Mason jar lids. Medicine. Resin. FTC Commissioner Rohit Chopra notes that too big to fail firms and cost cuts are sabotaging our supply chains and causing shortages.
This quote jumped out at me, b/c I've been thinking it since I started reading your work:
"From what I’ve gathered, it feels increasingly Soviet out there."
Combining your economic observations w/those of Chris Hedges about 'inverted totalitarianism' the parallels between the USSR and the current US society is...well...kinda scary, and I'll tell you why I think so.
(Caveat: I'm just a schmoe sitting at my keyboard. I have no credentials other than my two eyes and brain)
In the Soviet Era, the political elite (the Duma?) lived large. Fancy schmantzy country homes, opulent apartments in Moscow, and an apathy over the declining standard of living for the average citizen.
In the USA, we can easily see the growth of wealth in our legislature. Sure there's a bit of performance involved, but c'mon... a woman who was a taco slinger in lower Manhattan now attends $30K/plate galas and is the star of the show? She slaps some graffitti on the back of her dress and becomes a media darling. Who now drives a Tesla. As her boss is worth over $100M and eats $25 pints of ice cream from her $12K freezer.
The Soviet Union had full control of the press, and in the USA it's basically 5 CEO's that control 90% of media. Both of them control society through propaganda and outright lies. (Does anyone believe in Russiagate here? ) While cable news viewership is slipping, its influence certainly is not.
The overall economy? Centralized control? About a year ago some smarty pants wrote an illuminating analysis of 'The Cantillon Effect' about how proximity to power facilitates acquisition of wealth.
(TBH, maybe you could give Taibbi a holler Matt? I think his take on this thesis would be stunning)
Centralized power in major realms: political, social and economic, combined with a glaring apathy for the cratering standard of living in the USA over the last 20++ years draws many more parallels b/t the current US society and the past USSR.
Hey Matt, good to find you on here. A friend just sent me this and I'm very grateful, will be signing on post-haste. Here in a remote Alaskan fishing village we have been on the front lines of shortages for two years---across the board. We're on the tail end of anything not ordered in advance. I've been waiting for 3 months for 4 picnic hams alone and have had to buy secondarily-processed sliced or de-boned and am happy enough to have gotten what I have.
The canning lids are a huge issue here as we all put up our salmon primarily every year, multiple cases. I've watched the costs go up along with shrinkflation ( One example: 32 oz mayo suddenly 30 oz at the same or higher prices.)
Fortunately I'm old enough to have seen this coming, the whole enchilada, I just didn't know which form it would take (the Covid-19 surprised me.) Being a keen student of history and cycles, it has been a matter of intuitiveness, rather than a specific warning bell that made me a 'prepper,' but I'm so glad I did and that I'm of a community (the whole town) for which disaster preparedness is first nature.
I first became aware of you via TJDS, it would be more than timely for you to get your message out via his platform; you'd likely get a big subscription bump from it as well.
I don't think low wages and bad conditions in the trucking industry are due to monopolies, except indirectly. Trucking is a competitive and easy entry business for low-skilled or low-credentialed people. Wages and conditions are bad for all such people, in part because monopsonists like Amazon, Walmart and food chains squeeze workers, in part from the destruction of unions, and in part because the tax and service system is increasingly rigged against the bottom of the wealth distribution.
Shimano is Japanese, not Taiwanese. Also, in addition to Shimano & SRAM, there is Campagnolo (Italian brand) for group sets (components), though they are at the premium end of the spectrum....FYI, Giant Bicylces, based in Taiwan, has their own brand of bikes, but also builds for Trek (almost everything except their high end products) and many other brands.
Good article, but the title did not reflect the content - where are the potatoes? There is real pressure on common food stuffs - for instance, I am having trouble getting reasonably priced organic oatmeal and as a result have suspended my micro granola production. My customers are unhappy and beginning to be alarmed. You concentrated on bike parts and resin - both important, but nothing on where are the potatoes (and oatmeal).
