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Speaker 1: From the opinion pages of the Wall Street Journal. This is Potomac Watch.
Kyle Peterson: The White House knows that has a problem with rising prices and supply chain bottlenecks. But what tools does President Biden have to address them? Welcome. I’m Kyle Peterson with the Wall Street Journal. We’re joined today by my colleagues, WSJ columnists Kim Strassel and Bill McGurn. Let’s start with these supply chain issues, which were the subject of President Biden’s remarks on Wednesday. Here’s part of what he said. “I know you’re hearing a lot about something called supply chains and how hard it is to get a range of things from a toaster to sneakers to a bicycle to bedroom furniture.” He then went on to say, “With the holidays coming up, you might be wondering if the gifts you plan to buy will arrive on time.” So, Kim, what is going on with this economy?
Kim Strassel: Yeah. So the description that Joe Biden gave per usual was not very accurate. He wanted to make it sound as just a question of the port’s not operating 24 hours a day. It’s not that simple. It’s much more complicated. And some of it, to be fair, is not the result of this administration. There are global supply chain snarl-ups, starting with the fact that you’ve still got a lot of countries in Asia that are dealing with lockdowns. We have largely opened again but other places have still got manufacturing facilities shut down. Look at places like Malaysia, which is where we end up with a lot of chips for cars. There are issues there. Other raw goods coming from other countries. You meanwhile have a shortage of barges and cargo ships, which are a result of yet other factors that’s making it harder and higher costs to get goods in and out.
You have China that is still quarantining ships that are coming into its port for a week, which takes a really long turnaround before they can then head back out to get to other places. So, that’s one of the global perspectives. And then here in the United States, in particular, we’ve got a worker shortage and that is a result of a lot of government policies that are both paying people to stay home but also discouraging them to come back to work because of vaccine mandates or other complexities that have been imposed because of COVID, or people walking off the job because they don’t like vaccine mandates. So a lot of different things are combining. It’s taken months to get to this point. It’s probably going to take months to unwind. There is no quick fix for the administration.
Kyle Peterson: Yeah. The bottom line it seems to me is that demand is back and supply is failing to keep up, and Kim mentioned several issues and it seems like they cascade through the supply chain. A manufacturer will be short of apart, and so its products don’t get out to the next rung. A truck driver shortage means containers are stacking up. And so one thing that Biden announced on Wednesday is that the Port of Los Angeles, he said after negotiation with the union and the freight movers, the Port of Los Angeles will be operating now 24/7. Bill, do you think that, that is going to have much practical effect or is Biden just trying to be seen doing something?
William McGurn: Yeah, I think it’s more the latter. Look, I’m glad that it’s going to operate 24/7. A lot of ports around the world do that. We’re not necessarily the most advanced when it comes to some of those practices. Some of those are work rules by the unions and so forth, but it’s not a magic fix. I do think Joe Biden is contributing to the problem with the emphasis on the demand side and all the spending he’s throwing in when what we really have is a supply side problem. Not enough supply or none and very difficult to get supply from, A, where it’s made to, B, where it’s sold. So I think there are huge problems. Kim mentioned I believe the truckers. I was talking to someone who has a friend in the trucking industry and he was saying they have a hard time attracting people because a lot of these young guys who might be truck drivers think, well, in 10 years, you’re going to have electric trucks, driverless trucks, and I’m going to be out of a job.
Whatever the reason, we have fewer people working as the result of the lockdown, so that makes it harder. And, again, 24/7, that’s good. It should get those ships unloaded faster provided they don’t fill up the port area and have no place to store the containers after a while. But if you don’t have the truck drivers and the trains and so forth to get that cargo out of there and onto its destination, it’s not going to do much help. The other real problem with it I think is the Joe Biden approach. The idea that if this is a huge problem, Kim outlined the global implications of it, global problems everywhere, and guess what? The answer is for the federal government, not even the federal government, the President of the United States to say, “I’m going to make sure it runs 24 hours a day.” That’s just not the way to look at the economy.
We had a story on one aspect of this, the big retailers who are worried about empty shelves. Big Christmas season coming up and they’re having trouble getting their goods. What are they doing there? They’re chartering other ships. Home Depot is using planes, a lot more expensive to fly, in tools. That’s going to have an effect on the economy because someone’s going to have to pay for the higher shipping costs and it’s this consumer. But a lot of these big retailers are saying, “Well, it’s better than having empty shelves. People will pay more if that’s the choice they have.” I think that the private sector is very innovative and there’s not a single problem that it can’t solve in this regard if they had more flexibility. But we’re hamstrung by a lot of things. The Jones Act that requires ships going between U.S. ports to be U.S. built, U.S. manned, and U.S. operated, just all it does is add cost to things and inefficiency. So it didn’t get here in a day and it’s not going to be undone in a day, much less by an executive order.
Kyle Peterson: On the point about flexibility, the other thing that stuck out to me from Biden’s remarks on this Port of L. A. business is he says that most of the leading countries in the world are already operating 24/7. He says our ports have traditionally been only open during the week, Monday through Friday, and they’re closed down nights and weekends. And why is that? Why are we an outlier among the world’s leading trading nations? The only thing, Kim, that I can figure out is it has to do with longshore unions, pushing up costs, and opposing automation, which is why we didn’t get to 24/7 until the President of the United States marched in to have some negotiation. And maybe this is a breakthrough that it is now beginning, but then you’ve made one small step without really solving the lack of flexibility problem.
Kim Strassel: Yeah. Some of us remember not so long ago the longshoremen going on a big strike along the West Coast, and a big part of it, they were resisting any updates and reforms and changes that would actually make the ports more efficient. Essentially, they wanted to continue, they want to continue with a situation in which people are still filling out paperwork in triplicate because the more things you have like that, the more workers it takes, more jobs. The union likes that, and then, of course, there are all kinds of rules in union negotiations over how long you work and how much overtime is going to be and seniority and who gets the jobs. And it’s a real mess out there considering, as was mentioned here, that rest of the world has moved beyond this. It’s understood that in a global community that we’re now in where so many goods travel from country to country all the time that you have to have a workforce and a situation that is a lot more flexible than that.