Just In Time FUBAR

Just In Time FUBAR

Just in time supply chains are a great thing and have many advantages, but these were initially put in place in industries with oodles of supply, and a list of suppliers waiting to replace the first vendor miscalculation. As these business tactics spread and tightened to other companies and industries, the downside was if they failed, it would be the consumer who would suffer, not the company. There was limited competition and a supply chain failure, or strain, would be felt by all. The damage would not, in all probability, be focused on one manufacturer. The consumer would still be left wanting, but would be there, ready to buy again, when supply returned.

It was infallible.

But like so many business practices, it has risks. As companies tighten the proverbial collar on Congress and demand greater barriers to entry, tariffs, subsidies and tax benefits – tax advantages no small business would have a snowball’s chance in the Alabama summer heat of ever accessing, the consumer is left with fewer choices. As has been discussed, in some respects it is the consumers’ gluttony that is partially to blame, but policy could be put in place to stifle some of this. As the stock market continues its slide, fewer companies will survive. Just as Covid caused many a small business to close, a recession will continue to decimate those remaining.

A Darwinian forecast, at least for the little guy.

For the Amazons, Googles, Facebooks and other billionaire multinationals, the recession will be a blip. RIF’s will occur, severance might be paid, and some will make take early retirement firm in the belief that their hard-earned savings, and impressive stock portfolio, will carry them through. It will be like last time. The market will drop, stock prices will be slashed by seventy percent, or more, but will eventually come back to pre-recession prices. Those bold enough to invest, like many did in 2009, will be busy planning how to spend their bazillions.

But it won’t come back.

Sure, the Fed can print more money, but eventually it becomes worthless and we are heading there quick. We have seen that Congress has zero pecuniary abstinence and it will not magically appear when the Republicans take over or in the coming years when the Democrats are in power again. As history has made clear, both sides are equally culpable. Policies will not be enacted to entice the creation of smaller businesses in an effort to expand supply options, it will continue to narrow. The large will grow larger and the smaller will be fewer.

A recession and associated economic fallout will have other hidden ramifications. As noted in other posts, the 09-recession had far-reaching implications when it came to innovation, idea generation and expanding the entrepreneurial spirit. Keep your head down and pray was a mantra for a very good reason. That was not an environment that invites new ideas or different ways of doing things, recessions don’t foster discussion. This recession will further damage the innovative landscape. Perhaps if economic conditions get bad enough, innovation may be welcomed and encouraged, but that is the proverbial double edge sword. I hope the citizens of this great country wake up before it gets too bad.

Sooner rather than later.

Categorized as Policy

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