Problems in the supply chain aren’t going to be solved any time soon
It’s hard to imagine a worse time for massive increases in taxes and spending, yet that’s what Democrats in Washington, DC have in mind. We all know that, as Press Secretary Jen Psaki said this week, President Joe Biden sees the COVID-19 pandemic as an opportunity to “make fundamental changes to our economy.” But the changes they have in mind are going to take us on an economic cliff.
Businesses of all sizes are already seemingly being hit by supply chain bottlenecks, as well as labor shortages, and unusually high consumer demand – all driven by pandemic-lockdown conditions that only lead to a rise in prices. There are going to be reasons as we get closer to Christmas.
This is a Ph.D. does not take To accept in economics that limited supply coupled with increased demand is a recipe for inflation, which has been growing at an alarming rate for several months already. An increased tax burden coupled with an artificial surge in demand fueled by new government spending is exactly the kind of thing that could change InFlats in more serious reindeerWhich will ruin our entire economy.
Problems in the supply chain are not going to be solved any time soon. For years, businesses have relied on timely supply chains to meet consumer demand while reducing waste and storage costs.
This approach can be extremely efficient, allowing companies to keep prices low and delivery times short. But it also depends on factories with sufficient production capacity, a reliable supply of ships and shipping containers in which to ship goods across oceans, warehouse space in which to sort and store products, trucks and trains to move products. , and many more.
Today, however, factories are facing severe staff shortages and pandemic-related disruptions in their normal operations. Empty shipping containers are piling up in US ports, making them unavailable for use by foreign exporters.
Biden responds to supply chain crisis, urges private sector to ‘step up’
Ships are being forced to stay outside ports for days or weeks before unloading their cargo. Warehouses are filling up because there are not enough trucks to bring products to their final or intermediate destination. At almost every point in extremely long and complex supply chains, there are bottlenecks and shortages.
The net result is an unprecedented disruption to our daily lives, with empty grocery store shelves and warnings of Christmas orders being placed months in advance.
Eventually, we will reach a new equilibrium – most likely less efficient but more flexible which involves larger inventory, and thus more waste and higher production costs. In the meantime, we must do everything possible to avoid putting additional pressure on the supply chain or placing additional burdens on businesses, especially small businesses.
Former Walmart CEO: How Biden’s supply chain is ‘messy from start to finish’
In the midst of this economic readjustment, politicians in Washington are acting as if they can magically work to implement any plan they choose to write into law. they can not.
The real-world consequences of the policies they make in Congress are much broader than most elected officials understand. Those consequences may be unexpected, but they are no less real.
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One example: After months of massive government spending, businesses across the country are struggling to stay open, either because they can’t find enough employees or because they can’t use the inputs they need to meet customer demand. Cannot create source. It’s great that they have willing customers who are flush with taxpayer cash generously from the government, but that doesn’t mean they aren’t able to supply goods or services in demand.
So, what it means for the Biden administration is to focus most of its energy on trying to save the law, which calls for trillions and trillions of dollars in new government spending of taxpayer money, which it plans to do with the historic tax hike. Planning to finance? This will not solve the problems plaguing the US economy; It will increase them.
In addition to more than $1 trillion in so-called “hard” infrastructure spending, Democrats want green energy subsidies and trillions more for those who choose not to work, all at a time when there are millions of unfulfilled jobs. and lack of basic inputs like wood and microchips. Stimulating the demand side of the economic equation without eliminating supply side deficiencies will likely drive prices up while keeping a tighter strap on growth – in a word, stagflation.
You can’t “Build Back Better” without workers or supplies. You would think this was quite obvious, but apparently it is not.
Still, none of this should come as a surprise to President Biden and his progressive policymakers. After all, he contributed to the problem with $1.9 trillion in government handouts last March. Within a month, inflation surpassed wage growth for the first time since the Trump presidency. Now they want to double this gross economic error. Unfortunately, expecting different results with similar policies is a form of fiscal madness that our country cannot afford.
Andy Puzder was the chief executive officer. CKE Restaurant Having a career as a lawyer, for more than 16 years. He is currently a Senior Fellow at Pepperdine University School of Public Policy. He was nominated by President Trump to serve as the US Secretary of Labor. In 2011, Puzder co-authored “Job creation: how does it really work and why doesn’t the government understand it?“His latest book is “The Capitalist Comeback: The Trump Boom and Left’s Plot to Stop It(Center Street, April 24, 2018).