The coronavirus epidemic and its aftermath have brought chains around the world, contributing to stockpilement, declining productivity and the fastest rise in decades.
But in a report released Thursday, economists at the White House say that although the epidemic revealed trade risks, it did not create them – and warned that the crisis would not go away after the epidemic.
“While modern chains have lowered the prices of many commodities, they can also be depleted,” the Council of Economic Advisers wrote. Climate change, as well as the increasing number of natural disasters, make it possible for future disasters to be avoided, the team said.
Economists at the White House have analyzed the supply chain as part of the Presidential Economic Report. The annual report, which this year has more than 400 pages, often provides new insights, but outlines leadership ideas on the major economic challenges facing the country, and how the President hopes to address them.
This year’s report emphasizes the government’s role in the economy, and calls on the government to take action to address the decline in the number of jobs, the reduction in the number of workers, the sharp rise in rates and other causes of the epidemic.
Understanding the Depression in the US
“The US is one of the richest countries in the world, but if we look at what has happened in the last few decades, some of it is threatening to undermine the situation,” said Cecilia Rouse, chair of the Council of Economic Advisers. he said in an interview. The problem is another part of “governments have left their jobs.”
The report cites one of seven of its chapters to handcuffs, citing a previously existing theme “entering into dinner negotiations” in 2021. Decades ago, Ms. Rouse and other authors of the report note that US manufacturers rely heavily on certain components. produced in low-cost countries, especially China, a practice known as offshoring. At the same time, companies are adopting timely manufacturing processes that reduce the components and equipment they store.
As a result, the authors claim, they are more effective but less effective chains – which are at risk of being disrupted by epidemics, wars or natural disasters.
He wrote: “As a result of exports, borrowing and inadequate purchasing power, many marketing strategies have become increasingly complex and fragile,” he wrote, adding: neglected expensive items that are hard to come by. financially, or emotionally. ”
But some economists have also suggested that making chains stronger can be self-sufficient, which in turn makes prices more expensive while inflation is already a major problem.
Adam S. Posen, President of the Peterson Institute for International Economics in Washington, said the plague and the Russian invasion of Ukraine could cause companies to get some of their assets in less stable and less prosperous places. But pushing companies to repeat production could cost taxpayers money and lead to inefficiency, raising consumer prices and reducing growth.
He said: “It’s good that you are paying for your insurance. “The worst thing you can do is do it for political reasons that are not going well for the economy.”
Some economists have confirmed that global chains are not always broken – sometimes they can be strong, too.
What is inflation? Lower prices and loss of purchasing power over time, meaning that your dollar will not arrive tomorrow as it did today. It is shown as an annual change in the prices of everyday items such as food, furniture, clothing, transportation and toys.
Ngozi Okonjo-Iweala, chief executive of the World Trade Organization, said in a statement that the world has seen a way to reduce the division of production and manufacturing, as trade extends from China to Vietnam, Laos, Cambodia. Bangladesh, Ethiopia and other countries. This is an opportunity to integrate supply chains and bring the poorest countries into the world in trade, allowing them to also benefit from globalization, he said.
Instead of struggling in developed countries, he said, businesses are doing the “approach” – moving to low-cost but low-income countries – as well as pursuing risk reduction measures such as manufacturing.
Ms. Rouse, a financial adviser to the White House, said that while it would be prudent to promote the proliferation of household items such as computer chips, Biden’s management was not pressuring them to do so.
He said: “We don’t need to do anything here. “We know that it can be expensive and unnecessary.”
But while emphasizing the role of the financial sector, economists at the White House have advocated a few steps the government can take to establish chains. They called on the government to help integrate and disseminate information that would enable companies to better understand the processes they provide and to identify weaknesses. And he said the government could encourage the production of household items that are essential to national security or other important things. Independent experts said the methods could be effective, but they could not solve the problems described in the report.
“The short answer is that there are no easy answers,” said Chad P. Bown, an economist and senior at the Peterson Institute.