Consumers are long accustomed to getting whatever they want when they want it. The frenetic intemperance of having everything instantly and effortlessly defines consumer society. Manufacturers accommodate the immediate expectations by organizing seamless supply lines worldwide that get everything to its destination “just in time.”
This world of instant gratification is breaking down. Suddenly consumers face the unimaginable prospect of being told a product is not in stock. And no one knows when or if it will be coming.
The culprit is a tiny virus. The COVID crisis is scrambling the world’s vast interdependent global networks in communications, transportation, shipping, finance, and many other fields. These networks allow prodigious quantities of goods to flood world markets. However, these same systems are now a source of enormous fragility. And the world does not know how to deal with it.
An Enormous Fragility and Moral Defect
This breakdown is not a logistical but a moral problem that reflects a system that is out of balance. In the quest for instant product accessibility, the world has built a Frankenstein that can turn on its master with a vengeance. The intemperance of an everything-now world lays bare the imprudence of a no-moral-restraint production system that has gone awry.
The situation is made worse by consumers unaccustomed to being told no. There is raging demand but little desire to sacrifice. There are few local alternatives to replace distant suppliers. The new normal is not “see and buy” but “wait and see.”
An Intertwined System With Little Margin for Error
COVID-impaired global networks now suffer from three major problems that threaten to take down the system.
The first problem is a world order that has become so intertwined, operates so tightly coupled, and moves things so quickly that there is little margin for error. The slightest maladjustment, natural disaster or human error has dire effects on the whole. A world of vulnerable neuralgic chokepoints that range from geographic straits to supply chains to electric grids can throw everything out of balance in an instant.
Indeed, the world is now out of sync. Each new COVID wave creates hiccups that turn things upside down. The delicate choreography of getting everything where it needs to go is now disjointed. The just-in-time inventory and production processes that govern manufacturing are breaking down because no one has backup inventories. Computer chip shortages, for example, are shutting down car assembly lines. Production schedules have gone awry, putting pressure on factories, docks, warehouses, trucks and ships to rush goods to destinations when they become available.
The great supply chains, especially those from Communist China, are overwhelmed by these glitches. Cheap international cargo shipping is a pillar upon which so much commerce depends. The price of trans-Pacific shipping has increased tenfold as companies struggle to find container space and ports. The unpredictability of supplies is calling into question the misguided model that has long been in place.
Product complexity is also taking its toll on the COVID economy. Manufacturers no longer use local components and raw materials to make their goods. They have outsourced their way into dangerous dependencies.
The Wall Street Journal recently reported on the case of Bullfrog Spas in Herriman, Utah, which makes the M9 model hot tub. Despite great demand for its product, the complexity of its manufacturing processes has made it hard to reach production goals. A tub that used to take a few weeks to finish can now take six months.
Each hot tub consists of 1,850 parts coming from seven nations and 14 states. The most distant parts come from Chinese suppliers. All these parts must travel a cumulative distance of 887,776 miles over bottlenecked global networks.
To meet demand, factories everywhere report that they are scrambling for metal parts, plastics and other raw materials strung out worldwide. Available products often carry higher price tags, fueling inflation fears.
The final problem with global networks is the danger of unintended consequences. Indeed, the more complex the systems, the more unpredictable life becomes. The number of possible unintended consequences is multiplied, and even advanced technology cannot deal with them. Minor events can have catastrophic consequences. The slightest risk can lead to decisions to stop all operations.
For example, a minor navigational problem of a huge container ship in the Suez Canal closed down the route for about 12 percent of the world’s trade for a week. The impact of the incident lasted months.
For a few days in August, China shut down its Ningbo container port, the world’s third-largest, after one employee tested positive for COVID. An earlier outbreak in May closed the port of Shenzhen for several weeks. In a world of vast networks, authorities are not willing to take any risks; they shut down everything just to be sure. No use of systems analysis can foresee all the possible outcomes.
The Limits of International Trade
The COVID crisis exposes the limits of international trade. Such commerce must exist and flourish. It should be both ample and common, especially when satisfying basic needs. However, international trade should not dominate or destroy local culture and production. It should not use illicit means to dominate. It should not engage in unfair competition or brutal labor practices that oppress workers.
Today’s just-in-time economy has become an artificial and unbalanced machine in the frenetic intemperance of throwing off all restraints to produce everything instantly. Its operators often abandon the moral standards that should govern manufacturing and trade and engage in the cutthroat strategies that can characterize its massive and vulnerable economies of scale.
Gigantic offshoring movements exploit the cheap (and even slave) labor in communist countries. These nations also routinely disregard safety or environmental standards that further endanger workers and lower operating costs. Such practices favor totalitarian regimes that steal intellectual property rights and fail to open up their markets to the West.
Finally, the gigantic aspects of the global networks make them cold and impersonal, fast and frantic, mechanical and inflexible. People find it easy to hide the moral responsibility of their actions which seem to have no consequences inside a vast network.
The Dangers of Frenetic Intemperance
These factors skew the modern economy away from the more flexible and less vulnerable economies that should govern markets. These more authentic economies are more suited to deal with crises since they operate inside a climate of virtue and diligence. They also allow for expressions of culture and local development that make economies more flexible and human.
Indeed, there is no substitute for virtue and sound economic principles based on moral restraint. Virtue-based systems have the internal mechanisms to weather storms and crises. Virtuous people have the elements to improvise and dare in the face of danger.
However, the COVID crisis has revealed that the world no longer has those mechanisms in place. When COVID appeared, the systems bogged down and even struggle to survive now. The new norm is that the world is and will continue to be short of everything for the near future.
Thus, the world enters a new phase of vulnerability and danger in which the global networks fail and turn against the system.
Today, the world lays prostrate by the action of a tiny virus. Tomorrow, all it will take to bring these great networks to a grinding halt is an attack by a terrorist group, an irresponsible piece of socialist legislation or an underestimated risk by a rogue broker.
What seems so powerful is suddenly at the mercy of just a few.
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