[HN Gopher] What caused all the supply chain bottlenecks? ___________________________________________________________________ What caused all the supply chain bottlenecks? Author : CalChris Score : 370 points Date : 2021-10-28 18:45 UTC (4 hours ago) (HTM) web link (twitter.com) (TXT) w3m dump (twitter.com) | spookthesunset wrote: | Or maybe attempting to shut down large swaths of world economy | for an indefinite amount of time wasn't such a good idea? In the | timescale of months to years all business becomes "essential". | Sure shut it down for "just two weeks" but a year or more? | | What did people think would happen? | hoppyhoppy2 wrote: | >What did people think would happen? | | We thought that if we _didn 't_ do that we'd run a very real | risk of the entire healthcare system collapsing. We were trying | to "flatten the curve" so that hospitals could deal with an | ongoing roar instead of being hit with a massive explosion. | celtain wrote: | >We were trying to "flatten the curve" | | Not were, _are_. | | The entire lockdown/restriction/mask mandate set of policies | has been based on managing hospital capacity. State and local | governments are still using hospital capacity to decide when | to lift or reimpose restrictions. | | The wave of explainers we got last year about flattening the | curve were wrong about how long it would take, but the | fundamental strategy and the reasoning behind it never | actually changed. | polote wrote: | At least now we know that public health care experts cannot | be trusted to make predictions | Afforess wrote: | The TX Winter Storm and Big Freeze did more damage to the TX | economy than the shutdowns. Try again. | hosteur wrote: | That's not a good argument. 1: damage done by shutdowns is | still going on so we don't even know the full cost. 2: the | winter storm is not self inflicted. 3: I am not sure you are | right that said winter storm did more damage. Would like a | source though. | erosenbe0 wrote: | When analyzing the storm I'm not clear are we talking about | the power grid alone or the normal organic effects of Texas | just not operating well at those temperatures and pipes | bursting, frost heave, exposure deaths, etc? | JaimeThompson wrote: | Gas producers not having themselves marked as critical | infrastructure so ERCOT would not kill power to them and | the failure of plants to winterize themselves are self- | inflicted. | numpad0 wrote: | A lot of people alive and not dead | silent_cal wrote: | Sweden | elsonrodriguez wrote: | What about Sweden? | | https://ourworldindata.org/explorers/coronavirus-data- | explor... | silent_cal wrote: | Compare it to UK: https://ourworldindata.org/covid-deaths | rajin444 wrote: | That's not a fair comparison. Most covid deaths are from | those already past the average life expectancy. There's a | very good chance they were going to die soon anyways. Not | to mention you have to account for cancer patient + | covid, etc. | | https://www.reuters.com/article/us-health-coronavirus- | europe... | MisterBastahrd wrote: | It's completely fair. There's always a cause of death, | and averages aren't indicative of individual cases. If an | old person gets shot by a gun tomorrow, we don't chalk | that up as "well, they had their time." | [deleted] | fullstop wrote: | Their COVID death rate is 10x their neighbors, per capita. | [1] | | 1. https://www.businessinsider.com/sweden-covid-no- | lockdown-str... | silent_cal wrote: | No it isn't: https://ourworldindata.org/coronavirus/count | ry/sweden?countr... | fullstop wrote: | I specifically said "death rate" and "per capita". | | Your source here is comparing two countries, one of which | has 67 million people and the other which has 10 million | and showing _totals_ and not _per capita_ , which is a | worthless comparison. | | Additionally, I don't consider Great Britain a neighbor | of Sweden. | silent_cal wrote: | https://ourworldindata.org/covid-deaths | | Compare cumulative for Sweden and UK. It's two countries | away. | fullstop wrote: | Great. Now compare Sweden, Norway, and Finland. | | The UK is culturally different and not a neighbor. | brian_cloutier wrote: | This kind of comment is extremely unproductive. | | The idea of Sweden has no connection at all to the topic at | hand. You are using the word "Sweden" to make an argument | because you believe the connection between Sweden and | conversations about lockdowns is so clear that the mere | mention of the word is enough to bring the entire argument | into someone else's mind. | | So, this demonstrates that you believe everybody reading | this comment knows what you mean. Which in turn means you | know your comment is adding nothing at all to the | conversation. | | To belabor the point, if the connection between Sweden and | lockdowns was an entirely convincing argument then | everybody reading your comment would already agree with | you, and there would be no reason for you to remind people | of the connection with this comment. Since that doesn't | appear to be true, you believe your peers need to be | reminded of this argument, some elaboration on your part | seems to be in order! | | Hacker News is a lovely community where you can learn from | a large variety of people, each knowledgeable in their own | particular domain. The more thoughtful and substantial we | make our comments, the nicer a place it becomes for | everybody else. | [deleted] | allturtles wrote: | I really don't understand what you mean by this comment. The | only swaths of the economy that I'm aware of that got shut down | in the U.S. are things like bars, restaurants and movie | theaters. These are not tightly connected to global supply | chains, AFAIK, and if they were why would their shut down cause | bottlenecks (it should lessen demand, not increase it)? | ralph84 wrote: | Tesla's California factory was shut down for 2 months. | zamadatix wrote: | Thinking about it from the perspective of someone who thinks | the shutdowns were net good but reviewing the comment in good | faith: | | Lessened demand in large sections of the economy can itself | create shortages in the parts that take on the load or at | least stress on the supply chain to redirect to those places | now in extreme demand. Take restaurants for example, people | didn't stop eating but vast swaths of food supply chains had | to change pretty much overnight. | | Then there is also the problem of the demand of certain | things being highly uncertain, like cars towards the | beginning. | | Then there is the extreme induced demand on certain things | like webcams, laptops, or other home electronics as everyone | stays home. I'm sure that also isn't an easy overnight change | to make and then swing back from since it was completely | unplanned. I know the area I work immediately ran out of | widgets based on orders of 10s of thousands instantly coming | in and it has been backed up since that time to this day. | | Finally during the initial portion of the pandemic lots of | factories, both in the US and China, were getting shut down. | China seemingly longer. When restaurants and whatnot started | to open back up was about the time you saw those shutdowns | stop happening too. So on top of the above concerns for the | supply chain lots of non bars and movie theatres were also | affected by shutdowns, just perhaps not as long. | | May be more I'm missing but I don't think GP is an empty | comment by any means. | allturtles wrote: | Much of the problem with understanding what GP means is | that 'the shutdowns' is a very hazy term. Implicit in the | comment seems to be the idea that there was some small set | of authority figures who decided to shut down the global | economy and if only they hadn't done that things would be | better. | | e.g., The induced demand from work from home you mention I | wouldn't count as part of any 'shutdown' at all. It has | been largely driven organically by the decisions of | individual firms and workers. My office was ordered to work | from home by company HQ, not by any government authority, | and at this point staying WFH is an individual voluntary | choice. Does this count as part of the 'shutdown'? | Certainly my sector of the economy (software development) | was not shutdown, quite to the contrary. | zamadatix wrote: | I'm not sure the comment is implicit of who did the | shutdowns but even taking it as so the widget orders by | the 10s of thousands I referenced were mostly public | school systems receiving mandates and associated COVID | relief funding to compl,y not private enterprises. | Particularly younger grades weren't normally assigned | personal hardware and not every child had internet access | at home. Though like you say the private sector remote | work shift certainly happened too and exacerbated the | ordering situation. | pdabbadabba wrote: | A fallacy that might be at work here is comparing the shutdowns | that actually occurred with a counterfactual world where | business activity remained essentially unchanged. | | We'll never know for sure, but I doubt that's the correct | comparison. Even without government-mandated shutdowns, many | areas--especially major urban cores--would still have | experienced massive shocks as people voluntarily shifted to | working from home, stopped going out to eat, etc. In other | words, much of what the government did through law would likely | have happened anyway out of fear and individuals exercising | their common sense. | | Sure, it wouldn't have been exactly the same, but I think the | counterfactual is much less rosy than you assume. And then | there are the _benefits_ of the shutdown which helped to direct | the drop in activity towards less essential parts of the | economy and increased predictability, to say nothing of the | benefits of reduced viral transmission. | fullstop wrote: | People working from home increased demand for microphones, | web cameras, office chairs. | fullstop wrote: | Where I live the vast majority of people were deemed | "essential" for the purposes of working and then not | "essential" for the purposes of receiving the vaccine. | | The places which were closed were not producing things used in | the supply chain. | _Algernon_ wrote: | Have you forgotten the state of Italy and New York (among | others) at the start and middle of 2020? There were literal | trucks full of dead bodies in the streets because they couldn't | be buried fast enough. | | How do you envision the time between march 2020 and the point | where herd immunity through vaccines / infection would have | been sufficient would have gone without a lockdown? | | I'll take a lack of a few non-essential luxury goods for a year | or two over a world where everywhere looked like that, any day | of the week. | rajin444 wrote: | I'm not familiar with Italy, but NY was sending elderly | patients back to nursing homes when they had covid. | | https://apnews.com/article/new-york-andrew-cuomo-us-news- | cor... | AnimalMuppet wrote: | Which was insanely, criminally stupid, and absolutely | contributed to a lot of deaths. | | But New York also has a subway system that (approximately) | everyone uses to get around. That turned out to be a | perfect spreading ground for a respiratory virus. If I | understand correctly, that's a big part of why New York got | hit so hard. You can't _just_ pin it on Cuomo 's criminal | irresponsibility. | fidesomnes wrote: | this is how effective propaganda works | aaron695 wrote: | I like the way how he explains how I still have more _stuff_ | available to me during a fucking global pandemic than my parents | ever had in normal times, let alone the grands but it 's still a | troubling "supply chain bottleneck" that's about three letter | acronyms something something. | | I think it's a good test run for a time of war, or ultra serious | pandemics. And we did fucking well. Also a good thing to bring up | the next time some trashy moron talks about how on Twitter they | read about oversupply of food in the West and how it's bad. | snowwrestler wrote: | Mandating a lower-than-maximum container stacking height was | itself a buffer, which is now being filled by temporarily | stacking higher. | | The idea that we run without buffers in the supply chain is | contradicted by his own big idea to use one of them. | | We don't have big warehouses full of inventory sitting around | like we used to, true. But we do have the money we generated by | running more efficient supply chains, and money is more flexible | than outdated inventory. | | Edit to add: whether that money is sitting with founders, | shareholders, or employees is largely irrelevant from a macro | perspective. | ARandumGuy wrote: | Money doesn't do you much good if you can't actually spend it | on anything. Getting rid of warehouses full of car parts to | save some cash doesn't do a lot of good when no one can sell | you car parts for any price. | | Buffers won't solve a long term shortage, but they can prevent | a short term shortage from cascading. When the entire global | economy is running with minimal buffers, then the effects of | supply disruptions can last years, and that problem can't just | go away by throwing money at it. | dang wrote: | Ongoing related thread: | | _An unexpected victory: container stacking at the port of Los | Angeles_ - https://news.ycombinator.com/item?id=29026781 | | The previous stack: | | _Long Beach has temporarily suspended container stacking | limitations_ - https://news.ycombinator.com/item?id=28971226 - | Oct 2021 (483 comments) | | _Flexport CEO on how to fix the US supply chain crisis_ - | https://news.ycombinator.com/item?id=28957379 - Oct 2021 (265 | comments) | sadfev wrote: | Nothing it's just hysteria. There were some companies who made | awful decision of canceling existing and future orders. | | The suppliers and wholesalers have moved on to different products | and customers. | | Absolutely scummy companies like GM,Ford,VW and Stellantis are | the culprits. | | Also it doesn't help the fact that California the most corrupt | state in US history is fighting with the most corrupt dock | workers Union in SF port. | | Corruption, inefficiency and stupidity are creating mass | hysteria. | jshen wrote: | Absolutely shocked that a founder of a new company believes that | founder led companies are the simplistic solution to our complex | problems. | rytill wrote: | On one hand, people say what benefits the position they're in. | | On the other hand, people enter positions they believe will | benefit them. | dpierce9 wrote: | The average lifespan of a company is 10 years.[0] The average | lifespan of companies on the S&P is maybe a little more than | twice that. Each year you have a 1/100 chance of seeing a hundred | year flood. With a short lifespan the odds are decent that your | company simply won't see one. The question is then: how good of | an idea is it to spend to be robust to them? Of course it is | viciously circular: planning to not be robust to white swans is | probably why the lifespans are so short and shrinking. | | Tim Cook doesn't have voting control of Apple but it is sitting | on a massive shock absorber made of cash earning insanely low | rates of return. The idea that you need control of the board to | be robust doesn't seem to be necessary. It is probably helpful | but it isn't necessary. | | [0] | https://www.sciencedaily.com/releases/2015/04/150401132856.h... | jonnycomputer wrote: | Market forces tend to reward efficiency rather than resilience | through redundancy. But super-efficient systems can be fragile | ones too. So dude has a point. But seems like a mistake to say | that its the only relevant factor. | 01100011 wrote: | Isn't sort of foolish to expect companies to do anything but play | by the rules of the game which are defined by their | stakeholders(customers, partners, suppliers) and the government? | You can rant all you want about things companies should do, but | if they're rewarded or incentivized towards bad behavior then | that's what you'll get. | | Companies may increase their buffers for a while, but the market | will punish them and they'll move back towards their pre-covid | behavior in short order. You can write all the blog posts you | want about it, but without incentives and rules nothing changes. | jollybean wrote: | It's fallacious to suggest that 10% capacity everywhere would | have abnegated the supply chain issues. | | That said, shipping in particular is problematic in how they | externalize costs. They can get away with shenanigans because | they use international loopholes etc.. | | I say we need to dump this 'flagging in exotic country ABC' and | require that any ship landing in country ABC has to abide by all | the regulations of ABC. | evilotto wrote: | He's right to point out that the obsession with RoE is a big part | of the problem. | | He's wrong to suggest that the billionaire class and founders | will solve the problem if we only trust them and let them keep | their money. Founders have just as much incentive to optimize the | excess out of the system, they just call it "disruptive | innovation" by which they mean tweaking how the system works so | that they can squeeze out profit for themselves. | | I think economists call it rent-seeking. | JPKab wrote: | The obsession with RoE is really just a major form of | efficiency. Having things sitting around unused is a huge | reason that US car companies got their asses handed to them by | Toyota and their TQM/LEAN system they developed. | | People writing articles like this forget that it's not just | Wall Street, but competitors who created the huge pressures for | adopting JIT inventory systems. There's also the consumer. Are | you willing to spend the additional money required to buy a car | from a company who wastes tons of $ on excess inventory? | ghaff wrote: | The Toyota system got a lot of attention in the DevOps world | because basic principles such as empowering workers resonated | with the movement. Reducing waste throughout the system | doesn't get as much attention--given that computer software | doesn't really have inventory as such (at least not | literally)--but inventory/WIP reduction was an important | motivation behind Toyota's system. | makomk wrote: | This. Also, the tweets complain about not having excess | capacity due to the "obsession with return on investment", | but that's really just an abstraction around the fact that | extra capacity means using more limited real-world resources | to supply people with the same amount of stuff - more land, | more steel and concrete and construction labour and equipment | to build