The Daily Signal - What Is the Root Cause of Our Supply Chain Problems?

Episode Date: October 22, 2021

Americans across the nation are feeling the effects of an unprecedented supply chain crisis. Prices for everyday essentials like milk and gas have skyrocketed and public officials are warning people to start buying their Christmas gifts now. But what is causing all of these supply chain issues? And how do we get out of this crisis? Heritage Foundation research fellow Joel Griffith talks about the different factors affecting the supply chain, from organized labor to COVID-19 shutdowns to government policies. Griffith joins "The Daily Signal Podcast" to discuss all this and offer some commonsense solutions to get America back on track. We also cover these stories: Attorney General Merrick Garland testifies before the House Judiciary Committee on a memo he sent out regarding school board meetings and domestic terrorism. Former President Donald Trump announces he's planning on launching a new social media platform called TRUTH. Following comments by Boston Celtics center Enes Kanter critical of the Chinese Communist Party and supporting Tibetan independence, videos featuring the team are wiped from Chinese social media. Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Daily Signal podcast for Friday, October 22nd. I'm Virginia Allen. And I'm Doug Blair. Americans across the nation are feeling the effects of an unprecedented supply chain crisis. Prices for everyday essentials like milk and gas have skyrocketed. And public officials are warning people to start buying their Christmas gifts now. But what is causing all of these supply chain issues? And how do we get out of this crisis?

Heritage Foundation Research Fellow, Joel Griffith, has some thoughts. He joins the Daily Signal podcast to discuss the myriad of causes for the supply chain crisis, as well as offer some common sense solutions to get America back on track. And don't forget, if you enjoy listening to this podcast, please be sure to leave us a review and a five-star rating on Apple Podcasts and encourage others to subscribe. Now onto today's top news. Attorney General Merrick Garland testified before the House Judiciary Committee on Thursday. The hearing was intended to discuss Garland's oversight of the Department of Justice as a whole, but much of the conversation focused on a memo, the Attorney General, recently sent to the Department of Justice and the FBI. The memo asked the DOJ and FBI to look into the rise of criminal conduct directed towards school personnel.

Republicans are saying that Garland overstepped his bounds by asking the federal government to get involved in matters that should be handled by state. and local law enforcement. During the hearing, multiple lawmakers raised concerns that the memo and a letter the National School Board Association sent to the Biden administration

less than a week before Garland sent his memo to the FBI and DOJ. In the letter, the School Board Association requested assistance looking into whether parents' actions

against school personnel could be classified as acts of domestic terrorism. Ohio Republican Representative Steve Chabot raised a specific example the National School Boards Association used in their September letter to the Biden administration. Chabbit questioned Garland on the issue per C-SPAN. According to the Sarasota Herald Tribune, one example of a so-called terrorist incident was apparent, merely questioning whether school board members had earned their high school diplomas. Now, that might have been rude, but does that seem like an act of domestic terrorism that you or your Justice Department ought to be investigating? Absolutely not, and I want to be clear that Justice Department supports and defends the First Amendment right of parents to complain as vociferously as they wish about the education of their children, about the curriculum taught in their schools?

That is not what the memorandum is about at all. nor does it use the words domestic terrorism or Patriot Act. Like you, I can't imagine any circumstance in which the Patriot Act would be used in the circumstances of parents complaining about their children, nor can I imagine a circumstance where they would be labeled as domestic terrorism. Texas Representative Chip Roy also questioned Garland on why he asked the FBI and DOJ to look into criminal conduct conducted toward school. personnel. Roy asked Garland about an incident in which a father was arrested at a school board meeting in Loudoun County, Virginia over the summer. The father's daughter is reported to have been raped by a biological boy in the women's bathroom of the school. The dad got upset during the meeting

after the superintendent said there had not been any cases of assault in women's bathrooms in the school district. Garland denied having any knowledge of the case as Roy questioned him. I don't know the facts of the case. Is the FBI or the Department of Justice investigating the Loudoun School Board for violating civil rights or under authority of, say, the Violence Against Women Act? I don't believe so, but I don't know the answer to that. I'd ask why not? Because on June 22nd at his school board meeting in Loudoun County, Virginia, the superintendent,

Scott Ziegler declared in front of the father of the girl who had been raped that the predator, transgender student, or person simply does not exist. And that to his knowledge, we don't have any records of assault, a car, in our restrooms. When this statement bothered the father of the girl, I'm a father of a daughter, I believe you are too, sir. The girl who had been raped, sodomized in the bathroom of a high school by a dude wearing a skirt, that father reacted.

