Cargo Is Piling Up Everywhere, and It's Making Inflation Worse
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A gut punch to your operating margin but still not remotely close to flipping the economics to move production.
A fun side effect we've seen is the wild routing being done to find ways to move containers. Rail to this place, ship from a smaller less busy port to the opposite side of the country and rail back. Goods still arrive faster for basically the same increased price.
Moving production is much more complex and requires long term policies and strategies- something most countries (other than China) seem unable to muster.
I doubt it will go back to the days before pandemic, where containers and shipping are operating at literally negative profit margin. Read Hanjin Shipping.
But it should hopefully ensure more healthy shipping industry.
https://www.marinetraffic.com/en/ais/details/ships/shipid:65...
This 700 TEU ship is only 122mx18mx7m.
https://shipselector.com/offers/sale/cargo-ship/container-sh...
Is this the price of container + shipping?
Modern life is pretty damn great but let's not kid ourselves that it's basically theft from the poor and the young.
Sweatshops are a bad thing which we should work to replace, but just shutting everything down makes the workers worse off, it doesn’t give them 21st Century middle class G7 lifestyles.
The good news is, China has been going through those same growing pains much faster than the British did.
If we really want globalization, we should hold our business partners accountable to the same standards that we hold ourselves to: humane working conditions, environmental practices, etc. If a country wants to do business with us, they can't win our business by artificially lowering their costs. For example, with respect to carbon emissions, this could look like a carbon tax with a border adjustment--Chinese products are taxed at the border in accordance with their pollution.
Businesses want to pay as little as possible, but are in competition with each other for labour who want as much as possible, so it doesn’t feel like it’s merely “at the expense of” workers to me (that said: trade union effectiveness is not a constant).
Also, while freedom of movement for workers is clearly less than freedom of movement for businesses and goods — and the difference favours businesses over workers — I’m not clear how much of that is anti-migrant sentiment rather than globalisation.
Regarding slavery: you’re right, that isn’t what I mean. I am of the opinion that forced labour in USA prisons counts as slavery, and I oppose this unequivocally and do not expect its immediate and permanent termination to cause any problems for the slave-prisoners.
When it comes to “mere” poor working conditions and low pay, that’s when it gets more complicated, because that’s when shutting down the relevant business can have non-zero negative consequences for the workers. And, as you say, even then I would prefer to uplift the conditions rather than shrug and say it’s just how things are. Likewise a carbon tax on imports.
Right, but that labor comes from abroad and is plentiful. The US manager who exports jobs overseas is reward handsomely for saving the company money precisely because it means laying off the more expensive US labor. So rich get richer and poor get poorer, by design.
> Also, while freedom of movement for workers is clearly less than freedom of movement for businesses and goods — and the difference favours businesses over workers — I’m not clear how much of that is anti-migrant sentiment rather than globalisation.
As far as I can tell, we're not talking about migrants, we're talking about outsourcing jobs overseas.
> Regarding slavery: you’re right, that isn’t what I mean. I am of the opinion that forced labour in USA prisons counts as slavery, and I oppose this unequivocally and do not expect its immediate and permanent termination to cause any problems for the slave-prisoners.
Granted (or at least I'm not particularly interested in opening up a debate about whether prisoner labor is meaningfully 'slavery'), but how does foreign slave labor compare with domestic slave labor i.e., pre-abolition American slavery. Why is it wrong for people to say "abolishing slavery [in the US] would be bad for slaves" but not wrong to say "abolishing slavery in China would be bad for [Chinese] slaves"?
> When it comes to “mere” poor working conditions and low pay, that’s when it gets more complicated, because that’s when shutting down the relevant business can have non-zero negative consequences for the workers.
Pro-slavery Americans used to argue that slavery provided slaves with room and board, and that abolishing slavery would deprive them that. That's certainly a "non-zero negative consequence" argument, so how does the globalized slavery case differ?
> And, as you say, even then I would prefer to uplift the conditions rather than shrug and say it’s just how things are. Likewise a carbon tax on imports.
However, you can't do these things (taxing pollution or poor working conditions) without making it harder for e.g. China to compete with other labor, which in practice means moving jobs out of China and the "non-zero negative consequences" for the Chinese worker (it's economically infeasible for China to pay its workers better and keep the west's business--the whole reason so much stuff is "Made In China" is because the prices of Chinese products are artificially low because of slavery and pollution).
