Capitalism and global responsiblity

[Fenring]

Here's a CNN article about warnings of a potential global supply chain breakdown:

https://edition.cnn.com/2021/09/29/business/supply-chain-workers/index.html

A few choice excerpts:

Seafarers, truck drivers and airline workers have endured quarantines, travel restrictions and complex Covid-19 vaccination and testing requirements to keep stretched supply chains moving during the pandemic.

But many are now reaching their breaking point, posing yet another threat to the badly tangled network of ports, container vessels and trucking companies that moves goods around the world.

[...]

"All transport sectors are also seeing a shortage of workers, and expect more to leave as a result of the poor treatment millions have faced during the pandemic, putting the supply chain under greater threat," it added.

[...]
When Karynn Marchal and her crew were told that they wouldn't be allowed to go on shore upon docking in Hokkaido, Japan it was a big hit to morale.
"None of us knew how long it would go on for," the 28-year old chief officer of a car-carrying ship told CNN Business.
That was more than 18 months ago. Marchal — and hundreds of thousands of seafarers like her — have not been permitted shore leave since.

[...]

Coronavirus testing is also a challenge. In February, Germany unilaterally introduced mandatory PCR testing with no exemption for truck drivers, leading neighboring countries including Italy to impose similar restrictions to avoid having thousands of drivers stranded in their own territory.
These measures affected thousands of truck drivers, particularly on the Brenner Pass between Italy and Austria, forcing them to queue for days in sub-zero temperatures with no food or medical facilities. The EU Digital Covid Certificate has since eased some of the pressure, but bottlenecks remain.

So there are many issues in play here: international safety standards, quarantining, no safe place to go, covid testing and vaccinations, grueling work schedules to keep the goods flowing, and many others. Sheer worker morale breakdown seems to be a big one, now hitting the UK hard with a lack of transport drivers threatening to cut off their supply lines (there have been some predictions of food shortages in stores), and in North America some sectors are having labor shortages as well due to burnout and lack of interest.

What all of this boils down to is that there is neither the incentive nor perhaps the coordination to keep all the plates spinning while also maintaining normal business practice. One thing that capitalism advocates have always maintained is that the free market is the most efficient force out there, and that even in crisis it corrects itself shortly (if it's permitted to). And yet we've seen cases in history of major runs on the banks where the business-as-usual model fails spectacularly when things become significantly unusual, and we know from these cases, as well as from the recent skyrocketing of "too big to fail" (since the entire economy would collapse like a house of cards if certain business failures were allowed to occur), that it's not just a question of a market correction. There is no way back from 'total collapse' in the usual economic meaning of numbers going up and down, employment levels readjusting, and so forth.

In light of the crisis in the UK I understand that a new wave of hiring has happened, with increased worker incentives; but we will see if it's enough incentive or done quickly enough. And when discussing the entire global supply chain, of course covid is a compounding factor. There is always some compounding factor when there's a massive run on the economy. What strikes me as worth asking is whether capitalism (i.e. individual companies operating out of a sense of their own self-interest alone, and globally this resulting in prosperity for all) could be seen as being put to question if scenarios like this can occur where every company is individually doing what they think best (keep overhead down, salaries minimized, profits maximized, cut corners if needed) and the net global result may be a collapse of the global economy. Not to be a doomsayer, but let's just say this was a real possibility: would it not seem sensible to question whether this model of doing business really makes sense? After all, we know now that it's not just 'your company' at stake as a result of your decisions, but everyone else's too. And this in a way bleeds into the general covid discussion about personal choice versus collective responsibility. Should you be 'allowed' to choose to push your workers to the edge, if what that means is - assuming everyone else behaves the same way - you keep your profits up but throw the world under the bus? And I think a similar argument is often made about global pollution, so perhaps there is an analogy there too.

The alternative offered is always something outrageous, like "look at what happened to the USSR". So I'm not saying anything like that. But I don't think "do what thou wilt" and "totalitarian lockdown" are the only two options under the sun for organizing labor and resources.

[TheDrake]

Boston dynamics will have a solution shortly to replace many, though not all, supply chain jobs. Only question is if it is soon enough. That's your market response, acceleration of autonomous robotic workers.

[Fenring]

Boston dynamics will have a solution shortly to replace many, though not all, supply chain jobs. Only question is if it is soon enough. That's your market response, acceleration of autonomous robotic workers.

While the sci-fi person in me is always happy to hear of advances, this is actually the poster case for it *not* being a market response that fixes the situation. Automated labor is the most likely candidate to utterly destroy the ability for markets as we know them to function at all, ushering in a new age of UBI or whatever else.

