In a report released Thursday, April 14th, White House economists stated that while the pandemic did expose weaknesses in the supply chain, it did not actually create those problems. Modern supply chains have become very vulnerable nowadays, and climate change as well as the increasing number of natural disasters, like tornados, earthquakes and hurricanes, “make further disruptions inevitable.”
This information was released in the Economic Report of the President, which is an annual document released by the White House that outlines the economic issues facing the country and how the current administration is hoping to address and fix them. One of the seven chapters in the report was focused on the supply chain issues the global economy is dealing with, and in this chapter, White House economists claim that the practice of offshoring, where manufacturers buy low cost products from other countries, like China, as well as the adoption of just in time manufacturing has created a very efficient supply chain, but one that is also very prone to “breaking down” when there is a shock to the economy, like a pandemic, natural disaster, or a war.
In the report, the current administration explained that they will continue to look for weaknesses in the supply chain for certain products, like semiconductors and pharmaceutical products, and also hopes to increase American manufacturing through more government purchases, and an increase in investment. These measures hope to create a stronger supply chain that wouldn’t be as easily breakable, but would come with some added costs to manufactured goods, which can be seen as a problem in our already highly inflationary economy.
https://www.nytimes.com/2022/04/14/business/economy/biden-supply-chain.html
Current supply chains in the US are highly dependent on cooperation with other countries especially China. To avoid a future disruption, US would wanna encourage domestic investment in manufacturing.
ReplyDeleteThe dependance the U.S. government has on other counties with trade has caused so many supply chain issues. I think that the U.S. needs to become more independent and focus on creating jobs in the U.S. so they aren't lost to foreign investment.
ReplyDeleteThere is an increase in number of COVID cases in the US. The new variant have been identified by scientists. Hopefully, we will not enter another pandemic. The US depends on exports of many goods. If supply will decrease, prices will increase in the country
ReplyDeleteThe globalization of the supply chain is likely what makes it so susceptible to breaking down. The deep roots which America has in other countries would make it difficult to become more independent, especially with the high costs of production and living in America.
ReplyDeleteI read up on offshoring and many private sector analysts and policymakers attribute the offshoring wave to Chinese home-grown factors because of the low labor costs, stable political system, aggressive export promotion policies, and undervalued exchange rate. Apple is an example as they are offshore in China.
ReplyDeleteGlobalization at one point was definitely thought of in the only the ideal, fabulous imagery. Supply chain shocks contributing from other countries were probably never thought of until they started to become apparent.
ReplyDeleteSo would you suggest a decrease in offshoring in order to maintain lower manufacturing costs?
ReplyDeleteLabor shortages are also a major cause of supply chain problems. Although the epidemic has gradually eased, the labor market has gradually returned to pre-epidemic levels. But large numbers of people who left the workforce early in the pandemic have not returned to work.
ReplyDeleteIt is not only the US that is dependent on other countries. Almost all countries in the world are depended on each other now. This is a worldwide problem. It will be interesting to see if countries will change their production locations, or if they will keep doing what they are doing.
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ReplyDeleteI’ll be curious to see our nations adaptions as well as other nations adaptions. If some of these supply chain hurdles become too big for certain nations, adaptions will naturally come into play as economically, nations will go down roads that they seem as the best option. I wonder if the United States for example will do something like subsidizing certain fields, outlawing activities/purchases, or even creating new taxes on select item import/exports.
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