Day to Veterans Day in 1954. The parade has been held annually, Ryan said, and organizers considered canceling it last year because of public health safety before opting for a virtual event that included video performances, salutes, and video from past parades and was watched thousands watched online, he said. “Smarter minds than mine came together and convinced me we had to have one,” said Ryan. A dinner Wednesday night honored service members who participated in the response to COVID-19, which has killed more than 755,000 people in the United States, or more than the combined number of 673,687 U.S. service members who died from combat or other causes in both world wars, Korea, Vietnam, the two Gulf wars and the global war on terror that followed the attacks of Sept. 11, 2001. Service members helped in the fight against COVID-19 by cleaning nursing homes, setting up testing stations, and administering vaccines. “We’re honoring all of them,” said Ryan. Republished with the permission of the Associated Press.
