Reblogged:Want 'Resilience?' Try Freedom.

[Gus Van Horn blog]

The New York Times purports to answer (i.e., by blaming capitalism) the question Why [are] American mask makers are going out of business? in part as follows:

Image by Maskmedicare Shop, via Unsplash, license.

To put it another way, the modern imperative of maximizing shareholder value will always put efficiency and cost over resilience.

The mask manufacturers are a microcosm of a larger problem. Today, there are shortages that go well beyond personal protective equipment. Things as diverse as semiconductors and garage doors are in short supply -- all products whose manufacturing was offshored during the past decades as American companies embraced just-in-time supply chains and inexpensive foreign labor. Economists and corporate executives ignored resilience, and now the country doesn't have a clear idea how to create it, even as its necessity has become obvious. [bold added]

Amusingly, even the Times, for whom every economic problem is a nail to be fixed with the hammer of government planning, admits that its "imperative" of keeping manufacturing here regardless of cost might be ... difficult:

The problem is that if the government subsidized every vital product that required supply chain resilience, it would get awfully expensive.

Gosh. Ya think?

This article offers lip-service to concerns about vital supplies and purports to be interested in solutions. At the same time, it fails to ask why making masks is so expensive in America, and whether any masks actually need to be made here at all. And then there's the elephant in its own room in the form of proof that if there is enough need for something, someone will find a way to fill that need.

Regarding the first question, I considered it myself, here, early in the pandemic, when I discussed the difficulties of mask manufacturer Mike Bowen -- with whom the Times opens:

In a truly free economy, Bowen would be able to hire as many temporary workers as he needed for as long or short as he needed them and raise his prices enough to cover the costs of rapid expansion (and the likely drop-off in demand). But since neither he, nor people willing to take temporary work, nor desperate hospitals are free to set their own terms for trading with each other, one man is being deprived of the opportunity of a lifetime while millions of others are losing the benefits of having a face mask, be it anything from greater peace of mind to protection from disease.

Bowen in particular faced numerous regulations, including labor laws that made hiring too many people a potentially cost-catastrophic proposition.

And all that is on top of the fact that it may not make sense, most of the time, for people to manufacture masks in America due to comparative advantage.

So we have ample room already to ask why the Times doesn't consider these questions. Keeping in mind that there are sound reasons for the United States not to have a huge mask manufacturing sector -- and the regulatory obstacles in the way of growing one -- please peruse the following, from the grey horse's own mouth:

In Miami, a family-owned surgical device company, DemeTech, spent several million dollars to expand its facilities, build machines and hire hundreds of employees; by the fall of 2020, it was capable of churning out five million masks a day, according to Luis Arguello Jr., vice president of the company. "We took a risk as a family," he said. [bold added]

The fact that a small company could so quickly raise capacity should cause one to question the need to maintain such a capacity at all times.

An astute businessman would surely realize that a sharp peak in demand will require corrective action -- e.g., layoffs, finding new customers, shifting to different products -- sooner or later: I cannot help but wonder if Arguello fell victim to the same regulations that made life so difficult for Bowen, or was lulled by our government's equally wrong practice of bailing out failing businesses -- i.e., redistributing their losses.

All of this, and we haven't even touched the fact that the Times is mum about the government's role -- via universal indefinite at-home detention (aka "lockdowns") -- in disrupting the very "supply chains" it seems to enjoy blaming for our resulting shortages!

-- CAV

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