the extra factory and shipping capacity that goes | unused - which then can't be used for other things. The | tweets frame it as though it's only finance types and | investors that benefitted from this, but in reality everyone | was better off in real, "what can I afford to buy with my | money" terms due to it. | acdha wrote: | > Having things sitting around unused is a huge reason that | US car companies got their asses handed to them by Toyota and | their TQM/LEAN system they developed. | | It didn't help but I think that's more of a symptom of | building shoddy products: part of why inventory backed up is | that Detroit was producing cars which simply weren't as good. | Toyota didn't have a shortage of demand, and neither did | Saturn. If you make shoddy, poor-handling gas guzzlers, yes, | you'll underperform on sales. That doesn't meant the only | option is less inventory. | JPKab wrote: | There's an entire book (I've read it) about this called | "The Machine That Changed The World" published in the early | 90's. It goes into great depth as to the issues that were | plaguing GM/Ford etc. The excess inventory was absolutely | not driven by too little demand. It was simply inefficiency | in the manufacturing process and inability to rapidly | reconfigure the shop floor or reallocate labor towards | bottlenecks. | | The book is a deep, academic examination of the roots of | lean production, and is a must read for any engineer who | wants to get the Agile cultists to shut up and go away. I'm | a hardcore believer in the ACTUAL Agile philosophy, which | is rooted in lean, and I despise the cult of clerics that | have risen up around it and turned it into management | consulting BS. That book helps to know real agile from | consultant billing hours agile. | ladyattis wrote: | Yep, the capital owning class just doesn't care if their | businesses go into shock because they already have their cash | in hand. They'll never go back to pre-ROE days because they'd | have to live with less money and worse less control. While they | still have personal reserves in the billions they can decide | the fate of their ventures but if say 20% of their current cash | was on the balance sheets of corporations with boards that | don't vote their way most of the time then they're forced in | the medium to long term acceptance of their policies. This | isn't an argument for a return to traditional corporate power | because they bungled so many things (GM and the rest of Detroit | got their rear ends handed to them by the Japanese and their | application of JIT). | | Rather, it seems like to me the reliance of having a few owners | or a few institutions with consolidated power in the form of | money or assets is a recipe for disaster. If anything, it's | time to disperse the wealth and responsibility of production to | as many firms as reasonably as possible. I'd rather have 20 | smaller companies making the same thing than 3 big ones that | supposedly make them cheaper due to scales of economy which imo | is wrong and that most big firms are in diseconomy of said | scales now (prices imo reflect this). Basically, we need to | both economically and politically Switzerfy the economy (more | dispersed institutions, less central control where reasonably | possible). | amelius wrote: | > Yep, the capital owning class just doesn't care if their | businesses go into shock because they already have their cash | in hand. | | What if there was inflation? | ajmurmann wrote: | AND Ryan's point about taxing unrealized capital gains was | that it forces founders to divest over time. Which one is | it? | nostrademons wrote: | Inflation generally helps big business and its owners. They | get to raise prices, and they usually get to raise prices | more than the average firm does because they have little | competition. You're seeing this now with record-high | corporate earnings. | | As long as the capital-owning class is holding equity | (stocks, real estate) they benefit from inflation. | Spooky23 wrote: | The endgame isn't going to a fix, it's defeat. | | Newer, smarter Asian companies will displace stupid old | American ones, just as the Americans crushed the Europeans. | mensetmanusman wrote: | R&D in 20 small companies is less effective than in 3 big | ones due to less diverse teams and more inefficient double | spending, e.g. twenty $5M microscopes utilized at 15% versus | three at 90%. | bsder wrote: | If _only_ we could overcome the negatives of the | bureaucracy of a large company with a mere double-spend on | equipment. It would be cheap at 10x that price. | | The whole point of the startup culture is that they can do | things better than a large company. | | And, quite often, _they can_. But not always. | | A semiconductor plant, for example, is not a startup thing | because the capital cost is _so_ gigantic. | | However, most fields are not that bad. Even bio equipment | just isn't that expensive relative to the cost of the | _people_ to use that equipment. | | The bigger problem, right now, is that _investors_ don 't | want to fund anything which requires more than 18 months | before flameout/unicorn. That blocks startups that have a | 5+ year horizon. | ethbr0 wrote: | > _GM and the rest of Detroit got their rear ends handed to | them by the Japanese and their application of JIT_ | | GM and the rest of Detroit got their rear ends handed to them | because they'd underinvested in fuel-efficient engine designs | (the lost 70s) and grown lazy in reliability. | | Lean manufacturing may have allowed Japanese manufacturers to | price more competitively and be more agile, but at the end of | the day, they increased their sales because they made better | cars. | xyzzyz wrote: | > Yep, the capital owning class just doesn't care if their | businesses go into shock because they already have their cash | in hand. | | Billionaires have relatively very little cash in hand. Their | billions typically are in form of business equity, and so | they very much care of the businesses go into shock. | Swenrekcah wrote: | Relatively little can apparently be $10B: | | " In 2014, for example, Oracle cofounder Larry Ellison | disclosed he had used 250 million of his Oracle shares as | collateral to secure a $9.7 billion personal line of | credit." | | Source: https://www.businessinsider.com/american- | billionaires-tax-av... | tharkun__ wrote: | I would not call that 'cash in hand'. I get why you see | it that way but to compare it to the little guy: | | A credit card with a $5000 limit is not $5000 cash in | hand. It's a 'line of credit' for $5000 and whether I | actually have the cash to pay that back is a different | story. I might actually have $0 cash in hand to pay that | back and many people don't until their next paycheck | arrives. | | Any guesses how far the Oracle share price (of ~$100) has | to drop before the bank will actually use that collateral | to get their cash? | Swenrekcah wrote: | It is true that it's not cash in the wallet but it's | there available if you want it. It is in no way | comparable to paycheck to paycheck living. | | This practice also comes with all sorts of tax benefits | as well. | | If they really need to pay some of it back then the | company might decide to buy back some shares. | | And realistically, like the old adage says: If you owe | the bank $1M it owns you, if you owe the bank $1B you own | the bank. | lupire wrote: | Billionaires have massive personal loans (compared to human | needs, not compatrd do their owned equity) collateralized | by their business equity. | xyzzyz wrote: | Yes, they are "massive" by normal people's standard, but | they are usually minuscule relative to their equity | holdings. | Swenrekcah wrote: | Which is kind of to the point, they have more money on | hand than a small country's budget and even if they lose | it all it almost doesn't make a dent in their net worth. | | In this situation it is almost reasonable to want a small | crisis to shake out your upcoming competitors and buy | some more land or other things of real value at a | discount. | xyzzyz wrote: | > Which is kind of to the point, they have more money on | hand than a small country's budget | | They don't, though, that's the entire point. | | > and even if they lose it all it almost doesn't make a | dent in their net worth. > In this situation it is almost | reasonable to want a small crisis to shake out your | upcoming competitors and buy some more land or other | things of real value at a discount. | | A small crisis will in fact not cause them to lose | significant amount of cash, but will cause them to lose | significant amount of their net worth. Nobody wants that. | Swenrekcah wrote: | Unless the billionaire in question is extremely vain, | they should absolutely want some of their paper wealth to | vanish temporarily since it is an opportunity to accrue | more real value stuff at a discount for those that have | large amounts of either cash or cash equivalents on hand. | All of their paper wealth will appear again in the next | upswing. | legutierr wrote: | https://en.wikipedia.org/wiki/Distributism | gruez wrote: | >Yep, the capital owning class just doesn't care if their | businesses go into shock because they already have their cash | in hand. | | You do realize when we talk about jeff bezos being a | billionaire, it doesn't mean he has his billions in gold/cash | in a vault somewhere? The overwhelming majority of his wealth | is tied in various financial assets (eg. equities) that | certainly do get affected when "businesses go into shock". | Sure, he'll be in a much better position to weather such | "shocks", but it's still in his best interest to ensure that | the economy doesn't crash. | xmprt wrote: | Genuine question: 2020 feels like the biggest shock to the | economy in a while yet it was one of the best years for | most big businesses. If Jeff Bezos didn't feel the shock | from 2020 then when will he feel the shock? | gruez wrote: | >2020 feels like the biggest shock to the economy in a | while yet it was one of the best years for most big | businesses. | | by what metric? | leppr wrote: | Stock market valuations | munificent wrote: | The millions of people who lost their jobs and had to | rely on emergency cash payments from the government to | pay for food and rent? | gruez wrote: | How does this have anything to do with the claim that it | was "best years for most big businesses"? Do "most big | businesses" do better when that happens? | ironSkillet wrote: | There were two quantified subjects in the quote you | referenced - "biggest shock to economy" and "best years | for most big businesses". My guess is he was replying | about the first subject. | DevKoala wrote: | This shock benefitted the particular industry in which he | invested. A different kind of shock such a total internet | meltdown for anything but basic services, would render | his wealth down to just a couple billion while other | billionaires would win the top position. | revolvingocelot wrote: | >it's still in his best interest to ensure that the economy | doesn't crash | | Technically, yeah! Functionally, though, if the Even | Greater Depression arrived tomorrow? He'd still be the | richest man alive, and probably even more powerful than he | already is right now thanks to how Amazon and AWS would get | to take over more failing social institutions. | | Sure, a falling tide lowers all boats, but Bezos will still | comfortably afford his gigayacht. It's a setback for Bezos, | and maybe he wants to avoid it in order to maximize profit | and utility and whatever, but it's an existential threat to | him in the same way spilling a glass of milk or losing a | round in a video game are. Even extreme social unrest has | been priced in, at however much a luxury bunker in New | Zealand costs. | | Other people, when the Big Crash arrives, will -- in a | totally economically rational way! -- commit suicide in | order to ensure their spouses and children aren't | bankrupted by their medical bills. Uh, in greater numbers | than they already do. Many will starve, or at least go very | hungry. In greater numbers, I mean. Should be a good time | for the owner class to buy up all the housing stock for | cheap, too. | | I don't think the owner class is worried about it. I think | they actually might be excited. | ethbr0 wrote: | > _He 'd still be the richest man alive, and probably | even more powerful than he already is right now thanks to | how Amazon and AWS would get to take over more failing | social institutions._ | | Bezos isn't even the richest person alive today. That | would be Musk. | | https://www.msn.com/en-us/money/companies/elon-musk-is- | now-n... | rpmisms wrote: | Personally glad Elon holds that title. He has an explicit | reason to have that much money, and a plan to use it. | cto_of_antifa wrote: | This guy probably thinks he'll be on the Mars rocket lmao | darawk wrote: | None of this is the point, though. The point is that | Amazon wouldn't have achieved what it has if Bezos was | forced to slowly divest control of his company over the | last two decades. | | Bezos does not have his cash in hand, for the most part. | To the extent that he _does_ have cash in hand, he has | already paid taxes on that cash. To the extent that he | has not paid taxes on his wealth, he is fully | incentivized by the share price of AMZN. | micromacrofoot wrote: | I'm willing to bet he has more cash on hand than we will | make in our entire lifetimes... what's the point of | arguing how much it is? the point is that he has so much | money that nothing really matters. | darawk wrote: | The point is exactly what I said in the rest of the | comment. He has already paid taxes on the cash he has in | hand. The only assets he has not paid taxes on are the | shares in AMZN that he has not realized the gains on. | wavefunction wrote: | >The point is that Amazon wouldn't have achieved what it | has | | Sounds good to me. | xyzzyz wrote: | Fortunately, you don't get to decide that. Contrary to | popular sentiment on HN, Amazon is one of the most | favorably perceived brand by Americans, ranked top 4 in | 2020. When you go against Amazon, you go against | something that Americans like more than Netflix. | bangkoksbest wrote: | > When you go against Amazon, you go against something | that Americans like more than Netflix. | | That just gives more reason to go against, there's quite | a few Western comforts that could use a bit more | opposition, Amazon being one of them. | | You're making the case that it is virtuous to be aligned | with popular sentiments on issues, which is a position | that dissolves any ethical or political principles in the | name of conformity. | rsj_hn wrote: | This is interesting: | | https://tenetpartners.com/top100/most-powerful-brands- | list.h... | | Apple, Google, Amazon, Microsoft all in the top 10. | | Exxon way more popular than Netflix. | throw0101a wrote: | > _Bezos does not have his cash in hand, for the most | part. To the extent that he does have cash in hand, he | has already paid taxes on that cash._ | | What a lot of high wealthy individuals are doing is using | their portfolios as collateral against lines of credit. | The LOCs give them cash to fund their lifestyle, and they | don't have to liquidate their portfolios and take the | capital gains charges (at least in the short-term). | | Someone can have _both_ holdings _and_ cash in this | situation. | | This has been possible lately because rates are so low, | so the interest doesn't cost borrowers that much. | darawk wrote: | > What a lot of high wealthy individuals are doing is | using their portfolios as collateral against lines of | credit. The LOCs give them cash to fund their lifestyle, | and they don't have to liquidate their portfolios and | take the capital gains charges (at least in the short- | term). | | > Someone can have both holdings and cash in this | situation. | | Ya, I understand this. This is exactly my point, though. | If he's taken out loans against his shares, he is _even | more_ incentivized by the value of those shares than if | he had not done so. | | To the extent that he has pure (unencumbered) cash | positions, he's paid taxes. To the extent that he has | unrealized gains or loans against unrealized gains, he is | incentivized by share price appreciation. | | This was in response to the a comment suggesting that | because Bezos had already cashed out, he didn't care | about the value of his shares anymore. | rsj_hn wrote: | Pretty sure many in the middle class do the exact same | thing. That's the whole idea behind mortgages, auto | loans, etc -- to fund consumption on credit and pay the | interest with income. | throw0101a wrote: | For the middle-class, the closest would be a home equity | line of credit (HELOC). Reverse mortgages are also a | variant of this. | | Generally though, most 'middle-class loans' have an end | date. | [deleted] | rsj_hn wrote: | I think a lot of middle class people roll over their | debt, too, no? Say buying a new car when the warranty | expires on the old car. Or buying a new house every 10 | years (US average). | | But I don't feel like digging around SCF data, so this is | just a hunch. Having said that, my hunch is that middle | class households are much more indebted than wealthy | households. | doopy1 wrote: | Don't they have to payback the loans at some point? And | at that point do they not liquidate some assets to do so | and pay taxes on that? (Serious question.) | throw0101a wrote: | > _Don 't they have to payback the loans at some point?