I'm a controls engineer who installs industrial automation for manufacturing and testing. Most of my customers have headquarters, R&D, and some manufacturing in the Midwestern US (especially Detroit automotive companies) but many have expanded to add Mexican or Chinese factories. I've worked with, trained, and socialized with a ton of operators, technicians, engineers, and translators (my Spanish is passable, my Mandarin is abysmal) in those countries just as I've worked with their equivalents in the US. My observations have been that when American companies add overseas manufacturing, sure, the American management siphons off what they can, and I'm extremely dubious that this money is legitimately proportional to the value that they add to the stream instead of the wealth that they have power to extract, also, there are some growing pains of exploitation and pollution - but the overwhelmingly more powerful effect is the growth in the foreign town where the new factory is installed.
Time and time again, I've talked to people whose parents or grandparents were practically subsistence farmers, but now they're happy to be English-speaking engineers, members of the global economy, possessing more wealth than many generations of their ancestors could have dreamed of. You're familiar with the American phenomenon of disenfranchised Millenials still living with their parents with (or without) a minimum-wage job and college debt who are unable to afford to live on their own... In Mexico and China, the opposite is true - the parents have no money, and have never had money, instead, whole extended families are living with their children who have foreign money and modern luxuries like medicine, air conditioning, and automobiles. It is true that this unimaginable wealth is initially earned by the children at something on the order of laborers at $5/hr and engineers at $20/hr, which would be criminal in the US, but (1) those salaries grow far more rapidly than American minimum wages as the workforce gains education and experience, and (2) the purchasing power of that amount of money is far higher in those countries.
Their living conditions have gone from that of villages that wouldn't be unfamiliar to someone on the 17th century American frontier, to something more like the 'bad part of town' in a 21st century American city. I agree that it would be better if they were in conditions like the good part of town. I agree it's inhumane to take more than your fair share of the revenue out of the hands of people making $10k/year. I agree that we could do better to ensure this doesn't happen with slavery and pollution taxes. But I also have first-hand communication, albeit in my second language, that the resulting situation is better than erecting barriers to trade and leaving them alone.
I don't think this is the "working class" and certainly not the slavery conditions people are talking about. No doubt globalization affects different people differently, however.
Serfdom effectively ended in the UK and France somewhere around the 1300s, with the Black Death probably being the single biggest impetus towards ending Serfdom. Queen Elizabeth outlawed serfdom for good in England in 1574, well before the Industrial Revolution.
Intriguingly, while serfdom was dying off in Western Europe, it was starting in Central and Eastern Europe, where it was only killed off by the Revolutions of 1848. But, as we all should know, the Industrial Revolution had its birth not in Germany but in Britain.
I'm not an expert on the Early Modern economy in the UK, but I also think that subsistence farming would be an adequate description for the UK rural economy in the 18th century. A lot of people would have been employed in the putting-out system for fabric manufacture. Given that farming itself being mechanized doesn't happen until the late 19th century, well after we see the rise of the industrial factories in concentrated cities, there had to be enough agricultural surplus from the rural areas to sustain large urban centers, so that doesn't seem like it would be subsistence agriculture.
Of particular importance was a combination of increased productivity and decreased labor requirements. Yes, this happened before mechanization thanks to factors such as larger fields from enclosures combined with better plows. The result of the enclosures in particular was a wave of poor people migrating to the cities. Those became the desperate poor who provided a workforce for the Industrial Revolution.
When people fought for societal changes, for instance in France during the Revolution or May 1968, the ruling class did not have a complete control of the means of communication, powerful automated censorship, pervasive facial recognition, a dystopian social credit system, etc...
Otherwise what seems to happen throughout history, is that people gain power and use that to extend their leads indefinitely. Technology seems to make this process even more efficient and with a resulting inequality that is millions of times greater than what could be achieved 1000 years ago.
Now there seems to be no hope for better social conditions, because the powerful can isolate themselves almost completely while retaining their power with automated tools. In addition, we are in the age of constant distraction and stimulation (panem et circenses). The future of the average person doesn't seem very bright.
Yeah, you can get a cheap house. Somewhere were there are no jobs and you couldn't even buy that cheap food, because you wouldn't have any income.
Masses of homeless people are almost as angry as starving people.
I don't think it was the industrial revolution that ended serfdom in a lot of places, at least not per wiki: https://en.wikipedia.org/wiki/Serfdom#Dates_of_emancipation_...
In a lot of those places, it did end because of revolutions, but it was the French and 1848, not the Industrial.
