Can Government Policy Affect the Supply Chain?
The 21st century supply chain is a modern marvel. Ford trucks, for example, are assembled in the U.S., but the parts travel thousands of miles from all over the world. Components are made by whatever businesses can produce them quicker, better, or for cheaper.
For consumers, that’s a good thing. It means lots of selection at lower prices.
But a globalized supply chain is not without downsides. Bad government policies can trip up the intricate global web of producers, shippers, and sellers.
State and local restrictions associated with the pandemic have created the worst supply chain disruptions in modern U.S. history. As Americans slide back into normal life, we’re experiencing the effects.
Appliances provide a good example.
Appliance assembly facilities, as well as parts manufacturers, produced fewer refrigerators, dishwashers, and washing machines amid government imposed closures and slowdowns. And with more people at home during the lockdown, more wear and tear was put on existing appliances. Now you have a lot of demand for new appliances while the factories are struggling to catch up.
Worker shortages, exacerbated by government mandates, excessive unemployment benefits, and other incentives to stay home are throwing another wrench into the economy. A deficit of truck drivers, pilots, and other logistical personnel are making it more challenging to move products from “Point A” to “Point B.” Therefore, there will be longer wait times to receive gifts during the holiday season and more sparse shelves at the grocery store.
The high standard of living enjoyed by Americans today is partially a result of a globalized supply chain that delivers more goods for cheaper to consumers. However, as we’re currently experiencing, the system can crack under bad government policy.
To learn more about the impact of government policies, visit InformationStation.org.