[TheDeamon]

Boston dynamics will have a solution shortly to replace many, though not all, supply chain jobs. Only question is if it is soon enough. That's your market response, acceleration of autonomous robotic workers.

While the sci-fi person in me is always happy to hear of advances, this is actually the poster case for it *not* being a market response that fixes the situation. Automated labor is the most likely candidate to utterly destroy the ability for markets as we know them to function at all, ushering in a new age of UBI or whatever else.

Automation is the poster child for market response in my book.

If you cause the costs of labor to exceed the cost of automation, you should expect the automatons to take over in all but the most niche of markets.

And the truck driver shortage has been "critical" for over a decade now in much of the developed world, the industry had been (slowly) increasing pay while also leveraging technology to also increase efficiency.

Covid19 policies dealt a nasty shock to the system as the "average truck driver" is in their 50's and at high risk should they become infected with Covid.

Throw in the EU side of things where they were far more overt in their use of (eastern European) migrants to backfill demand for Trucker jobs, and you find yourself wandering into the "special set of problems" the UK is now encountering when Brexit effectively shut off the ability of people from the EU to perform truck-driving tasks inside of Britain that begin and end within Britain's borders. (Cabotage rules are all kinds of fun, North American has that with NAFTA and the USMCA agreements)

In any case, freight rates are heading up, between increasing fuel costs(thank, Joe Biden), and increasing labor costs in a capacity restricted system. The cost of moving freight only really has one of two options at hand, and the second option(switching to the freight rail) isn't widely available outside of the United States, and even the US is limited in its intermodal (rail) capacity.

Europe has a great High Speed Rail infrastructure, but their freight rail lags behind even the US.

[Fenring]

Automation is the poster child for market response in my book.

If you cause the costs of labor to exceed the cost of automation, you should expect the automatons to take over in all but the most niche of markets.

I think you are mistaking what the real meaning of 'market response' is supposed to be. It does not mean "things happen in response to other things." Of course that is true, it's trivially true. Obviously things happen in response to things, you don't need an economy theory for that. What a 'market response' is supposed to mean in terms of the theory of capitalism is that individual decision-making with efficiency and/or profit in mind, spread over a mass economy, makes for the most efficient driver of wealth and growth, providing the most for all. The theory of capitalism doesn't mean much of anything outside of these bounds. To say that people make choices in response to certain conditions is true in many systems that are not particularly free markets, but what free market theory claims is that this type of approach creates the most stable and successful system. Naturally, if the free market system were instead to generate a dysfunctional or even self-destructive result, then the theory is simply proved to be false and that's all there is to it. This is in fact quite self-evident if you look at pro-free market advocates, because when chinks in the system are brought up the general defense is to argue that these problems are in fact a result of the market not being free enough, and that government (or other) interference is what caused the problem. The implication is this type of defense is plain: that if one were forced to admit that the problems did not originate from government, but from the system itself, the inevitable conclusion would have to be that the system does not work.

So take automation: you have rising costs, a labor force increasingly refusing to work for slave wages, and a technological alternative is coming into play. The logical approach is to use this technology, just as has always been done when entire sectors of labor vanish throughout history. So sure, it's logical, but that doesn't make it a 'market correction'. A real market correction would not only be a strategy taken to deal with a condition, but also one whose result was a stable economy, with good productivity, that provides the most for all. Take away any of these clauses and it's not a market correction, just a failure. The 'free market' ceases to be any kind of market if the economy collapses outright. This has always been a danger, and is one reason you have significant government oversight on not allowing certain companies to fail. Most people are vehemently against this too-big-to-fail mentality, but the converse would be an economic domino effect where utter destruction ensues. So clearly someone has to do something to prevent that. The case of automated jobs (which could eventually be most jobs) is the lynchpin argument against a free market system always having the right answer. There would be no answer at all to a scenario where there are simply no jobs to be had. So that's why I say that automation (like replacing drivers) is absolutely not a good argument for the market always correcting itself and settling back into a good business cycle; it's more like the opposite, where it pushes us toward its utter demise.

[TheDeamon]

So take automation: you have rising costs, a labor force increasingly refusing to work for slave wages, and a technological alternative is coming into play. The logical approach is to use this technology, just as has always been done when entire sectors of labor vanish throughout history. So sure, it's logical, but that doesn't make it a 'market correction'. A real market correction would not only be a strategy taken to deal with a condition, but also one whose result was a stable economy, with good productivity, that provides the most for all.

That isn't a market at all, at least not in the context of economics and "free markets." That is a rigid, regulated, planned and static economy where nothing can be allowed to change--even the weather.

