In his New York Times column yesterday, Farhad Manjoo claimed that a “very American set of capitalist pathologies” exacerbated the national mask shortage, and argued that the Trump administration should order “companies to produce more supplies and equipment.” He writes:
Hospitals began to run out of masks for the same reason that supermarkets ran out of toilet paper — because their “just-in-time” supply chains, which call for holding as little inventory as possible to meet demand, are built to optimize efficiency, not resiliency.
Given the time-sensitive nature of our response to COVID-19, it might plausibly be argued that President Trump should enforce the Defense Production Act. The market signals that incentivize supplier entry into the mask marketplace are functioning as they would in “peacetime,” but the lag between rival firms’ awareness of those signals and their entry into the marketplace might take too long to materialize in practice.
Whatever one thinks of Manjoo’s full critique of the policies pursued (or not) by the Trump administration — and setting the capitalism quip aside — the value of the “just-in-time” supply-chains which “optimize efficiency” should not be so flippantly dismissed. That “efficiency”– which entails fewer perishable food items going to waste and ensures scarce resources are being allocated to their most productive use — helps to lower costs for grocers and, in turn, keep food prices low for working-class Americans.
A benefit, if you like, of our “very American” form of capitalism.