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WHY LIBERAL COSMOPOLITANS SHOULD WORRY ABOUT SUPPLY CHAINS
Published online by Cambridge University Press: 14 May 2024
Abstract
The complexity of supply chains means that it is difficult to tell where national security arguments begin and end. That may weaken some of the traditional arguments for free trade for the same reasons that we accept the difficulty of rational economic calculation in a socialist society. National security arguments for protectionism may not remain restricted to very small and manageable segments of the economy. Liberals and cosmopolitans will need to pay greater heed to these problems. This essay also considers why complex supply chains may create problems for a carbon tax and for the notion of corporate social responsibility.
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- © 2024 Social Philosophy & Policy Foundation. Printed in the USA
Footnotes
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Department of Economics, George Mason University, tcowen@gmu.edu. Competing Interests: The author declares none. I thank David Schmidtz, the other contributors to this volume, and two referees for very useful comments on a previous version of this essay.
References
1 For one look at recent work in this area, see Bomin Jiang, Daniel E. Rigobon, and Roberto Rigobon, “From Just in Time, to Just in Case, to Just in Worst-Case: Simple Models of a Global Supply Chain Under Uncertain Aggregate Shocks” (National Bureau of Economic Research Working Paper No. 29345, October 2021). Management research is in the lead here; for instance, see recent research publications in the Journal of Supply Chain Management.
2 On mask issues, see Rana Foroohar, “Cheap Masks Carry a High Cost for US Manufacturing,” The Financial Times, October 13, 2021; also see Paul L. Joskow, “From Scarcity to Abundance: Government and Private Initiatives to Manage the Allocation of N95 Masks in the U.S. During the COVID-19 Pandemic” (National Bureau of Economic Research Working Paper No. 29876, March 2022).
3 See, e.g., Robert Roos, “Bush Asks $7.1 Billion to Prepare for Flu Pandemic,” Center for Infectious Disease Research and Policy, November 1, 2005, https://www.cidrap.umn.edu/avian-influenza-bird-flu/bush-asks-71-billion-prepare-flu-pandemic.
4 On the Moderna and Pfizer supply chains, and on these supply chains more generally, see Bown, Chad P. and Bollyky, Thomas J., “How COVID-19 Vaccine Supply Chains Emerged in the Midst of a Pandemic,” The World Economy 45, no. 2 (2022): 468–522 CrossRefGoogle ScholarPubMed. The Novavax vaccine depends on a specialized adjuvant extract from the soap-bark tree of Chile.
5 See Don Clark, “The Tech Cold War’s ‘Most Complicated Machine’ That’s Out of China’s Reach,” The New York Times, July 4, 2021.
6 Clark, “The Tech Cold War’s ‘Most Complicated Machine.’”
7 See Matt Stoller, “America Faces Supply-Chain Disruption and Shortages. Here’s Why,” The Guardian, October 1, 2021; and David J. Lynch, “Covid Pandemic Is Not the Supply Chains’ Only Problem,” The Washington Post, September 30, 2021.
8 Hayek, Friedrich A., “The Use of Knowledge in Society,” American Economic Review 35, no. 4 (1945): 519–30Google Scholar.
9 See, e.g., Hayek, Friedrich A., “Socialist Calculation: The Competitive ‘Solution,’” Economica 7, no. 26 (1940): 125–49CrossRefGoogle Scholar; Ludwig von Mises, Economic Calculation in the Socialist Commonwealth (Auburn, AL: Ludwig von Mises Institute, 1990).
10 On the issues surrounding these dyes, see Christopher Rowland, “Covid Shutdowns in China are Delaying Medical Scans in the U.S.,” The Washington Post, May 11, 2022.
