Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: You're listening to Bloomberg BusinessWeek with Carol Messer and Tim
Speaker 2: Steneveek on Bloomberg Radio, Bill Clinton and the wto Just
Speaker 2: in Time, and Lean Manufacturing Mackenzie Consultants who earned the
Speaker 2: nickname the Lean Taliban China, share buybacks, increasing dividends and
Speaker 2: executive compensation that has skyrocketed.
Speaker 1: Well, the decline of union power and the working class
Speaker 1: monopolistic takeovers, and then of course the pandemic and the
Speaker 1: Great supply chain crisis. If you want to understand how
Speaker 1: our world really really works today economically and politically, and
Speaker 1: how we got here, then sit down, put down whatever
Speaker 1: the heck you are working on. Get ready for our
Speaker 1: next guest. Journalist and author Peter S. Goodman, his global
Speaker 1: economics correspondent at The New York Times. His new book,
Speaker 1: which neither of us, to be fair can put down
Speaker 1: How the world ran out of everything inside the global
Speaker 1: supply chain. He joins us here in studio and fair
Speaker 1: to say we found our summer.
Speaker 2: Yeah, I'm going to need another read pretty soon after
Speaker 2: this one. To understand the supply chain. Peter visits seemingly
Speaker 2: every link of it. He spends time in one of
Speaker 2: the largest exporters of almonds in California and with the
Speaker 2: dock workers who are supposed to get those almonds all
Speaker 2: over the world. He hitches a ride through Kansas with
Speaker 2: a Brahms loving trucker, feeds cows with a third generation
Speaker 2: rancher in Montana, and eats breakfast with the commissioner of
Speaker 2: the Federal Maritime Commission. He visits ports from LA to
Speaker 2: Savannah to explain how the world found itself in the
Speaker 2: greatest supply chain crisis it's ever seen.
Speaker 1: All Right, he is here in our Bloomberg Interactive Broker studio.
Speaker 1: We wanted to do the setup because it's really comprehensive,
Speaker 1: and I do feel like I think it's safe to
Speaker 1: say that it explains a lot of kind of where
Speaker 1: we are today. So, Peter, you have had such a
Speaker 1: front row seat to so much that is going on
Speaker 1: in the world. Tell us about that front row seat
Speaker 1: and what kind of really stands out for you. We're
Speaker 1: going to kind of dig into the book specifically, but
Speaker 1: that front row seat has given you really this wonderful
Speaker 1: opportunity to see a lot.
Speaker 3: You know, it's changed the way I look at any
Speaker 3: package that lands at my door, or really any product
Speaker 3: that somebody made somewhere that had to be transported to
Speaker 3: a store or to a home or a business. We
Speaker 3: don't tend to think about the supply chain, you know.
Speaker 3: It's one of those things. It's like the light switch.
Speaker 3: We're not thinking about the internal wiring. We flip it on.
Speaker 3: The light's work well, when.
Speaker 2: We needed it most, it failed, it.
Speaker 3: Buckled, and we had frontline medical workers dealing with COVID
Speaker 3: patients without protective gear. We had families unable to find
Speaker 3: infant formula. I mean, that was an incredible criestion. If
Speaker 3: we had a toilet paper scare, which turned out to
Speaker 3: not be so much as shortage as a question of hoarding.
Speaker 3: And we all remember these ships, you know, fifty sixty
Speaker 3: seventy ships that were floating off the coast of southern California,
Speaker 3: unable to land, floating for weeks at a time before
Speaker 3: they could find a slot to load and unload all
Speaker 3: these factory goods coming in from China. And I think
Speaker 3: for all of us in the midst of the pandemic,
Speaker 3: it was so bewildering that it gave us this curiosity
Speaker 3: about these people we never think about. So, Yeah, as
Speaker 3: you guys pointed out, I climbed into the into in
Speaker 3: the front of a truck. I visited with rail maintenance
Speaker 3: workers who were away from their families for weeks at
Speaker 3: a time, and I really tried to understand what has
Speaker 3: gone haywire here.