Now that father reacted by simply using a derogatory word. Would that statement have bothered you if your daughter had been raped, if somebody said that it didn't occur? Again, I don't know anything about the facts of this case, but derogatory words are not what my memorandum is about. Through all the questioning, Garland insisted true threats of violence are not protected by the First Amendment. Those are the things we're worried about here. On Wednesday, former President Donald Trump announced he was planning on launching a new social media platform called Truth Social

in a bid to compete with what he called the Liberal Media Consortium. Trump currently is banned from a number of different social media platforms, including Facebook, Twitter, and Instagram. In a statement announcing truth, Trump highlighted what he saw as these platforms' hypocrisy in allowing actors like terrorist organizations to stay on, but not him. We live in a world where the Taliban has a huge presence on Twitter, yet your favorite American president has been silenced, said Trump. The platform's beta version will be available to a small group of invited users in November before a planned open release in the first quarter of 2022. Former Secretary of State Condoleezza Rice spoke out against critical race theory during an interview on ABC's The View.

Rice joined the View on Wednesday to talk about the issue of education and parental involvement in their child schooling. She shared her own story of growing up in the segregated South before she shared her opinions of critical race theory. Take a listen. I grew up in segregated Birmingham, Alabama. I couldn't go to a movie theater or to a restaurant with my parents. I went to segregated schools till we moved to Denver. My parents never thought I was going to grow up in a world without prejudice, but they also told me that's somebody else's problem, not yours.

You're going to overcome it, and you are going to be anything you want to be. And that's the message that I think we ought to be sending to kids. One of the worries that I have about the way that we're talking about race is that it either seems so big that somehow white people now have to feel guilty to feel guilty for everything that happened in the past. I don't think that's very productive. Or black people have to feel disempowered by race. I would like black kids to be completely empowered, to know that they are beautiful in their

blackness, but in order to do that, I don't have to make white kids feel bad for being white. So somehow this is a conversation that has gone in the wrong direction. Rice went on to argue that how we teach students' history is the most of the most of the conversation. is the most important factor to consider. And co-host, Whoopi Goldberg, agreed. We teach the good and we teach the bad of history. But what we don't do is make seven and 10-year-olds feel that they are somehow bad people because of the color of their skin.

We've been through that. And we don't need to do that again. We don't want anybody to feel that. Precisely. That's the idea. Rice's remarks, of course, come at a time when more and more parents are expressing their concerns, over the teaching of critical race theory in schools across America.

Following comments by Boston Celtic Center, Inez Cantor, critical of the Chinese Communist Party and supporting Tibetan independence, videos featuring the team were wiped from Chinese social media. Cantor tweeted Wednesday, Dear brutal dictator Xi Jinping and the Chinese government, Tibet belongs to the Tibetan people, along with an attached video. My message for the Chinese government, is free Tibet.

Tibet belongs to Tibetans. I'm here to add my voice and speak out about what is happening in Tibet. Under the Chinese government's border rule, Tibetan people's basic rights and freedoms are not existent. They are not allowed to study and learn their language and culture freely. They are not allowed to travel freely. They are not allowed to access information freely. The Tibetan people are not allowed to access information freely.

The Tibetan people are not. not even allowed to worship freely for more than 70 years. Tibetan monks, nuns, intellectuals, writers, poets, community leaders, activists, and many more have been detained, sent political re-education classes, subject to torture, lengthy interrogations, and even been executed simply for exercising the freedom that you and I take for granted. Chinese government officials were quick to express their displeasure with Cantor's comments. Chinese foreign ministry spokesman Wang Wenbin responded to a question during a press conference, saying, the player you mentioned was clout chasing, trying to get attention with Tibet-related issues.