_ | | LOCs are often open-ended, so as long as they're at | minimum paying the interest, the lender doesn't care. | Presumably it will be cleared up eventually on death with | the estate. | andrekandre wrote: | > Bezos does not have his cash in hand, for the most | part. | | yes, but it works as collateral for whatever cash he may | need/want, which means effectively the same thing in the | end, no? | gruez wrote: | >He'd still be the richest man alive | | if you're measuring outcomes by relative income/wealth, | then you can also argue that the "Even Greater | Depression" wouldn't affect the average person either, | because everyone would stay in the same place (on | average). | | >probably even more powerful than he already is right now | thanks to how Amazon and AWS would get to take over more | failing social institutions. | | We just had a huge pandemic and recession. Did he take | over "failing social institutions" did he "take over"? | | >It's a setback for Bezos, and maybe he wants to avoid it | in order to maximize profit and utility and whatever, but | it's an existential threat to him in the same way | spilling a glass of milk or losing a round in a video | game are. Even extreme social unrest has been priced in, | at however much a bunker in New Zealand costs. | | Surely he'd prefer to be the leader of a global megacorp, | travel anywhere in the world, partake in various space- | related adventures, and not be trapped in a bunker? | You're right he won't ever have to worry about his basic | needs, but I wouldn't characterize it as "spilling a | glass of milk or losing a round in a video game". I'd be | pretty pissed if the US government somehow revoked by | right to leave the country. | | >Other people, when the Big Crash arrives, will -- in a | totally economically rational way! -- commit suicide in | order to ensure their spouses and children aren't | bankrupted by their medical bills. Uh, in greater numbers | than they already do. | | I'm not sure why this is being brought up, other than for | the shock value. | | >I mean. Should be a good time for the owner class to buy | up all the housing stock for cheap, too. | | Similar to your fears about amazon taking over, this | seems to be unsupported by the data. The great recession | lasted from Q1 2008 to Q3 2009, according to the fed. | However, this doesn't seem to correlate with institutions | buying up houses? | | https://cdn.vox- | cdn.com/uploads/chorus_asset/file/22647043/S... | throw0101a wrote: | > _The overwhelming majority of his wealth is tied in | various financial assets (eg. equities)_ | | When the DotCom Bubble burst AMZN's stock when down 90%: | | * https://www.cnbc.com/2018/12/18/dotcom-bubble-amazon- | stock-l... | | He didn't seem to freak out then and kept chugging along. | | Short of the (zombie) apocalypse happening, I doubt it will | ever drop that much again, and so I doubt Bezos would care | about any kind of draw down that could realistically | happen. | theshadowknows wrote: | That brings me to wonder...who has the most cash on hand at | any given time and how much cash do they have? I'm really | quite curious about that. | krapp wrote: | I have $9.00 and three Avenue C coupons in my wallet. | MR4D wrote: | > Switzerfy the economy | | Just off the top of my head, the Swiss: | | don't make airplanes (no Boeing, Embraer) | | don't make cars (no GM, Ford, Toyota, etc) | | have big consolidated banks (UBS & CS) | | have large trading firms (Glencore, Trafigura) | | etc.... | | My point is not to nitpick (I actually agree with your post) | , but to show that even in a tiny country like Switzerland | (smaller than Chicago), it is _hard_ to do that. | kbenson wrote: | > He's wrong to suggest that the billionaire class and founders | | What? How did you get billionaire class and founders? He | specifically says founder led companies and _family owned | businesses_. Unless you reduce that group to the Waltons, how | does family owned businesses equate to the billionaire class? | | "Only founder led companies and family owned businesses can | stand up to the immense pressure from the dogmas of modern | finance."[1] | | 1: https://twitter.com/typesfast/status/1453753942228160515 | paganel wrote: | > I think economists call it rent-seeking. | | There was a book published a couple of years ago (before the | pandemic) which was "demonstrating" (so to speak) that going | back through history real financial/economic levelling at a | reasonable scale only happened as a result of violent means | (wars, revolutions etc). | | I think what those violent means do (among other, more nasty | things like people getting killed) is that (in some cases) they | obliterate the societal/institutional structures on which a | specific rent-seeking system is based, which gives the majority | of the people a chance to "level up" until a new rent-seeking | system takes shape. | marvin wrote: | Probably "The Great Leveler: Violence and the History of | Inequality from the Stone Age to the Twenty-First Century" | jonny_eh wrote: | > violent means (wars, revolutions etc). | | Also plagues/disease. Currently relevant. | jason0597 wrote: | This would be true if lockdowns didn't happen. As it is | most of the wealth-owning class was told to shut themselves | inside, isolate, then we got the vaccine and they manage to | live on and keep their wealth. So not even plagues can save | us anymore. | kwertyoowiyop wrote: | In the 80s and 90s it was called "unlocking value." | gruez wrote: | > Founders have just as much incentive to optimize the excess | out of the system, they just call it "disruptive innovation" by | which they mean tweaking how the system works so that they can | squeeze out profit for themselves. | | >I think economists call it rent-seeking. | | Are you saying all "disruptive innovation" rent-seeking? Or | only certain kinds? If a founder was able to "optimize the | excess out of the system" by providing a better consumer-facing | experience (eg. amazon), why shouldn't they be rewarded with | profits? Is there any room for profits without being called a | rent-seeker? | TAForObvReasons wrote: | There are genuine "disruptive innovations" that are not rent | seeking, but by and large that is not what we've seen. | | Picking on Amazon for a moment, their original "innovation" | was a sales and use tax dodge: based in Washington, they were | able to sell books to California without having to charge the | relevant sales tax upfront. That margin gave huge room to | provide free shipping and other customer conveniences. | Technically customers were supposed to pay a self-reported | use tax but many did not. | | The relevant laws have changed since then, but the general | point still stands. Does mere tax and legal arbitrage count | as rent-seeking? Absolutely. | gruez wrote: | >Picking on Amazon for a moment, their original | "innovation" was a sales and use tax dodge: based in | Washington, they were able to sell books to California | without having to charge the relevant sales tax upfront. | That margin gave huge room to provide free shipping and | other customer conveniences. | | Sales tax in california was 7.25%. While not having to | charge tax was a competitive advantage, I'm skeptical that | was the defining factor that led to amazon's success. This | is further compounded by how prices work in the US (taxes | are not included), so I doubt this even made a conscious | difference to most people. Finally, the exemption isn't | limited to e-commerce sites. According to wikipedia, it | includes "companies doing mail order, online shopping, and | home shopping by phone". Why did amazon dominate while | sears languished? | dragonwriter wrote: | > Finally, the exemption isn't limited to e-commerce | sites. | | It isn't really an exemption, anyway, it is a limitation | under then-existing federal law on the power of states to | impose taxes. | | > According to wikipedia, it includes "companies doing | mail order, online shopping, and home shopping by phone". | | That's misleading. | | What it actually applied to, at the time, was companies | without physical presence in the state into which the | sale was being made. So companies that _exclusively_ did | those things would be covered (except in the State they | operated from, but they could operate in a no sales tax | state), but companies that did them alongside physical | operations would not, and before the web, those other | models alone had so much less access to customers that | the sales tax hack wasn 't worthwhile. | | > Why did amazon dominate while sears languished? | | Because while Sears _also_ had mail order business, it | was a ubiquitous brick-and-mortar retailer, and thus was | paying sales tax on its mail order sales, because they | had retail everywhere. | gruez wrote: | 1. What changed with the internet? When amazon was | started in the 90s, was the ubiquity of computer+internet | access anywhere close to the ubiquity of the sears | catalog? | | 2. I'm not really convinced that "the sales tax hack | wasn't worthwhile". How expensive would it be to spin off | your mail order division? Lawyers might be expensive, but | 7.25% of your revenue is also a lot of money. | caust1c wrote: | Yeah, this guy has clearly read about the theory of constraints | but his pivot into criticizing the wealth tax on the basis | "founders will lose control of their company" is simply | bullshit. | bluetwo wrote: | I don't think he is talking about tech founders. I think he is | talking about mom and pop businesses of all types. | | Tech founders are a different breed. | tmp538394722 wrote: | What do you mean - How are they different? | analognoise wrote: | As they constantly and insufferably tell us. | | Whether we believe them is another matter entirely. | jonny_eh wrote: | Who aren't billionaires, so I don't know why he brought up | criticisms of a proposed new tax scheme that only targets a | few hundred people. | JoshCole wrote: | I think a lot of people just read emotional language and turn | off their minds. So let's expand out what you said to make it a | bit easier for others to reason about what you said. | | We're talking about founder owned companies owned by | billionaires. So let's use an example of one: SpaceX. You're | maligning "disruptive innovation" so let's expand out your | claim with the specific example: an order of magnitude | reduction in the cost of space flight and the introduction of | competition in rural internet service. | | So you're saying enabling access to other planets and the moon | while providing people in isolated areas with internet service | is an example of squeezing out profits and you're saying that | you think it is rent seeking. Rent seeking is defined as an | economic concept that occurs when an entity seeks to gain added | wealth without any reciprocal contribution of productivity. | Typically, it revolves around government-funded social services | and social service programs. We already had programs to access | space. They were an order of magnitude more expensive. We | already had programs to provide internet. They didn't serve | well the subset of people that are in remote areas. So in both | cases it just isn't the case that the company is doing rent | seeking. | | In other words, you are completely wrong when we use a specific | example. | | This applies to more specific examples. Lets use the specific | example of Flexport. It is owned by a founder and you're | replying to things posted by them so it's even less of a reach | than before. | | They are introducing computers to an industry that has | competitors from the 1400s era. These competitors sometimes | have legacy processes built on physical paper and for some of | them excel is an example of the use of cutting edge technology. | You're saying that doing better than that for people using | modern technology is an example of rent seeking. | ren_engineer wrote: | why blame the players rather than the game? It's the | government's job to prioritize long term health of the nation | | Plenty of people warned about the hazards of allowing these | companies to outsource everything, government did nothing. | Mostly because they are bought off by lobbyists. This could | have pretty easily been prevented by putting tariffs on key | industries to keep manufacturing here or at least in North | America | Agathos wrote: | The billionaires' tax he mentioned is dead anyway, so that part | of the discussion is moot. It was floated a couple of days ago | as a possible addition to the reconciliation bill, but it's not | in the framework announced this morning. | 015a wrote: | I think his statement is that founder (and family) led | businesses are the only businesses capable of building the | shock absorbers necessary to weather hundred-year storms; not | that they _always_ will. By comparison, committee-appointed | CEOs rarely, if ever, will, because they cannot. | tonyedgecombe wrote: | I was always under the impression that family run businesses | tended to have poorer quality management. | The_Beta wrote: | It's not that they cannot. They don't have an incentive to do | it. | | If I'm being paid for my performance while I'm a CEO, why | would I spend money today (and hurt my performance today) to | fix a problem that MIGHT affect the company in 20 years | ODILON_SATER wrote: | It just that it is more likely that founders genuinely care | about their baby, so they have more incentive to make the | company more resilient to long term risks. I don't think | this is an absurd claim. It's not that every founder is the | same, there are founders who behave just like most CEOs. | jonas21 wrote: | No, they literally cannot. Because if they try to, they | will be fired by the board for failing to perform and | replaced with someone who will undo their work. | tuatoru wrote: | To align incentives, perhaps we should have a law | specifying that executive stock options can only be | exercised after a delay of 17 years or more. | lupire wrote: | The biggest business organizations in the world is one of the | oldest: the Chinese Communist Party. | bobdosherman wrote: | If I estimate a model to predict an anomaly using data that | never has any realized anomalies, how well will that model do | out-of-sample? While framing this as a bad unrestricted ROE | maximization problem is a nice simplification, it's not clear | that having everyone move to a restricted ROE maximization | subject to keeping assets large enough to insure against some | unforecastable shock is welfare enhancing. That could be a lot | of wasted insurance. | | I will give him credit for cleverly spinning this logic all | into a pitch to kill the unrealized cap gains tax proposal! | AussieWog93 wrote: | > Founders have just as much incentive to optimize the excess | out of the system ... tweaking how the system works so that | they can squeeze out profit for themselves. | | So do workers, to be fair. The goal of workers in purchasing | departments and HR isn't to make the business more efficient | but to propagate a cushy lifestyle for themselves and their | mates. | | To an extent, that same misalignment exists in all classes of | worker, including engineers. | | SWEs are probably the worst at this; so many of the problems | that we solve don't have anything to do with squeezing the most | performance out of the hardware or reducing technical debt. | Instead, a huge chunk of our time is spent on man-made bullshit | that sysadmins don't solve properly because otherwise they'd be | out of a job. | simonh wrote: | You have it backwards. Rents are revenue accrued due to the | ownership of a resource, such as grants, subsidies, tax breaks | and loaning or leasing an asset. Optimising out excesses is | minimising the holding of assets, so it's directly antithetical | to rent seeking strategies. | thereddaikon wrote: | Rent-seeking practices are not the same as a traditional Rent | or Lease arrangement. They get the term because instead of | buying a product that you know own and can do with as you | wish, they still maintain control as if you were a renter. | | A topical example is consumer electronics companies designing | devices to only last so long and actively suppressing the | after market through DRM, difficult or dangerous to repair | designs, restricting owner autonomy through software patents | and IP law and other methods to ensure you must come back to | them and purchase another one. | | Another more direct example is the slow conversion of all | paid as a product software into subscription services. You | can't buy the adobe suite anymore. You have to subscribe to | it. Sooner or later you wont be able to buy your operating | system either. | simonh wrote: | DRM is rent seeking through control of digital assets. | Patents and IP law manipulation, yes also rent seeking | based on ownership of IP assets. Software subscriptions | again, no question, that's renting access to a software | asset or service. These all meet the criteria I described. | | Designed obsolescence is arguable though. The customer | could always buy elsewhere. | | Anyway tye case I was replying to is not rent seeking. | Leaner businesses may be more fragile, but they are also | more profitable and productive. It's just being paid to do | work. | SkittyDog wrote: | In the terms "economic rent" and "rent seeking", the concept | of rent is not specific to assets. Rent paid to landowners | was the original inspiration for the terminology, but in | actual usage it refers to any economic behavior that extracts | value without creating new value. | | * https://en.m.wikipedia.org/wiki/Rent-seeking | | Notably, this usage does not include "providing liquidity", | so most of what hedge funds and private equity do for a | living is rent seeking, by definition. | | So the parent commenter's usage appears to be correct... If | it's any consolation, I was under the same mistaken | impression as you for a long time. | simonh wrote: | Liquidity is a service customers pay for. It's not clear to | me that's unproductive work. More efficiently allocating | capital can absolutely improve productivity. | | Some activities classed as renty can be economically | beneficial. It's not all pure usury, but activities that | seek to increase rent revenue without increasing the value | provided are a problem and that's the 'rent seeking' part. | I've no problem with fair value rents, but rents should be | as low as the market can reasonably bear as excess rents | are essentially a tax on production. | SkittyDog wrote: | I'm not arguing whether the definition is valid, just | correcting the previous poster's misuse of some well- | established economics jargon. | | Re: Liquidity... The fact that a service is immediately | useful to somebody (and has a willing customer) does not | prove that it's a net productive behavior for the | society, as a whole. That's just how the field of | economics defines it, and the practioners widely agree | that "providing liquidity" falls into that category. | | Now, it sounds like you may be trying to defend the | _morality_ of rent-seeking behavior... If that 's the | case, I wish you good luck in your argument, with | somebody besides me. I have no dog in that fight. | vanattab wrote: | Unless you consider liquidity to be valuable? No? | SkittyDog wrote: | It's not about whether something is immediately valuae to | somebody... It's about whether the total net effect on | society produces _new_ value, or if it 's just shifting | value from someone to another. Per the overwhelming | opinion of economists, providing liquidity is rent | seeking, because the benefit it provides to one