Speaker 2: Peter, Know, the reason we're talking about such a complex
Speaker 2: supply chain is because of globalization. And one thing that
Speaker 2: Carol and I were talking about as we were preparing
Speaker 2: for this was that your career has kind of coincided
Speaker 2: with the rise of globalization, right being a reporter in
Speaker 2: South Asia in the nineties and then post dot com
Speaker 2: crash working for the Washington Post. I think it was
Speaker 2: out of Shanghai.
Speaker 3: That's right.
Speaker 2: You visited a lot of these factories at times when
Speaker 2: they weren't what they are today. Talk a little bit
Speaker 2: about how you've seen that your career alongside the rise
Speaker 2: of globalization.
Speaker 3: Yeah, I appreciate your pointing that out. So I landed
Speaker 3: in China in two thousand and one, which was the
Speaker 3: same year that China of course enters the World Trade Organization,
Speaker 3: this landmark, you know, moment for globalization, and it was
Speaker 3: pretty clear then that China had huge aspirations and that
Speaker 3: the world was flocking to China in large part because
Speaker 3: you know, corporate CEOs who were constantly looking for ways
Speaker 3: to cut costs availed themselves of this ultimate opportunity to
Speaker 3: you know, engage Chinese labor as a way of undercutting
Speaker 3: labor costs at home in the US and in Japan,
Speaker 3: in South Korea, in Europe. And it was also clear
Speaker 3: that the Chinese government had very systematically built out the
Speaker 3: infrastructure that was needed for trades. So you know, visited
Speaker 3: massive ports factories that were capable of making you know,
Speaker 3: enough microwave ovens to supply Walmart for a year, you know,
Speaker 3: and whole towns were you know, set up for single industries.
Speaker 3: I remember going to the necktie town. There was this
Speaker 3: one town in one province that was suddenly making more
Speaker 3: neck ties than all of Italy, you know, in the
Speaker 3: course of a decade. So you could feel that the
Speaker 3: scale was was you know, a able. But what I
Speaker 3: didn't understand, and what I've come to understand through this book,
Speaker 3: is that all of this was premised on the idea
Speaker 3: that container shipping would be basically free and reliable. And
Speaker 3: what I've come to see is that, you know, we
Speaker 3: built this global economy up, putting ourselves really at the
Speaker 3: mercy of this international cartel.
Speaker 1: Well, so go back to we did kind of a
Speaker 1: laundry list coming in and there's so many different characters.
Speaker 1: Henry Ford, the rumors, plant tat Ono, Toyota after World
Speaker 1: War Two, McKinsey, the consultants, Bill Clinton, and the WTO,
Speaker 1: and then we'll also get into mister Walker and his
Speaker 1: company Glow. But if you had to pinpoint, was it
Speaker 1: President Bill Clinton, former President Bill Clinton and the push
Speaker 1: to get everybody or to get China in the WTO.
Speaker 1: That that's why we're having this conversation. That's why when
Speaker 1: the pandemic hit, we were like, what the heck happened
Speaker 1: to our global supply chain? Isn't that particular moment in
Speaker 1: time that God iss to hear?
Speaker 3: I think that's a landmark. I mean there's a lot
Speaker 3: of moments at time, right. I mean I write about
Speaker 3: Ford because I was interested in the rise of mass assembly.
Speaker 3: I write about the roots of the shipping container because
Speaker 3: the process of standardizing cargo made it possible to go
Speaker 3: look for the cheapest plays to make anything. You could
Speaker 3: go anywhere around the world.
Speaker 1: But if China wasn't accepted on a global scale in
Speaker 1: terms of trade, right, there was a big push. There
Speaker 1: were lots of concerns about human rights. There are still
Speaker 1: lots of big concerns about human rights, and yet there
Speaker 1: they were right in the WTO, something they fought for.
Speaker 3: Well, here's the part that people are generally afraid to
Speaker 3: talk about. You know, China gets into the WTO because
Speaker 3: American retailers lobby like crazy to get China into the WTO,
Speaker 3: and nobody wants to be affiliated with the story of
Speaker 3: labor exploitation. Now, let's remember Chinese labor in American history.
