The NIMBYs behind the supply chain fiasco
There’s still a great deal of handwringing over clogged supply chains that threaten to make Christmas a little less bright, and the economy as a whole a lot less productive.
But a lot of that public worrying misses some trends and policies surrounding our supply networks that have just been waiting for the right moment to become crises. As Bloomberg’s Virginia Postrel writes, part of the problem with all those cargo backlogs in California comes down to local zoning regulations:
Long Beach prohibits companies from stacking off-loaded containers more than two high. The law is not a safety regulation but an aesthetic one. City officials decided that stacks of containers more than eight feet high were too ugly to tolerate.
The situation exemplifies why the formerly can-do state of California has become such a difficult place to build anything, including an upwardly mobile life. In the name of protecting local vistas, a seemingly minor rule got enacted that exacted enormous aggregate costs far beyond the immediate area. The voters in Long Beach gained a modest improvement in the view while the entire national — indeed global — economy suffered from less efficient shipping. (The Port of Los Angeles is two nautical miles from the Port of Long Beach, and the two account for about 40% of U.S. container traffic.)
It’s a classic example of a well-recognized issue in political economy. The benefits of the policy are concentrated while the costs are dispersed, spread out among tens of thousands of businesses and millions of consumers. Under ordinary circumstances, most of those hurt have no idea what’s happening. Only in a crisis does anyone beyond a few industry insiders recognize the harm.
The outcry over Long Beach’s zoning got results, if only temporarily:
Almost immediately, Long Beach’s city manager waived the stacking restriction for 90 days, allowing four or, in some cases, five containers in a single stack. (Petersen had recommended a limit of six.)
But that is the tip of the much larger regulatory iceberg. Zoning rules can have the perverse effect of making it nearly impossible to build anything anywhere – even when the need is acute.
Not that the Biden administration understands any of this. Far from it, as Scott Lincicome writes:
The latest version of Biden’s Build Back Better plan raises additional red flags. For example, billions in additional federal spending on U.S. ports (to reduce air pollution) appear to expressly exclude investment in automation—the lack thereof being one the key reasons that U.S. ports are currently so inefficient! It also provides convoluted bonus subsidies for electric vehicles made by unionized U.S. factories, even though such subsidies are blatant protectionism and several non‐union U.S. factories actually pay more than their unionized counterparts.
Because the president is, as he always has been, a ward heeler whose job is to look out for the crew that got him where he is, and no one else. Regardless of the cost. Remember that when you go Christmas shopping and pay higher prices for goods that may, or may not, be in stock.