It's actually debated as to whether it was better at first.[1]
It seems for a for the first 60 years or so the standard of living may actually have fallen until the initial shock was over and working conditions etc. improved.
You are right though that modern industrialising nations may be able to leapfrog some of those difficulties allowing for a much more rapid arrival at decent living standards.
[1]https://www.econlib.org/library/Enc/IndustrialRevolutionandt...
We have plenty of examples of modern production that doesn't externalize its harms and still produces a modern lifestyle. Often for not much more than that which does externalize.
For example, take some time to read up on Mondragon - a worker owned and operated behemouth that provides much of the economic output for an entire region of Spain.
Japan has similar industries I believe.
Britain had a safety-netless trickle-down economic model that gave rise to huge economic inequality and combined it with a nearly uninterrupted hard gold standard and a very laissez-faire financial sector. This is the regime that gives a certain kind of right winger wet dreams, but it depended on resource extraction on a vast scale from the colonies for its success and still was hugely unstable, with five major economic crises hitting London in the C19th, with one deeper than the Great Depression.
China's interventionist model has some serious issues, but I think in terms of equity, stability and self-sufficiency its last 40 years compares well to any period of the British Empire.
Its last 40 years has been one of decreasing centralized economic control, and increasingly capitalistic engagement. The wealth gap between the few richest and the many poorest is far greater than the UK's- Britain looks practically egalitarian in comparison.
China has inequality today, but it does not have a rentier class, which dominated C19th British politics.
I'm not sure what this means concretely (are you suggesting the poor Chinese worker need representation in western politics, or does the west need to topple the CCP and install a suitable democratic government?), but if we in western countries hold our business partners accountable to our own worker protection standards (and environmental standards) then we can solve lots of problems at once without toppling the CCP or giving non-citizens voting rights in western countries.
At least in 2021 a lot of the hardest and dirtiest work was "outsourced" to machines and robots.
Edit: -1 for a comment that does not contain anything controversial as far as I can see.
I'm sure in many cases companies should be providing their workers in these countries with better working conditions, and maybe we should put more pressure on them to do so. But if people are voluntarily working at companies like Foxconn (for example) because it is better than their other options, it's not "theft", its objectively better for them because it gives them more options.
Countries that have a significant outsourcing footprint, do you think they do it because they're foolish/greedy? if it is so bad for them? There is a pressure especially in overpopulated nations to create jobs and the local economy is not mature enough to create enough jobs nor value to pay well.
> Modern life is pretty damn great but let's not kid ourselves that it's basically theft from the poor and the young.
OT: Generally you tend to end up with locations that are only competive with automaton narrowing down their output to products that can have production runs nearly unchanged for years while stuff that is subject to fashion or fast innovation goes elsewhere.
Industrialists often suggest that dumping waste is the only viable option, but frequently it’s pinching pennies with minimal economic benefit.
They didn't. Nobody cares. And that has to be the end of that argument.
It’s totally unclear whether some product is produced ethically or not. Some ultra cheap products are likely to be unethically produced but a bit more expensive and there’s no way to know except for doing extensive research.
Nobody has time for that shit. Many don’t have the money to buy ethically because they themselves are working on the low end.
Sure you might buy the slavery free coffee bones and the fair phone 2. Good for you, but what about all the other stuff everyone buys day after day?
Nice. Glad others didn’t think this way too or we’d have no ozone layer anymore, lead in gasoline and paint, and no building codes.
Sure, 'nobody' is an exaggeration, but people still smoke, people still drive unnecessarily wasteful cars, people still fly when there are alternatives. People in general just don't care. Only if political leaders care enough and can fix things without a big impact to their constituent, this stuff gets solved. If the impact on daily life is too big, nobody wants to make these hard decisions. Just look at how little is actually happening to combat climate change or plastic waste in the grand scheme of things.
Well, yes. But parent is equating people not putting their money where their mouth is with "nobody cares so we shouldn't try and change anything", which is wrong IMO.
Of course this goes through regulation. Nobody complains about seat belts anymore (and those who do are being Darwined away so that takes care of itself), yet everyone only started wearing a seatbelt once regulations were introduced.
- clothes are cheap because they are mined/manufactured/transported mostly with energy coming from fossil sources, and the IAE itself says that Oil has reached its peak. If energy goes down, production can only go down (yes, processes have been more efficient, but the efficiency has only transformed into even more stuff produced. That's the Jevons effect)
- clothes are cheap because their pollution, chief among them CO2 emission, is "free". But it's the kind of cost we'd rather not be paying
I think my average yearly spending on imported goods over the last few years was around £1000.