Speaker 3: You know, from the beginning, it's about undercutting wages. Right,
Speaker 3: Chinese workers are systematically brought over from China to build
Speaker 3: the railroads because the mostly Irish laborers say, ah, this
Speaker 3: is pretty dangerous and we're not getting paid enough. So
Speaker 3: this is a continuation of that story, you know, a
Speaker 3: century later where now we're bringing the production to China,
Speaker 3: and it's there's a sort of seeming unsavory quality to
Speaker 3: this story because of course China is controlled by the
Speaker 3: Chinese Commediest Party. There's no elections. You can get access
Speaker 3: to land, you can bypass workplace and environmental standards by
Speaker 3: cutting some local party official in I'm part of the sports. Well,
Speaker 3: this is not a good story for Bill Clinton, who,
Speaker 3: you know, only a decade before he lobbies to get
Speaker 3: China into the WTO, is running as the guy who's
Speaker 3: you know, disciplining George H. W. Bush for coddling the
Speaker 3: butchers of Beijing. He's very critical of the crackdown against
Speaker 3: the pro democracy demonstrators in Tianneman Square. Well, I tell
Speaker 3: the story in the book.
Speaker 1: You know.
Speaker 3: It's not even a decade later, and Clinton's in Beijing
Speaker 3: at a banquet at the Great Hall of the People
Speaker 3: across the street from Tieneman Square, where he literally picks
Speaker 3: up the baton and conducts the People's Liberation Army Orchestra
Speaker 3: as they play this John Phillips south from March. Now,
Speaker 3: why is Bill Clinton there? He's there because his party,
Speaker 3: the Democratic Party, is pulling in massive campaign contributions from retailers,
Speaker 3: and they're fashioning this story. It's not totally a fairy tale, right.
Speaker 3: I mean, trade has been the lynchpin of American farm
Speaker 3: policy since the end of the Second World War. But
Speaker 3: there are a lot of reasons to be dubious that
Speaker 3: you know, this is really about it's not just about
Speaker 3: selling Chinese people lots of stuff. It's not just about
Speaker 3: buying cheap goods from China. This is about democratizing China
Speaker 3: once well, that was.
Speaker 1: The goal, the thinking that okay, let's open up you know,
Speaker 1: trade and probably democracy will come and the human rights
Speaker 1: abuses will go away like that, you know, like you
Speaker 1: feel like my career has kind of seen like the
Speaker 1: opening of China, and that this was going to solve
Speaker 1: so much, and yet it didn't necessarily play out that way.
Speaker 3: Well, one part of it played out. We got really
Speaker 3: low cost goods from China. The Walton family, the founders
Speaker 3: of Walmart, for a while became, you know, the wealthiest
Speaker 3: family on Earth, and anybody who moved production over to
Speaker 3: China at scale and managed to do the right deals
Speaker 3: rewarded their shareholders handsomely. That part held to form. Also,
Speaker 3: not incidentally, the industrialization of China lifted several hundred million
Speaker 3: people out of poverty, and that's highly significant. But the
Speaker 3: part about you know, once Chinese people get a taste
Speaker 3: of Kentucky fried chicken, they're going to demand the ballot
Speaker 3: box well, that has not worked out, as I think
Speaker 3: everyone is now a where you know, we're talking about
Speaker 3: genocide according to the Biden administration in Hinjong, where the
Speaker 3: Wigers are pressed into forced labor to produce cotton that
Speaker 3: ends up in lots of apparel. Of course, we still
Speaker 3: don't have elections. The central government has actually strengthened its
Speaker 3: role in Chinese society, so we don't hear that talk anymore.
Speaker 3: And of course now it's become politically fashionable within both
Speaker 3: parties to attack China as our enemy. One.
Speaker 2: Peter, you mentioned concentration in shipping. I believe you called
Speaker 2: it a cartel. I had no idea before reading this
Speaker 2: that it was basically what three companies.
Speaker 3: Three alliances that control a bunch of companies. But think
Speaker 3: of it like airline alliances.
Speaker 2: Three alliances that control basically all.
