“Where do we get the masks? China. Where do we get the gowns? China. Where do we get the gloves? China. Where do we get the ventilators? China,” Cuomo told reporters at a press conference in Albany.
“I don’t know how we got into this position.”
In another portion of the briefing, he sounded a similar alarm.
“Why don’t we have medical supplies made in this country? Why are we shopping in China for basic medical supplies?Perhaps he doesn't often think seriously about where the policies he supports lead us. I can imagine saying, "I see now that the priorities I gave different goals have led us to this emergency, so I'm painfully rethinking my positions." Nothing could induce me to say something as ridiculous as "I don't know how we got into this position" of relying on cheap imported Chinese goods. Any semi-sentient person knows exactly how we got here.
Naturally the clamor is for more government intervention to force American companies to supply critical goods. And yet in this emergency American companies are doing so voluntarily, when regulations don't stymie them. In the long term, we consumers will have to demand it by being willing to pay more for secure local supplies instead of cheap, tenuous ones.
11 comments:
I got my half face mask from 3m... I don't think that company makes much stuff from China.
They were 18 USD back in January. I think what NY State does is... they look for the lowest bidder. SO they can funnel more money to their bank accounts and social services. So when a Chinese companies does a lowest bid, they go for it. However, just like other bids, the "lowest" bid doesn't necessarily help you, if their mass manufacturing methods have zero quality control. Maybe you want a "middle price" bid instead.
What held up the US manufacturing, exactly for instance 3M was the need to be immunized from lawsuits. Once they got that OK they went full speed ahead. The government assumed liability.
The hold up wasn't greed of the companies, nor capacity - it was the certainty of being sued if they weren't 'immunized' prior. The certainty, not possibilty.
https://www.washingtonpost.com/business/2020/03/19/change-us-law-will-make-millions-more-masks-available-doctors-nurses-white-house-says/
I think consumers can drive the production of many goods back to the US and I certainly intend to do my part in that. But there are some goods that are crucial and I don't know if we can leave those to the marketplace. As an analogy, I would hope that the US is not buying its military ammunition from China.
One suggestion I've seen is for the US military to have to buy everything from US companies. Since the military buys much of what the private sector buys, especially medical supplies and equipment, that guarantees there will be manufacturers of those items in the country.
The problem then becomes what we reportedly had in the 80s: $500 hammers for the military. If the military cannot get competitive bids for items, the items will be over-priced. I don't know how we balance the two issues and get out of the cycle of : tie military spending to US; items are over-priced; open bidding to outside US; we can be held hostage if we desperately need those items; lather, rinse, repeat.
"One suggestion I've seen is for the US military to have to buy everything from US companies."
Yes, that's a very good idea. For one thing, it'll ensure that everything the US military actually needs is made by American companies -- and thus can't be denied us by foreign interests who want to compel us in some matter.
Or we can treat it like the Strategic Petroleum Reserve. It's not 100% a matter of where we buy it, it's more a question of how insulated we feel from a sudden cut-off. If it will take x months to start making something domestically in an embargo, we need a strategic reserve of x months' supply. That way we can still let the market do its thing, which is way better than expecting the government to produce something on anything like a reasonable schedule or at a reasonable price.
The US military gets insignficant things like rare earth minerals for high speed magnets for precision weapons [smart bombs] from China, so not to worry. At least we won't be paying $40 dollars for a - specialized, small batch so more expensive - hammer.
As for Mr. Market: I'm extremely in favor of bringing all our manufacturing home, but Mr. Market is a sellout for bailouts for about 12-20 years now, and I don't know why anyone would mention the market now. Markets chief function is Price Discovery.
Price discovery?
Fine. Your 401K's are worthless, because of this..$640,442 Billion =$640.442 Trillion
Global OTC derivatives market
In billions of US dollars
Notional amounts outstanding Gross market value
H2 2017 H1 2018 H2 2018 H1 2019 H2 2017 H1 2018 H2 2018 H1 2019
All contracts 531,911 594,832 544,383 640,442 10,956 10,326 9,662 12,061
https://stats.bis.org/statx/srs/table/d5.1?f=pdf
So perhaps we won't do Mr. Market and price discovery after all.
