The vulnerable links in our economic chain

In one sense, I suppose we should actually be grateful to the coronavirus pandemic for the way it’s highlighted how our economy has been structured around a series of assumptions, which in turn have driven decisions made to implement those assumptions.  The whole house of cards is predicated on nothing disturbing the arrangements thus made.  Throw a wild card into the equation, and massive disruption ensues – and COVID-19 has been one heck of a wild card!

Let me illustrate with a few examples.  Nobody in their right mind would argue that food safety is unimportant.  Upton Sinclair‘s novel “The Jungle“, serialized in 1905 and published in book form the following year, exposed the appalling conditions in Chicago’s meat-packing industry, leading to the establishment of what we know today as the Food and Drug Administration.  This regulates the food and drug industries, their methods of production, the safety of their products, etc.  In order to make such control easier, it was advantageous for many smaller plants to be consolidated into fewer, larger ones, so that fewer inspectors could supervise and control processing and production.  Over time, this consolidation increased, particularly as it became more and more expensive to attract and retain sufficient inspectors with the specialized knowledge and qualifications needed to oversee operations.

Today, there are relatively few meat-processing plants, and those that exist tend to be very large.  Cattle, pigs, sheep, poultry, etc. are brought to them over long distances for processing.  When these plants were hit by COVID-19 infections and closed, consumer shortages inevitably resulted, since there was nowhere else to take the animals for processing.  Because they could not be slaughtered, their numbers increased very rapidly, augmented by ongoing production on the “factory farms” that feed animals into the system on a regular basis.  The result has been the euthanasia of literally millions of animals and birds, and the disposal of their carcasses in landfills – even while consumers were having to make do with a more limited selection and lower quantities of meat available in stores.  Farmers and processors have lost tens of millions of dollars, all because the system was set up for massively large-scale processing in relatively few plants.  A more distributed system, with a lot more smaller plants situated closer to the farms, would probably have been less hard hit by the coronavirus pandemic, and supplies would probably have been maintained at a more stable level.

Another example is “just-in-time” manufacturing.  In the name of efficiency and the most productive application of capital, factories have largely been set up to keep minimal stocks of their input components (raw materials, parts, etc.) on hand.  They receive them “just in time” to use them on the production line.  (This has been reinforced by so-called “inventory taxes” levied by some states.  Where these are applied, it actually costs businesses money to keep large stocks of inventory, rather than move it in and out as quickly as possible.)  As a result, the factory-to-consumer pipeline is a high-volume, low-reserve proposition.  Goods move from factory, to distributor, to store, to consumer on a day-by-day basis.  There are no major reserves anywhere, so that a breakdown in that chain of movement inevitably results in shortages downstream of the break within a very short time.  We saw this earlier in the pandemic, where auto factories shut down within a couple of weeks of critical supplies of parts being interrupted.  It’s since spread to almost every high-technology industry.

That, in turn, has been made worse by the global supply chain.  In the name of saving money on wages, buildings and other production costs, many companies shifted production of their components and finished products to lower-cost countries.  China, in particular, has benefited from this over the past few decades.  When manufacturing in those countries, and/or shipping of their production from source to market, was affected by the pandemic, supplies already on hand dried up fast, leaving chronic shortages that are still plaguing us.  (The availability of personal protective equipment for hospital personnel, such as masks, gloves, gowns, etc., is a well-known example.)

The question now becomes:  should our production and distribution systems, facilities and practices be revised in the light of the pandemic?  This seems like an obvious solution to many people – but it will involve massive expense.  To set up new factories in our own country, and have many smaller facilities rather than fewer, larger ones, and keep reserves of products in case of disruptions . . . we’re talking billions, probably trillions of dollars in the short to medium term to accomplish those changes.  They may be desirable, and offer the only practical alternative to what we have at present;  but if we can’t afford them, they’re going to remain a pipe-dream.  What’s more, if private enterprise is expected to accomplish all that on its own, it’ll soak up a vast amount of money – something those who own the money will resist, because it’ll take profits out of their pockets.  Also, countries where our products are presently made will do everything in their power to keep their factories open.  They may reduce their prices so much that it’s uneconomical to make goods anywhere else, or impose economic sanctions to make the cost of moving production much higher than it would otherwise have been.  (China is taking all those steps at present, and being very unpleasant to countries that resist its pressures.)