I think that 70-80% of the food in the UK is imported so I don't think the impact is that negligible. While most of the money is spent on local things as you said, if after housing / healthcare / education / ... you are left with a fixed amount of money to buy groceries, a 50% price increase is huge on your QoL and purchasing power.
So if the transportation will be twice expensive, it will translate into price increase only of 10%.
Which can lead to riots. Imagine the worst off, the people making minimum wage and similar, who see their food increase in price 10% across the board. The spark for the Yellow Vests in France movement was a small increase in taxes on fuel : `tax increase had been 7.6 cents per litre on diesel and 3.9 cents on petrol in 2018, with a further increase of 6.5 cents on diesel and 2.9 cents on petrol planned for 1 January 2019`
Those protests raged for more than a year, and were stopped only by the pandemic, and caused billions of euros of various damage and have left multiple people dead and wounded.
And fuel, as vital as it might be in rural areas to move, is significantly less important than food which even people who can move around on bike or public transit need to survive.
By that logic there should have been a civil war after 2008.
The changes proposed would provide jobs to the worst off, that's a fairly reasonable trade, which you may or may not be inclined to take
The percentage sounds about right, but in money that’s £11.5 bn out of a £2038 bn GDP.
https://www.gov.uk/government/statistics/food-statistics-poc...
https://www.wolframalpha.com/input/?i=uk+gdp+in+GBP
That said, Brexit is a live demo for many of these issues.
If other things increase in price, people have less money to spend on housing, rents go down, which leads to house prices going down.
London has the worst [years of wages] for 1 square meter of housing ratio in the world. Excluding Hong Kong.
Around 1% would be my guess.
[1] https://howmuch.net/articles/breakdown-average-american-spen...
Now it is my time to consume: drive a nice car, buy things I always wanted, travel a lot.
I am honest to you, my opinion is not noble as yours: I want to consume, I want my things cheap, because I would not be able to afford otherwise.
There are billions like me on this planet who did not grow up in a nice middle class family in a 1st world. Those people want to move up and consume such as the Western middle class did until recently. The new generation that grew up in a very stable, rich world and had everything suddenly realises that they do not need consumption and hence talks noble things.
But you cannot and must not force it to all those people who did not grow up in fanciness.
Not having it in the past is not an excuse to waste in the present.
I understand your point though, but let's see examples.
For how long you're intending to keep that nice car? Modern cars easily last well over a decade, so if you do get a nice car, and keep it for long, that is a good route to take.
Or another one: instead of buying plastic garden furniture and replacing it every X year because you're bored with it, buy locally made, wooden ones. Higher initial investment indeed, but those last for decades with minimal maintenance of re-painting every few years.
The current idea of consumption is near equivalent to wasting, but it shouldn't have to be like that. When purchasing, plan ahead, and take arcane factors into the process: what is it packaged in? how far it was shipped from? for how long I'm intending to use it? And so on.
Try not to waste, that's all.
So much of the "piled up cargo" is cheap, bad quality, throwaways stuff, that nobody really needs or should need when better options are available.
EDIT: fyi, I'm from eastern europe, so I had plenty of time in my childhood to learn how to be patient to have something. When you to save money in small bits for a "grand" purchase, like a bicycle, a guitar, a PC, etc, one leanrs how not to spend it on things they don't actually need.
I remember learning in school that there were 6 billion people in the world. Recently I realised that we are over 8 billion already.
And all of us want to have a good life and those who grew up poor want to consume. 100% understanable.
Tech makes a big difference: If humans didn’t farm our population would be ~100 million; If we tile the world in greenhouses, and if we’re careful with our resources, we could have ~10 trillion.
Where? Physically, where? Compressed into tiny apartments all over the planet, like sardine cans?
I’d only be happy with that population level if we had a lot of Arcology-style mega-buildings to give each of us enough space and parkland, but that’s rather my point: tech enables the otherwise impossible.
63% of protein and 82% of calories come from 23% of agricultural land, which is itself 51% of habitable land, which is itself 71% of land, which is 29% of the surface. That agricultural land mostly isn’t greenhouses, which are far more productive than open ground, but even greenhouses are not the most productive food sources we know how to make.
Even without changing the ratio of farmland where greenhouses or better are used (a cunning trick if you can do it, given you’d need something like a greenhouse or aeroponics to turn uninhabitable land into farm land), that takes us up to 7.7-fold increase in carrying capacity for pure land use and 26.6-fold if you add in potential aquaculture.
