“Bart, the Internet is more than a global pornography network.” – The Simpsons
Biden shooting the Chinese Spy Balloon® is the only thing he’s done to fight inflation so far.
It’s all about the chain.
A global supply chain has some attributes. Just like money is freely (in most cases) able to cross borders, in a global system labor can cross borders as well, without ever having to leave home. People in (spins wheel) Bangladesh work for $0.0010 an hour sewing soccer balls? If they’re as productive (per dollar) as having a machine and skilled operator in the United States do it, the work went to Bangladesh.
This is (if you’re in Bangladesh) probably a good thing since your alternative was farming spider webs or whatever it is that people in Bangladesh eat. In theory, it’s good for the company that sells soccer balls, since they can (not saying they will, but they can) price them lower, and still produce a profit. It also would appeal to the women who play soccer while their husbands are in the kitchen doing the dishes in Europe.
Why did the Italian join Tinder®? He was provalonely.
But what it doesn’t do is help the highly-skilled guy who used to make them in a non-spider web eating country. In fact, over time the knowledge of all the little tricks that are necessary to make soccer balls cheaply and effectively are lost as they’re transported to Bangladesh.
This might not be such a big deal when it comes to soccer balls, because you can (in a pinch) use the heads of your enemies for one, which would make soccer my favorite sport, ever. But when it comes to things like computer chips, well, that’s a different story. I believe it was the head of the Economic Advisors of George H.W. Bush’s White House who made the comment that he didn’t care if Americans were making potato chips or computer chips as long as they had a job. Oddly, G.H.W. Bush hadn’t had had a job for decades, so, why not?
The question even I don’t know the answer to: is this my last inflation joke?
Bush’s advisor was wrong. While Americans were making potato chips, places like Taiwan Semiconductor were making computer chips. Likewise, they were learning how to make them. Knowing what’s on a computer chip is nice, but it doesn’t tell me about all the of the steps required to make structures that are so very small that we’re near the limit of shrinking chips because the of the size of the silicon atom itself. Yeah. It’s that complicated. But, hey, we have Ruffles® instead of knowing how to do that.
Making chips of such precision took literally decades of investment, billions of dollars in research, and replicating it is very, very hard, unless you’re China and steal the secrets while putting “your people” in sensitive positions in corporations that do the work. Oh, did I just describe every industry?
No, there’s an absolute advantage to making computer chips over potato chips. Building computer chips takes knowledge but it also builds knowledge, some of which can result in additional, new businesses that make use of the technologies developed in building computer chips. Imagine, a PEZ® dispenser a billionth of an inch (40 Newtons) tall! This was what the Soviets dreamed of!
Speaking of names, because of inflation, Dollar Tree® will soon be calling itself Tree Dollar®.
It’s not just the high technology parts that go into nearly every appliance, car, and weapons system that is used in the United States, it also applies to commodities like sweet, sweet oil. It also applies to rare-earth minerals, which China (currently) leads the world in production.
But rare-earth minerals aren’t all that rare – we have them in the United States, but don’t have active mines and refining processes. Why? It’s expensive to mine here (labor costs) and it’s expensive to mine here (environmental compliance costs). So, it’s cheaper to ship the mining off to China and just let them do the dirty work since they (at least in the past) don’t seem to care about losing a few million people to escalators, building collapse, explosions, or whatever other dystopian nightmare you can imagine.
How does a mollusk hide from predators? Clamoflage.
The downside of this global civilization is that it’s pretty tightly wound. In most cases, companies don’t like to stockpile “stuff” so they have it delivered just when it’s needed and don’t have a big supply sitting in a warehouse. When writing for a post a few years ago, I wanted to know how much grain was sitting in the silos near Modern Mayberry (which is near the silos that produced the grain).
The answer surprised me – the silos were nearly always one-half to two-thirds full. Whoever is making the bread doesn’t want the wheat until they’re ready for it – they certainly don’t store it on site until it’s much closer to becoming a loaf.
COVID exposed the supply chain, and the panic response of the public. Toilet paper was in short supply not because there wasn’t enough toilet paper, but rather because there wasn’t enough toilet paper capacity to produce 1,000 roles for every person today.
If I had a $0.05 for every bread joke I’ve told, I’d have a pun per nickel.
As warfare hits Ukraine and Israel (and maybe the wider Middle East) and as tensions rachet with China over the status of Taiwan, which just happens to lead the world in computer chip manufacturing, we’ll soon see if the globalism that we’ve faced is as fatal to the fate of nations as it was to so many million middle-class jobs in the United States. When we (by default) import Bangladeshi labor along with the millions of illegal aliens that we destroy, we (by default, eventually) import the Bangladeshi lifestyle.
Pardon me, I need to research how to cook spider webs.