We’re in an “irresistible force meets immovable object” moment here.  What will the outcome be?  Nobody knows right now.  The only thing we can be sure of is that disruptions are likely to continue.

The current shape of our economy has proved to be inadequate to cope with a crisis like the coronavirus pandemic.  We can reshape it to be more flexible and responsive, but only at a very high cost.  Are we willing to pay that, as a society?  Are the owners of current means of production willing to forgo short-term profit to change the way they do business, in the hope of long-term stability of production?  Are our politicians willing to forgo short-term tax money (particularly inventory taxes), and provide tax credits, in order to make it easier and more affordable for businesses to change their methods of production?

Nobody knows the answers to those questions right now.  What we do have is a stark choice between a centrally managed economy (the socialist ideal) and a free-market one, where businesses decide for themselves how to change and the market tells them (by voting with its wallet) whether they’ve made good choices or bad.  Given government ineptitude in handling the coronavirus pandemic, I know which option I prefer.

What about individuals and families?  Each of us needs to take these things into account in planning for our own future.  We should determine what our “essentials” are – the things that we really need to have on hand to cater for what’s important to us.  Examples:

  • We need a sound, reliable basic food supply.  It’s not a bad idea for every family to have at least one month’s food in reserve (what my wife calls a “deep pantry”) in case of shortages or emergency.  I prefer a three-month supply, and some people try to keep a year or more’s food on hand.
  • If we rely on a vehicle for transportation, we should consider keeping basic consumables – oil, brake fluid, transmission fluid, filters, belts, etc. – on hand, so that if there’s any disruption in factory supplies, we can keep it operating for at least a few months.  A few tools to allow us to change fluids and do other basic maintenance would not be amiss, either.  Also, we should probably be proactive in changing tires, shock-absorbers, etc. before they actually wear out, so that we can be sure they’ll have a reasonable useful life if supplies of replacement components are disrupted.
  • If we have particular interests, sports or hobbies, how about keeping enough reserve supplies that we can continue with them during interruptions?  For example, I enjoy the shooting sports.  I’ve made sure that I have a decent reserve supply of ammunition, so that in a sudden shortage (such as we’re currently experiencing, and which looks set fair to continue for at least months, if not years) I can continue to enjoy my hobby.
  • What about clothing?  Nobody can stock a complete spare wardrobe, but if you have specific needs – business clothing for office wear, or workshop clothing for blue-collar workers, etc. – there’s no harm in keeping a small reserve supply of it, particularly safety gear such as work boots, head and eye protection, and so on.  That way, a shortage of supply won’t prevent you working, or be embarrassing if you have to wear visibly old, worn-out clothing.
  • We live in an electrically powered world.  How many of our essential items of equipment rely on batteries?  Do we have adequate stocks of spare batteries?  What if we suffer local brownouts or blackouts if the electricity supply is cut off due to a lack of spare parts?  Do we have emergency measures (e.g. battery powered flashlights or lanterns) in place?  What about recharging things like cellphones, tablets, laptop computers, etc.?  A small generator (or, at the very least, a solar charger) might well be regarded as an indispensable accessory today.  If we have well-stocked freezers, it’s doubly so.

Those are just a few ideas.  If you have more, please share them with us in Comments.



  1. As someone who has worked in a manufacturing environment, and served as a "Lean" resource in a few places, I have long stated that while JIT / Lean do have advantages when things are running well, "The Leaner you get, the more susceptible to Murphy you become. He's out there, and he's an SOB".

