Supply Chain Problems? Blame the Government, Not Covid

Months ago, this columnist commented that the ‘supply chain problems’ were mostly self-imposed and were the result of government policies that created the shortages. I argued at the time that most of the problem was the result of the price of fuel, environmental regulations that kept truckers from investing in new equipment and laws in California designed to help unions but which ended up hurting small independent business people and truckers.

To be sure, there are lingering effects from the disruptions caused by covid and the resulting shutdowns of economies around the world. But, it has to seem odd that there have been record numbers of ships just anchored off the coast of Los Angeles, Long Beach and elsewhere waiting to be unloaded. I mean, if the problems were the same across the world, how did those ships get to the United States with all of those tons of goods just waiting to be unloaded and shipped around the country? If the supply chain problems were as bad worldwide, how did all of those tons of goods get produced and ready to ship, and how did those goods get to a port and loaded onto ships only to get to the United States and sit?

As if to confirm that view, independent truckers in California went on strike last week to protest a law that requires 70,000 independent truckers to be re-classified as employees thus making it harder for them to operate.  The law was backed by the Teamsters Union which said it would increase wages for ‘exploited’ truckers. But at the same time, it put tens of thousands of truckers out of business and those ‘exploited’ workers went on strike and shut down the port of Oakland for several days. They do not seem to feel the same way as the union.

The law effectively took tens of thousands of truckers out of the supply chain, a note which few media outlets have mentioned. Why, then, should we be surprised when we have ‘supply chain problems’?  The problems are the creation of the government of California, plain and simple. Add back tens of thousands of truckers to the supply chain and all of a sudden you will not have ships waiting for weeks for trucks to ship their goods across the country. The rest of the United States is paying for California’s policy.

At a broader level, the issue is a traditional one. Who would be against people making more money? The law is supposed to help truckers make more in compensation and that is why the Teamsters have said they favor it. But there is a fine balance as to when that is something that should be done by law because if not done perfectly, and in the exact point of balance in the economy, then the mandate will cost jobs. That is the genius of the free market, and economist Adam Smith’s ‘invisible hand’.  The market will make those decisions without a government having to try to figure it out and risk doing it wrong. And that is exactly what happened in this case: literally tens of thousands of independent truckers, who owned their own trucks and equipment, have been put out of business.  The rest of the country is feeling the effects.  California so miscalculated in blindly following ideology instead of economics that the rest of the country is paying for their screw up.

The fact that these things have been little reported does not change the fact that the supply chain problems are self-imposed.

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