person is | exactly offset by the value it takes away from someone | else. | newbie789 wrote: | That part of the Twitter thread actually made me laugh out | loud. In the middle of talking about how modern finance is | messed up he has a kind of unprompted little aside about how | "taxes are bad!!!" | | Dear lord the amount of smug "wE aRe ThE mOSt EfFicIEnt wAY Of | AllOCaTinG CaPitAl" arguments from very wealthy founders that | would prefer to become more wealthy is frankly ridiculous. I | get it, you went to Stanford and they taught you some fancy | words to trick people into giving you money instead of | investing in public infrastructure and services. | jonny_eh wrote: | Especially since it's easy for founders of such large | companies to sell their shares, but give themselves fewer | shares with greater voting rights... thereby maintaining | control while spreading the wealth. | philwelch wrote: | I'm not sure this is the case. The problem is that RoE is a | metric that can be gamed for short term gains while incurring | long term risks. This is more likely to be an issue with short | term career-oriented leadership. Founders are more likely to | have a concern for the long-term success of the business. | Simply put, founders are not the people sacrificing their own | companies' long term success in exchange for enhancing their | personal careers. | | A lot of the JIT fashion came from Toyota, and yet Toyota | doesn't seem to suffer from these issues as much as others. I | don't think it's any coincidence that most of the senior | executives of Toyota have all been at Toyota for longer than | many of us have been alive, and that the company president is | the grandson of the company founder. | Invictus0 wrote: | JIT works nicely in isolation--when everyone relies on it is | when it starts to break down. It basically offloads the | responsibility of forecasting your inventory needs to the | supplier, who has absolutely no knowledge of your inventory | needs. | ajsnigrutin wrote: | JIT works just fine with stuff that's simple to make or close | by geographically. Car seat covers? Many textile firms around | you? Sure, do it JIT... if one of them fails or gets wiped | out by a tsunami, there are ten more than can take over the | production. | | Computer chips? Made only in one company in china? Trying to | get someone else to make them, means weeks or months of | production line changes + waiting time + other customers... | good luck. If they're far away (eg. china), and the transport | system is fucked up, you're basically fucked up too. Even a | huge company like toyota can't make a chip factory | "overnight" anywhere. | quartesixte wrote: | Toyota has over the years adjusted how their JIT operates, | and are now known to stockpile certain critical parts. | | This is pure speculation, but I also wonder if Japan's | geography + slightly more diverse economic landscape (lots of | small businesses that do nothing but make components) help | make their JIT more resilient to shocks. With Osaka, Tokyo, | and Nagoya all within an area less than the length of | California, it's far easier to "in-time" material. | nickff wrote: | Toyota became significantly less JIT after the 2011 | earthquake and tsunami, which severely disrupted their | supply chain. That said, JIT involves many useful lessons | for organizations with higher inventory levels as well. | Kye wrote: | My understanding is this kind of alignment is essentially | what makes Shenzen in China such a manufacturing | powerhouse. | tootie wrote: | I was thinking this thread was basically explaining kanban | darawk wrote: | This is exactly right. It's about the term length of | incentive alignment. Most founders have a long term | reputational stake in the company they founded. Hired CEOs | generally do not. | phkahler wrote: | >> He's wrong to suggest that the billionaire class and | founders will solve the problem if we only trust them and let | them keep their money. | | He didn't say they'd solve the problem. He said they're the | only ones who can be resilient in hard times. OK I think he | said the ARE resilient, I say "can be" because it's still a | choice. | | "I think economists call it rent-seeking." That's what the | incumbents are after, and so are a lot of the startups - at | least the startups seeking round after round of investment. If | they're not seeking rent, they're trying to set up | infrastructure (manufacturing or cloud this-or-that) and | collecting returns (rent) on that investment. Nobody talks | about profit on goods sold, they talk about return on capital | (or RoE) and that seems a lot more like rent. | yalogin wrote: | What? This turned from a supply chain to don't tax the rich post. | I completely disagree with it. A good CEO will be able to do both | look at the long term and deliver shareholder value. Yes, the | growth could be slower but it is on the CEO to convince the board | and investors that its a good thing. Either way, now that this | issue is front and center, CEOs will not be blamed for planning | ahead, so we can happily tax the rich? His logic not mine. | hk1337 wrote: | What's the deal with writing 20+ consecutive tweets instead of a | blog post and tweeting the link to the blog post? | stjohnswarts wrote: | Blogs just aren't that popular anymore, so maybe he doesn't | keep one and Twitter is his main outlet? | dragonwriter wrote: | On Twitter as everywhere else, approximately nobody clicks the | link. But there's some chance they'll read through a chain of | tweets. | wvenable wrote: | I clicked a link to get to this twitter feed monstrosity. | t-writescode wrote: | A large percentage of TypeFast's twitter followers won't. | coolso wrote: | It's hard to write 20 consecutive blog posts without seeming | extremely pretentious. To the average Twitter user, massive | Tweet chains means the person has something really important to | say. The fact that they're getting around the max tweet size | makes things very rebellious, adding to that counterculture | feel you only get on Twitter.. Add in the blue checkmark next | to the name and yeah, I guess you could say Twitter users are | pretty cool for using Twitter. | malfist wrote: | Worse, 20+ tweets that don't provide any more nuance than the | original tweet, so this literally could have been one tweet | legitster wrote: | No, no, no! | | Stockpiling is not a solution to a bottleneck! | | In the grand scheme of things, having a couple weeks of extra | inventory on hand will not help you weather a 100 year storm. But | it will increase waste - inventory that you have to throw away | when there are defects or when they become obsolete. | | Imagine trying to predict the run on lumber, and the solution was | to have kept a bunch of lumber sitting in yards rotting waiting | for the off-chance that there was a sudden unexpected demand. The | proposal that we should have been shipping over more of | everything, building giant strategic stockpiles across the | country of everything, and then tossing out 10-15% of everything | from storage loss is bonkers. | | Just In Time manufacturing reduces waste and improves quality | across the board. And stockpiling only hides your bottlenecks! | bsder wrote: | True, but what isn't on the table is _producing locally even if | it doesn 't optimize to the penny_ instead of _shipping crap | halfway around the world to save half a cent_. | | This has the advantage that you already have industries that | have capacity that can scale up. You have people trained who | can train others. You already have equipment and facilities to | which you can add to to break a bottleneck. | | Basically, vertical integration at the country level. | | Of course, this is the CEO of a _shipping startup_ so that | solution isn 't on his plate of possibilities. | arendtio wrote: | Even if you are right, what would be your solution? | | I mean, the problem is not that we lack transparency, but that | we have run out of options to fight the bottlenecks. Having | some stockpiles as buffers would be one options to fight the | problem. | urthor wrote: | Is there even a better solution than to let the current | supply chain issues play out? | | The status quo with supply chains and manufacturing is there | for a reason, silicon in particular reflects its boom bust | cycle as well as the _absurd_ costs of CapEx. | | I think people are reaching when they table the hypothesis | that current supply chain issues are due to mistakes or | mismanagement of some middle manager, in some corporation | somewhere. | | Maybe, just maybe, the cost of having a bunch of spare | infrastructure for a once in a lifetime rearrangement of the | supply chain due to Covid isn't worthwhile? | blhack wrote: | He's not suggesting stockpiling, he's suggested increasing the | amount of RAM in the system (to us a computer analogy). | chrisan wrote: | What exactly is the "RAM" if not inventory? | zen_of_prog wrote: | I think they do mean inventory, just not sitting around in | a forgotten storage room. To try other computer analogies, | it might be increasing the queue size or using a capacitor. | dkokelley wrote: | Production and logistics capacity. If you run a factory at | 100% efficiency, anytime >100% throughput is necessary you | get backlogged. If you have ~15% headroom as a GOAL, you | can weather a shock without any downstream impact. | | In the case of the Port of LA shipping containers, | optimizing lot storage so that you always have exactly | enough space (100% efficiency) breaks down as soon as that | space requirement jumps to 110%. | Grakel wrote: | Quite the opposite, the lumber industry has been selling | greener and wetter wood year after year. If they would | stockpile the quality would increase, and they could build a | cushion to fluctuating demand. | legitster wrote: | Haha! Point taken. | rsj_hn wrote: | I've noticed this with musical instruments, and it sucks. | This has been a chronic problem with Gibson guitars, but also | even small scale luthiers are being hurt. | | https://www.guitarworld.com/features/adam-jones-i-told- | gibso... | efficax wrote: | the wood in my house is over 100 years old and is still in good | shape. Stored properly, wood lasts very long. but i get your | overall point. A balance has to be struck between too much and | too little inventory... | modeless wrote: | > In the grand scheme of things, having a couple weeks of extra | inventory on hand will not help you weather a 100 year storm. | | That's not really what he's saying. It's not about a single | company, it's about the whole economy. When every company is | running JIT, a small temporary supply disruption anywhere can | bubble and propagate through the whole chain, becoming a huge | disaster. It's like a traffic jam; when a highway is running | right at capacity it only takes one person hitting the brakes | to turn the whole thing into a parking lot. Except it's worse | than a linear highway because the economy has many backlinks | where companies early in the chain rely on companies later in | the chain, causing feedback loops. Whereas if there was slack | in the system then the relatively small initial shock wouldn't | propagate. | legitster wrote: | Supply chain issues were sooo much worse before JIT. Imagine | one person taps the brakes, but every car weighs 100 tons. | | When companies kept huge inventories, most of it was not | useful to solve the supply chain issues that came up and | often made it harder to respond to demand shocks. | dpierce9 wrote: | The average lifespan of a company is 10 years.[0] The average | lifespan of companies on the S&P is maybe a little more than | twice that. Each year you have a 1/100 chance of seeing a hundred | year flood. With a short lifespan the odds are decent that your | company simply won't see one. The question is then: how good of | an idea is it to spend to be robust to them? Of course it is | viciously circular: planning to not be robust to white swans is | probably why the lifespans are so short and shrinking. | | As for the turn to founder control, one counterexample is Tim | Cook who doesn't have voting control of Apple but is sitting on a | massive shock absorber made of cash earning insanely low rates of | return. The idea that you need control of the board to be robust | doesn't seem to be necessary. It is probably helpful, apple may | be sui generis, but it isn't necessary. | | [0] | https://www.sciencedaily.com/releases/2015/04/150401132856.h... | rsj_hn wrote: | This is like a Rorschach test. There is truly something for | everyone. What caused all the supply chains | bottlenecks? Hard Left: "It's the fault of | *capitalism*!" Hard Right: "It's the fault of | *unions*!" Soft Left: "Truckers don't have a | living wage!" Soft Right: "We stopped producing | because of lockdowns!" Greens: "It's *climate | change* disrupting the economy!" Libertarians: | "*Government mismanagement of ports!*" YIMBYs: | "*Zoning laws don't allow stacking!*" De- | regulators: "*AB 5 bans independent operator trucks!*" | Taleb: "Globalization JIT is *too fragile*!" | Krugman: "Republicans destroyed our infrastructure!" | Montana: "Workers are staying home, collecting unemployment!" | (h/t tamaharbor) | | Did I miss any explanation? I need to start collecting these. | | Full Disclosure: I have no idea what the causes of the port | bottlenecks are, but it's a great launching pad for talking about | all of these issues. | tamaharbor wrote: | Staying at home and collecting unemployment. | rsj_hn wrote: | Yes! I have _definitely_ heard that one, too. I will update | the list. | 1970-01-01 wrote: | Alternate: https://threadreaderapp.com/thread/1453753924960219145 | rdiddly wrote: | Thanks, I hate when people try to blog on Twitter. | three14 wrote: | Why would you expect a company that pays for buffers to be able | to compete with a company that doesn't, even if the first company | is owned by benevolent founders? Shouldn't the company that's cut | inventory to a minimum be able to charge less than the | competition, and drive the high-inventory competition out of | business? I understand that not having inventory might create | long-term problems, but how is the high-inventory company | supposed to compete during the good times? | KingMachiavelli wrote: | How bad are the supply chain bottlenecks really? Compared to the | amount of discussion on the matter they seem pretty minimal | outside a couple sectors. I certainly don't see any lack of | products being sold at grocery and big box stores. The only | exception I see are some hot items like GPUs and game consoles | but I don't they the supply chain itself is the constraint but | rather the actual silicon. | | The only significant example I can think of is the car market. If | you sold or didn't have a car pre-pandemic then getting one now | is going to be expensive both new and used. Then again I have | scene dozens of used cars sitting in parking lots (w/o license | plates and with old car rental decals) so I'm starting to think | there is some scalping going on in that market as well. | andrewstuart wrote: | Queue dynamics. | | Late entrants to a backed up queue take exponentially longer to | service. | president wrote: | Is anyone honestly surprised? Seeking short term gains has been | the story of the last decades. | throwaway4good wrote: | What it is the alternative to the current just-in-time regime? | | Warehouses filled with stuff to be sold. Overproduction. Stuff | getting destroyed because it expires or cannot be sold for | whatever reason. | | We may get there, hopefully only temporary, as a reaction to the | current situation. For most companies, the amount paid to the | factory in China or elsewhere, is only tiny fraction of the price | the product is sold for. | | That is why companies now are double or even triple ordering. | Most of that stuff will just ending up getting destroyed. | jkingsbery wrote: | For an alternate take, see | https://www.nationalreview.com/2021/10/the-real-culprit-in-o... | ... | | These posts raise some interesting points I hadn't thought about | (I don't see any problem with Next-in accounting). But it seems | that lack of inventory isn't the only problem, throughput at | ports is also an issue, and the ports themselves are limited at | what changes they can make to fix these issues, partly due to | profits (no one will want to operate a huge port that's | profitable 5% of the time), but also partly due to limits put on | ports and shipping by the government. | [deleted] | alex_young wrote: | E-commerce did it. | | We operated with little head room in a very very big system for a | long time without these issues, and the major change was online | shopping, which really took off during the pandemic. | | This worked, mostly because there was suddenly slack in the | system to accommodate this changed purchasing pattern, caused by | a slow-down in practically everything else. | | Now that the everything else is back online though, there is | massive contention for space on ships etc, so retailers hoard | more in warehouses, and that backs up into container yards, and | then into the parking lot at the dock. | | Adding more capacity in the middle (stacking some containers) | doesn't do anything to materially solve this problem. | | https://www.census.gov/retail/mrts/www/data/pdf/ec_current.p... | WesolyKubeczek wrote: | All nice and logical, and the stark lack of long-term planning is | a huge part of the problem, but this: | | > Only founder led companies and family owned businesses can | stand up to the immense pressure from the dogmas of modern | finance. | | This observably does not compute. Unless those family owned | businesses are the size of Samsung or comparable, they can rarely | afford to invest so much in their prime, much less so now. | Founder-led and family businesses seem to be the huge collateral | damage in this clusterfuck. Or am I wrong? Are those businesses | not hit with transportation growing expensive AF and energy | shortages just as bad? Do they have enough lobbying power that | their government simply will not let them drown one way or | another? | motohagiography wrote: | It's a policy problem. Truth is hard to determine because the | delays are the effect of upstream decisions. There were internet | anecdotes about California port policy preventing drivers from | picking up loads (allegedly the owner operator law changes that | hit Uber also hit truck drivers as well), federal policy changes | reducing the time drivers can spend at the ports and number of | loads they can take each day, but it was hard to