Most of us don’t have a reason to care more about efficient use of farmland. Some places do, which is why greenhouses, hydroponics, and aeroponics exist at all, but most of us don’t.
And then, separately from greenhouses (probably before but I don’t know how to account for it), there’s better crop choices, and finally GM crops.
If everyone wants to live and consume like a 21st century American, we need to make sure the world only has around 2 billion people (this is based on a fact I read that we need the resources of 4 Earths to sustain American style consumerism globally).
As our quality of life goes up more, the number of humans Earth can support gets smaller. Depending on the target global average lifestyle, we probably already have too many people by a significant amount.
As I said increasing technology and life comforts genrally reduce population growth, let's hope for other technology miracles as well. This is a reasonable position. I spent the weekend in the Pennsylvania wilderness in an area that in the mid-1800s had been stripped bare by logging and was now a preserved and expansive wilderness. Humanity can and will adapt. Believing so helps me sleep at night.
Yes, its true that if global population was 10 million and all lived in 50-ppl villages you could shit in the streets and still not get the Plague, pollute to your heart's content and still be fine, practice slash-and-burn agriculture and still have forests left. But then you wouldn't have most products of civilisation in the first place.
Once you start getting cities, you cant shit in the street, you need suers and restrictions on pollution
I suspect the main barriers are political. There is a lot of suffering in the world that has little to do with lack of resources, yet persists for political reasons.
As much as I care for the environment, I still drive around in my car to sightsee with my partner (burning fuel for no reason).
We order take away and it gets put into plastic containers which go into the trash.
We do our best not to pollute, be wasteful and recycle what we can, but modern life will always have waste and excess.
It's like the company that wanted to build a modular phone that all tech people got behind, yet now we're buying more and more highly embedded computing devices which are harder to reuse/replace/recycle.
We need more leaders, particularly tech/science background people in governing roles with power to change our course.
It's fancier/easier to sell fast electric cars and promise people we'll go to Mars than proposing to fix our problems here and now apparently
Countries like China and India are still in the industrialization phase as they pull millions out of poverty. India is far behind though, as the quality of life for an average person on the ground is still depressingly terrible. Sometimes I stumble upon random channels like this: https://www.youtube.com/c/WalkEast/videos - and the QoL in China is in the stratosphere compared with India.
I always thought you can compare China and India. After that trip I must say: My assumption was just so wrong.
China is cleaner, way more modern, more reliable and way more industrialised than India. I made the mistake to go out in Old Delhi after 9 PM and I was fearing for my life. People just lie down on the road and slept away, dogs followed me, people followed me. People were making open fires on the road, others were defacating. The air was terribly poluted, it is not recommended to use tap water for brushing teeth.
And yet, I liked the people there very much. It was great to be able to communicate in English, to speak to the normal taxi and uber drivers and to learn about their life.
Again, the biggest takeaway for me was: China and India are separated by 30-40 years of Chinese high-speed development, I would assume.
https://qz.com/india/404758/once-near-equals-china-and-india...
There is no way you can get the entire population to collectively reduce CO2 emissions if they feel like they will lose out. Most people are "lazy" (in the sense that they cannot care about millions of different problems) which means high moral standards for CO2 emission reductions will turn them off.
It's unrealistic and hypocritical to suggest that everyone should pitch in equally to reduce consumption while the developed world probably consumes 10x of the developing world.
I doubt that they all grew up in an equivalent level of poverty. When climate change takes major effect, it won't be western countries that first bear the brunt of it - it will be the poorest.
What a sad state of affairs. New generations completely internalised the fact that living = consuming goods and traveling (or more accurately consuming travel destinations).
> The new generation that grew up in a very stable, rich world and had everything suddenly realises that they do not need consumption and hence talks noble things.
This should be a warning rather than a motivation. We fucked up and realised consumerism is hell, now you're thinking "I want to be part of it too". I get the sentiment but I don't get the logic. I grew up in relatively modest family and we couldn't afford much besides our basic needs, now that I earn three times what I need I still live frugally. I'm focusing on working less and enjoying life rather than earning more money to buy more BS, all it does is create artificial needs that are, by design, _never_ fulfilled
I was reading "A brave new world" again recently and the "conditioning" part of the education made me think of the modern view on the economy, from our earliest age we're bombarded by ads and talks about how we must live for the economy, work for the economy, consume for the economy, production must go up, new products must be created continuously, &c. It's like we built a monster and it took control of us. Don't fool yourself, "you" don't want to consume, we've all been conditioned to think consuming is our main goal.