His wrong remarks are not worth refuting. Protests against the Chinese Communist Party have increased in recent weeks as the Beijing-2020 Winter Olympics, set to open on February 4th, draws nearer. Per the Washington Post, anti-Chinese Communist Party protesters interrupted the Olympic flame lighting ceremony in Greece by unfurling a Tibetan flag and a banner reading, No Genocide.

Now stay tuned for my conversation with Heritage Research Fellow Joel Griffith as we discuss supply chain issues and some solutions. My name is Claire Marker. I'm Jonathan Ski. And I'm Natasha Tuneowski. And we're interesting. at the Heritage Foundation.

The Heritage Foundation Young Leaders Intern Program gives college students and recent graduates the opportunity to work for America's leading conservative think tank. Intern opportunities span from research and writing to filming and editing videos, creating social media content, organizing heritage events, and much, much more. I'm Plomwich Cone, and this semester I'm interning in Heritage's Communication Department, and every day I get hands-on experience in audio and video editing. Every Heritage intern has the opportunity to participate in weekly first principal seminars and policy briefings. You will hear from leading experts on the big issues facing America today.

The Heritage Foundation offers housing for all interns right in the center of Washington, D.C. And the best part, it's a paid internship. So if you want to apply for next semester's program, visit heritage.org. Click on About Heritage at the top of the page and then click Careers. You'll find the link for the Young Leaders Program there with all the instructions on how you can apply today. Our guest today is Joel Griffith, a research fellow for the Institute for Economic Freedom and Opportunity at the Heritage Foundation. Joel, welcome to the show. Thanks for having me.

So, Joel, if there is one thing that is dominating the new cycle right now, it is that there are massive supply chain issues. Americans are seeing images of empty store shelves and prices for things like electronics and gasoline have just completely shot through the roof. With all of this in mind, what exactly is the problem with the supply chain right now? Well, we have unprecedented demands placed on that supply chain. When we talk about that chain, when we go to our grocery store, fill up our cars, we're often not thinking of that process by which we actually get that merchandise. but in our interconnected global economy, which gives us a lot of benefits, we have a much higher standard of living now than we did a few generations ago, but we're also really rely immensely on the ability to transport goods from point A to point B.

And actually, in between point A and point B, you have many, a multitude of destination points. You could be importing a suit from, let's say, Vietnam. And from Vietnam, you have to go ahead. loaded on a ship, get it to LA, get it from LA all across the country. And if just one part of that process goes awry, you can be talking about delays for months on end. Because even prior to getting that finished product, you have a whole manufacturing product that also has its own supply chain.

So once one week link in that chain can mean we don't see the merchandise that we are in demand of. So a lot of different explanations have been given for what the supply chain kind of root cause is, what the root cause of these issues with the supply chain is. Are these basically COVID problems left over from the pandemic? Is this government policy? Is it both? Like, where are we seeing the root causes of this problem? Well, there's a, there's a multitude of root causes to this problem. Going back the past 18 months, on the manufacturing side, we have many restrictions that were put in place that impact even the ability to run a factory, distancing restrictions, shutdowns on occasion. And then to get that merchandise transported, there are a lot of restrictions

that were placed on not just the cargo shipping sector, but also in the trucking sector as well. If you back up a year ago, year and a half ago, truckers, especially in places like California, to face so much difficulty in even operating their profession from not being able to get a shower, not being able to get food. You had instances in which those that wanted to get CDL licenses to drive, couldn't because those facilities were closed. And during that downtime, you had a lot of truckers retire. So we're paying for those repercussions now.

But in the immediate term, even though the United States is largely reopened from COVID, that's not the case across the entire world. You see, even in China, most recently in August, you had the immediate term. the world's third largest port that was in effect shut down for two weeks because of one single COVID case. And you multiply that across all of China and across South these days where you've had these ports that were shut down on occasion or you had capacity restrictions in place. Well, that really compounded. That really made it difficult to ship the same number of items as we did just a year ago prior to the pandemic. And even here in the United States,

You know, in the port of New Jersey, New York, New Jersey ports, we had a lot of COVID restrictions in terms of social distancing guidelines that were in place even throughout much of the summer. And we're still dealing with the consequences of that. So that's just the COVID aspects of these shutdowns. But we can get into the detail about some of the other government actions that have really exacerbated this problem. So you've mentioned a little bit about the COVID issues and that there were other root causes. I'd like to go in depth a little bit more on the specific government policies that are to blame for this issue. Obviously, the government does have a role to play in the supply chain crisis. What are some of the policies that have been exacerbating this problem?