separate these | from partisan criticisms, even if the problems seem to have | appeared overnight. Covid was around all last year, and between | the availability of vaccines and the number of cases in cities | being in the low hundreds, it's not like people working on supply | chains are suddenly home sick with it. | | It's getting more challenging to not interpret the destruction of | independent business (such as owner operators of trucks, retail, | restaurants and bars, and other policies) as an intentional soft- | dekulakization of western economies, which is a necessary step in | an old playbook. It would be helpful toward demonstrating a | better explanation if there were some other economic factor that | has appeared in the last year that was not just clumsy | application of policy. | [deleted] | DevKoala wrote: | > Only founder led companies and family owned businesses can | stand up to the immense pressure from the dogmas of modern | finance. | | > The proposed tax on unrealized capital gains will force | founders to sell larger and larger pieces of their companies to | pay the tax, until eventually they lose control of their | businesses and turn them over to the Wall Street sharks to run | their disastrous playbook. | | I agree with this argument. Love him or hate him, with a tax on | unrealized capital gains someone such as Elon Musk would not have | been able to drive Tesla to profits thus forcing the automotive | industry towards EV's. Moreover, we would have fallen behind | decades in the space race. | dragonwriter wrote: | > Love him or hate him, with a tax on capital gains someone | such as Elon Musk would not have been able to drive Tesla to | profits thus forcing the automotive industry towards EV's. | | Yes he would have. One, because there is a tax on capital | gains, and he did; you probably mean an _unrealized_ capital | gains tax, but... Two, it is quite possible (and explicitly a | motivation of the proposed law, so impossible for any honest | critic to overlook) to borrow against public tradable assets, | and if they are gaining value fast enough that a 20% tax on | unrealized gains would significantly erode your holdings you | can do so at interest rates far below the value growth, | essentially without limit (that 's how people fund lavish | lifestyles without taxes on unrealized gains already), so he | would be able to use that method to pay taxes without any | dilution of ownership. | DevKoala wrote: | You think he would have doubled down on the risk? Perhaps, | but I know it would have been another obstacle in the road | for him. At what point does it stop being worth it for him? I | do not like his social media antics, and hate to even bring | him up as an example since I am tired of hearing of him. | However, the guy works like a madman for goals that mainly | benefit all of humanity to whom he owes nothing. History will | look kindly on him and down on all of us that did so much to | hold him back. | | Edit: thank you for pointing out I missed the "unrealized" | bit. | tome wrote: | Ah, another chance to plug my article about why he was wrong | about the bottleneck at the ports! | | https://news.ycombinator.com/item?id=28987281 | [deleted] | flurie wrote: | The buried lede is an assertion that a tax on unrealized capital | gains will cause reduced private ownership of large companies, | resulting in a reduced ability to handle 100-year flood events. | | Along the way, there are a bunch of other assertions that serve | as prerequisites, like the idea that these companies can | cultivate better employee loyalty and plan for longer horizons. | | How much do we know about how true that is, though? Do privately- | owned companies disproportionately survive these sorts of events | historically? | ootsootsoots wrote: | Behind every big corp is a well armed government and police | apparatus | | Given how many Fortune 500 companies have died even in | prosperous times since the list started, I'm gonna file this | away as "manufacturing consent to maintain the status quo." | | Corporations are not literal machines or organisms. They're a | social acquiescence given the reality of biological need at | scale. The logistics are necessary; the behavior is necessary; | the ownership angle is propaganda. | jjoonathan wrote: | Yeah, when they get public bailouts. | AnimalMuppet wrote: | Well, _publicly_ owned companies have, in the last 20+ years, | been very _bad_ at keeping spare capacity around. Lots of | "rationalizations" and "rightsizing" and so on have cut all the | reserves. | | That said, this does read like someone with a personal axe to | grind, leading to motivated reasoning. | whatever1 wrote: | "cause reduced private ownership of large companies, resulting | in a reduced ability to handle 100-year flood events." | | How the market speculation on the value of a company can affect | its resiliency ? If tomorrow everyone sold Apple stock for 1 | cent, why would Apple the company care ? Same revenue, same | costs. Give me a break with the importance of the stock casino. | FeepingCreature wrote: | It would impact Apple's ability to raise money on the stock | market tho. | whatever1 wrote: | Banks are in the business of giving loans and they pay | professionals to evaluate the assets of borrowers. | | That is in contrast to me and everyone else who just gamble | collectively. | jollybean wrote: | The assumption that stock prices don't matter, because | company ABC doesn't necessarily depend on it 'for now' - is | just wrong I'm afraid. | | If Apple crashed to 1 cent it would gut the entire market. | Even just that crash alone, the amount of money wiped out, | retiree savings etc., other companies would be valued lower | and then the mass selloff would crush them as well. | | Apple may not need to 'raise money now' but it very well | could in the future - and - every company is somewhat of a | proxy for every other company. | | If there is no ROI, there is no investment, and there is no | economy outside the government, it's that simple. | | Taxes on unrealized gains are a separate thing, and probably | a bad idea - just contemplate that they would have to be | paired with tax-sheilds on unrealized losses as well. Due to | speculation, it would open up the door to all sorts of | shenanigans. | | It's just a bad idea all around. | | Elon Musk is a 'paper zillionaire' that's very, very | different than someone with a zillion in the bank. | | There are probably some very boring, old, already established | ideas for increasing taxes on the ultra-wealthy that would | probably work very well. Including getting rid of loopholes | etc.. | whatever1 wrote: | One of the two is true: | | 1) The market value of a company is true, aka the owners of | this company must be taxed for the real value growth in | their portfolio (since it constitutes income), even if they | do not sell | | 2) It's a casino, a share is just a ticket that may worth | nothing or a billion. In that case we don't need tax | protections. The owners of the tickets must be taxed only | when they cash out. The governments should actively | disincentivize gambling into this and ensure the pensions | of its citizens by funding public projects and enabling | future growth. | | You cannot have it both ways. | [deleted] | [deleted] | cbdumas wrote: | All of this talk about supply chain issues are totally missing | the point in my opinion. So many articles (and tweet chains I | guess) have been written about supply chain issues, yet every one | of them seems to ignore the elephant in the room which is demand | for goods vs services. Over the course of the pandemic there was | a staggering re-balancing of consumer spending [0] from services | to goods, to which supply chains have not caught up. | | If the spending doesn't re-balance again as restrictions are | lifted this is not a temporary supply chain issue caused by just- | in-time methodology, it's just the new normal. | | [0] | https://apps.bea.gov/iTable/iTable.cfm?ReqID=19&step=2#reqid... | Azsy wrote: | The RoE analysis is decent, but it wouldn't be HN if every now | and then someone really wants to sell the idea that your average | business owner and your average S&P 500 business are all in this | together with taxes as their enemy. | | Taxes don't apply equally. Taxes are a good thing. Taxes can | work. | nso95 wrote: | Was there a point in history where we could handle something as | big as covid and without supply chain issues? Skeptical.. | kwertyoowiyop wrote: | The interconnected supply chain is a headache right now, but on | balance it's still a good thing for the world if it prevents some | country from starting a global war. | Mountain_Skies wrote: | The global interconnected supply chain is a relatively recent | phenomenon. It's far too early to make any claims about its | ability to prevent physical war and so far seems to have | created the necessity for fiscal and cyber war. | Barrin92 wrote: | It's true but just looking at supply chains or 'the economy' | misses that this isn't just how we do business, our entire | culture runs on fumes. | | People during the pandemic didn't just learn that their toilet | paper is delivered just on time, people learned that's how their | friends and family are organized. The amount of people who were | basically alone during the last two years with no actual communal | support if there even is still such a thing as a community at all | was staggering. | | The founder of flexport thinking that giving founders more | control isn't exactly surprising but misses the point that the | problem he's talking about has already infiltrated just about | everything. | hprotagonist wrote: | https://en.wikipedia.org/wiki/Beer_distribution_game | | after a very short period of time after a major disruption, there | ceases to be a simple cause and the answer rapidly becomes "well, | it's the gibbs phenomenon, it's gonna ring for a while now". | mrkramer wrote: | Long story short: Big spike in demand in a very short period of | time. | Mountain_Skies wrote: | How big of a spike and a spike in what? Consider the size of | the import market in its entirety and how much of a spike would | be needed to disrupt it. Don't think more PPE is clogging up | ports. | intricatedetail wrote: | In my country mostly legislation that taxes small business on | revenue even over 50% effective rate and prevents from claiming | legitimate business expenses. That wiped off thousands of HGV | drivers working through their own small business. They got also | smeared by the government as tax dodgers without showing any | proof that this was ever the case. They of course blamed that on | Brexit. | rsj_hn wrote: | That's interesting -- do you have a link for some background | information? | cmenge wrote: | Hm, seems like a monocausal 'explanation' of a complex problem - | or let's say a mere opinion with little background information. | | Given the 'hundred year crisis', I think we have fared relatively | well from a purely economic point of view... So, yes, some | problems may exist but I think we have witnessed a surprisingly | resilient system, given how optimized everything is and how | unprecedented the issue is. | | I don't know if a slight price increase in graphics cards is the | key issue to worry about at this point. | | Keeping tons of spare capacity is neither economical nor | environmentally friendly. Also, it would probably only shift the | problem elsewhere. | joe_the_user wrote: | _Keeping tons of spare capacity is neither economical nor | environmentally friendly. Also, it would probably only shift | the problem elsewhere._ | | * There some things that are people simply need for survival. | At a certain point, having no spare capacity and cascading | failures means people die. Lack of masks last arguably killed | people last year. | | * It's quite possible to excess capacity and be good to the | environment while present production is often terrible despite | the lack of excess capacity. | | * Sure, a complete lack of excess capacity is economical. Which | is the OP's point in different words. Robustness to failure has | been traded for immediate returns. | sammalloy wrote: | > Lack of masks last arguably killed people last year | | I think that was the least of the problem. At the beginning | of the pandemic in the US, hospitals, nursing homes, and many | other companies would not allow their workers to bring in | their own PPE. This continued for upwards of six months. | Several outbreaks occurred in my area because management | refused to allow their workers to use PPE. Fast food | operators also had several outbreaks because they were not | testing their employees temperatures until it was far too | late. | | As late as April, we had dental offices across the country | refusing to allow receptionists to wear masks. Same went for | supermarkets and restaurants. Upwards of 30% of lives could | have been saved if corporate and management hadn't setup | major roadblocks for worker protections. One of the most | common arguments I heard was, "we don't want the customer to | see our people behind a mask". For companies, this wasn't a | pandemic with real health risks, this was a front-facing | visibility problem for the organization. These people should | all lose their jobs for the suffering they caused. | CamperBob2 wrote: | _I think we have fared relatively well from a purely economic | point of view._ | | There's no reason to think this is over yet. We might just be | getting started. | WesolyKubeczek wrote: | Just you wait until China pulls a Crimea on Taiwan. | | There go our semiconductors, this time for real. | nebula8804 wrote: | Well at least we will be going back to writing everything | in C and squeezing everything out of our old legacy chips | because what else can we do? Maybe the | Intel/IBM/Globalfoundries fabs in the US can continue | producing whatever last gen chips they are capable of. | jollybean wrote: | There's no reason to think that we are 'just getting | started'. | | We know what the system looked like before, and post- | pandemic, there's no reason to believe it wouldn't return to | that state. Aside from some ongoing pandemic measures, by and | large, we should see things mostly settle into the system | that already works. | | It's just going to take some time to clear. In the meantime, | most things are working well enough. | | Much of the inflation we are seeing is a function of 12 years | of mass money printing and pandemic response, if it were not | for that, the pricing issue wouldn't be so acute. | | If there is a 'new normal' it will due to monetary issues - | the adjustments in supply chains I think will be incremental, | with a few strategic changes i.e. TSMC in Austin etc.. | cmenge wrote: | Agreed, good point. I should have said "we have been faring | relatively well [so far]" | ben_w wrote: | If it was just one item, such as graphics cards, I wouldn't be | particularly concerned. The problem is it's a bit of | everything, a mere 11-ish years after the Great Recession, | which was itself "supposed" to be a once-a-century economic | catastrophe. | rootusrootus wrote: | To be fair, once a century refers to average, it is by no | means a guarantee that it will be a century before the next | crisis. | kqr wrote: | To be even more fair, there's absolutely no reason to think | these types of events are independent; there's good reason | to believe they're positively correlated. This means once | one happens the chances of it happening again soon are | greater than before it happened. (But if you're lucky and | it doesn't happen again the chances decrease further, | giving you an average of 100 years between them again.) | ben_w wrote: | I can believe a pandemic might cause a global economic | catastrophe on par with the Great Depression or the Great | Recession, but I my imagination isn't giving me any ideas | how the latter might cause the former? | breser wrote: | By the economic catastrophe causing us to elect a | president who dismantled a group that worked to monitor | and respond to global health issues to prevent them from | becoming a pandemic. I think it's hard to say if that | group could have prevented Covid-19. Nor am I necessarily | saying that the economic crises of 2008 caused us to | elect Trump. But I think you could possibly find a path | from one one to the other. | tuatoru wrote: | ... poverty causes a rise in consumption of bush meat, | like bats in Wuhan[1] or primates in central Africa[2]? | | 1. https://en.wikipedia.org/wiki/Investigations_into_the_ | origin... | | 2. https://en.wikipedia.org/wiki/History_of_HIV/AIDS | cmenge wrote: | I was trying to be a bit dramatic there... | | Sure, it affects everything and given the complex | interconnections and dependencies within production chains / | networks, the cause-and-effect relationships are hard to | understand and cause for concern. But given how complex and | decentralized things are, I am still amazed we haven't seen | worse effects (yet). I doubt that spare capacity in logistics | alone would make a huge difference, because you'd also need | spare parts, materials and manufacturing capacity, all of | which are part of the same network. | CityOfThrowaway wrote: | First one thing, and then the next. | | The spiral is in its early innings right now. Hold on | tight! | kwertyoowiyop wrote: | With shipping containers being sent back to Asia empty | rather than taking an extra leg to mid-America to fill up | on US farm products to sell in Asia, is the price of | soybeans and corn in Asia going to spike soon? | [deleted] | joe_the_user wrote: | _Given the 'hundred year crisis', I think we have fared | relatively well from a purely economic point of view..._ | | Covid was essentially "Sars II". If Sars1 had had the qualities | needed to be a world wide epidemic, we'd be looking 10-100x the | casualties. Sars1 happened a decade ago. Calling this a | "hundred year crisis" seems wholly disingenuous. This event was | forecast by quite a few people, the world was terribly | unprepared and there's every reason to think the same factors | that created this virus will create others much sooner than a | hundred years from now. | greendesk wrote: | I have a tidbit on the following: >> we'd be looking 10-100x | the casualties. | | Viruses conform to the distribution of deadliness-vs- | reproduction rate. For Sars 1 to spread widely, it has to be | less deadly. There are limits to how a virus can both be | deadly and contagious. | | But just a tidbit on this statement. | joe_the_user wrote: | _Viruses conform to the distribution