The trick was really well played, once consuming is your main goal you don't care about much besides a salary allowing you to consume more and keeps the wheel spinning. I think a lot of people will have very hard realisations once they get old enough to start thinking about death and reflecting on the best years of their lives, all this time, energy, money spent on long gone gadgets of instant gratifications which faded away decades ago.
A few quotes from a book written in 67 by Guy Debord, during the infancy of mass marketing and mass consumption, he must have had a good crystal ball back then:
> The proliferation of faddish gadgets reflects the fact that as the mass of commodities becomes increasingly absurd, absurdity itself becomes a commodity.
> Reified people proudly display the proofs of their intimacy with the commodity. Like the old religious fetishism, with its convulsionary raptures and miraculous cures, the fetishism of commodities generates its own moments of fervent arousal. All this is useful for only one purpose: producing habitual submission.
> To this end the reserve army of the unemployed is enlisted into the tertiary or "service" sector, reinforcing the troops responsible for distributing and glorifying the latest commodities at a time when increasingly extensive campaigns are necessary to convince people to buy increas ingly unnecessary commodities.
> The economy's triumph as an independent power at the same time spells its own doom, because the forces it has unleashed have eliminated the economic necessity that was the unchanging basis of earlier societies. Replacing that necessity with a necessity for boundless economic development can only mean replacing the satisfaction of primary human needs (now scarcely met) with an incessant fabrication of pseudo-needs, all of which ultimately come down to the single pseudo-need of maintaining the reign of the autonomous economy.
> the more he contemplates, the less he lives; the more he identifies with the dominant images of need, the less he understands his own life and his own desires. The spectacle's estrangement from the acting subject is expressed by the fact that the individual's gestures are no longer his own; they are the gestures of someone else who represents them to him. The spectator does not feel at home anywhere, because the spectacle is everywhere.
Where are you getting that number from?
>...A fast-food restaurant could typically run labor costs around 25% while a full service restaurant could run about 30-40% of revenue depending on how up scale the bar or restaurant is and the demand needed.
https://academy.getbackbar.com/average-restaurant-costs-liqu...
>... you want a hamburger to cost $50?!?!
No one is claiming that proposed higher minimum wages would cause hamburgers to cost $50 - you don't need to use a hyperbolic straw man. But even before the pandemic, the minimum wage increases that went into affect in 2020 have had some effects on restaurants:
>... A study by Harri revealed that a whopping 71% of restaurants have responded to the recent minimum wage increases by raising menu prices. In addition to price increases (71%), reduced employee hours (64%) and job eliminations (43%) were the most common reactions to wage inflation.
https://pos.toasttab.com/blog/on-the-line/how-restaurants-de...
The costs of housing and medical care completely dwarf everything else in my life, so the cost of consumer goods hardly matter at all compared to those things. We pretend we don't have inflation just because consumer goods are still cheap, but we're not looking in the right places.
I may as well buy fewer goods at higher prices and get Americans back to working higher paid manufacturing jobs in the process. My dollar's already worth less towards the things that really matter, anyway.
Great, so then there's an added advantage of less consumption / waste / pollution.
I said trade imbalances, trade itself is good and there is nothing wrong with being a trade champion.
That debt hat to be taken on by someone. The private sector doesn't want it. We have run out of good borrowers as indicated by the 2008 financial crisis. Interest rates drop to 0% as money is not finding any takers. So the government must take the debt and forcibly invest it as the borrower/investor of last resort.
Just address the problems at their root. Stop saving too much money and stop foreign nations from dumping their savings into your country. When people invest too much into land tax it appropriately. These are century old problems. They aren't new.
Not if the deficit nation can pay off the debt using its own currency whose supply is also controlled by the same nation, no?
Your narrative is perpetuating a lot of negative, false things
Harder to deliver to customers = more expensive
Easier to deliver to customers = less expensive
So, short of price gouging or labor shortages, no, it would make things cheaper in the long run (and people would have more money to buy things because they have jobs).
Edit: one addendum is raw material costs. If we don't have a ready domestic supply of some mineral or other raw material, then that could/would bump prices (because we're still stuck in the imports trap).
Clearly the "really cheap stuff" angle has seriously embroiled American prosperity so it's arguable the benefits do not outweigh the costs in aggregate.
Personally, I'm in the "I'm happy to pay a bit more if my environment is peaceful because the people around me can eat and have a future" camp.
