The Supply-Chain Mess
Recent bottlenecks and price surges have underscored the risks that come with sprawling global supply chains supposedly built around the principle of economic efficiency. But beyond these glaring issues, supply chains impose additional social costs that warrant policymakers' attention.
BOSTON – Global supply chains used to be the last thing policymakers worried about. The topic was largely the concern of academics, who studied the possible efficiency gains and potential risks associated with this aspect of globalization. Although Japan’s Fukushima nuclear disaster in 2011 had demonstrated how supply-chain disruptions could impact the global economy, few anticipated how central the problem could become.
Not anymore. Today’s supply-chain bottlenecks are creating shortages, propping up inflation, and preoccupying policymakers around the world.
US President Joe Biden’s administration deserves credit for recognizing that supply chains are key to future economic security. In February 2021, Biden issued an executive order directing several federal agencies to secure and strengthen the American supply chain; and in June, the White House published a 100-day review on “Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based Growth.”