An effective response to inflation – and to the more systemic supply demand mismatch that threatens the US economy – requires investment in supply. This is a project for the private sector. But the private sector needs a push from Washington.
For decades, bad habits have become entrenched. The country has allowed itself to auction off long-term economic prosperity in exchange for short-term profits. Now, the US must break its habits, not take false shelter in them.
With record gas prices, squeezed agricultural producers, and stubborn labor crisis, the era of shortage is here to stay -- and likely worsen. Cue shifting consumer habits, Sri Lanka's default, and a move toward industrial integration (anti-trust be damned). Happy Memorial Day!
If Secretary Granholm wants more energy production, she should orient her relationship to industry around reshaping incentives to align tomorrow’s demand with today’s supply. She should make clear that incentives for increased production will continue next month, and the months after.
The baby formula shortages shows the US entering an era of industrial dislocation, and competition, not seen in decades. The way for America to win in an era of shortage and a competition for supply chains is to recognize the hot spots – and then open the floodgates for industry to do its thing.
It's shortage everywhere: In agriculture, wheat is the latest victim, threatening tomorrow's food supply while a baby formula shortage wreaks havoc today; meanwhile, China eyes the aluminum vacuum and a South Korea x Canada collab tries to shore up tungsten dependencies.
Washington needs to invest not only in next-generation technological advance, but also into semiconductor production itself, and the materials necessary for it. Such investments are critical for a robust industrial base. They would also be diplomatically advantageous.
The optimistic take is first, that Washington sits at the perfect inflection point to adjust economic policies that contributed to this imbalance – and, second, that early indications suggest the private sector may already be taking the lead, whether Washington adjusts or not.
What if, in addition to immediate, demand-side monetary policy quick fixes, Washington was to set about investing in production of critical inputs, manufacturing facilities, and improved logistics systems? It’s entirely possible, and necessary.
The US needs to start thinking about food as a strategic resource, investing in and protecting supply accordingly, and doing so in a way updated for the realities of modern agriculture. That is what defending today's global order demands.
The Biden Administration's SPR release fails to address supply gaps -- but invocation of the Defense Production Act for critical minerals maybe does; Canada's abundant resource supply pushes it to the big stage in a new geopolitical environment
Russia’s invasion of Ukraine has shown that the US cannot afford to depend on geopolitical adversaries for critical factors. Instead, the US should be investing in domestic production that can not only prop up national resilience, but also that of allies and partners.
American national defense faces a very different threat than it did in when the Defense Production Act was implemented in 1950. But mobilization of domestic production may be even more critical to today’s challenge – and to the future of the United States – than it was seven decades ago.