of deadliness-vs- | reproduction rate._ | | That's a fine rule of thumb but not something to literally | bet your life on. When smallpox was introduced to North | America, it wiped out a substantial percentage of the | population of the continent (This [1] claims 90%, which | might be much but it was a lot). | | [1] | https://www.pbs.org/gunsgermssteel/variables/smallpox.html | CamperBob2 wrote: | _There are limits to how a virus can both be deadly and | contagious._ | | That leaves out the whole question of incubation time. The | scary thing about COVID is that it gives you several days | to a week or more to walk around spreading the infection | before you even know you have it. | | That's why the reaction in the public health sector was so | dramatic. It was the sort of thing that could have easily | been much worse than it has turned out to be. | | And it's _still_ only one or two mutations away from living | up to the worst-case fears: a seriously-deadly virus that | spreads all over the world before anyone knows what 's | happening. One that large sectors of the population have | already been preconditioned to deprecate or ignore. | makomk wrote: | The original SARS didn't have the qualities needed to be a | world-wide pandemic, though, and one of the big obstacles to | that was that it was just too deadly. Not only do people who | are so sick they have to be hospitalized not go out and | socialize and spread the disease, all the hospitalizations | and deaths gives a whole bunch of really obvious starting | points for contact tracers - instead of only knowing about a | tiny fraction of cases, most of them are highly visible and | those people's contacts can be tracked down and isolated | before they become infectious. | | Also, a lot of governments did take suitable precautions in | case Covid was more like the original SARS early on and just | got flak for it. This was particularly visible here in the | UK, where Public Health England and the government had | already planned for another SARS or MERS-like virus and | introduced really aggressive testing and contact tracing | early on in case this was it. They just got attacked in the | press for not continuing that once it became clear this | wasn't like SARS and it wouldn't work - and then once they | gave in and reintroduced testing and contact tracing as a | measure, they were attacked again because (predicatably) it | wasn't that effective and the media fuelled endless badly- | informed conspiracy theories about the testing and contact | tracing program only existing to funnel money to their pals. | rand49an wrote: | The UK test and trace program cost PS37 billion, which was | handed solely over to a company that has a long history of | delivering projects poorly. By all good measures it wasn't | effective in tracking COVID or preventing cases. In my | opinion the government were rightly attacked over this | issue. | mfer wrote: | > I don't know if a slight price increase in graphics cards is | the key issue to worry about at this point. | | The price increase in graphics cards isn't related to this. | | GMs trouble selling cars because they don't have enough chips | to finish off the cars is a problem related to the pandemic and | planning like the posts on Twitter note. The lack of new cars | available has driven up prices on used cars. This is all supply | chain driven. | | > how unprecedented the issue is. | | How unprecedented is it? In the last 130 years there have been | two world wars and two global pandemics. | | The US has now outsourced most of the production of goods to | places in other countries. So, if something changes there (like | the mask issues we had early in the pandemic) we have | limitations here. And then there is the changes in posture of | China where many of our things are manufactured. It wouldn't be | unheard of, historically speaking, for that to impact | businesses in the future. | marcosdumay wrote: | > In the last 130 years there have been two world wars and | two global pandemics. | | Delays on intercontinental shipping and lack of availability | of a few durable goods is a perfectly fine price to pay on | that frequency. Optimizing to surviving a global pandemics | without any problem would be ridiculous expensive. | | Yes, specifically on the subject of cars, the manufacturers | seem to be accepting way more risk than what is sensible. But | that's their decision to make. If they were just left to face | the costs of their decisions, they would stop making bad ones | quite quickly. | | (By the way, there were 2 flu pandemics similar or worse than | this one on the last 100 years. That's one more than you are | counting.) | philwelch wrote: | > In the last 130 years there have been two world wars and | two global pandemics. | | I count 13 global pandemics: | https://en.wikipedia.org/wiki/List_of_epidemics#Chronology | gruez wrote: | what's your methodology? The linked section includes stuff | like the "2015-2016 Zika virus epidemic", which was | "worldwide" but had a death toll of 53 people. Should that | be considered a pandemic? If we go with the "Epidemics and | pandemics with at least 1 million deaths" table, there's | only 6 worldwide pandemics. | philwelch wrote: | If you're counting pandemics since 1891, I think any | number between 6 and 13 is more defensible than the | number 2. | | Let me count again, while leaving out relatively minor | pandemics like Zika: | | * Fifth cholera pandemic | | * Third plague pandemic (multiple outbreaks are listed) | | * Sixth cholera pandemic | | * 1915 encephalitis lethargica pandemic | | * Spanish flu | | * 1957-58 "Asian flu" | | * Seventh cholera pandemic | | * 1968-70 "Hong Kong flu" | | * 1977 Russian flu | | * HIV/AIDS pandemic | | * 2009-10 swine flu | | * COVID-19 | | That's 12 and doesn't count stuff like Zika, SARS, or | MERS. It also doesn't count any of the Ebola epidemics. | | I don't know if cases or deaths are a good proxy for | expected supply chain impact. SARS, for instance, had | relatively few cases and deaths because it mostly broke | out in well-functioning developed East Asian countries | that were capable of responding to it effectively, but | those same countries have outsized effects on global | supply chains. | xyzzyz wrote: | There were many more global pandemics in last 130 years. | There were multiple global flu pandemics that were within the | same order of magnitude of severity as Covid-19, eg. the Hong | Kong flu of 1968 killed more people than Covid-19 had on per- | capita basis. | | It is not deadly global pandemics that are unprecedented, | it's the lockdown response to them that is. | legutierr wrote: | > In the last 130 years there have been two world wars and | two global pandemics. | | One rationale behind the push for global integration after | WW2 and later on with China and the former Soviet Bloc was | the idea that such integration would create incentives | against a resurgence of war between great powers. It is | precisely because another world war would be so disruptive in | light of global economic integration that global integration | was promoted and pursued in the first place by many policy | makers--in order to make such wars less likely to occur. | | I suppose the thinking was that the obvious downside--that if | a great-power war were to occur, the global economy would be | in shambles--was irrelevant given that another world war | would likely amount to Armageddon. | | In other words, preparing for the contingency of a world war | is worse than useless, because the only viable path (both | from a utilitarian and from a moral perspective) is to do | what is most effective to prevent the occurrence of such a | war (which pursuant to this line of thinking includes, of | course, making significant investments in defense). | shagie wrote: | (tangent) | | > One rationale behind the push for global integration | after WW2 and later on with China and the former Soviet | Bloc was the idea that such integration would create | incentives against a resurgence of war between great | powers. It is precisely because another world war would be | so disruptive in light of global economic integration that | global integration was promoted and pursued in the first | place by many policy makers--in order to make such wars | less likely to occur. | | That's a topic explored a bit in The Interdependency Series | by John Scalzi. I found it am amusing read (and actually | liked Wil Wheaton as a narrator for it... though not | everyone agrees on that point). | | The teaser for the first book of the series: | | > Our universe is ruled by physics, and faster-than-light | travel is not possible - until the discovery of The Flow, | an extradimensional field we can access at certain points | in space-time that transports us to other worlds, around | other stars. | | > Humanity flows away from Earth, into space, and in time | forgets our home world and creates a new empire, the | Interdependency, whose ethos requires that no one human | outpost can survive without the others. It's a hedge | against interstellar war - and a system of control for the | rulers of the empire. | jollybean wrote: | The 'lack of chips' has nothing to do with US preparedness, | it's entirely an overseas issue. | | China & Co. did a big over-correction during the start of the | pandemic, and that put a lot of things into chaos. | | You now have chip speculators entering the foray, jacking up | prices, not very helpful in letting the market clear. | | 10% padding in US operations I don't think would have made up | for anything, the problems exist in shipping and on key/acute | issues from the suppliers in Asia really. | | I don't think it's reasonable to imply 'We should build all | the stuff here to avoid delays during 1 in 50 years | pandemics'. | | I'm not blaming so much as pointing out that's where the | underlying issues are. | | Of course exacerbated by other things. | | I think working out solutions to transportation, buyers | paying for things like guarantees, plant and supply chain | risk analysis etc. will become a thing now. | | CEOs will hire consultants and firms to measure the | likelihood in supply chain failure and make ammends. | | I actually think we'll get adapt past most of this. | cmenge wrote: | > The US has now outsourced most of the production of goods | to places in other countries. | | I think that is the point (or one of the points): it's not | just logistics and spare capacity - it's a much more complex | set of issues. | | This isn't something accounting practices or "less greed" | would solve, as seems to be implied in the Twitter thread. | | Would you have voted for a party that spent $1b annually on | mask manufacturing subsidies for masks nobody even bought? | Who could have foreseen that demand spike? | kilna wrote: | > This isn't something accounting practices or "less greed" | would solve | | Are you seriously trying to say that production being moved | to China, et al. is _not_ because of greed generally, and | ROE specifically? | lotsofpulp wrote: | It might have something to do with drastically lower | labor prices and environmental laws. | | There is only so much discrepancy in prices that global | markets will allow before buyers start rewarding the | lower priced sellers for taking advantage of the | arbitrage. | caethan wrote: | Plenty of people foresaw it. California spent ~$200m on | building up a stockpile of PPE and other medical supplies | back in 2006, before Brown cut funding for the program in | 2011. | AnimalMuppet wrote: | Being right too early leaves room for the people who come | after you to be wrong in a way that makes it useless that | you were right. | joe_the_user wrote: | _Would you have voted for a party that spent $1b annually | on mask manufacturing subsidies for masks nobody even | bought?_ | | I would have voted for a party with a program of "bring the | manufacture of strategically crucial items back to the US | and make it robust". This seems like it would even be | Republican "bread and butter" and I don't see why either | party had an issue with it. | [deleted] | JaimeThompson wrote: | Use the stockpile to sell / provide such masks to the VA, | Military, and other government organizations on a FIFO | basis so the stock is never stale. For stock that can not | be moved quickly enough donate it to other countries that | may need it. | whiddershins wrote: | The pandemic didn't kick the machine, the lockdowns and other | unprecedented interventions did. | | So this was a once ever event. | rsj_hn wrote: | But this was known, and why many people (such as myself) | opposed lockdowns. | | It's stunning how much knowledge and wisdom has been lost | about simple things like how to deal with plagues. This is | not a new thing facing humanity. | Consultant32452 wrote: | In wealthy countries like the US it might be harder to get that | new XBox you wanted. In the rest of the world there's hundreds | of millions of people who are starving to death. | | https://www.pbs.org/newshour/show/pandemic-could-mean-260-mi... | dzonga wrote: | as someone originally from a 3rd world country. I can truly | say never trust what the UN or any of those big NGO's say. | It's propaganda pushing a narrative. what causes starvation | in most poorer parts of the world are western induced climate | change i.e draughts, floods etc. Then of course political | instability | tuatoru wrote: | Indeed, rural people in less-developed countries are hardly | connected to global trade at all. | BurningFrog wrote: | This is from 18 months ago saying covid "could mean" "up to | 260 million" face a food crisis. | | I'm very confident the real numbers of starved people since | then is vastly lower. | rossdavidh wrote: | Nassim Taleb calls this fragility vs. "antifragility". A system | with frequent small shocks, gets information from those shocks | about what to keep buffers of. A system without an absence of | frequent, small shocks, keeps no reserves (like the bones of an | astronaut in weightlessness too long becoming thinner, or the | muscles of someone who does not work becoming smaller). Small | shocks are information, and they tell a system what to bulk up | on. | | Long periods of tranquility, leads to fragility. Which, for many | reasons (climate change? war? pandemics? disruptive | technologies?) is not a good preparation for the near future. | IronWolve wrote: | This is also why cyber security and infosec has been avoided, | ceos don't want to spend the money, until something bad happens | and they have no choice, and then its way more expensive to fix | after the intrusion. | lvl100 wrote: | Current supply chain model is largely based on the likes of | Walmart. They are also the company that pushed to manufacture | goods in China. Walmart destroyed the rust belt. Walmart | destroyed small businesses across the country. | | Walmart is the reason why US middle class got screwed. Walmart is | the reason why we saw unabated rise in China. Walmart is boomer | legacy. | Dumblydorr wrote: | Is Twitter the best place for such analyses? They're stream of | consciousness sentences and paragraphs, not cohesive narrative | essays. | occamrazor wrote: | For articulated analyses of complex phenomena a Twitter thread | is completely inadequate. For simplistic explanations whose | objective is to promote an opinion it is great, because it | makes it easy to re-share morsels of the argument. | dredmorbius wrote: | When developing ideas, tootstorms offer some advantages. | | https://news.ycombinator.com/item?id=28970983 | tyrfing wrote: | I think this misses a lot. I suppose it's because it has to | support the pro-billionaire-founder conclusion. | | First: monetary policy. _This_ was half the shock, not just the | pandemic - it was on a scale similar to World War II. In | hindsight, you can say that the pandemic was a signal to increase | production, but that 's a bit ridiculous. If vaccines took | longer, if governments didn't spend more than WW2, we would be in | a much different situation. Not to mention all the retail | bankruptcies that happened anyway. | | Second: structural changes in the labor market. Huge numbers of | Baby Boomer retirements [1], for example, which | disproportionately affect the sorts of manufacturing and | transport jobs that are relevant here. | | Third: operational effects. Lots of spare capacity can mean | operating at normal rates after accounting for things like social | distancing, quarantines, and government forced shutdowns. | Examples include mass factory closures in Vietnam the last few | months, huge outbreaks at meatpacking plants, forced quarantine | of air crew, and Amazon employees waiting taking 20-60 minutes to | pass screening before work. | | 1. https://research.stlouisfed.org/publications/economic- | synops... | chernevik wrote: | Lean manufacturing isn't just about minimizing book inventory and | cash tied in inventory. It helps keep production flexible and | responsive, and helps identify bottlenecks and inefficiencies. | And it reduces risk -- a car manufacturer holding several months | of chips is going to lose that investment every time its chip | stock gets obsoleted. | | I expect that increasing buffers of material work in progress to | levels indifferent to the current mess would be very expensive, | very risky and have all sorts of secondary effects. | Trias11 wrote: | Doesn't Let's Go Brandon's vaxx mandates contributing to the | problem? | Mikeb85 wrote: | Really? Forced shutdowns -> things not being made -> not enough | things... | | It's basic supply/demand. If demand stays the same but supply is | interrupted, production needs to increase for the same amount of | time just to satisfy the demand that went unfulfilled. If supply | is interrupted and 'reopening' simply means going back to initial | production, you'll always be playing catch up. | callmeal wrote: | It's not that simple. Modern (just-in-time) practices have | created a situation where a single change in customer demand | leads to widespread supply shocks. Take a look at the beer | game[0] for a smaller version of real life. | | That's what happened here - lockdowns led to a single change in | customer demand for a wide variety of goods both on the | personal side(more people at home -> snacks, food, toiletpaper | that would have been used up at work started being needed at | home), and on the commercial side (no people in the office: no | ongoing bulk papertowels/toiletpaper/vending machines/office | supplies). | | [0] https://www.shmula.com/the-bullwhip-effect/310/ | Mikeb85 wrote: | It's always more