Speaker 3: Of shipping ninety five percent of the shipping from China
Speaker 3: to the West coast of the United.
Speaker 2: States, some of them some of the companies owned by
Speaker 2: China or like our state subsidized organizations. How did it
Speaker 2: become like that?
Speaker 3: It became like that because there was deregulation pretty much everywhere,
Speaker 3: including in the US, where you know there used to
Speaker 3: be this anti trust exemption, but there was regulation on
Speaker 3: shipping rates, so you had to post what your rates
Speaker 3: were from one place to another. You couldn't negotiate a
Speaker 3: deal in secret. It was all above board, sort of
Speaker 3: like a utility, right, like, the governments involved because this
Speaker 3: is a vital part of the economy. And then basically
Speaker 3: retailers lobbied. There were a couple of landmarks. The last
Speaker 3: one was in the eighties. There was no Amazon then,
Speaker 3: but there was Walmart target. The big retailers thought, well,
Speaker 3: if we're bringing over lots of these factory goods from
Speaker 3: China to the West coast of the US to the
Speaker 3: East coast of the US, we would like to be
Speaker 3: able to negotiate a better deal than the smaller competitors.
Speaker 3: So essentially we've optimized the supply chain for the biggest companies,
Speaker 3: and the anti trust was essentially deactivated throughout much of
Speaker 3: American life. Right you go back to Reagan, although really
Speaker 3: the story starts with Carter. You know, we're steeped in
Speaker 3: this idea that scale is the way to serve consumers,
Speaker 3: and so let's just get out of the way of
Speaker 3: business and let them provide, you know, that will deliver innovation.
Speaker 3: But once you take away competition, of course, what we
Speaker 3: get is pricing power. And for a long time, these
Speaker 3: mostly well they're all actually foreign companies in international shipping.
Speaker 3: There were like extensions of state policy and China, as
Speaker 3: South Korea, Taiwan, so they were content to keep shipping
Speaker 3: costs low as a way to bolster their exports. But
Speaker 3: once we get a shock, you know, in the great
Speaker 3: supply chain disruption during the pandemic, we see shipping prices
Speaker 3: go up tenfold, and we see, you know, you guys
Speaker 3: were alluding to the fact that I spent some time
Speaker 3: with Alman farmers in central California. We see almed farmers
Speaker 3: I visited had an entire crop sold to Dubai, to
Speaker 3: Japanese purchasers, and they were just sitting on all this
Speaker 3: crop that they couldn't actually get on a ship. Because
Speaker 3: these shipping carriers were making so much money sending factory
Speaker 3: goods from China to the West coast of the US,
Speaker 3: which is the gateway for forty percent of American imports,
Speaker 3: that they didn't even want to bother to send empty
Speaker 3: containers up to the Central Valley to load up with
Speaker 3: farm products. Like Ammonds, they just unloaded factory goods in
Speaker 3: LA and sent empty containers back across the Pacific. We're
Speaker 3: talking about burning diesel fuel to send back across the Pacific.
Speaker 3: So they can get twenty five twenty seven twenty eight
Speaker 3: thousand dollars to move a container of factory goods from
Speaker 3: you know, a place like Shanghai to LA that used
Speaker 3: to cost like twenty twenty five hundred during the pandemic.
Speaker 3: That's largely the story of deregulation.
Speaker 1: I want to you know, one thing I think about, though,
Speaker 1: in particular in your book is kind of the role
Speaker 1: of consultanc here. And I don't want to pick pile
Speaker 1: on anyone in particular, but you do single out mackenzie.
Speaker 3: I sure do.
Speaker 1: You do talk about the lean Taliban. You also get
Speaker 1: into a lot of just in time inventory for anybody's
Speaker 1: taken accounting classes, Like we've played around with this, right,
Speaker 1: but this idea too that you don't want to have
Speaker 1: big inventories. You want to be lean and mean, right,
Speaker 1: So because those inventories are costly to store them, to
Speaker 1: have them, and all that thing, and so this financial
Speaker 1: focus on that and this kind of narrative of saying
Speaker 1: be lean and mean that's a good thing. We've all
Speaker 1: played a part of it. When we go through the
Speaker 1: quarterly lean and mean this is a good thing for
Speaker 1: a company. How big a role did that play in
Speaker 1: getting us so that when the pandemic hit, nobody had
Speaker 1: excess supply anywhere?
