'Just-in-Time' Whipping-Boy for Lockdowns?

We have all endured shortages over the year-plus of the pandemic. In my case, they have ranged from toilet paper (due to panic-buying idiots) though salami (intermittently all over the place and nowhere), Arrogant Bastard ale (nowhere for months in my neck of the woods), and the canned version of my daughter's favorite lemonade (nowhere for over a year).

But have no fear: the Grey Lady has figured it all out for us.

It's those greedy, short-sighted capitalists, as usual. And this time, the way they screwed the world over was through the get-rich-quick scheme of just-in-time shipping.

My sarcasm will sound unjustified, especially on a cursory reading of the first few paragraphs of the story: Of course any business that tries to save money on the cost of storing large amounts of things it needs -- or avoid getting stuck with suddenly-obsolete or out-of-fashion inventory -- is at risk when major parts of its supply chain get interrupted.

This is common sense, and given the long time span of the pandemic, I'm not sure a company that did business the old-fashioned way would have necessarily avoided such problems. I don't keep a month's supply of milk on hand "just in case." Do you?

How much of what any person or business concern should keep on hand is a fair question that goes unasked at the Times, which happily assumes that businesses should be run, I guess, by the same kind of people who empty grocery shelves of toilet paper every time the news says something bad might soon happen.

This occurs even after the following recitation of what sounds like a good case in favor of just-in-time shipping (or lean production):

Scientists and physicians are hardly the only people we owe thanks for getting us all through this pandemic. (Image by wdreblow0, via Pixabay, license.)

... Just In Time has enabled manufacturers to customize their wares. And lean production has significantly cut costs while allowing companies to pivot quickly to new products.

These virtues have added value to companies, spurred innovation and promoted trade, ensuring that Just In Time will retain its force long after the current crisis abates. The approach has also enriched shareholders by generating savings that companies have distributed in the form of dividends and share buybacks.

Still, the shortages raise questions about whether some companies have been too aggressive in harvesting savings by slashing inventory, leaving them unprepared for whatever trouble inevitably emerges.

"It's the investments that they don't make," said William Lazonick, an economist at the University of Massachusetts.

Intel, the American chip-maker, has outlined plans to spend $20 billion to erect new plants in Arizona. But that is less than the $26 billion that Intel spent on share buybacks in 2018 and 2019 -- money the company could have used to expand capacity [(!) --ed] , Mr. Lazonick said. [bold added]

Intel saved more money than it cost to expand capacity by building new plants. I don't understand why the Times is second-guessing Intel's buybacks here: Should they have not saved the money? Spent the whole amount saved and then some? I don't know, but I suspect not, and it's not my money, anyway.

In any case, Intel remains a large and profitable business despite the economic havoc that came with the pandemic. Absent that curve ball, it seems ridiculous to second-guess Intel. And frankly, it seems even more so with the pandemic.

It reminds me a little bit of local television interviews I'd see regularly in the South after ice storms: There's always somebody willing to volunteer the opinion that transportation departments there should, I guess, budget for blizzards every year even though we have mild winters and get paralyzed by the occasional winter storm for a few days every two or three years.

Many things go into planning, and it is ridiculous to expect someone to plan for every imaginable doomsday scenario.

The flip side of that kind of myopic focus on the Rare Disaster of the Moment would be to project that kind of error on the people you're criticizing. The Times obliges with an "expert" with enough anti-business prejudice to fit right in in a blue state:

"The real question is, 'Are we going to stop chasing low cost as the sole criteria [sic] for business judgment?'" said [Willy C.] Shih, from Harvard Business School. "I'm skeptical of that. Consumers won't pay for resilience when they are not in crisis." [bold added]

What of strategic considerations like the ability to pivot? Who cares, when we can paper over the many disruptions to normal operations caused by the pandemic and blame Scrooge in the bargain

And speaking of disruptions, the Times lists many: the pandemic itself (natch), winter storms, that ship that got stuck in the Suez canal -- damned near everything except lockdowns. While it is true that the pandemic itself might have prompted voluntary business closures or raised costs as companies made adjustments to protect customers or workers, that is nothing quite like the local dictator panicking and making everybody stay home indefinitely from any activity he doesn't deem "essential."

The word lockdown does not appear one time in the article.

It is clear that businesses dependent on just-in-time shipping are quite vulnerable to disruptions in their supply chains. Indeed, I'd go so far as to say it's obvious. But it is simply wrong to assert up front that "Just In Time is running late," go into all kinds of proximate causes of particular shortages of goods supplied in that way, vaguely blame dollar-chasing, and then leave it at that.

These chains functioned quite well -- before the pandemic and before practically every major government threw a spanner in the works with unnecessary, rights-violating, indefinite, near-universal lockdowns.

The coronavirus may well have caused comparable waves of shortages across the globe even if most individuals had been free to make their own decisions about whether to go to work or keep their businesses open, but completely ignoring the possible role of the lockdowns is a ridiculous omission. It fails to ask the fair question whether lockdowns are a right or practical measure -- or to acknowledge or consider better alternatives from a public policy perspective.

Worse, it confuses two fundamentally different kinds of disaster: The natural (or metaphysical) disaster of a pandemic is something that is predictable within broad kinds of parameters and increasingly surmountable as a given disease is better understood over time. The man-made disaster of rule by decree, on the other hand, is completely unpredictable because human beings have free will, and it is something we should take great pains to avoid, in large measure for that very reason.

You can plan for a pandemic; you can't plan for tyranny.

It also wrongly demonizes businessmen for failing to plan for a disaster nobody saw coming -- or two, if you do as I do and count the pandemic and the lockdowns separately. Indeed, coming as it does in a paper of this importance, it risks bringing on calls for onerous new regulations on businesses that will wrongly and unnecessarily make them less profitable and even less able to meet customer needs daily and especially come the next disaster.

Businesses do not myopically focus on profit. Nor should their customers, recent trauma to the contrary, focus solely on the fact that businesses also didn't see these twin pandemics of disease and bad government coming.

-- CAV