It's not just the Emperor who's naked, it's the entire Empire.
The market just got a $4T dollar bailout, we're still waiting on checks and SBA loans. There is no market. This is a Palace Economy, actual a Palace Casino economy.
Wisely in their sociopathic way the Gamblers took everyone's retirement funds to the tables, so we're all in this together.
The Wuhan angle is Wuhan is Detroit's replacement.
Mr. Market was already going into Liquidity Freeze in Nov/Dec 2019 [his gambling on basis points trades] so when Wuhan hit Mr. Market was Just no Time Left Supply line for his payday loans, or as you may hear it called REPO.
When you own the media ruthlessness can always meet opportunity...so they hyped up a strain of flu and got themselves $4T.
Mind you shutting down the economy was overkill, so they may have sunk their own boats.
And the 401Ks.
Or perhaps we'll muddle through. You should know however that ultimately your 401K is dead, and in the long run it will most likely die before you.
Cuz dis: https://stats.bis.org/statx/srs/table/d5.1?f=pdf
Cheers.
I would hope that the US is not buying its military ammunition from China.
But we are, at least from the People's Republic of China. We do far too little business with the Republic of China. We get our rare earth minerals and too many computer chips from the PRC.
$500 hammers for the military.
And badly overpriced toilets on our trash haulers, and.... Debunked NLMSM BS, for the most part. Production contracts and DoD and Federal, generally, regulations limited what defense contractors could charge for their end products, to the point they couldn't recover all the costs of production--so those costs got rolled into unregulated items like hammers and aircraft toilets. That wasn't all of it, but it was the bulk of it. Fixed price and cost plus contracts seemed like a good idea at the time, but they proved no match for competitive, market price bids. Which are hard to achieve when there's not much of a market for a long-range bomber that can deliver particular types of weapons quickly and invisibly. If you want overpriced compared to the task, look no further than our F-22s and F-35s.
I think T99 is on the right track, but I think a better move would be to require designated industries to maintain a core capability to produce from an entirely domestic supply chain, from dirt in the ground to end product, while producing the bulk of their end products via the most efficient means, including importing. This would maintain a critical capability that could be scaled up--a much easier and faster capability than gutsing up from a non-existent capability.
Eric Hines
we need a strategic reserve of x months' supply
That would work but you'd need to sort out market distortions as you rotate the supplies out. Say, for example, you stockpile 10,000 cloth face masks and they'll last in storage for 5 years. You'd have to think about what to do with them when they age out. Sell them and buy an equal number may be market neutral.
require designated industries to maintain a core capability to produce from an entirely domestic supply chain, from dirt in the ground to end product, while producing the bulk of their end products via the most efficient means, including importing.
That would work but you'd have to come up with a way to pay them for doing this. I'm not sure how you'd price that. Also I'm not sure how long it would take to spin up something really big, like steel mills.
...10,000 cloth face masks and they'll last in storage for 5 years. You'd have to think about what to do with them when they age out.
Shop rags.
More seriously, That would work but you'd have to come up with a way to pay them for doing this. I'm not sure how you'd price that. Also I'm not sure how long it would take to spin up something really big, like steel mills.
Free market pricing. National security isn't free; this is just part of that premium. Whether particular companies in the industry labeled the products as coming from the required domestic supply chain, amortized that cost over all of its similar products regardless of supply chain, or some other method would be immaterial. We already do big things like steel mills for much of our steel. Specialized steel would need their own mill. Again, national security isn't free. But this is why only a core needs to be domestic--it's the capability and the expertise that needs to be maintained at home, not total production.
Eric Hines
I don't know that we need to bring everything home, but perhaps for many things could have an approved list of favored countries that manufacturers can source from, and also require a diversity of sources, so no one location controls too much sourcing. The world's a big place.
Whether particular companies in the industry labeled the products as coming from the required domestic supply chain, amortized that cost over all of its similar products regardless of supply chain, or some other method would be immaterial.
Okay, I'll buy that.
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