Great stuff, as usual. I just read this article in the Atlantic — which also speaks to trucking — that seems to gloss over the entire anti-trust/monopolization aspect entirely. I understand the point she’s making about the actual labor required to make and ship this stuff, but after reading this newsletter for a year I was practically shouting about market roll ups while reading it.
I think every current instance of a shortage has the same reason, to increase short term profits. GM can make and sell 5% fewer cars and their profit margin will be increased enough to offset the 5% sales volume loss. The BS "hack" stories similarly have the effect of slightly cutting production in a specific industry. The GM shareholders don't seem to care either about losing sales to their competitors, which would be a sign of monopolization/collusive behavior
Hey, I write my own Substack over at the Omega Inflection. Have you read any Nassim Nicholas Taleb? He came up with the notion of anti-fragility to explain the flaws which emerged as a result of the Crash of 2008 https://en.wikipedia.org/wiki/Antifragile_(book) . Basically, the ideal industry is the restaurant sector, because while an individual restaurant can fail, the sector will usually be able to feed you because it is constantly tested, and subjected to stresses which make it stronger.
Another example of this relates to human biology. For years, expectant mothers were given a test to see whether their children might be susceptible to peanut allergies and told to avoid them at all costs. It turns out this was entirely the wrong approach. Studies using an Israeli snack which was coated in peanut dust showed that children were far less likely to develop peanut allergies if they were exposed at an early age.
What we are witnessing is yet another example of a sector which hasn't experienced the normal stresses and strains for years, which would usually make it healthy. It's become overly centralised, ultra-lean and, until recently, worked at the extreme end of a just-in-time spectrum. We didn't know it, but the facility of being able to order goods online and find the lowest prices easily had us sleep-walking into a global transport system which was endemically lacking in the healthy resilience and ability to handle shocks which is worrying to say the least.
There is also something to be said for looking at the cumulative or compounding which occurs when a system comes under stress. First, we had the container crisis- this forced businesses within the supply chain to move to a just-in-case rather than just-in-time system which ate up critical capacity at the supply end. At the same time the pandemic has been producing a residual reduction in the total capacity of drivers. Finally, there has been the structural problem of potential automation looming in the future- it has discouraged younger drivers from training in the longer range and larger vehicle classes (many retail customers expect the drivers to unload for them as part of the service, partially insulating the retail end from automation).
We are having the same problem with containers and driver shortages here in the UK. My neighbour's lad is a driver and his boss has been giving him day bonuses. To give you a good idea of the awful treatment of drivers in the industry, the Co-op supermarket recently put out a call for agency drivers, offering them £25 an hour and a £50 day bonus. The normal hourly rate for their regular drivers is £12.50 an hour.
And it not as though better pay for drivers should necessarily require higher prices. The pandemic has finally shown employers that office workers and call centre workers are more efficient working from home, and for women with children this is an altogether more humane and ergonomic way of working. With the savings made from cutting out an entire layer of supervisory management, and all the saved costs from selling or releasing offices for redevelopment, there are ample budgets to reallocate corporate fund from redundant costs to systemically pay drivers more money.
I wouldn't hold out much hope for any quick solutions though, we still haven't replaced or updated the structural software which runs our financial systems, making the risks of contagion from one failing institution just as omnipresent as they were back in 2008.
If you are thinking about writing about the housing market and Black Rock's move into real estate, I would think about investigating the role of the depreciation allowance in real estate. It allows investors and corporations to defer taxes against the depreciation of the building on the property they own. And, of course, once they are there, they are going to profit maximise. It's a highly unusual aspect of your tax system, I don't know of any other country which allows for this depreciation- we certainly don't have it here in the UK (although we do allow for depreciation on furnishings for retail properties).
I don't necessarily mean that one would need to eliminate it completely- especially not for regular homeowners. But it might be worth thinking about replacing with another system. Sweden and Denmark allow for the deferment of tax against mortgage debt. They effectively refund 30% of any debt interest you pay on your property. Not only does this work quite well in encouraging home ownership, shifting the higher costs to government from rental or public housing, but it also works out quite well for former students, because the debt interest relief applies to student loans as well as mortgages...