Speaker 3: A huge role. We cut inventories to the bone. Publicly
Speaker 3: traded companies cut inventories to the bone over decades. Now,
Speaker 3: just in time is a sensible idea. It was pioneered
Speaker 3: by Toyota and of World War two devastation, not a
Speaker 3: lot of capital, not a lot of land to develop.
Speaker 3: Taichi Ono, who is running Toyota, pioneers this idea. Instead
Speaker 3: of making as much stuff as possible like Henry Ford
Speaker 3: did at Ford and letting salespeople try to figure out
Speaker 3: how to sell it, Let's just make enough to replenish
Speaker 3: the cars that we've already sold. Let's get our suppliers
Speaker 3: to deliver the stuff we need right when we need it,
Speaker 3: rather than waste capital on warehouse. Hey, that's a good idea,
Speaker 3: But a long come of publicly traded companies guided by
Speaker 3: consultants like McKenzie who say, listen, this should apply to everything,
Speaker 3: and you should not stop until there's basically no inventory.
Speaker 3: And what you do is, instead of wasting capital on
Speaker 3: sticking you know, auto parts in a warehouse as a
Speaker 3: hedge against trouble, just liquidate the warehouse. Take the cash,
Speaker 3: give it to yourselves to reward yourselves, corporate executives for
Speaker 3: being smart enough to hire McKenzie, give it to shareholders
Speaker 3: in the form of dividends and share buybacks, and everybody's
Speaker 3: happy until there's a problem. And this pandemic was not
Speaker 3: the first time we saw a shock to the system.
Speaker 3: I mean, I wrote my first supply chain story back
Speaker 3: in nineteen ninety nine. It was about an earthquake in Taiwan.
Speaker 3: And back then people said, oh, whoops, we've got computer
Speaker 3: chip shortages. Maybe we shouldn't concentrate all our industry here,
Speaker 3: maybe we should have a little more differsa.
Speaker 2: We learn our lesson with the computer tip industry.
Speaker 3: We sure did not. I mean, you know, I tell
Speaker 3: the story in the book of Henry Ford, who is
Speaker 3: a problematic figure in history, but knew a thing or
Speaker 3: two about supply chains and never wanted to be in
Speaker 3: a position where he could be pinched by a supplier
Speaker 3: constrained would have been horrified to see what I saw
Speaker 3: one hundred years later, as I'm walking the catwa his
Speaker 3: signature River Rouge plant outside of Detroit, where they're making
Speaker 3: these beautiful f one fifty pickup trucks, their most popular vehicle.
Speaker 3: They've got all the things they need except for the
Speaker 3: one thing that brings it to life, the computer chip.
Speaker 3: And I watched them park these cars in the shadow
Speaker 3: of Ford's corporate headquarters across the street from Henry Ford
Speaker 3: Elementary School. I mean, he would be spinning in his
Speaker 3: grave over this. We did not learn the lesson.
Speaker 1: I think this is the part, and forgive me if
Speaker 1: I've got it wrong, But when I read it, Detroit
Speaker 1: had devolved into a poignant example of what happened when
Speaker 1: middle class factory jobs were replaced by poverty level positions
Speaker 1: at retailers, warehouses, and fast food chains. Next to the
Speaker 1: old Highland Park factory, now a forlorn brickshell, a shopping
Speaker 1: center called Model ty Plaza was anchored by a dollar store,
Speaker 1: a payday lender, and a plasma collection center awaiting people
Speaker 1: willing to swap blood for cash. The car itself had
Speaker 1: become an instrument of white Flight like that to me,
Speaker 1: says so much of what's going on across America and
Speaker 1: explains to me politics in a big way.
Speaker 2: So that's what I wanted to talk about it.