11 See Malthus, Thomas Robert, An Essay on the Principle of Population: The 1803 Edition (New Haven, CT: Yale University Press, 2018)Google Scholar, III.IX, X, 349–69; Thomas Robert Malthus, “The Grounds of an Opinion on the Policy of Restricting the Importation of Foreign Corn” intended as an Appendix to “Observations on the Corn Laws,” in The Works of Thomas Robert Malthus, vol. 7, ed. Edward A. Wrigley and David Souden (London: Pickering, 1815 [1986]), 151–74. For useful background, see James, Patricia, Population Malthus, His Life and Times (London: Routledge & Kegan Paul, 1979), 249–63Google Scholar. For a survey of Malthus on protection, see Hollander, Samuel, The Economics of Thomas Robert Malthus (Toronto: University of Toronto Press, 1997),CrossRefGoogle Scholar chap. 17. On the one hand, it is easy to say that Malthus was wrong about protectionism, as most nations have relied on international trade to procure themselves cheaper and more abundant foodstuffs. A lot of actual famines, such as in Maoist China, were accompanied by attempts at domestic self-sufficiency in the food supply and even restrictions on food transport within China. On this point, see Dikötter, Frank, Mao’s Great Famine: The History of China’s Most Devastating Catastrophe, 1958–1962 (New York: Walker Books, 2010)Google Scholar. In defense of Malthus, however, he was not arguing for nationalization of the food supply or even central planning, but rather, a series of taxes and subsidies to shift the equilibrium toward greater national self-sufficiency for Britain. Today, many countries still use subsidies and tariffs to boost their margin of self-sufficiency with their food supplies. While many economists object to such policies, it would be wrong to consider them mere archaic curiosities. Malthus laid the groundwork for those policy approaches.
12 On this episode, see Aime Williams, “Biden Official Says Protecting US Steel a National Security Issue,” Financial Times, October 3, 2021, https://www.ft.com/content/e1f33362-2c36-4f99-9b11-7dcd82ee7c06.
13 See Jeanna Smialek and Madeleine Ngo, “Why Supply Chains Are a Mess,” The New York Times, August 24, 2021.
14 Jiang, Rigobon, and Rigobon, “From Just in Time,” 6, which is from more of an operations research perspective. For one version of this argument, see Gene M. Grossman, Elhanan Helpman, and Hugo Lhullier, “Supply Chain Resilience: Should Policy Promote Diversification or Reshoring?” (National Bureau of Economic Research Working Paper No. 29330, October 2021).
15 See Bown and Bollyky, “How COVID-19 Vaccine Supply Chains,” on this and related issues, with 47–48 covering interdependence in particular.
16 Bown and Bollyky, “How COVID-19 Vaccine Supply Chains,” 19–20.
17 “Strengthening the Global Semiconductor Supply Chain in an Uncertain Era,” Boston Consulting Group/Semiconductor Industry Association Report, April 2021, https://www.semiconductors.org/strengthening-the-global-semiconductor-supply-chain-in-an-uncertain-era/.
18 See Todd N. Tucker, “Supply Chains Endanger American Security. Here’s What Biden Is Doing,” The Washington Post, May 17, 2022.
19 For a look at how the United States responded to supply chain issues during World War II, see Maury Klein’s useful A Call to Arms: Mobilizing America for World War II (London: Bloomsbury Press, 2013).
20 On this point, see Richard Baldwin and Rebecca Freeman, “Risks and Global Supply Chains: What We Know and What We Need to Know” (National Bureau of Economic Research Working Paper No. 29444, October 2021).
21 N. Gregory Mankiw, “The Key Role of Conservatives in Taxing Carbon,” The New York Times, September 4, 2015, https://www.nytimes.com/2015/09/06/upshot/the-key-role-of-conservatives-in-taxing-carbon.html.
22 See Hotelling, Harold, “The Economics of Exhaustible Resources,” Journal of Political Economy 39, no. 2 (1931): 137–75CrossRefGoogle Scholar.
23 For a survey of the empirical critiques of locavorism, see Cowen, Tyler, An Economist Gets Lunch: New Rules for Everyday Foodies (New York: Dutton, 2012).Google Scholar
24 Danielle Moran, “BlackRock, Goldman Join Racial-Justice Push in Muni-Bond Market,” Bloomberg, September 24, 2021, https://www.bloomberg.com/news/articles/2021-09-24/blackrock-goldman-join-racial-justice-push-in-muni-bond-market.