If you have the time, I would appreciate your taking a look at my Substack: I am new to non-fiction writing, although I have written erotic fiction under a nom de plume in the past, and would appreciate any tips or advice you might have to offer. At the moment, I follow the discursive method and usually publish straoght from first draft after a little copy editing. Do you think I would benefit more from a planned approach? https://geary.substack.com/p/how-to-fix-america-in-one-easy-step/comments
If you want to know which way your housing market is moving I would read Liam Halligan's book Home Truths. We effectively have an oligopoly here in the UK with a small number of firms controlling both the supply of the building and the supply of land. Housing land costs around £1 million an acre in the South of UK- which gets you around 6 homes or up to 18 rabbit hutches unfit for human habitation. Even the former Chancellor Of the Exchequer Sajid Javid was keen on the idea, but he was nobbled by Dominic Cummings and resigned out of protest. The book won praise from people on both sides of the political aisle in the House of Lords.
I actually wrote an essay on housing oligopolies. It caused a minor dogpile from my mainly conservative readership on a discussion forum I frequent... Still, it needed saying and as a heterodox I can't afford to take sides.
After a gap visiting a grocery store near me (a few months) I went in and was sticker shocked. A cut of meat we would buy on occasion (a higher-end treat) was at least 50% more than what I remembered. Maybe that's a good starting point to turn vegetarian? But as the oatmeal story below posits, even that may become a problem.
Another thing: canned pet food. I used to buy canned wet food for my cats to give them small portions at night. Royal Canin has stopped deliveries to the shop I normally go do (and the only one that carries this brand near my place.) Apparently they are having 'supply issues', but the shop didn't know what was it exactly. Other brands are still on their shelves.
At this point I'm keeping an extra 1 - 2 bags of dry food around, just in case.
This quote jumped out at me, b/c I've been thinking it since I started reading your work:
"From what I’ve gathered, it feels increasingly Soviet out there."
Combining your economic observations w/those of Chris Hedges about 'inverted totalitarianism' the parallels between the USSR and the current US society is...well...kinda scary, and I'll tell you why I think so.
(Caveat: I'm just a schmoe sitting at my keyboard. I have no credentials other than my two eyes and brain)
In the Soviet Era, the political elite (the Duma?) lived large. Fancy schmantzy country homes, opulent apartments in Moscow, and an apathy over the declining standard of living for the average citizen.
In the USA, we can easily see the growth of wealth in our legislature. Sure there's a bit of performance involved, but c'mon... a woman who was a taco slinger in lower Manhattan now attends $30K/plate galas and is the star of the show? She slaps some graffitti on the back of her dress and becomes a media darling. Who now drives a Tesla. As her boss is worth over $100M and eats $25 pints of ice cream from her $12K freezer.
The Soviet Union had full control of the press, and in the USA it's basically 5 CEO's that control 90% of media. Both of them control society through propaganda and outright lies. (Does anyone believe in Russiagate here? ) While cable news viewership is slipping, its influence certainly is not.
The overall economy? Centralized control? About a year ago some smarty pants wrote an illuminating analysis of 'The Cantillon Effect' about how proximity to power facilitates acquisition of wealth.
(TBH, maybe you could give Taibbi a holler Matt? I think his take on this thesis would be stunning)
Centralized power in major realms: political, social and economic, combined with a glaring apathy for the cratering standard of living in the USA over the last 20++ years draws many more parallels b/t the current US society and the past USSR.
The implications are frightening.
Hey Matt, good to find you on here. A friend just sent me this and I'm very grateful, will be signing on post-haste. Here in a remote Alaskan fishing village we have been on the front lines of shortages for two years---across the board. We're on the tail end of anything not ordered in advance. I've been waiting for 3 months for 4 picnic hams alone and have had to buy secondarily-processed sliced or de-boned and am happy enough to have gotten what I have.
The canning lids are a huge issue here as we all put up our salmon primarily every year, multiple cases. I've watched the costs go up along with shrinkflation ( One example: 32 oz mayo suddenly 30 oz at the same or higher prices.)