Speaker 1: We want to bring in Doug Prisoners here we are,
Speaker 1: I'm doing well. Doug is like this great thinker and
Speaker 1: like your book just kind of reminds us of the
Speaker 1: things we talk about with Doug.
Speaker 4: So we wanted to bring in one of the things
Speaker 4: that's interesting, Tim was going to talk about politics. In
Speaker 4: the nineteen ninety two presidential campaign. Ross Perrot was the
Speaker 4: lone voice who was kind of cautioning against at that time,
Speaker 4: what was the North American Free Trade Agreement Canada, the
Speaker 4: US and Mexico. What's stunning is how quickly the conversation
Speaker 4: became about China. Why did that pivot happen so quickly
Speaker 4: in your view away from North America manufacturing in China.
Speaker 3: Well, China operates on a whole different scale than Mexico, right,
Speaker 3: So Ross Paro, of course, yeah, famously warned of the
Speaker 3: giant sucking sound. And we did lose some jobs in
Speaker 3: the industrial Midwest to Mexico, but we picked up a
Speaker 3: lot of jobs because the US and Mexico were economically integrated.
Speaker 3: And I mean it's ironic now to think about Mexico
Speaker 3: as the solution to some of our supply chain problems.
Speaker 3: But when we import something from Mexico, forty percent of
Speaker 3: the value of that imported good was actually made in
Speaker 3: the United States. So you know, we bring in a
Speaker 3: car that was made in a Mexican factory, and forty
Speaker 3: percent of the value of that car was built by
Speaker 3: American labor in American factories. The component number for China
Speaker 3: is three percent, so only three percent of the value
Speaker 3: of imports from China have American value add and of
Speaker 3: course Chinese state policy is really directed to driving that
Speaker 3: as close to zero as possible. But I think it's
Speaker 3: really important to note that a lot of these failures
Speaker 3: that have fueled the backlash originally Mexico now China. I
Speaker 3: argue in the book, I mean this part nobody really
Speaker 3: wants to talk about. These are homemade failures. I mean,
Speaker 3: we have benefited from trade with China, we have benefited
Speaker 3: from trade with Mexico. We've got a lot of low
Speaker 3: cost goods. In the case of Mexico, again, we boot
Speaker 3: did our exports. We've got consumers benefiting. A lot of
Speaker 3: data shows that consumer spending has been juiced by trade
Speaker 3: with China, and that money ends up, you know, in
Speaker 3: the hands of American service providers. Our leisure you know,
Speaker 3: is more robot We have more money here. The problem
Speaker 3: is we haven't cushioned the people who have lost, and
Speaker 3: we have seen whole communities, industries, you know, really hit
Speaker 3: hard by this China shock that you know, a lot
Speaker 3: of the data shows we're talking one million direct jobs
Speaker 3: in the space of a decade lost to Chinese imports.
Speaker 1: But it is China the bad guy or is it
Speaker 1: investors and companies who constantly we're seeking out the low
Speaker 1: cost provider.
Speaker 3: The ultimate winners are the investor class, without any question.
Speaker 3: And there's a lot of labor exploitation in China. So yes,
Speaker 3: the winners are the people who funded the Clinton campaign
Speaker 3: and got Bill Clinton.
Speaker 4: Against say nothing of environmental regulation, of course.
Speaker 3: Okay, right, go.
Speaker 2: Ahead, Peter. I want to talk about labor exploitation in
Speaker 2: the trucking industry, sure, because a common thing that we
Speaker 2: heard over and over again during the pandemic and the
Speaker 2: supply chain disruption that we saw was that trucking companies
Speaker 2: just didn't have enough drivers. They needed people to go
Speaker 2: learn how to drive a truck and start driving trucks.
Speaker 2: You found that that wasn't the case. It's just a really,
Speaker 2: really bad job.
Speaker 3: It's a horrible job. I mean, I rode with a
Speaker 3: trucker in the best possible conditions who actually likes his job,
Speaker 3: from Kansas City to Dallas and back in the middle
Speaker 3: of the winter. I slept in the cab for two nights.