Well, on the COVID front itself, social distancing restrictions that were put in place, both in California but also across New Jersey, that really impacted the number of workers that could be on site at any one time. And then restrictions too in terms of the testing, the quarantine, impact the number of workers that you would have on site. And now, of course, we're facing a possible vaccine mandate, which is discouraging quite a few, possibly upwards of 10% of that workforce from participating. But if you go back to during the shutdown component of this, you know, for quite a time up until late this summer, you had the federal government that was providing massive unemployment bonuses. to individuals. And a lot of warehouse workers, a lot of dock cans, a lot of truck drivers found that when you're dealing with all of these hassles to actually earning a living, for them it was more personally worthwhile to just be unemployed and take those unemployment

benefits, which might have been personally the right decision for them. But of course, that created a further backlog because you have to be able to transport that merchandise once you actually get it into the shipping, the dock facility. So that was a big issue. On time, of that, we had government putting in policies that was suppressing the supply of goods, but that was increasing massively the demand for goods. If you look at the retail sales numbers right now, we see that our retail sales are at all-time highs. Our retail sales are actually around 15% higher now than they were prior to the pandemic. So we have immense demand for goods, and that is contributing to that backlog. But that immense

demand for goods isn't really spurred by the free market at this point. That spurred in large part by the federal government borrowing and printing hundreds of billions of dollars and juicing up demand. So we see this artificial pressure put on that supply chain as well, which once again, that is the government responsible for. Do labor unions in any way, shape, or form have anything to do with this. I know we've talked a little bit about how labor and employment shortages are affecting these supply chain issues like dock hands and retail workers. Do unions have any part in this problem as well? Well, the organized labor has played a significant role in the delays in relation to the ports in California in particular. Now, usually you have a maximum of one or two cargo ships

that are stranded off the port of Los Angeles. And I say stranded, waiting, waiting to unload the merchandise. And we saw those numbers increased to over 70 just several weeks ago. And that was due in large part to the organized labor groups refusing to expand their work hours and work on weekends. And so this delay was growing and growing. And about last week, the ports in Florida, they offered to jump in and start taking in some of that excess shipping demand. And I think that's why you saw those labor leaders

finally bend just a few days ago and say, okay, they're going to agree to run those ports 24-7 for the time being in order to catch up. We've discussed some of the implications of the supply chain issues in terms of massive hikes in common consumer goods and services, price hikes on those certain things as well. What are some of the other implications of the supply chain issues that you see if this isn't tamped down on? Yeah, well, you mentioned that price.

I think it is important underscore just how much those prices have risen for the shipping side. You've seen cargo costs to ship a big container have increased from around $1,500 back in 2017. It's gone up 1,000 percent to about $25,000 today. And those cargo ships, even though most of us have never visited a port in L.A. or New Jersey, and that accounts for over 10% of all global trade, just the container ships themselves. So there's a lot riding on this.

So if these supply chain disruptions continue, that's going to have a real impact on us as a country, both in terms of the price of goods continuing to rise, which we've all noticed. also just the very ability to gain access to these goods, which I think, too, we've noticed. It's harder to get shipments in on time at Amazon Prime. You go to Costco, go to your grocery store. Oftentimes, items are out of stock, so that's another repercussion. But something that might not be as evident are the fact that we have a number of manufactured goods that are relying on shipments, on components to finish those processes. And when you see a delay in that, well, that can cause an entire assembly plant to close, which could,

can result in labor disruptions and layoffs. So those are all big economic concerns, but there's also a national security component as well. Our military relies on a lot of shipments as well from across the world, just in time inventory, lean inventory standards, where they don't want to have a lot of stockpile on hand. It's more efficient to ship these items and have them in just in the nick of time. So I think this is going to really be something the military will have to

focus on and ultimately have to reassure Congress that our national security interests aren't being threatened by the possibility of continued disruptions. In order to maybe tamp down on some of these problems, recently President Biden announced that he was going to be keeping the port of L.A. open 24-7. Do you find that this is going to be maybe an effective government response? And if this is something that we should be doing, what else should the government be doing to maybe fix this problem? Sure. The ports being open 24-7, that common sense measure, this should have been something that was really dealt with months ago.

