Sen. Josh Hawley (R–Mo.) Sen. Josh Hawley (R-Mo.) has an idea to fix the supply chain issues that plague the American economy.
They should be permanent, he says.
An op-ed The New York TimesPublished Friday, Hawley used temporary supply chain issues as an excuse for pushing for permanent federal expansion of power over private business affairs. Hawley says we must “fundamentally rebuild our trade policy,” which means companies will have to buy from both the Commerce Department and Pentagon bureaucrats. A bill proposed by Hawley would require that at least 50% of any product considered “critical to our national security” and “essential for the protection our industrial base be made in the United States.
How is it possible for the government not to be more involved in global trade, which has enabled Americans unparalleled wealth in recent years. Because “the global pandemic has exposed this system for what it is—a failure,” Hawley writes.
It is reasonable to assume that Hawley would react to the loss of electricity in his home due to storms by saying that electricity was a mistake, and requesting that gas and candles be used to light the rooms. What is the electric grid but a complex supply chain that makes Americans dependent on complicated production and distribution systems (power stations, substations and lines), that they don’t fully control? You can make your lighting yourself. If this means that you must live without TV or internet, then those are the compromises necessary to attain self-sufficiency.
A storm—or a pandemic—can create temporary problems in the highly complex systems that run so much of the modern world. They are not to be abandoned. Hawley may be imagining an America that is entirely self-sufficient. He’s asking for you to believe that the United States would fare significantly worse than today.
“The supply chain for an Apple iPhone crosses an international border more than 600 times, and if it didn’t, you probably wouldn’t have one—it would be too expensive,” writes Mario Loyola, a senior fellow at the Competitive Enterprise Institute, in an op-ed for National ReviewThis does a better job than Hawley of identifying the real culprits in the supply chain disaster.
No matter who you blame, it’s impossible to argue with the larger point that trade makes modern cars and iPhones possible. Hawley’s plan would cause massive disruptions in supply chains. It is worse and more long-lasting than our current situation. Mandating that at least 50 percent of all vital products be made in the United States would mean that many of those products would simply not be available anymore—not because they are sitting on a ship somewhere, but because the federal government is literally prohibiting their import.
Loyola says that globalization isn’t causing the supply-chain problem, just as it was with jobs moving offshore. Protectionism makes the problem even worse by ensuring that regulation and taxes are not competitive.
The solution to the supply-chain logjam is not in the hands of more government. In fact, the reason this problem exists is that the government interferes in the economic process. A shortage of trucks is one of the major bottlenecks currently causing trouble. chassis—a special type of truck trailer made for hauling shipping containers. The tariffs for imported truck chassis were increased in 2018 increased by more than 200 percentThey effectively double the cost of purchasing one. These tariffs should have done exactly what Hawley wanted: Encourage more domestic production. But they have just created shortages.
Hawley states that supply chain crises are the result of a “crisis of production.” Again, wrong. American manufacturing has never been stronger. This is partly due to the outsourcing of low-level production, which has enabled companies to concentrate on high-value goods and higher wages (which in turn has resulted in a higher wage for those who produce them). The true cause of the current mess is a disconnect between supply and demand—supplies have been constrained by a number of pandemic-related issues like temporarily closed factories and worker shortages, while demand has shifted in unexpected ways.
Hawley’s proposal will only increase this disconnect. Further Limiting supply He said that he wanted to extend the “Made in America” rules, which already apply federal procurement regulations “to all commercial markets.”
How does federal procurement rule impact the economy? You will find more options and higher prices for goods. Yes, that sounds exactly right!
Hawley can also look into the U.S. supply chains during these times. The thesis suggests that products made in America should be exempted from problems caused by overseas supply chains. But that is not the truth. Scott Lincicome (a Cato Institute senior fellow) points out that most of the food we eat in the United States comes from the United States. It was grown and raised here. Yet, Americans also face higher grocery store prices and shortages.
“That a mostly‐domestic U.S. food supply chain hasn’t protected American consumers from recent shortages and price increases is unsurprising,” Lincicome writes. Lincicome writes, “First of all, there are many things that stress.” Global supply chains—COVID-19 outbreaks; supply‐demand imbalances; labor shortages in the trucking and warehousing industries; misguided trade, transportation, and immigration policies; etc.—stress DomesticThey also have one.”
Therefore, Hawley’s plan would not be effective at all. The worst case scenario would be to create barriers between producers/consumers, strengthen the regulatory power and prohibit products Americans otherwise would choose to buy. Hawley’s ideas aren’t going to solve the America supply chain problem; instead, empty stores would become the norm.