    I was also far more "into" distributed systems than most. For example, at one plant I was pushing for smaller but more units of a particular piece of equipment that had a specific function (yes, being vague here). Why? Because if one went down it wouldn't cripple all production flow. The plant went for a much larger system through which everything would flow – overall capital cost being the issue. So when that thing had a days-to-fix issue I just went around from crisis meeting to crisis meeting and simply smiled. I didn't even need to say "I told you so".

    It didn't help my popularity because everyone had read the Goldratt book THE GOAL and I went into these crisis meetings with a small, handmade label that said NO HERBIES. (You have to have read the book to know what that means… and everyone there did.)

  2. Something else to consider. Will your stockpile (s) survive natural disasters?
    We had a few small stockpiles of things. Never expected a tornado to hit a 140 year old house…

  3. The whole chain is vulnerable.

    The current problems are because those specific links were hit, this time.

    Anything that depends on any other one thing becomes a Single Point Of Failure.

    Build webs and nets, not chains.

  4. Something to keep in mind, regarding clothing. Needle(s) in sizes and strength to accommodate broadcloth to jean, and thread in several common or key colors;t strong, quality thread. For youngsters, have a pamphlet on sewing, including how to attach a button, fix a hem, fix a seam, and make a small fabric repair (tuck). I've re-sewed buttons on new clothes, when they were that loose on receipt. Repairs – discrete, small tuck or dart (20 minutes, maybe pennies of thread) saves a far more expensive garment. An emergency office repair can either save you embarrassment or make you someone's hero.

  5. During the gas crises of 1973 & '79 the complaint was "there's no gasoline." Actually, there was the same amount, but it was in car gas tanks instead of gasoline stations because people who didn't buy gas until nearly empty started "topping off." There's a lesson there.

    Is it better to have 25 million cans of beans on the shelves of 40,000 grocery stores (actual number for the US) or 25M cans distributed across 10 million pantries? (Yeah, that's only 2.5 cans/pantry, but work with me here, it's the concept that's important.)

    As long as the "supermarket to pantry" transfer rate is manageable (meaning the supply system never gets "drained to zero" at any time) the 10M pantries is better. Managing that transfer rate is what prepping is all about, and it's done with calendars rather than stopwatches.

    The burden, however, gets placed on individuals to perform and the result is largely immune from "bureaucratic interference;" individuals are notoriously bad at planning, especially in the face of Shiny New Stuff That's Sexier and bureaucrats will not want to give up their positions of power.

    So buy your own beans and more ammo to protect it. Not necessarily the best solution, but one which will work.

  6. The concept is moot for the other 100M late adopters, for whom there are neither beans nor bullets, which current nationwide reality is rather the point just now.

  7. A few notes about food storage and supply.
    – Look at and try out substitutes for foods you eat often. For example, for many people noodles, rice, or potatoes can be their main carb source. If so, you can buy one when another is expensive or unavailable.
    – What "trimmings" do you enjoy that make food, and therefore life, better? Spices, unusual ingredients, flavorings, etc will make palatable what is available when the pickings are slim.
    – In this 'crisis', electricity was not interrupted, but in other scenarios it is likely to be erratic or off entirely. Do you have a non-electric means to prepare food, access water, etc? Note that many gas stoves these days have a plug and won't work without electricity. What of your Deep Pantry relies on freezing or air conditioning?
    – Do you have alternate sources of food outside of stores? Most of our meat (beef and lamb) comes from a farm family we are close friends with. This state allows them to butcher and sell directly from the farm with no inspections, licensing, or records required.
    – What else will be an issue when times are difficult? Think about medical supplies, water sources, entertainment, etc – everything to keep your family running as smoothly as possible.

