WHY THE SUPPLY CHAIN CRISIS IS SO REVEALING: Joel Kotkin: Slow Boat From China.
To some in the Biden Administration, the supply chain crisis can be dismissed as a loss of East Asian-made consumer trinkets that, as Vox tells us, we could all be better off without—or as White House spokesperson Jen Psaki suggested, amounts to little more than “the tragedy of the delayed treadmill.” Yet, in reality, a broken supply chain is hardly a rich man’s problem—global bankers are having their best year ever—but mostly impacts ordinary folks suffering from rising prices for everything from soybeans to natural gas. The crisis is now expected to last for at least a year.
The chaos on the ground level may not much hurt the elites of Manhattan or Palo Alto, but inflation, which is now expected to continue apace for at least the next year, has wiped out wage gains in the U.S., the UK, and Germany. Low-income groups are the most threatened, struggling to pay energy costs, surging rents, and higher food prices. All this is also eroding President Biden’s already weak poll numbers.
Our vulnerability to supply chain disruption clearly predates the Biden Administration, forged by the abandonment of the production economy over the past 50 years by American business and government, encouraged and applauded by the clerisy of business consultants. The result has been massive trade deficits that now extend to high-tech products, and even components for military goods, many of which are now produced in China. When companies move production abroad, they often follow up by shifting research and development as well. All we are left with is advertising the products, and ringing up the sales, assuming they arrive.
Unable to stock shelves, procure parts, power your home, or even protect your own country without waiting for your ship to come in, Americans are now unusually vulnerable to shipping rates shooting up to ten times higher than before the pandemic. Not surprisingly, pessimism about America’s direction, after a brief improvement Biden’s election, has risen by 20 points. The shipping crisis is now projected to last through 2023.
Not everyone loses here. For years the American establishment saw China as more of an opportunity than a danger. High-tech firms, entertainment companies, and investment banks profit, or hope to, from our dependency, becoming in essence the new “China lobby.” Behind the scenes these representatives of enlightened capital often work to prevent condemnation for the Middle Kingdom’s mercantilist policy, and its joint repression of democracy and ethnic minorities.
After all, the pain is not felt in elite coastal enclaves, but in Youngstown, south Los Angeles, and myriad other decaying locales.
Plus:
But even possessing the best piece of real estate on the planet is not enough if you don’t take advantage of it. America’s brief flirtation with energy self-sufficiency is now being undermined both by increased imports from the Middle East and a drive to wipe out much of our domestic production. The passionate embrace of renewable energy bolsters China’s dominance of solar panels and the essential metals needed to produce “clean” electricity and electric cars.
In traditional colonialism, nations colonized other countries in order to seize their wealth and organize trade to their own benefit. In neocolonialism, rulers colonize their own nations while collaborating with foreign enemies. But in the 21st Century, Western rulers view their own populace as their most dangerous foes.
Finally: “Under normal circumstances, we would expect a government more focused on reshoring and addressing the supply chain than indulging in virtue signaling on everything from climate to race and gender.”
Well, yes.