complicated. It's also always that simple. | | Consumer preferences changed slightly *because* of lockdowns | in addition to supply changing drastically *because* of | lockdowns. | | In our just-in-time supply chain system, interruptions of the | magnitude we experienced aren't accounted for. | pphysch wrote: | There are plenty of things, they are just stuck on boats off | California. | [deleted] | Mikeb85 wrote: | There's a shortage of many things that aren't on boats off | California as well. | giantrobot wrote: | The goods stuck on ships waiting to be unloaded don't help | the overall situation. Containers sitting loaded on ships | and ships waiting in an anchorage are containers and ships | that can't pick up newly manufactured items elsewhere. | patrickyeon wrote: | > Only founder led companies and family owned businesses can | stand up to the immense pressure from the dogmas of modern | finance. | | How about worker-owned companies, co-operatives, and collectives? | I totally agree the problem is that with the finance people | steering the ship there's incentives to push up your short-term | performance and collect bonuses and watch your publically-traded | stock value go up. So don't go public; use the value an | organization creates to pay the people in it, and invest in | making it better for those people and the people you serve. The | people who have say in the decisions are the ones who are most | interested in having the organization continue to be healthy and | a good place to work. | | There are other ways. We don't even need to imagine them, they've | already happened. We just need to resist the siren song of the | lottery ticket and instead try to create systems and | organizations that we want to be a part of. | WJW wrote: | The fact that there are so few of these types of company around | probably means that they have trouble surviving in a world | where the competition is supported by modern finance. | JumpCrisscross wrote: | > _they have trouble surviving in a world where the | competition is supported by modern finance_ | | The problem with cooperatives is longevity. We have white- | collar coops of sorts: partnerships. They tend to | disintegrate after a generation or become quasi-corporations | over time because immortal entities can make plans and | promises on time scales that ones that grow old and change | priorities and die can't. | justinator wrote: | Sorry, I don't trust this guy. It was _just explained_ how he | uses social media to manipulate the story he tells. | | https://thezvi.wordpress.com/2021/10/28/an-unexpected-victor... | BoiledCabbage wrote: | Seriously, it's looking like he pretty quickly is looking to | start an influence/propaganda channel. | | Following the exact same playbook. A bunch of easily agreeable | "Rah, Rah bad Wall st. Short term over long term bad" to get | everyone nodding, then an incredible leap to push his actual | argument. | | This guy is falling very quickly from "interesting how he got | that thread picked up everywhere", to "somethings fishy here". | | The logic presented is "The cause for the port slowdown is a | future policy proposal I want people to oppose." | | Obviously he isn't literally saying that, but that's the logic | path he walks the reader down. | skinkestek wrote: | What? If this is manipulation then I'm a manipulator as is | every other parent (and teacher, and every customer service | worth their salt) aren't we? | | Yep, we simplify. Yes, we tell stories. We don't lie. (No, | teaching Newtonian mechanics without mentioning Relativity | isn't a lie, and neither is simplifying the container | explanations until even bureaucrats can understand it ;-) | | That said, having | | 1. seen the email that circulated with my customers ten years | ago about how container ships transport goods from Asia to US | and American air back | | 2. and having recently listened to "The Goal" by Eliyahu M. | Goldratt | | I do wonder if this is really the best solution. | pchristensen wrote: | I've heard Ryan speak at a dozen or so company meetings. He's | genuine, knowledgeable, and has a long term focus not just on | Flexport but on the whole freight industry and the global | economy. | | I'm not saying he's right about everything, but trusting his | integrity and industry knowledge is a very safe first step. | [deleted] | _ph_ wrote: | Does it invalidate the message, if you tell it well? | 015a wrote: | Are you really, actually sorry, or are you just saying that to | soften your message? Isn't that manipulation? | nostrademons wrote: | This is communication 101. If you start internalizing that form | of storytelling, you'll see it _everywhere_ - literally all of | our public discourse has this structure, from the Build Back | Better plan to "Immigrants are taking our jobs" to "Flatten | the curve" to the right-wing school-board stuff to fluff pieces | on local restaurants to top-ranked HN comments. It's so | prevalent because it works - it taps into fundamental cognitive | & emotional biases that humans hold, so the ideas that spread | are the ones expressed in that form. | | If you want to be rational about this, judge the plan (and this | one too) on its own merits rather than on the fact you're being | manipulated. You're being manipulated - you are _always_ being | manipulated, every time someone communicates with you, and you | can 't escape that. It's good to understand how, but then your | job is to tease out the rhetoric and understand the underlying | proposal enough to judge it on its own merits. | starky wrote: | Exactly, I think the most succinctly way I've heard it put | is, "Everything is Marketing" | ryanmercer wrote: | No. | | My industry (international freight) is hemorrhaging people left | and right in "the great resignation", COVID outbreaks at ports | and facilities have been shutting specific facilities down on and | off for almost 2 years, cargo containers aren't moving from ocean | ports because there aren't any chassis to be had, Suez canal, | weather, etc. etc. , so on and so forth. | | Not "Return on Equity". | flyinglizard wrote: | That's just finger waving. The main cause is the madness of the | situation where a deadly global pandemic causes the money supply | to increase across all sectors. If you were a manufacturer in | March 2020, the only responsible thing was to reduce operations | to the bare minimum. | | Add lockdowns and changing, unpredictable consumption patterns | (e.g buying more cars against all predictions because who wants | public transport now?) and you get the perfect storm. | | You could hold a years worth of inventory and you'd still have a | problem. | erosenbe0 wrote: | Correct. The Fed is holding huge amounts of assets artificially | boosting stocks and both corporate and govt. investment, | creating a housing bubble and wealth inequality as a tradeoff | to keep unemployment low. Combined with the government | 'stimulus.' School districts and municipalities with millions | to spend for several years into the future. | | Why would we expect there to be a perfect equilibrium | immediately? | nojito wrote: | This tweet storm is largely nonsense. | | For example: | | >The proper way to do accounting is _Next_ in First Out (NIFO). | This means you price your goods against the cost of | replenishment. | | NIFO isn't GAAP which is why it's largely pointless. | ltbarcly3 wrote: | Where are the bottlenecks? I see that things are in low supply | and sold out, but when I look at specific things (say cpus or | complete computers) I see increasing and record numbers of units | delivered. | | Runaway inflation looks like a supply problem at first, as | shelves are emptied by the huge amount of money in the economy | chasing the goods available. The price increases are a supply | side response to demand being higher than can be supply can keep | up with. | | Please feel free to downvote this and insist that inflation is a | myth as is usual on HN. | nimbius wrote: | I can speak from a trucking perspective. it was a cascade failure | for professional drivers. | | when covid first hit, supply chains either had too much or too | little almost instantly. Things like raw supplies based on JIT | ordering either ground to a halt because demand died and so did | the modelling, or because demand was too high for the computer | model (think a bell curve.) low-boy trucks shipping things like | construction equipment and preform concrete werent affected as | governments in most cases stepped in with works projects to keep | people employed, but trucks in the supply-side chain of things | like toilet paper and frozen pizzas ran into trouble in almost | the first few hours of the pandemic. | | It helps to keep in mind all these things in JIT are connected. | they work like a slinky, and anything that holds up the line will | only amplify problems later. | | frozen pizza is the best example. for example if things like bell | peppers and onions could be delivered, but dough could not, then | trucks for dough would idle in the yard until their yard-pay | expired and they moved to the next job. yard-pay is the money you | earn idling after X minutes in a lot waiting for a hookup, and it | can be rather substantial. Anyhow, once dough can be shipped | again, peppers cannot because the peppers have spent too much | time in transit and now theres loss. pepper trucks then go | offline for cleanup and you have too much dough and surprise, the | onion trucks just automatically dropped you as a customer because | you didnt meet a monthly required minimum. | | this doesnt even cover the hell of intermodal port shipping. | containers full of perishables rot because cranes are frantically | unloading COVID masks, and now those containers are offline for | cleaning. containers full of COVID masks cant be unloaded because | theres a backlog of Hydrogen Peroxide for a floor tile company in | Sheboygan that went out of business eight minutes ago due to | shipping constraints, and if its not unloaded and chilled the | entire port will explode into flames. in the yard, eighty-one | trucks have been on yard-time for nearly 3 hours and a third of | the trucking companies paying that yard time will be bankrupt | because of it by the end of the day, but they have no choice. | Trucks and drivers that went unpaid for weeks are now just taking | up lot space until someone figures out how to remove them and the | city will likely have to foot the tow. | | Later in COVID as cities enacted mass casualty plans they | basically absorbed any and all refrigerated 53' trailers they | could find as a temporary morgue. now it doesnt matter how many | pizzas you wanna sell, the toilet paper company has bought up all | your transport market and the city just left you with no | refrigerated trailers to use. Once cities are done, you generally | scrap those trailers as they cant be used for food again. | | Finally, you have trucking firms that went belly-up during the | shutdown for any number of reasons, including over-leveraged in | JIT style software or a single customer. these truck drivers | either left the job to do something else because professional | driving is a pretty thankless gig, or retired because the average | age of a professional driver is in the 50's. now that we need | drivers we have no one to perform necessary training, so it | doesnt matter how much cash we throw at highschool kids. | | yard conditions also play a role. factories that manufacture | bacon might be running at 10% capacity due to covid infections, | so trucks show up and idle because the past 3 logistics managers | either died or went home sick and nobody in the front office | knows what to do. these factories cant or wont shut down because | theyre considered supply chain critical (s/bacon/disinfectant/), | with "hero" workers and whatnot. shipping companies might also | decide to drop you as a customer due to insufficient COVID | precautions or an overwhelming amount of COVID infection. | IronWolve wrote: | >it was a cascade failure for professional drivers. | | California ports suffered from AB5 and EPA rules more than | other states, and with California controlling like 40% of the | containers, they shot themselves. | | Older trucks banned on roads and ports (CARB) and Owner | Operator trucks (AB5) gig workers banned, they relocated their | llc's outside california to keep their businesses running. | | The CA EPA/DOL CARB rules also expanded fire seasons, as older | logging companies closed down due to the state not renewing | licenses on trucks. Mom/pop companies couldn't afford to buy | very expensive trucks, new engines, or licenses. Less companies | logging = more fuel. | | CA just banned gas generators, as most construction sites use | them power their tools. Work arounds will be people buying ford | f150's with onboard generators as a quick work around, and most | likely will raise costs even further. | nebula8804 wrote: | When the climate crisis begins to hit, this kind of a system | will rapidly collapse the world economy way before climate | change even starts to wipe humans out. | erosenbe0 wrote: | Hook NPR up with some people to interview and some B-roll crane | and diesel noses. They have been discussing this and might | appreciate. | dredmorbius wrote: | Rules and heuristics built for normal times and a specific set | of expectations and constraints fail when those expectations | and constraints are no longer valid. | | Odd, that. | | In my household, we started making our own pizza, from scratch | (save canned / bottled Pizza sauce). Flour keeps and is shelf- | stable. Most toppings survive refrigeration. Those best served | fresh are bought as available, menu rotated as needed. | | If your supply chain can't guarantee delivery of complex sets | of fresh time-sensitive product, drop constraints such that the | product mix is less time-sensitive. Sourdough substituted for | dry yeast, unavailable at any price. | | (This works well at the household level. It works less well at | industrial-scale production where flexibility is greatly | reduced.) | matwood wrote: | > Sheboygan that went out of business eight minutes ago due to | shipping | | Even before covid I used to read about consumer companies that | have a shipping problem right before Christmas and go out of | business. So I can believe that shipping problems on a scale | this large will take time to fix. Thank you for your comment. | tester756 wrote: | Why is Flexport lately popular on HN? | tgb wrote: | Is "NIFO" really the right way to do accounting? If you sell the | government one aircraft carrier, the cost of producing a second | one will be much lower, so NIFO doesn't seem to fit there. | chernevik wrote: | I suppose it depends on what we're talking about, but probably | not. LIFO and FIFO are book accounting concepts, and business | decisions aren't (shouldn't be) based on book. | | For example, almost every successful company is valued at some | multiple of book equity, because book equity doesn't (and | shouldn't, and can't) incorporate any notion of growth. Tesla's | book value per share is something like $27/share, which | reflects the cars it has sold and the ones in process. It | trades at $1077, which reflects hopes for cars that it will | sell. | | LIFO and FIFO are just book accounting methods for tracking | costs of production. They tell financial statement readers how | management puts the cost of unit production into inventory | values on the balance sheet, and how inventory values are | translated into Cost Of Goods Sold on the income statement. | They really aren't the right basis for business decisions like | pricing or production. | | I don't know what he means by "companies now use FIFO or LIFO | accounting" as if this is some innovation. These have been the | _only_ choices under GAAP for . . . a century? Longer? Letting | companies use Next In First Out for financial statements would | be inviting management to manipulate its balance sheet and | earnings through its cost assumptions. Of course a company will | use up-to-date cost information for pricing decisions, but | they've always done that. | | Accounting is really a language of its own. It provides a lot | of useful information, but you have to know how to use it and | what to use it for. | philwelch wrote: | I think NIFO applies only to variable costs. Fixed costs are | fundamentally different. | | Also, low-volume items like aircraft carriers are probably a | bad example. Aircraft carriers are ordered and built in small, | specific quantities; I think it makes more sense to account for | building a single aircraft carrier as a construction project | rather than as a unit of mass production. Almost like you were | building a small airport, thousands of units of housing, and a | nuclear power plant. | notatoad wrote: | typically when you're selling aircraft carriers, you're selling | it before you build it - the customer is paying you to make it, | not paying you for the one you've already made. so the neither | the economics or the accounting work the same way as acting as | middleman for retail goods. | josh_today wrote: | Covid gave governments in free markets the ability to control | capitalism. | | The outcome is a less efficient supply chain. | | Very simple. | wonderwonder wrote: | What I am curious about is if the unrealized gains tax will lead | to more and more company boards being run by massive retirement / | hedge funds such as black rock. All these companies will then be | essentially forced to the ROE / share price over all model as all | the BlackRock's of the world care about is share value because | that's what their customers want from them. When that scenario is | combined with a massive economic shock, what happens? | 55873445216111 wrote: | Must also take into account that many industrial processes are | not easily restartable. Even if only shut down for 1 day or 1 | week, it can take multiples of that length of time to ramp back | up to 100% output rate. Complex factories do not switch on and | off like a lightswitch. | onion2k wrote: | My dad worked on some testing software for a float glass | factory back in the 1980s. Float glass is a process where a | factory makes a continuous sheet of glass that floats on a | river of molten tin, about 3 meters wide, 24 hours a day. It | never stops. If it does then the glass cools down and | solidifies inside the machinery, and the factory needs to be | practically scrapped and rebuilt. I imagine that's the worst | case scenario, but many large scale manufacturing businesses | are likely to have similar processes that