I haven’t seen any real problems. There does seem to be a shortage of Little Debbie Honey Buns and Wise has had to put more popcorn and less chips into their Variety Pack, but that’s kind of the definition of a first-world problem, and I hope I never get spoiled enough to treat that as a crisis.
Yet supply chains can pose a danger to an economy in two important ways (beyond the defense-related concerns mentioned above).
The more complex a supply chain becomes, the greater the economic risks. A break in any link can affect the whole chain and send prices surging if it creates sudden shortages of a necessary input.
The worst-case scenario is when a failure in one part of the chain triggers domino effects, bringing down other firms and bringing the entire sector to a standstill.
Logically, this scenario is similar to what one finds in financial networks, where the failure of one bank can push others into insolvency or even bankruptcy, as happened in 2008 following the collapse of Lehman Brothers.
In principle, because uncertainty is costly, businesses will take these risks into account when deciding to build supply chains.
In practice, however, there are good economic reasons why firms may overextend their supply chains. For one thing, firms will account for their own risk, but not for the systemic effects they are creating, nor for the risks they are imposing on other firms or the entire economy.
Moreover, when global competition creates powerful incentives to reduce costs, even small price differences offered by foreign suppliers can become attractive, especially in the short term.
CEOs enjoy immediate compensation when they can achieve cost reductions and increase profits, whereas the significant costs of future uncertainty—or even bankruptcy—will likely be someone else’s problem.
A second way that companies may overextend their supply chain is subtler but no less important. The problem, the White House review notes, is that “the United States has taken certain features of global markets—especially the fear that companies and capital will flee to wherever wages, taxes and regulation are lowest ✁
Don’t forget supply chain shortages also allow greedy corporations to jack up prices to scam those less fortunate. The almighty dollar is the real reason for the season.
B 8671 almost 3 years ago
Who knew Santa was a republigoon? Well he is wearing red after all.
Cornelius Noodleman almost 3 years ago
Rare to see them inside.
nosirrom almost 3 years ago
With the supply chain problems we may really be celebrating Christmas in July.
Sanspareil almost 3 years ago
Nah, Carmen! it’s all Branden’s fault! /s
KenseidenXL almost 3 years ago
Gift cards….
CarrollJr almost 3 years ago
Nonsense, most people have too much junk anyway. Donate to a charity as a gift!
Ignatz Premium Member almost 3 years ago
I haven’t seen any real problems. There does seem to be a shortage of Little Debbie Honey Buns and Wise has had to put more popcorn and less chips into their Variety Pack, but that’s kind of the definition of a first-world problem, and I hope I never get spoiled enough to treat that as a crisis.
Silly Season almost 3 years ago
Yet supply chains can pose a danger to an economy in two important ways (beyond the defense-related concerns mentioned above).
The more complex a supply chain becomes, the greater the economic risks. A break in any link can affect the whole chain and send prices surging if it creates sudden shortages of a necessary input.
The worst-case scenario is when a failure in one part of the chain triggers domino effects, bringing down other firms and bringing the entire sector to a standstill.
Logically, this scenario is similar to what one finds in financial networks, where the failure of one bank can push others into insolvency or even bankruptcy, as happened in 2008 following the collapse of Lehman Brothers.
In principle, because uncertainty is costly, businesses will take these risks into account when deciding to build supply chains.
In practice, however, there are good economic reasons why firms may overextend their supply chains. For one thing, firms will account for their own risk, but not for the systemic effects they are creating, nor for the risks they are imposing on other firms or the entire economy.
Moreover, when global competition creates powerful incentives to reduce costs, even small price differences offered by foreign suppliers can become attractive, especially in the short term.
CEOs enjoy immediate compensation when they can achieve cost reductions and increase profits, whereas the significant costs of future uncertainty—or even bankruptcy—will likely be someone else’s problem.
A second way that companies may overextend their supply chain is subtler but no less important. The problem, the White House review notes, is that “the United States has taken certain features of global markets—especially the fear that companies and capital will flee to wherever wages, taxes and regulation are lowest ✁
~
https://www.marketwatch.com/story/global-supply-chains-may-be-efficient-but-they-also-risk-boosting-inflation-and-inequality-11638467210
jconnors3954 almost 3 years ago
It’s the thought!
Kip Williams almost 3 years ago
Turn it upside down and it just about says …NOT.
Bradley Walker almost 3 years ago
Over in Tank MacNamera Santa’s giving out NFTs…
Night-Gaunt49[Bozo is Boffo] almost 3 years ago
Not for Santa who is totally separate from us.
randolini Premium Member almost 3 years ago
Don’t forget supply chain shortages also allow greedy corporations to jack up prices to scam those less fortunate. The almighty dollar is the real reason for the season.