Speaker 3: I watched this man have to worry about caffeinating enough
Speaker 3: so we wouldn't fall asleep at the wheel, and yet
Speaker 3: not having to pull over to use the restroom. Truckers
Speaker 3: are constantly worried about where they're going to park. They're
Speaker 3: at the mercy of lots of other parts of the
Speaker 3: supply chain they have no influence over. They can get
Speaker 3: stuck at warehouses for hours waiting for somebody to load
Speaker 3: or unload their vehicle because warehouses have shortages of workers. Now,
Speaker 3: this trucking industry shortage, this is an industry talking point.
Speaker 3: There's ten million people in the United States who have
Speaker 3: licenses to drive long haul trucks, and we need roughly
Speaker 3: a third that number. We've run out of people. We
Speaker 3: can feed into the mill who are willing to sign
Speaker 3: off on these predatory lending arrangements by which truckers pay
Speaker 3: for their certification, by which they end up buying these
Speaker 3: vehicles at wildly inflated prices from the trucking companies. Then
Speaker 3: they're forced to go service these vehicles at places that
Speaker 3: are part of the empires of these trucking companies. And
Speaker 3: so a lot of people, you know, they get tired
Speaker 3: of being away from their families. They get tired of
Speaker 3: hearing that they've missed another chill child's birthday party, they
Speaker 3: miss people's funerals. It's a tough job. It's always been
Speaker 3: a tough job. The difference is it's been downgraded to
Speaker 3: the point that we've run out of takers for this
Speaker 3: tough job.
Speaker 4: What's the remedy in your view? I mean, how do
Speaker 4: we get out of the situation that we're in now.
Speaker 4: I'm listening to the trucking story and I'm thinking of
Speaker 4: robotic vehicles that are going to be creeping into the
Speaker 4: scene pretty soon. So the argument that you're making right
Speaker 4: now may get a remedy, but it's going to be
Speaker 4: at the cost of labor in a major way. But
Speaker 4: what do you think the remedy is longer term?
Speaker 3: I mean, I think for openers, we got to look
Speaker 3: at these predatory arrangements that truckers make with the people
Speaker 3: coming through these educational mills that set up certification. With
Speaker 3: taxpayer funding, you know, we are paying to feed people
Speaker 3: into these training programs where they end up getting jobs
Speaker 3: that pay a fraction of what they've been promised. So
Speaker 3: that's the first thing to do. Look, automation is inevitable,
Speaker 3: it's going to happen, but we got to have a
Speaker 3: conversation about how we compensate the people who are still
Speaker 3: in the business. We got to make sure that they
Speaker 3: can get exercise, that they can different eat better than
Speaker 3: their eating. I mean the food that you see at
Speaker 3: these truck stops. It's just a tough life. The government
Speaker 3: has to get involved in looking at these working conditions.
Speaker 1: What's the bigger solution though, because to me, I'm thinking,
Speaker 1: all right, if we're bringing a lot of stuff home,
Speaker 1: maybe more jobs are going to be created back home,
Speaker 1: but it's going to more expensive, so get ready to
Speaker 1: continue to pay more money. But if it means that
Speaker 1: workers are actually making more and a real living, that's
Speaker 1: a good thing. So I don't know. I'm just trying
Speaker 1: to figure out what you see, is this wait in.
Speaker 3: Some cases if we shift production from China to other
Speaker 3: countries where wagers a high, if we bring some of
Speaker 3: it back to the US, that that'll mostly be automation. Yeah,
Speaker 3: the costs for some things are going to go up,
Speaker 3: some things may go down, some things may go up.
Speaker 3: But what is the cost that we're paying now that
Speaker 3: doesn't get factored into the simple you know, sticker price
Speaker 3: at the Walmart Superstar. What's the cost of running out
Speaker 3: of medical devices in the middle of a pandemic. What's
Speaker 3: the cost of discovering that we've depended upon a single
Speaker 3: country that we've decided is our adversary that we're having
Speaker 3: a trade war with for you know, personal protective gear
Speaker 3: to give frontline medical And none of.
Speaker 1: That's really changed right dramatically or.