And I think it's important to note that our Secretary of Transportation, Pete Buttigieg, has been pretty much off the job for two months. He is a new father and is taken paternity leave, but two months off the job in the midst of the biggest. transportation crisis of most of our lifetimes and generations, that's something we should not be applauding. So I'm glad they're going to be open 24-7, but longer-term other measures are going to have to be taken because in California, where we rely on a lot of the shipping, there are a number of issues that are going to threaten our supply chains going forward. One of these is an outright ban the state has proposed through Assembly Bill 5, an outright ban on independent owner-operators of trucks. And these are business owners. People work hard to be able to buy a truck and earn a living off that.

And there's a lot of special interests involved that want to deny the right of these independent truckers to operate. The legislature in California has already passed that bill. It's hung up in court right now. But if the court decides that that doesn't violate the California Constitution, you're going to see a big crisis in the trucking sector nationwide because a lot of folks won't be able to operate in California. Second of all, you have California moving to outright ban diesel trucks in the coming years. That, too, is going to impact supply chains. It's going to impact our prices. So my hope is that if California doesn't wake up and stop passing such absurd legislation, my hope are that places such as Alabama and Mobile, Savannah, Georgia, Texas, and Florida,

which have far more sane policies. My hope is that the ports there over the country. coming years, we're able to pick up the slack. But that is going to take time. You can't just dredge a bigger harbor and build a new railway system overnight. That takes time. And we are going to be dealing, I think, with the consequences of a lot of this California legislation in the coming years, separate and apart from the pandemic. I do want to kind of follow up on that. Switching gears slightly. I read a report in ABC News that says we probably won't be seeing the end of these supply chain issues for a while.

In your opinion, how long do you think that this could last? And to maybe quote a phrase from the vice president, do parents need to start buying Christmas gifts for their kids now? It's tough to prognosticate, but there is a substantial backlog. And we still see these disruptions continuing across parts of the world, particularly in China with these rolling COVID shutdown. So this is going to be something that's going to take months to resolve. but on the bright side.

I've heard a number of retail, including Best Buy today, talk about how they were working at advance to stock the shelves in time for Christmas. And Best Buy was saying that they're actually running ahead of prior years in terms of the merchandise that they have stockpiled ready for Christmas. So that's a positive.

On the negative side, if you look at, there's a real important ratio called inventory to sales that measures how much inventory you have on hand relative to your average monthly sales. And those numbers are still near all-time lows, or at least generational lows, suggesting we're not quite out of the woods yet. I want to kind of focus on something that I've been curious about these issues. It seems like we've been talking about this in the U.S. for quite a while now.

Are these issues something that the rest of the world is experiencing as badly as we are? I know you mentioned the ports in China that got closed down due to one case of COVID, but are other countries, experiencing supply chain issues just as badly as we are? Yes, we are not alone in this. I don't know if that should give us comfort, but other parts of the world are struggling with this as well. And in fact, other parts of the world are still struggling with lockdown measures, which are an absolute affront to human liberty.

