Thread by @matthewstoller

1. A lot of people are getting really freaked out by shortages. And they should be. But so far, no one has proposed answers. That's starting to change. mattstoller.substack.com/p/shortagewatc…

2. The shortages we're seeing were predictable, and I (among others) predicted them. This is because the supply chain problems have been obvious for decades. wired.com/story/covid-19…

3. What is the problem? In short, we stopped caring how we make and distribute stuff. Since the 1970s, policymakers allowed relentless cost-cutting in the name of efficiency. That has meant in practice lower pay, fewer production lines, more monopolies. mattstoller.substack.com/p/counterfeit-…

4. We've been thinning out our supply chains since the 1970s. Supply chains include labor, which got hit through deregulation in the 1970s. Deregulation killed trucker compensation, which means that now there's a huge shortage of drivers everywhere. mattstoller.substack.com/p/counterfeit-…

5. Because of deregulation and mergers, there were 30 railroads, now there are 7. And they cut service. The Union Pacific closed a giant Chicago facility in 2019; it now has so much backed up traffic that it suspended traffic from West Coast ports mattstoller.substack.com/p/counterfeit-…

6. Because of the Ocean Shipping Reform Act of 1997, ocean shipping consolidated into three giant alliances who constrain supply and do stupid stuff like send too big to sail ships into the side of the Suez Canal. Thank you Bill Clinton! mattstoller.substack.com/p/bill-clinton…

7. People are complaining about not being able to get french fries at Burger King, seeing the sign: "Sorry. No French Fries with any order. We have no potatoes."

That's because food distribution is consolidated, and relies on thinned out trucking.
mattstoller.substack.com/p/shortagewatc…

8. Vaccine production is in shortage because of a very concentrated biopharmaceutical production space. We don't have enough fancy plastic bags because the equipment oligopoly won't let the bags interoperate. It's like the Keurig coffee machine. mattstoller.substack.com/p/why-are-ther…

9. And where are the mason jar canning lids?!? Ask the canning monopoly Newell Brands. mattstoller.substack.com/p/shortagewatc…

10. Fortunately some policymakers are noticing the upstream problems. @chopraftc at the FTC is pointing to mergers as a causal factor in shortages, and calling for stronger merger policy. mattstoller.substack.com/p/shortagewatc…

11. The head of the Surface Transportation Board, Martin Oberman, has said that railroads are cutting too much capacity

12. In his piece on supply side progressivism, @ezraklein captures something important about liberal politics. Liberals don't think about production. But he also misses the chance to actually do that. The problem we have is the consolidation of power. nytimes.com/2021/09/19/opi…

13. When you pool production and pricing capacity, you also pool risk and reduce resiliency. That's what we've done for forty years in our economy. There's a reason we have two kidneys even though we can live with one!

14. Fundamentally the shortage problem is driven by our view of ourselves as consumers first and foremost. This is the destructive politics of affluence, a frame introduced by John Kenneth Galbraith in 1958. mattstoller.substack.com/p/counterfeit-…

15. We have solved the problem of wealth, Galbraith believed. No one need pay attention to production, because the big corporation's got this. And even if you want to, you have no power. You are a consumer.

That's how we've thought for 40 years. This is our wake up call.