> This can be addressed in large part by making immigration easier
Not if local laws don't provide the same competitive edge.
Also, there’s zero benefit to a domestic label. That’s just a fairy tale. The only label people care about is the price.
This is a temporary thing for the next 18 months. Then it will be back to business (with some modification).
I don't think it's possible to buy purely local/domestic for everything, but for some types of products, the switch is relatively simple and something more people should consider.
One area that I have managed to go fully local in is clothing. Since I live in Denmark, I consider the EU+Norway+Switzerland to be "local", There is such a good selection of all types of clothes produced here, from work wear to casual wear to office wear and especially as you go into higher-end clothing, quality suits and of course anything tailor-made can be ordered made from locally-produced fabrics.
Yes, each individual piece will cost more than an equivalent from a fast fashion brand, but the quality will be on a completely different level. And obviously some raw materials can only feasibly be produced outside your local area, which makes some transport necessary. But I prefer raw materials to be transported relatively directly and unprocessed, so the potentially harmful processing be done in countries with strict regulations on emissions and harmful chemicals, as well as reasonable labor protections.
Unfortunately, as long as people look at price as the primary (or only) factor influencing their purchases, we're stuck with shipping clothing halfway around the globe for no good reason.
So this relies on an arbitrary definition of "local". None of what you listed is actually "local" to you, it just benefits from a free trade zone such that it may as well be.
Now zoom out and apply the same thinking to the rest of the world. That's what we COULD have if economic populism arguments weren't so in vogue right now. We are in a globalized world, meet it and work with it.
Having common goods like clothes shipped halfway around the globe is pointless and wasteful.
If prices of things go up with a 100% correlation to an increase in the money supply, thats inflation
It can also simultaneously be other things and no price increase has to be permanent
I do think inflation indexes, as we have been using them in recent decades isn't quite as "real" as we have been treating it. We over learned lessons from 20th century inflation events... and the importance of such indexes in monetarism... also "unemployment." When inflation is low, price fluctuations noise out trends. General inflation is somewhat theoretical.
We don't understand this stuff as well as we pretend to.
when water accumulates at the top of a mountain it gravitates downward to certain areas and pools or flows from those areas. money is created in a very similar mechanism, when the money pools instead of flows, the issuer creates more money to make it more likely to overflow from those areas. excessive pooling makes investments expensive, excessive flowing makes commodities and services scarce. the issuer tries to moderate the velocity of both by issuing just the right amount of money. of this set of actions that the issuer does (it can do more than just issue money), both cause price distortions upward, where you need more money to buy the same asset or good or service. but unlike rain water, this approach has very limited utility as you are trying to force humans to behave certain ways and many times they just don't want to for reasons they were never asked about.
most of the debate around the word inflation is simply whether the target inflation has been met, because nobody can agree on which assets should be counted and it is a political football that is easy to unilaterally manipulate.
It is pretty obvious. An aging population spends less because old people have already reached their life goals. They had a job, got a house, got married, bought everything they wanted during their young years. Now they stop working, they have a small pension. They are less likely to be active as their body and mind can't keep up. They don't know if their pension will last. Oh and if they are in debt they will try to pay it off before they die. Some of them are also very rich (because of their long careers) and as you get richer you also run out of things to spend money on.
The global financial crisis during 2008 made people extremely risk averse. Even those who haven't retired yet are taking it safe and cut spending before retirement.
Interest rates drop on their own. It is only natural. Less borrowers, more lenders. Interest rates can't go up in such an environment.
You see. Young people have to work. They have to earn an income and income means spending. If "nobody" spends, nobody earns. You can't get full employment in such an economy. The decision to reduce spending is also the decision to reduce employment.
If people want to keep saving endlessly then you need to satisfy that demand by forcing money creation. Instead of waiting for borrowers to appear you just force the money upon (QE) them on behalf of the savers because the savers force money upon their banks. As saving money is not borrowed it does not create tangibles in the real world, the value of your savings have to decline, thus inflation becomes a noble goal instead of something to be avoided as it keeps the system alive for the benefit of the selfish savers.
Your money is getting worthless regardless of actual inflation because the real world is declining. If the real world is declining and money is not, we run into a problem. People will start ignoring the real world and save into money because they believe that the two are decoupled. The truth is that they are saving into nothing and inflation is just the logical consequence of a psychological desire to save into nothing.
>most of the debate around the word inflation is simply whether the target inflation has been met, because nobody can agree on which assets should be counted and it is a political football that is easy to unilaterally manipulate.