So in that respect, at least we are outperforming because we do have, in most of the country, a greater respect for human dignity and basic human rights. I also say this, with some of these other countries, that rely more on the export side, their economies are really being hammered on that because they are much more reliant on manufacturing for the employment of their populace. Now, moving back to the domestic side, is this supply chain issue something that affects rural and urban Americans equally, or is this affecting one segment of the population

more than another segment of the population? You know, that is a great question, Doug, that I don't know that I have an exact answer to. I do know this, that regardless of where you are living, if you are looking to buy new washer, dryer, vehicle, clothing, so much of that is reliant on imports, even if it's manufactured here, it's reliant on components that come from overseas. And you're facing some either mild inconvenience. For instance, if your washer machine goes out, you might have to wait a week or or two, maybe that's a modest inconvenience, but let's say you need a new vehicle, spending 30% more,

40% more for a car compared to a year ago, that's a major problem, especially for a middle-class family. And so these issues, they really do impact rural areas, urban areas as well. If you're looking to buy food, all of us, whether we live in the countryside or whether we live in a big city, unless we're growing our own food and 98% of us aren't, well, a lot of that food comes from across the border as well, whether Mexico, Canada, or even overseas for a lot of our vegetables, and those have been increasing double digits too. So that's impacting all of us. We are not to use that phrase, but we are all in this together. In a way, it's kind of refreshing that this is something that Americans are going to have to deal with together. So on that topic,

what can the American government do, if anything, to help end this supply chain crisis? I know we talked briefly about your you were in favor of President Biden's announcement that he was going to be keeping the port of L.A. open 24-7. You mentioned it was a common sense measure. What are some of the other things that the government can be doing to help end the supply chain crisis? Yeah, and to be clear with those ports, President Biden can't just flip the on-off switch on that, but he did encourage them to do that, and I think that should be applauded. But something that government could do is roll back some of these remaining onerous COVID restrictions aren't really grounded in science. And number two, this is a real big one.

The Biden administration has proposed a vaccine mandate for employees at companies larger than 100. That's 80 million people that are impacted by that. And there are possibly 5, 10 percent, maybe even more of individuals have indicated they would rather not work than be subjected to those vaccine mandates. Now, 10% of the workforce might not sound like a lot, but that's millions of individuals, and many of them do work in the transportation sectors, whether they are truck drivers or they work at docks. Well, that's going to not just be a burden on their families if they find themselves required to no longer work because of this mandate.

That's going to impact all of us, even if a few percentage points of people decide to sit at home that work in these vital sectors, that's going to impact all of us. So the administration could also forego its unconstitutional, unlawful vaccine mandate. Thirdly, and this is a big one, the federal government should stop juicing demand artificially. We have a supply problem. We need to have more items produced. You need to have more items shipped. What the last thing we need right now, and really ever, is for the government to be printing and borrowing more money

and artificially simulating demand at a time, especially when supply, it just simply, is constricted because of all these delays and restrictions. So that's three things right there that federal government could do to alleviate this problem. And I want to add one more thing going forward. States, states have a role to play here longer term. With California looking to impose even more onerous restrictions on people in the shipping industry and in the trucking industry and diesel requirements, well, this gives opportunities for those other states. We mentioned Alabama, Florida, Georgia, Texas in particular, to go ahead and pick up the slack, it'll benefit their state economies. It'll also benefit the country as well.

Well, Joel, those are some really good pieces of advice. I think as we start to run down the interview, I want to give you the opportunity to maybe promote something for our listeners who, if they want to learn more about these supply chain issues and some effective government responses to them, where should they go? What should they look for? So I would go to heritage.org, and we have a number of experts that have really been focusing on these supply chain issues. I think the easiest way, if you listen to the podcast, just go to heritage.org. And in our search bar, type in supply chain, and you're going to find some very solid information about the problems that we have currently and about solutions going forward. Excellent advice.

Well, that was Joel Griffith, a research fellow for the Institute for Economic Freedom and Opportunity at the Heritage Foundation. And Joel, it's always a pleasure to speak with you. You as well. Thank you. And that'll do it for today's episode. Thanks so much for listening to The Daily Signal Podcast. You can find the Daily Signal podcast on Google Play, Apple Podcast, Spotify, and IHeartRadio. Please be sure to leave us a review in a five-star rating on Apple Podcasts and encourage

others to subscribe. Thanks again for listening and we'll see you all on Monday. The Daily Signal podcast is brought to you by more than half a million members of the Heritage Foundation. It is executive produced by Virginia Allen and Kate Trinco, sound designed by Lauren Evans, Mark Geinney, and John Pop. For more information, please visit DailySignal.com.