Anything that vaguely resembles the "Free Market" is subject to disruption, be that the introduction of agriculture, the invention of the wheel, animal husbandry, the introduction of bronze weapons/tools, the transition to the use of iron and eventually steel, and then on into the steam engine, the internal combustion engine, and the use of electricity.

Automation through the use of electronics is just one more step along that chain. And if your priority is stability in your economy, then you have to stop innovation. If "providing the most for all" is the priority instead, then you need to have a planned economy, but your challenge then is determining who your planners are, and what criteria they're supposed to be using to determine which option is "better" for everyone. And in any case, you're then having to filter innovation through that core group of planners so they get to decide how to handle the resulting disruptions caused by that new innovation.

Take away any of these clauses and it's not a market correction, just a failure. The 'free market' ceases to be any kind of market if the economy collapses outright.

See, here is part of the problem, the "Free market" has been a myth for several decades now, there are distortions everywhere in the national and international markets because nations are imposing either artificial restrictions, or artificial subsidies, on selected items in the name of their respective national interests. This also plays into immigration policy at points(as the UK is acutely feeling now that the EU work visas no longer apply there).

If you've been distorting a market, you need to be very careful about how you end the distortion depending on what the impact of said distortion was. It appears that for the UK, EU work visa's greatly suppressed wages for Commercial Truck drivers due to the flood of cheap labor from more impoverished portions of the EU. Brexit brought an end to that flood of cheap and legal labor, and now the market is needing to correct for the disparity that was created by the sudden loss of that labor pool.

A "market based recovery" is still likely to be faster than almost anything the government can do to correct it. But it does means there are going to be shortages and supply restrictions while the market sorts itself out(and prices go up to support the higher operating costs of domestic freight companies handling those transportation needs). About the only thing the government can do is provide programs to help fund people getting the needed training to do the job, at which point it is up to the freight companies--and their customers, to agree upon freight rates to make it work.

This has always been a danger, and is one reason you have significant government oversight on not allowing certain companies to fail. Most people are vehemently against this too-big-to-fail mentality, but the converse would be an economic domino effect where utter destruction ensues.

As it specifically relates to freight and the associated dominoes, you do realize most of these problems are a direct result of government actions? (Re: Covid)

 If the European model is much like the US, most of those freight companies(although not always the driver, although sometimes that can be one and the same) are paid by the truckload. Anything that delays that truckload(like major delays due to needing to test drivers for covid at national borders) is eating into the revenues for those companies, and by extension their drivers. That is a market distortion, and on caused by the Government.

Likewise, the UK's sudden driver shortage was a government triggered market disruption caused by a change in government policy.

The Governments screwed things up, and somehow it is the companies in the involved markets that are at fault?

So clearly someone has to do something to prevent that. The case of automated jobs (which could eventually be most jobs) is the lynchpin argument against a free market system always having the right answer.

I'm going to disagree, up to a point. Automation is the answer when "the market" makes automation more viable than employing humans to do the work.

If humans don't want to do the work, why are insisting that some human be forced to do so, and that an employer be forced to pay them for said work? That is an inefficient allocation of resources all the way around.

There would be no answer at all to a scenario where there are simply no jobs to be had. So that's why I say that automation (like replacing drivers) is absolutely not a good argument for the market always correcting itself and settling back into a good business cycle; it's more like the opposite, where it pushes us toward its utter demise.

Now you're no longer talking about markets in the normal sense. You're talking about creating a new market distortion. And I agree that something like the UBI is looming in our future as the "most efficient" means of addressing that issue. But you're otherwise "stuck" in an older paradigm that isn't considering what a "post-automation" society with a UBI could likely do to address much of this. "Work" would still exist for those who choose to pursue it, either because that is their passion, or because they want to live better than someone on UBI alone can do. But considering we live in a digital age, so long as they're able to obtain a digital presence, their options to "exceed the UBI" are basically limited only by their imagination and willingness to see it through.

[Kelcimer]

What strikes me as worth asking is whether capitalism (i.e. individual companies operating out of a sense of their own self-interest alone, and globally this resulting in prosperity for all) could be seen as being put to question if scenarios like this can occur where every company is individually doing what they think best (keep overhead down, salaries minimized, profits maximized, cut corners if needed) and the net global result may be a collapse of the global economy.

One of the favorite pass times of advocates of big government is to blame capitalism for something big government did.

The governments that govern over a lot of the ports where there are backups are California, New York, etc, which are deep blue states that have encouraged a culture of fear and have the harshest measures in place to prevent the market from working.

Don't you think it is worth asking whether big government could be seen as being put into question if scenarios like this can occur where so many governments are encouraging fear, social division, and harsh measures to prevent the market from being able to function and the net global result may be a collapse of the global economy?