Let Biden keep doing PR, and let American businesses and consumers actually solve the problems, piece by piece.
Any measure coming from him that would have an effect is highly likely to make the situation worse, not better.
S cott Lincicome’s latest newsletter for The Dispatch says that Joe Biden didn’t save Christmas.
Lincicome is responding to claims from the administration that its supply-chain fixes ensured that stores were stocked for the holiday season. He writes that, “Contrary to the spin, however, the broader effects of these moves on store shelves and, by extension, Americans’ Christmas gifts, appear to be muted.”
He finds that port congestion remains high, productivity at Los Angeles/Long Beach remains low, container ships are waiting longer than ever to enter the ports, and the line of ships waiting is at a record high. He quoted the Financial Times, which said:
LA/Long Beach accounted for roughly 22 per cent of shipping capacity waiting to berth globally last Tuesday, according to Kuehne + Nagel, a Swiss logistics group.
“If we solve North America, then there would be enough capacity for the rest of the system,” Alan Murphy, an analyst at consultancy Sea-Intelligence, told a meeting of shipping experts in December.
So not only is the U.S. having a rough time, but we’re also holding up the rest of the world.
Yet it is true that holiday-season disruptions were not that bad overall. Lincicome explains why: Businesses and consumers changed their behavior to make sure things got delivered on time.
He finds that retailers ordered imports earlier than normal, and they routed them through ports other than LA/Long Beach. UPS and FedEx expanded capacity. Consumers anticipated possible delays and bought gifts earlier in the year.
Of course, the government didn’t command anyone to do those things. Biden didn’t sign an executive order telling Costco to charter its own container ships or Amazon to build its own shipping containers, to cite two examples of private-sector action that Lincicome provides. Congress didn’t pass a law mandating that people get their Christmas shopping done before Thanksgiving. Those things happened on their own because they made sense economically. Price signals were allowed to work, and they delivered decent results.
The relevant criterion for government intervention is not whether the market is perfect. The relevant criterion is whether government will do better than the market. Does anyone think that putting Joe Biden in charge of supply chains would have delivered a better result than the one we observed? That a crack squad of Gina Raimondo, Pete Buttigieg, and the armies of bureaucrats that report to them would have managed a timelier holiday season than the one we actually experienced?
Lincicome’s newsletter adds to the evidence that port congestion is not a market failure. It’s the result of decades of bad policy that have created countless inefficiencies and perverse incentives and left us with some of the least efficient ports in the world. The way to get better results now is to make better decisions five to 25 years ago, and we don’t have a time machine. In the real world, markets have been allowed to work and ameliorate some of the effects of those bad policies.
The best thing Biden can do for our ports in the short run is to leave them alone. There isn’t much the federal government can do to improve the situation immediately, but there’s plenty it could do to turn the tide in the long run. This would include repealing regulations and allowing more competition, and Republicans on the Joint Economic Committee have been looking at some solid proposals that would do just that. But those measures won’t have any effect on the current situation, and Biden isn’t likely to support many of them anyway.
The federal government has at its disposal a plethora of ways to make the port situation worse, and those have much quicker effects. Price controls, for example, would immediately throw off the price signals that allowed consumers and producers to adjust their behavior during this recent holiday season. Punitive tariffs, which can be imposed by the executive branch with no legislative input, can function as effective bans on products that American businesses need to improve the situation. (We already have one on truck chassis; we don’t need more.) Vaccine mandates can shrink workforces overnight.
Counterintuitive as it may sound, we should actually be grateful that Biden’s supply-chain fixes have been ineffective. Any measure coming from him that would have an effect is highly likely to make the situation worse, not better. Let Biden keep doing PR, and let American businesses and consumers actually solve the problems, piece by piece.