can't be stopped | easily, and that cost a fortune to restart. | chiefalchemist wrote: | What comes to mind is The Big Short. That is, following the herd | - to the point of negligence - is an advantage, until it's not. | Where and when did Wall Street and Finance get the reputation as | geniuses? What's so genius about rubber stamping herd mentality | ideas? | | That aside, have there been any winners? Companies or industries | that were less RoE driven? Or does the economy completely lack | "bio" diversity? | a-dub wrote: | _opening titles and music_ | | q: what caused all the supply chain bottlenecks? | | a: the pandemic. | | _cue outro_ | | next week: | | _opening titles and music_ | | q: should we have done anything differently? | | a: probably not. that would be really expensive and pandemics are | pretty rare. | | _cue outro_ | CalChris wrote: | The pandemic may be the _proximate cause_. But Petersen is saying | the _sufficient cause_ is Modern finance with its | obsession with "Return on Equity." | | With a more robust economic system not so beholden to return on | equity, this may not have happened even given the pandemic. | Without such a robust system, other proximate triggers can cause | similar effects. | advael wrote: | I make my living predicated on the assumption that digital | optimizers over loss functions have practical value, but seeing a | pretty terrifying meta-pattern where defining and then | subsequently obsessively optimizing and inevitably gaming metrics | will burn away basically all of the useful parts of most human | institutions, as we see in nearly every kind of business as noted | here, as well as government endeavors like education, I'm pretty | close to genuinely believing that quantifying success and trying | to optimize over a metric is something human institution should | literally never do, which is a weird place to be | maxerickson wrote: | Large businesses had a great pandemic, so it doesn't kick off to | a real strong start. | xondono wrote: | While I agree that a lot of companies have been screwing up the | supply chains and their providers ( _cough_ automotive _cough_ ), | maybe we should _not_ build extra widgets just to support events | that happen 1 out of every 100 years. | | Not every system is a critical system, not all systems require | spare capacity. | Johnny555 wrote: | _Maybe we should not build extra widgets just to support events | that happen 1 out of every 100 years._ | | Except the COVID pandemic is probably not a 1 in 100 year | event, the last SARS epidemic was less than 20 years ago (and | fortunately was not as disruptive as the current one). I | wouldn't be surprised if the next one is within a decade. And | we've done little to prepare for it. | joe_the_user wrote: | I believe the claim is completely defensible and ultimately | correct. | | A) This was a multi-factoral event certainly but all of these | other factor are "immediate causes" which can themselves be | traced to absolute maximum return on equity as a more final | cause. | | B) No doubt "hard to restart" process are were involved. But the | world relies on single-source, hard to restart, large scale | production of many things today because these produce the highest | returns for those who invest in them and the lowest prices for | those who buy from them. And both kinds of actors have been | willing to just stop producing rather than doing something that | might be costly to keep production going (and they decided they | didn't want backup before this for the same reason). | | C) Supply lines that stretch around world exist as a combination | of economies of scale and "labor market arbitrage" and both these | are driven by return, even though "labor market arbitrage" | doesn't increase efficiency or robustness. | | D) Chip manufactures put money into "up-date" chip processes, | notably leaving the sorts of chips actually used in cars woah | fully under-invested and generally many sorts of lack of | robustness can be traced down to money flowing only to the | normally profitable. Shutting down production isn't necessarily | that bad for a company - they don't wages and they can start back | up once things stabilize. It's much less disastrous than making a | bunch of stuff and not being able to sell it. Clearly, that | thinking is guiding a lot of decisions. | dragontamer wrote: | Anyone who has played Factorio knows that "just in time" is far | superior to actually holding reserves. If you buffer things up, | you don't know where the problems in your production are. | | People are saying "why didn't we buffer up more" ? Well, there we | go. Play Factorio. You'll see just how bad buffers are in a | simulated factory. | marginalia_nu wrote: | Well at the same time, Factorio teaches you that you need | _some_ buffers to build a fault tolerant factory. | | Factorio often has implicit buffers through its belts (or bot | network). If you build an inserter-only factory you'll become | painfully aware how important they are to to the smooth | operation of the factory. Otherwise it's very easy to get | rolling waves of cascading backpressure, where the entire | factory is only able to produce at good efficiency as long as | you have fully saturated input as well as complete consumption | of every product you produce. | dragontamer wrote: | That's a throughput problem. Inserters have 1/20th the | throughput of a belt. When you go truly just in time _WITH_ | good throughput (aka: Logistic Bots), its so effective that a | huge subset of the community thinks that its cheating. | | Leaving 1000 items on a belt (aka: a belt of length 70) is | just less effective than bots flying to fetch an item _just_ | when you need it. The buffer is counter-productive. | | ------- | | The only time you want to "buffer" in Factorio is to provide | 12-items to stack inserters, to maximize UPS (updates per | second). If your stack inserters are moving 12-items every | swing, that's using less CPU power than if they're moving 6 | or 5 items per swing. | | And as we all know: the expert's biggest problem in Factorio | is when you've built such a large factory that your own CPU | starts to slow down (aka: UPS problems). So buffers of size | 50 come to the rescue (the smallest buffer available, and | just enough to take advantage of 12-item stack inserters). | marginalia_nu wrote: | Bots still buffer items. Bot based factories produce when | those buffers are low, not strictly when items are needed. | | A true on-demand factory would take ages to produce | anything, it would basically not be much faster than | handcrafting because the iron plates wouldn't start being | created until the pipe is needed, and the pipe wouldn't be | needed until the steam engine is needed. But it's much | slower to make iron plates than pipes, and much slower to | make 10 pipes than make a steam engine. Which is why you | absolutely need those buffers. | dragontamer wrote: | Just in time doesn't mean "buffer free". It means | eliminating unnecessary buffers. | | When Ford ran out of chips | (https://www.cnbc.com/2021/03/31/ford-slashes-vehicle- | product...) because of its "just-in-time" process, Ford | was able to give 2-months of notice before shutting down | one of its lines. | | That means that Ford had a 2-month buffer __in | practice__. | | ---------- | | When you go bot-based, you have full control over the | size of your buffers at all steps of your Factorio | design. At that point, you realize that smaller buffers | are more efficient, and that larger-buffers don't do | anything. | | Ex: if you achieve maximum throughput with buffer-size | 20, you leave it at 20-sized buffers. There's no reason | to buffer-up 1000x items when 20-sized buffers work out | fine. | | --------- | | Belts force you to buffer everywhere... and | proportionally to the size of the belt. A long belt 1000 | tiles long would force you to buffer up 7000 (one side) | or 14,000 items (double-sided). The size of these buffers | are grossly larger than what anyone needs. | | The key buffer size is usually 12 (the stack-inserter's | grab size). Maybe 24 or 36 so that you have enough | buffering to handle 2 or 3 swings of the stack inserter | in case those items don't arrive on time (bots "seemingly | randomly" run out of power, from the perspective of that | assembly machine)... but anything more than that is | redundant. Buffer size 50 (minimum size allowed on | chests) are used in practice. | zelias wrote: | this only works if you can successfully keep the biters out | dragontamer wrote: | It only takes like 2 hits for a biter to destroy your chests | (aka: buffers) and everything inside of them. | | If anything, buffer-free is more resilient than buffers when | we think of the biter attacks. But this is a "gamey" aspect | of the game. Not really representative of real life. (Its not | like the items inside of a real-life warehouse just disappear | into /dev/null under random circumstances) | dpcx wrote: | I haven't played Factorio, so maybe I'm missing something... | but if you don't have buffers and suddenly whatever that | produces something essentially goes away, what happens to all | your just in time pieces? Seems pretty certain that they'll all | end up idle. | dragontamer wrote: | Yes. Iron mines run out in Factorio. That then causes the | player to search for new sources of iron to fix your supply | chain issue. | | ----------- | | In contrast, if you buffered up... you end up running out of | Iron 10 hours ago. Then your buffers deplete and you're back | in the same position, except you've built out your supply | chain to be even more fragile than before (because you had an | additional 10 hours of expansion). | bhelkey wrote: | > People are saying "why didn't we buffer up more" ? Well, | there we go. Play Factorio. You'll see just how bad buffers are | in a simulated factory. | | A shortage in real life causes critical issues for real people. | A shortage in Factorio does not. | dragontamer wrote: | > A shortage in real life causes critical issues for real | people. A shortage in Factorio does not. | | An iron shortage in Factorio causes my iron plates to run | out. My iron plates feed the steel furnaces. The steel | furnaces build ammo. My ammo is automatically belted to my | defensive garrisons. Then the bugs completely wipe out my | base, because I was out of ammo. | | Going backwards: Understanding why I'm out of ammo requires | me to understand why I'm out of steel, which requires me to | understand why I'm out of iron, which requires me to walk | over to the mines and realize the mine is out. | | ---- | | Now lets see what happens with buffers. | | Understanding why I'm out of ammo: wait, I'm not out of ammo. | I've got thousands of ammo buffered up right now. As such, I | don't fix the problem for 2 or 3 hours. | | 2 or 3 hours later: my ammo runs out. I then begin the | process of figuring out that I'm out of iron. When you have | buffers, its hard to tell where your bottlenecks are: buffers | make it _seem_ like you have plenty of supply, when in | reality, the iron mine ran out a long time ago. | | ------ | | Now look at real life. The same thing happens. Toyota had a | large buffer of critical chips so that it could feed its | factory for months after the chip shortage started | (https://www.reuters.com/article/us-japan-fukushima- | anniversa...). | | Oh right. Lol, guess what? Woops, Toyota has run out of chips | (https://www.nytimes.com/2021/09/10/business/toyota- | productio...) | ankeshk wrote: | I've not played Factorio but love your argument. Very | thought provoking. | | What happens if something in the middle breaks and you | don't have a buffer? What happens if there is no iron | shortage but the steel furnace blows up? Aren't buffers | important in such situations? | bhelkey wrote: | > Now lets see what happens with buffers. | | > Understanding why I'm out of ammo: wait, I'm not out of | ammo. I've got thousands of ammo buffered up right now. As | such, I don't fix the problem for 2 or 3 hours. | | We don't live in a centrally planned (by a single person) | economy where companies are run by simple automation. | | Companies are run by people. These people notice when their | suppliers are disrupted. They notice when they can't refill | their buffers even before the buffers run out. And | suppliers of raw materials certainly notice raw material | shortages. | | We didn't find out about the chip shortage from the article | you linked when Toyota's buffer of chips ran out. | rytill wrote: | Do you have an actual refutation though? Why does buffering | perform better in real-world factories than the simulated | ones in Factorio? | bhelkey wrote: | The cost of some shortages is measured in lives. With such | shortages, preventing the shortage is better than | mitigating the shortage. Mitigating the shortage is in turn | better than not mitigating the shortage. | | A buffer gives us time. That time can be used to save | lives. | | A buffer absorbs a short term disruption in a supplier | which prevents the shortage. A buffer gives time to look | for another supplier in a long term disruption. A buffer | delays a shortage when no other supplier is feasible. | Spivak wrote: | While this answers the question of why we couldn't respond to the | bottlenecks, I guess I'm still missing the piece of what caused | them in the first place. Like sure, "this silly little global | pandemic thing" but it's not really an enlightening answer | without more detail as to what the pandemic caused that shocked | the system. | rdiddly wrote: | Since a bottleneck implies a vessel with fluid passing through, | I'll stay with that analogy. There's actually no bottleneck; | the pipe is basically the same size as ever. (Actually just | slightly smaller because of capacity that was destroyed, rather | than taken temporarily offline, during the slowdown.[0]) But | the pipe in the first place was only _exactly_ as big as it | needed to be, because of the "maximizing ROE" stuff he | mentions early in the thread. So when the fluid volume suddenly | expands (slingshot effect following the slowdown), the whole | system becomes a bottleneck. | | [0] Capacity destruction: "Nobody's buying our stuff, we can't | afford to keep this one ship/plant/facility/machine running | anymore or we'll go out of business." But since every other | player in their industry who might've bought it is in the same | boat, maybe they're forced to sell to a scrapper, who promptly | disassembles the ship/plant/facility/machine. I got my house | this way. It was a rental property owned by a company that | could no longer afford to keep it, so I bought it, took it off | the rental market, and thereby slightly reduced rental capacity | in this town. Compare this to an airline temporarily parking a | slew of their planes in a densely-packed parking pattern at an | un-busy airfield near a nice runway. | thedogeye wrote: | People were locked down so they stopped spending money on | services (hotels, restaurants, travel, massage, etc) and | instead bought more goods. This happened at the same time | governments printed trillions and pumped it into the hands of | consumers and businesses. The result was a 20% surge in | container volumes, which our supply chain infra just wasn't | ready for. | wccrawford wrote: | As well as rolling labor blackouts as factories had to shut | down (repeatedly) because people got sick and they couldn't | risk _everyone_ getting sick. And distribution centers. And | retail. Etc etc. | jes wrote: | Have you seen the YouTube video where a waterwheel [1] | demonstrates predictable behavior under one set of conditions, | but with a small change, the system moves into chaotic | behavior? | | I figure the supply chain is like that. Under certain | conditions, JIT is fine. Given sufficient disruptions, the | system descends into chaos. Note that we have humans in the | loop, too, so expect non-linearities. | | I could be wrong. Corrections are welcome. | | [1] https://youtu.be/Lx8gMBJBlP8 | [deleted] | nostrademons wrote: | It was predicted by a lot of people with experience in supply | chain management or business. | | https://en.wikipedia.org/wiki/Bullwhip_effect | | Basically - complex systems behave in complex ways. When you | have a small shift in consumer demand, it gets amplified up the | supply chain, such that you need potentially big shifts in the | production of intermediate components. We had a big shift in | consumer demand. The supply chain basically can't cope, and so | we get chaotic behavior until consumer demand normalizes and | revised sales forecasts get propagated up the supply chain. | mindslight wrote: | In normal times, people mostly shrug off biological transfer | with other people. Maybe you avoid the odd symptomatic person | who comes to work anyway, but you don't act as if everyone else | is trying to get you sick. This allows for close working | conditions, less sanitary practices, etc. The pandemic | invalidated this assumption, requiring workers to become less | efficient in response. This is the fundamental dynamic - the | secondary effects of denial/overcompensation created additional | problems. | | It also didn't help that everyone was expecting an economic | slowdown, and then the government gave trillions of dollars to | corporations to juice the stonk market. The resulting price | signals induced a ton of aggregate demand for production | capacity that simply wasn't there. | zelon88 wrote: | I worked at a company who made products on contract, but the | contract stipulated the vendor we had to use to get the raw | materials. The raw materials were just aluminum castings, but | they were a custom shape specifically for this customer of ours. | They could only be used for this one product. | | I noticed that the inventory levels of our vendor were dropping, | but we weren't buying. Meaning our customer was ordering the same | product from a competitor. | | I proposed that we spend the money to buy the rest of the | material at the vendor. Basically denying our competitor the | materials and forcing either them to come to us or the customer | dropping the order and reordering through us. This would have | been a risk because that's about a year supply of proprietary | castings that we can't use for anything else, but I really | thought it was a worthwhile opportunity. But it went against lean | principles so we didn't do it. | | Fast forward 6 months and our competitor basically did the same | thing to us. ___________________________________________________________________ (page generated 2021-10-28 23:00 UTC)