I’ll admit it. I’ve always liked Lysol. And, Clorox. I know everyone loves organic and I use a lot of those products too, but, when the going gets tough? I’ve always had a theory that you need to bring in the big guns.
This is why I had Clorox and Lysol wipes on automatic delivery from Amazon every week for the last year. (Okay. It might actually have been because I pressed the wrong button at check out and somehow committed myself to the cleaning supplies without quite knowing I had…) but, I liked knowing I could always keep my house clean. And, the upshot was, I was constantly stocked with cleaning supplies.
That was until March. At that point, the deliveries stopped. It’s 100 degrees outside, and I’m rationing Clorox wipes.
I’ve tried my local grocery stores and hardware stores. Nothing at the big box retailers either. Amazon, I check every other day and they’re still out.
Come on. It’s Lysol!
How is it that we have a run on a product that should be so relatively simple to manufacture?
It turns out that these products are part of a vast supply chain, most of which originates out of China.
The raw chemicals needed to make Lysol or Clorox are manufactured in China. And, given the breakdown in our global supply chain associated with coronavirus, the U.S. has been unable to receive its regular shipments of goods from China. Including these simple chemicals.
You got to wonder: why on earth are we so dependent on China that we can’t even keep Lysol or Clorox wipes on store shelves? Can you believe that nearly five months into this ordeal, we are still dependent on China for something as mundane as chemicals to make disinfectants?
And, it could be worse: remember when we couldn’t get ventilators, or… even, masks?
For the world’s largest economy not to be able to produce masks, or ventilators or even the basic chemicals for disinfectants because we’re so reliant on China? It tells you something. This model, a model in which we rely entirely on countries that may or may not be our friends, is fundamentally flawed.
Granted, there are other reasons for the companies’ backlogs; in fairness, they certainly never anticipated this demand and therefore had not made enough product. They’ve been struggling to keep up ever since.
Nonetheless, even as they’ve amped up production, they’re faced with the basic reality that they don’t have the basic ingredients needed to manufacture the goods.
Traditional economists might say – don’t sweat it. Outsourcing was and is good. Making the chemicals overseas makes sense because US companies have the competitive advantage.
Adam Smith, writing on absolute advantage in trade said in his 1776 Wealth of Nations, that,
“If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it off them with some part of the produce of our own industry employed in a way in which we have some advantage. The general industry of the country, being always in proportion to the capital which employs it, will not thereby be diminished […] but only left to find out the way in which it can be employed with the greatest advantage.”
Other economists advanced the idea of comparative advantage by pointing out that some countries have a national ability to provide products and services at a better and cheaper rate – something that was, indeed, quantifiable.
Robert Torrens wrote in 1808 that,
“[I]f I wish to know the extent of the advantage, which arises to England, from her giving France a hundred pounds of broadcloth, in exchange for a hundred pounds of lace, I take the quantity of lace which she has acquired by this transaction, and compare it with the quantity which she might, at the same expense of labour and capital, have acquired by manufacturing it at home. The lace that remains, beyond what the labour and capital employed on the cloth, might have fabricated at home, is the amount of the advantage which England derives from the exchange.”
In other words, it would make sense for England to trade broadcloth for lace if it was easier for England to make the broadcloth and vice versa.
However, what do you do if and when the lace is actually a necessity… whether it be cleaning products to kill a deadly virus, drugs to manage a disease, or technology products that could compromise the underlying security of a nation?
These are the issues we now face.
China has offered comparative advantages but, US politicians have failed to recognize when China began to effectively take advantage of the comparative advantage equation–and, they did so at our expense.
As such, we have “comparative advantaged” ourselves effectively out of some vital industries. That’s had huge implications for jobs, and therefore, our society. Not everyone is going to be, nor should have to be, a PhD. There’s a value in being able to get a job and take care of your family without having to have studied massive amounts of science and mathematics. The PhD model is not one that provides for all members of our society… and we must find ways for everyone to have opportunity as a thriving middle class is fundamental to a successful society.
Jobs that we needed, and still need, have disappeared overseas. Whether it be medical supplies, technology, or just plain old disinfectant wipes – there needs to be some recognition for what the US needs from both a supply standpoint and a jobs standpoint. This is where government should and must play a role. I’m all for capitalism however, when trade interferes with the long-term economic security of our nation, then we have an issue. We must allow our companies to be as profitable as possible but still maintain some operations, at least for our most vital industries, here at home.
And, given the pandemic, we might as well include disinfectants in that group. As of this writing, I still can’t locate the darn wipes.
It’s high time American companies start bringing their manufacturing back home.