Speaker 3: Have changed somewhat. I mean, I spend a lot of
Speaker 3: time for the book, you know, I went to Guatemala
Speaker 3: with Columbia Sportswear. They're looking to move production closer to
Speaker 3: their biggest market, which is North America. Spend a lot
Speaker 3: of time in Mexico, you know, as we've discussed how
Speaker 3: that could potentially be part of this solution to our
Speaker 3: excessive reliance on China. But China's going to be the
Speaker 3: center of manufacturing for a really long time for the
Speaker 3: simple reason that's got this unbeatable combination of infrastructure, low
Speaker 3: cost efficiency. The question is how do we compensate the
Speaker 3: people who were depending on in our own country. And
Speaker 3: you know, Henry Ford again problematic character for all sorts
Speaker 3: of reasons, but he got some things right. You know,
Speaker 3: he doubled wages for his workers in the nineteen teens.
Speaker 3: He was called a communist by some people. He said, look,
Speaker 3: I'm just trying to sell cars, and I'm trying to
Speaker 3: sell them at low prices. And any business that's built
Speaker 3: on low wage labor is.
Speaker 4: Unreliable away from the government. Is there a role for
Speaker 4: organized labor in this.
Speaker 3: Oh, one hundred percent. I mean we should be embracing
Speaker 3: labor mobilization. I mean it's bumpy, it does involve higher costs.
Speaker 3: If you're running a business, you're not delighted that your
Speaker 3: union is now animated. But first of all, it puts
Speaker 3: spending capacity in p people's pockets. Right. It boosts consumer power,
Speaker 3: which is good for all businesses, and it's simply more
Speaker 3: reliable if people aren't are at work not worried about
Speaker 3: their ability to put groceries on there.
Speaker 2: I was thinking about that when I read about precision
Speaker 2: scheduled railroading in ye book, because those were union guys,
Speaker 2: right right, But they had a pretty tough gig too.
Speaker 3: So well, some of them are union So you wrote.
Speaker 2: About people who missed medical appointments and funerals and like,
Speaker 2: we're driving so far from their homes in that business
Speaker 2: were the non unionized? Were the unionized folks who were
Speaker 2: doing that in a much better position than the non
Speaker 2: unionized ones. I mean, that's a tough gig too.
Speaker 3: Look, the unions, you know, were ready to go on
Speaker 3: strike and couldn't go on strike because there's this law
Speaker 3: that says they have to basically get the president's permission
Speaker 3: to strike, and the president didn't grant that permission because
Speaker 3: it would have been a shock to the system. It
Speaker 3: would have uped inflation, and that wasn't something that Joe
Speaker 3: Biden wanted to happen on his watch. But even you know,
Speaker 3: this this powerful union that got right to the edge
Speaker 3: of strike, they couldn't get paid sick leave. You know,
Speaker 3: Biden gave it to them through the bully pulp and
Speaker 3: some of the companies then delivered a few days. But yes,
Speaker 3: I talked to people who were missing out on In
Speaker 3: one case, a guy who's who's infant, you know, needed
Speaker 3: cardiac surgery and he was told, sorry, pal, you know
Speaker 3: we need you on the maintenance crew. You can't be
Speaker 3: home for that. And then he finally quit and fired
Speaker 3: off a letter.
Speaker 1: Yeah, go ahead, no, buts so much for like, was
Speaker 1: it a few years ago? The business round table? Stakeholder like,
Speaker 1: think of all the stakeholders, including employees.
Speaker 3: That's my last book.
Speaker 1: We only have, I know, twenty seconds left. Are we
Speaker 1: going to run out of things again at some point?
Speaker 3: Look, we're still running out of things. Yes, you know,
Speaker 3: talk to contractors about why they can't build more housing.
Speaker 3: It's part of why housing so unaffordable.
Speaker 1: This was so much fun. So appreciate it. Thank you
Speaker 1: so much. Peter Goodman, global economic correspondent, New York Times
Speaker 1: his new book How the World Ran out of Everything?
Speaker 1: And then thanks to our Doug Prisner too. We really
Speaker 1: appreciate you coming to reading.
Speaker 3: You