Fortunately I'm old enough to have seen this coming, the whole enchilada, I just didn't know which form it would take (the Covid-19 surprised me.) Being a keen student of history and cycles, it has been a matter of intuitiveness, rather than a specific warning bell that made me a 'prepper,' but I'm so glad I did and that I'm of a community (the whole town) for which disaster preparedness is first nature.
I first became aware of you via TJDS, it would be more than timely for you to get your message out via his platform; you'd likely get a big subscription bump from it as well.
Thanks for all you do---cheers! DaveO
I don't think low wages and bad conditions in the trucking industry are due to monopolies, except indirectly. Trucking is a competitive and easy entry business for low-skilled or low-credentialed people. Wages and conditions are bad for all such people, in part because monopsonists like Amazon, Walmart and food chains squeeze workers, in part from the destruction of unions, and in part because the tax and service system is increasingly rigged against the bottom of the wealth distribution.
Shimano is Japanese, not Taiwanese. Also, in addition to Shimano & SRAM, there is Campagnolo (Italian brand) for group sets (components), though they are at the premium end of the spectrum....FYI, Giant Bicylces, based in Taiwan, has their own brand of bikes, but also builds for Trek (almost everything except their high end products) and many other brands.
Good article, but the title did not reflect the content - where are the potatoes? There is real pressure on common food stuffs - for instance, I am having trouble getting reasonably priced organic oatmeal and as a result have suspended my micro granola production. My customers are unhappy and beginning to be alarmed. You concentrated on bike parts and resin - both important, but nothing on where are the potatoes (and oatmeal).
Great stuff, as usual. I just read this article in the Atlantic — which also speaks to trucking — that seems to gloss over the entire anti-trust/monopolization aspect entirely. I understand the point she’s making about the actual labor required to make and ship this stuff, but after reading this newsletter for a year I was practically shouting about market roll ups while reading it.
https://www.theatlantic.com/technology/archive/2021/09/pandemic-supply-chain-nightmare-slow-shipping/620147/
I think every current instance of a shortage has the same reason, to increase short term profits. GM can make and sell 5% fewer cars and their profit margin will be increased enough to offset the 5% sales volume loss. The BS "hack" stories similarly have the effect of slightly cutting production in a specific industry. The GM shareholders don't seem to care either about losing sales to their competitors, which would be a sign of monopolization/collusive behavior
Monopoly (US owned?) Supplier of bottled industrial CO2 gas in the UK shuts down production due to high prices for natural gas (feedstock).
Used in many food product production including animal slaughter.
UK government has to pay millions to subsidise production (product not available elsewhere?)
Hey, I write my own Substack over at the Omega Inflection. Have you read any Nassim Nicholas Taleb? He came up with the notion of anti-fragility to explain the flaws which emerged as a result of the Crash of 2008 https://en.wikipedia.org/wiki/Antifragile_(book) . Basically, the ideal industry is the restaurant sector, because while an individual restaurant can fail, the sector will usually be able to feed you because it is constantly tested, and subjected to stresses which make it stronger.
Another example of this relates to human biology. For years, expectant mothers were given a test to see whether their children might be susceptible to peanut allergies and told to avoid them at all costs. It turns out this was entirely the wrong approach. Studies using an Israeli snack which was coated in peanut dust showed that children were far less likely to develop peanut allergies if they were exposed at an early age.
What we are witnessing is yet another example of a sector which hasn't experienced the normal stresses and strains for years, which would usually make it healthy. It's become overly centralised, ultra-lean and, until recently, worked at the extreme end of a just-in-time spectrum. We didn't know it, but the facility of being able to order goods online and find the lowest prices easily had us sleep-walking into a global transport system which was endemically lacking in the healthy resilience and ability to handle shocks which is worrying to say the least.
