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Comment by SSJPython | Hacker News Reader

It's mainly a supply issue. There is also a demand component but supply is the main bottleneck causing this sticky inflation. Originally they thought the supply issues would improve by now but it just can't catch up for some reason. So they need to force demand down until supply catches up. China also isn't helping with their foolish lockdown policies that are severely affecting supply chains.

Guess this is what happens when Western lawmakers sell out domestic manufacturing because some dickhead MBAs said it would be "efficient".

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> Guess this is what happens when Western lawmakers sell out domestic manufacturing because some dickhead MBAs said it would be "efficient".

One could make a more charitable interpretation than that. It has been an observed strategy of the modern western world to transition from physical labor as an asset to “IP”; i.e. immaterial rights (mostly copyrights and patents), as an asset. One could charitably then guess that law and policy makers might have envisioned the western world as, like Joel Spolsky once said, “a trendy couple sipping Chardonnay in their living room outsourcing everything”¹. Joel was talking about companies, but the analogy can be stretched to entire countries.

The strategy didn’t work as well as they hoped, obviously, since IP rights depend on laws, and sovereign nations are ultimately not beholden to laws. The strategy still worked somewhat, only, I think, because a Chinese company can’t just create a popular product and sell it in the west (although they are getting better all the time, like how Amazon is filled to the brim with pseudo-brand junk). There’s something fundamentally missing there, like how hardware companies can’t write good software to save their lives, and mostly vice versa. This fact has allowed the west to cling to the dream of Chardonnay long enough to survive until today, when we can finally see the first really big drawbacks of not having control of your own production and supply chains.

1. https://www.joelonsoftware.com/2001/10/14/in-defense-of-not-...

And Xi cannot change China’s zero-Covid policy, because, to do so, he would have to lose face by admitting it’s a failure. He would rather have the population endure continual hell. It’s such a tragedy for China.

Faillure how? The west let millions of people die.

The west preferred freedom to life.

There are many many historical figuresbwho died for that idea.

I think this is a really legitimate question with a complex answer. At the end of the day, Covid is one of the most contagious diseases out there. It has terrible impacts, but China’s policy is like trying to hold back the rising ocean with ever higher sea walls. The cost will continue to mount, the global isolation will continue to take its toll and one day the waters will break through the walls anyway.

China is just kicking the can down the road. They have poor population immunity and the virus is endemic in most of the world. Eventually it’ll sneak in

Wait, how is it a failure? I get that their cases have doubled in recent months, but that doubling is from 250 cases a week to 500[1] and their highest spike was a brief 5,000 number of cases in April.

Whereas the US, with a much smaller population, has been rocking at least 10,000 cases a day (and far more deaths) all year, with almost all of May to July having more than 100,000 cases a day.

[1] https://www.worldometers.info/coronavirus/country/china/

[2] https://covid.cdc.gov/covid-data-tracker/#trends_dailycases_...

It's a failure in that COVID will never be zero. The policy is pushing on a string, there will be lockdowns forever if the policy remains in place.

Okay, but an aspirational "Zero-COVID" policy seems to be working out better than the US's "burrying-our-heads-in-the-sand" policy.

I get it may have an impact on economy but, seriously, how can people value human lives so little?

“Better” is a vague term.

We could reduce a ridiculous number of deaths by reducing the speed limit on all roads and highways to 25mph, but we don’t. The trade off isn’t worth it to most people.

Zero COVID policies made some amount of sense when we thought a vaccine that would work really well was around the corner, as the effect on daily life would be temporary.

> how can people value human lives so little?

I would suggest reading up on how the zero COVID approach taken by the Chinese government has impacted its citizens, and how it’s really very much divorced from any pragmatic notion of saving lives.

Can anyone in this thread link to an actual article and describe how horrible it is? It's perplexing that I'm getting so downvoted and the replies have absolute zero information besides "it's just horrible" which sure, maybe it is, but they've had millions less people die from COVID so I need at least some information to change my mind from "it sure seemed to do it's intended job."

No link, but the logic is simple:

They are just going to have the millions of people die later when everybody catches covid, and in the meantime are inflicting lots of misery in their attempts to delay it.

Uh, isn’t COVID damaging on your system every time you get? Basically risking long COVID and death?

Also the more cases there are the more chances for mutation. The reasoning is like one step away from antivaxer logic.

COVID right now is mutating towards being more contagious but less severe. That isn't really antivaxer logic, get a good vaccine and you should be much more protected against either catching or getting severe symptoms from a more endemic COVID.

Ok, let's check in next year and see if the US life expectancy rebounds from its two year decline.

I'm guessing not though, if daily COVID deaths are anything to go by.

https://www.cdc.gov/nchs/pressroom/nchs_press_releases/2022/...

It most definitely will rebound, I don't think anyone with any knowledge about how these things work will argue otherwise. But it isn't clear if or how fast we will get back to 2019 numbers, especially since our long term health care labor and infrastructure was decimated by the pandemic (by COVID directly as well as by lockdowns, and just by people not wanting to do the work anymore for what we are willing to pay for it).

I think we have vastly different values and even if we agreed on the same set of facts we wouldn't agree. Interesting talk, though.

They are trying to prevent COVID completely, which, given that some amount of resistance to COVID is based on already having it before, it turning out to be untenable. Coupled with less effective vaccines and other countries taking a "COVID is now endemic" approach, it really puts them in a bind in how to move forward without huge medical and/or economic consequences.