  8. >>>The question now becomes: should our production and distribution systems, facilities and practices be revised in the light of the pandemic? This seems like an obvious solution to many people – but it will involve massive expense. To set up new factories in our own country, and have many smaller facilities rather than fewer, larger ones, and keep reserves of products in case of disruptions . . . we're talking billions, probably trillions of dollars in the short to medium term to accomplish those changes. <<<

    Yes but! The cost of is to the company, the privately held or
    publicly traded company not the government. Sure it may cost a few cents more for a can of beans or whatever but it will allow the company to run during a gap that might be cause by a flood, tornado, hurricane or even a pandemic.

    The stocking taxes may be an issue but far from every one is impacted by that and if the public gets hit by that then fix the damn tax law.

    But the real problem is in the head office, likely people that rre ly handle an empty can, shock absorber, or gear. This is I got a million in this thing and I want a return on my buck! Last few cases of that makes several really big companies go away and the people working there unemployed. Its not process its greed, and like the move line greed became good (or was it god!).

    So yes it needs to change but it will likely be small companies trying to bump out the big one trying to crush them. Anyone who doesn't understand that needs to read up on the 1880s though 1930 to understand how the wild west of business worked and the things tried to tame it.


  9. Logistics are essential, but that mountain of accumulated supplies can be taken away if you're not paying attention to the world around you.
    Forward Observer pushes the area study, and I believe he's right. Who are your neighbors, are they likely to help or harm? What about the town you live in? What resources are there, medically, enforcement, industry, entertainment, etc.? What natural disasters happen in your region? Are there families of bad actors, druggies, gangs?

    Prepping is more than getting stuff. Physical fitness, useful skills and knowledge about your home town are all needful.

  10. It isn't just (or even mostly) local and state taxing inventory.
    It's the feds.
    The financial sector employs a great many lobbyists to make sure it stays that way.

  11. Skimming the comments and the article good stuff.

    Can I break it down a bit? Who's responsible for YOU and yours Food Supply? Same with energy because I assume fragile systems like the grid will fail maybe for keeps someday. Same with security as when someone is seconds from assaulting you and yours the police are but hours away (See the city of Minni MN for details) or busy defending their own peoples.

    You can I cannot decide major policies of business nor government. BUT we can choose to eat out less or eat lower on the food chain with for example dry (not canned) beans replacing some or most of our ground chuck AND put those dollars into building up a strong pantry. I fear the window of easy prepping has closed BUT it's YOUR Family, it's YOUR Responsibility, get ON with it friends.

    Learning how to REALLY Cook using basic is a skill that takes time DO IT BEFORE your Forced too. Dropping expensive wants to FUND NEEDS needs to be done BEFORE your FORCED too. Waiting until your FORCED too is a bad place to be as a little more time or cash gives options you were FORCED to not have?

    Your choice, do it when you have options OR wait until your FORCED into choices you may not enjoy.

    Weather-fire-arson and such threaten our families major asset the home? A Major Prepper recently lost his home to fire and they are doing a FundMe campaign for them. Insurance, as well as Grandmothers storm cellar aka don't put all your eggs in one basket idea. Caching supplies and trusted friends were the support system LONG Before Social Safety Nets from the Government were in place.

    The Governments safety nets funded by good times are failing OR being mismanaged into the lifestyle of the Gimmie Dat's to keep them from rioting, get your head around that friend. Set up your own safety nets. Takes time and time is limited START NOW. The Gimmie Dat's ARE Rioting, the Government will choose the soft way of MOAR Bread and Circuses to calm it down again just like Rodney King. Our tax dollars at work.

    Know your neighbors, no matter what the SHTF situation IT's the Responses of People around you that make most of the long term hazards. Even the bible speaks of the poor guy who's "friends" desert him as he seeks help. It also speaks of true friends that stand back to back with you in times of trouble. Folks known to have temper troubles in "Normal Times" are unlikely to become stable trustable folks in bad times. Same with social drunks and even those that hold their Sh*t together with LEGAL Drugs once the supply of Legal drugs fail AND Stress Increases due to troubles.

    The time of the 7 fat cows is passed now we are going into the 7 lean years. Make choices before your FORCED too.

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