There is also something to be said for looking at the cumulative or compounding which occurs when a system comes under stress. First, we had the container crisis- this forced businesses within the supply chain to move to a just-in-case rather than just-in-time system which ate up critical capacity at the supply end. At the same time the pandemic has been producing a residual reduction in the total capacity of drivers. Finally, there has been the structural problem of potential automation looming in the future- it has discouraged younger drivers from training in the longer range and larger vehicle classes (many retail customers expect the drivers to unload for them as part of the service, partially insulating the retail end from automation).
We are having the same problem with containers and driver shortages here in the UK. My neighbour's lad is a driver and his boss has been giving him day bonuses. To give you a good idea of the awful treatment of drivers in the industry, the Co-op supermarket recently put out a call for agency drivers, offering them £25 an hour and a £50 day bonus. The normal hourly rate for their regular drivers is £12.50 an hour.
And it not as though better pay for drivers should necessarily require higher prices. The pandemic has finally shown employers that office workers and call centre workers are more efficient working from home, and for women with children this is an altogether more humane and ergonomic way of working. With the savings made from cutting out an entire layer of supervisory management, and all the saved costs from selling or releasing offices for redevelopment, there are ample budgets to reallocate corporate fund from redundant costs to systemically pay drivers more money.
I wouldn't hold out much hope for any quick solutions though, we still haven't replaced or updated the structural software which runs our financial systems, making the risks of contagion from one failing institution just as omnipresent as they were back in 2008.
If you are thinking about writing about the housing market and Black Rock's move into real estate, I would think about investigating the role of the depreciation allowance in real estate. It allows investors and corporations to defer taxes against the depreciation of the building on the property they own. And, of course, once they are there, they are going to profit maximise. It's a highly unusual aspect of your tax system, I don't know of any other country which allows for this depreciation- we certainly don't have it here in the UK (although we do allow for depreciation on furnishings for retail properties).
I don't necessarily mean that one would need to eliminate it completely- especially not for regular homeowners. But it might be worth thinking about replacing with another system. Sweden and Denmark allow for the deferment of tax against mortgage debt. They effectively refund 30% of any debt interest you pay on your property. Not only does this work quite well in encouraging home ownership, shifting the higher costs to government from rental or public housing, but it also works out quite well for former students, because the debt interest relief applies to student loans as well as mortgages...
If you have the time, I would appreciate your taking a look at my Substack: I am new to non-fiction writing, although I have written erotic fiction under a nom de plume in the past, and would appreciate any tips or advice you might have to offer. At the moment, I follow the discursive method and usually publish straoght from first draft after a little copy editing. Do you think I would benefit more from a planned approach? https://geary.substack.com/p/how-to-fix-america-in-one-easy-step/comments
If you want to know which way your housing market is moving I would read Liam Halligan's book Home Truths. We effectively have an oligopoly here in the UK with a small number of firms controlling both the supply of the building and the supply of land. Housing land costs around £1 million an acre in the South of UK- which gets you around 6 homes or up to 18 rabbit hutches unfit for human habitation. Even the former Chancellor Of the Exchequer Sajid Javid was keen on the idea, but he was nobbled by Dominic Cummings and resigned out of protest. The book won praise from people on both sides of the political aisle in the House of Lords.
I actually wrote an essay on housing oligopolies. It caused a minor dogpile from my mainly conservative readership on a discussion forum I frequent... Still, it needed saying and as a heterodox I can't afford to take sides.
Not the point, I know, but Shimano is a Japanese company.
After a gap visiting a grocery store near me (a few months) I went in and was sticker shocked. A cut of meat we would buy on occasion (a higher-end treat) was at least 50% more than what I remembered. Maybe that's a good starting point to turn vegetarian? But as the oatmeal story below posits, even that may become a problem.
Another thing: canned pet food. I used to buy canned wet food for my cats to give them small portions at night. Royal Canin has stopped deliveries to the shop I normally go do (and the only one that carries this brand near my place.) Apparently they are having 'supply issues', but the shop didn't know what was it exactly. Other brands are still on their shelves.
At this point I'm keeping an extra 1 - 2 bags of dry food around, just in case.
What about Otis elevators?
Isn’t Otis another major elevation player?