Or you just accept that the numbers are correct within reason. The Fed doesn't have the power to solve the problem or make it worse. It can only shield you from the worse horror by creating a less bad horror.
> Interest rates drop on their own. It is only natural. Less borrowers, more lenders. Interest rates can't go up in such an environment.
I don't disagree with this without elaboration. The primary driving force of interest rates dropping are the central bank's actions, as they are the biggest whale in the market, they buy the benchmark bonds which forces those bond yields lower as these are inversely correlated. Everything priced based on those yields drops lower too. The "yields based on perceived risk" idea is completely broken right now, as nothing is properly risk adjusted, ie the chance of losing all your money is greater than the ROI for a lot of assets. Your supply and demand model works but only if you replace the market participants with the central banks being the universe sized lender.
The only thing that I would consider natural about interest rates is that risks are reduced as society progresses (in its current path). Like, the stability of human society, the lowered geopolitical risks, the larger economic unions and assets to monetize, the maturation of the market.
It's also very much a boom and bust industry, and there has been a succession of past bubbles that has left shipping companies very wary of building extra capacity only for it to sit around unused.
I personally have spent way more than normal on sports goods, clothes, furniture, and home improvement during the pandemic.
Life is lived differently nowadays and some changes will persist, it will be interesting to see how this impacts global trade.
I think it was Covid money? It seemed like a lot of people were buying things they didn't really need. I was happy for them though.
So why does demand for money go down in the first place? Now that's complicated. The demand for money is determined by the market which is sometimes predictable and sometimes works in mysterious ways.
"High" inflation happens during seller markets. (sellers have more power)
Low inflation or even deflation happens during buyer markets. (buyers have more power)
There, the monetary explanation of inflation no longer makes sense as you can create money in a way that does not turn the labor market into a seller market. The pandemic turns the economy into a sellers market temporarily so it is inflation but it is unlikely to last.
As a bonus: Keynesian economics is mostly about buyer markets, Austrian/neoclassical/neoliberal economics are mostly about seller markets. The theories aren't even competing against each other because they aren't even talking about the same thing.
One generally expects the current month to be the busiest month in history, so long as the economy is growing.
It's almost always likely for any month in the current year be the busiest month year-over-year; but it's not often that May is busier than November, let alone all historical Novembers.
I suppose goods transport is inherently cyclical in that sense too.. since it encompasses everything that is (that's a physical good) too, but that's not the point you were making (which I agree with/sounds sensible/true to me not knowing the industry).
Also there must be a logistical limit to how 'busy' a port can be, which can only be increased by new processes / technology or physical expansion.
Pent-up demand, restart issues, rehiring, etc. are all problems that tend to get resolved.
Then, the piles of cargo finally get unloaded and there will be a glut in supply.
Systems destabilized tend to oscillate for a while after the destabilizing input.
The down-oscillation is already happening in the lumber industry, where prices are crashing.
We can expect the oscillations to dampen, then resume the background deflationary environment of the past decade++
That's 38% over the low this year, which was in the peak of a global pandemic. Not so huge
A full year ago, again in the middle of the global pandemic, it was $431, so we're double that. Not the slightest bit surprising, and the chart overall looks like a big bubble blip since earlier in the year.
I don't see how we can interpret that price series as indicating sustained inflation, when we have a clearly unusual and impermanent demand pull and simultaneous supply ramp-up delay.
So, yes, you'd still be in the profit zone had you invested in long-term futures pre-pandemic, but left a lot of money on the table by not selling in the last few weeks.
perhaps it will change and continue up again.
Are you putting any money on that trend? I'm neither long nor short
This arises in many areas in CS with many different names. Queues, buffers, backpressure, throttling, retries, DDoSing, congestion control, scheduling, QoS, pipelining, async-await/callbacks/channels/continuations, etc. are all mechanisms for dealing with various properties of this phenomenon. OSs and networks in particular are rich with this, as their normal state is for demand to outnumber supply (more connections than interfaces, more FDs than disks, more processes/threads than CPUs, …). As you mentioned, distributed systems also care about this at a higher level.
You can mitigate it with stuff like exponential back off (from the client/producer side) or rate limiting. It’s a complicated problem though.
It's terrible for people on fixed incomes and those without portfolios that can prosper through rising prices. (So think 'old folks and those who don't have investments or invest conservatively.)
Of course, massive government spending isn't helping.
I hope inflation slows and returns to reasonable levels soon.