Some context:

https://www.nytimes.com/interactive/2022/04/29/world/asia/sh...

https://www.theatlantic.com/international/archive/2022/04/ch...

https://www.theatlantic.com/international/archive/2022/09/ch...

https://www.latimes.com/world-nation/story/2022-04-08/shangh...

This makes me think of the oft repeated phrase in pop culture (i.e. movies).

"I don't want to survive... I want to live!"

I don't think any policy is or was perfect. All are an imperfect compromise attempting to balance preventing unnecessary illness and death with the rest of our needs - to produce, consume, be social, etc.

So overall I'm reasonably OK with the attempt to prevent overwhelming community transmission early on at the expense of some economic activity while buying time to get vaccines and treatments researched and distributed. It wasn't perfect, and lots of people are not happy about it, and millions of people still ended up dead. It might have been worse; maybe it could have been better.

But given what we know now, and that we have vaccines available, and a seemingly less dangerous strain dominating, it seems like strict lockdowns are all but entirely proven to no longer be the best attempt at balance and compromise for the overall well-being of the people (and the economy).

This is pure nonsense, you can progressively curb any human rights and stop civilization just to keep saving another human life. We can probably save few hundred thousands of lives annually just by banning cars. Same for cigarettes, alcohol. And so on.

There was time to be scared like small children when covid came and nobody knew anything and everybody was afraid to certain extent. Since then we know much more, covid mutated to being much less deadly and its in proper 'meh' category. Or are you equally concerned about flu?

Anybody spinning it as something more is doing so for some political reasons.

Live free or die isn't a "burrying-our-heads-in-the-sand" policy. It's the lord Farquaad policy, and has widespread support in the US.

What is weird is that he can't just force all the old people to get vaccinated. You'd think that'd be one of the benefits of being an authoritarian, but apparently that'd be touching some kind of political third rail in China.

He really is stuck with Zero Covid because China's death rate would still be very high if they drop that and let it rip (Similar to what happened in Hong Kong with Omicron).

> It's mainly a supply issue.

So there is less milk and bread being sold now than a year ago?

Because if it's the same amount of milk and bread for a higher price, then the it's mainly a shift in demand.

You're picking a subset of even the CPI basket of goods, but still the answer is yes[0]. The linked chart currently only goes to 2021, but 2021 was down almost 13% from 2020, and I have no expectations that 2022 will be any different.

The supply chain has stumbled incredibly badly in ways that affect almost everything, including milk and bread--which have to be packaged up and shipped and in the case of bread, contains added ingredient that might themselves be in short supply.

0. https://www.statista.com/statistics/251537/us-milk-sales/

To be fair, it looks like a long term decline, with a larger drop between 2018 and 2019. Could be that milk is less and less preferred by consumers. The milk might still be used for cream, cheese, yoghurt, ice cream, protein powder, and so on.

According to this, the number of milk cows stays constant:

https://www.statista.com/statistics/194934/number-of-milk-co...

Well if supply is not coming back the only thing you can and have to reduce is demand. Either via raising interest rates or via runaway, entrenched inflation if you don't raise rates quickly enough.

Once you have entrenched inflation you need to raise rates even more if you ever want to get it back under control.

Housing is also a huge contributor to inflation, and hiking rates kills demand for new construction as effectively as it kills demand for all other housing. They're making the housing crisis worse in the long term, just as they did in 2008.

It's wild. The Fed brought interest rates down to zero and created a massive asset bubbled fueled by cheap debt. Now they're cranking up interest rates to pop they bubble they created, and we're supposed to applaud them for carefully maintaining "stable prices". All they've done is put us through an economic rollercoaster where most of us ended poorer in the end.

well don't forget, in 2008/9 they were fighting a deflationary spiral. That was the biggest fear and Bernanke even said he'd drop bags of money from helicopters before getting trapped in that situation. There were lots of voices warning of the inevitability of high inflation but the deflationary conditions soaked it up until now.

I think the real problem is the pandemic was not a deflationary situation, we just turned off production quite literally and then increased demand by giving everyone money for not producing anything.

/not an economist just a normal everyday guy

The crazy part is that they dropped reserve requirements to zero for banks at the beginning of the pandemic, and for all the hiking of rates the reserve requirements are still at zero. They slammed on the brakes while the other foot is still flooring the gas pedal.

This is the thing that so many people miss.

New buyers want lower prices yet when that actually happens, new construction stops. Thus creating a massive backlog and shortage for the future, leading to the next bubble.

Actually, per the BLS report, cost of shelter is increasing slower than average inflation: 6.6% vs 8.2% for the average.

The big drivers are energy costs at 19.8% annually and food at 11.2% annually.

Actually the CPI is weighted. You can find the weights here [1].

Note that the weight for housing is much, much higher than the weights for food and energy costs. That plus historically high levels of inflation in housing means that housing is a big driver of inflation.

[1]: https://www.bls.gov/cpi/tables/relative-importance/home.htm

6.6% for housing is less than the 8.2% total average so it will always pull the average down. This is true no matter what the weighting is.

Total Inflation would be even worse if you weighted housing less.

Your are blaming others for your own failure.

Western companies cut costs by moving manufacturing overseas, can you elaborate how lawmakers are impacting that decision making process?

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