3 ms·

This was already one Rx from the Twitter thread. Also not all “capitalists” have aligned incentives. Everybody wants shipping to be efficient except those who

This was already one Rx from the Twitter thread. Also not all “capitalists” have aligned incentives. Everybody wants shipping to be efficient except those who profit from this inefficiency. Specifically ship companies are making huge profits by racing to the big East Asian ports right now. So much profit that they don’t want their ships to wait in US ports for empty containers to reload. This asymmetry makes it even more profitable to rush back to those East Asian ports. Snowball of profits for them at the expense of everyone else. This is a Tragedy of the Commons situation. It is a great purpose for government intervention.

bsder 5y ago
Not at all Tragedy of the Commons. In 40 days (one round trip from US to China), the system clogs and the boats can't go running off because they can't unload at all (happening now). At this point the system stabilizes. Sure, it's not a stable point that the shipping companies want, but it is stable. Capitalism has a way to deal with this. It's called "rising prices". However, business managers have gotten far too used to never suffering any consequences for their decisions. The moment actual responsibility comes down the pipe they all start whining and running home to Daddy (the government) for help. Let the ships sit. When the shipping companies lose more money with a sitting ship that can't be unloaded than they gained racing back without empty containers, it will correct.
- thephyber 5y ago
  That’s idealistic. Do you think people will just tolerate hyperinflation that would cause and sit quietly in line while waiting for overpriced food staples? Riots. Public disorder. Maybe even rebellion against the government. Governments get involved because the individuals in that government fear what happens when we reach the tipping point where basic society breaks down. I think we forget that 95% of all goods (or their inputs) are shipped and over 20% of GDP directly relies on shipping. That’s a massive gamble that the same people involved in the supply chain that is suffering from massive entropy can magically reduce that entropy after it snowballs.
- enahs-sf 5y ago
  I’m not sure if waging a siege on ourselves is a free market solution here.
- takinola 5y ago
  Won't there be an equilibrium at some point? Empty ships rush back to Asia but can't load in Asia because all the containers are back in the US. Hence they will sit idle in Asia not earning any money and ships that do carry empty containers back will be rewarded because someone will pay to ensure trade is not blocked in Asia
  - notatoad 5y ago
    in a closed system, at some point the containers stuck in the US would become valuable enough in china that the ships would prioritize shipping them back, yes. but it's not a closed system, the chinese are building new shipping containers as fast as they can, and every new container they build lessens the demand for those containers stuck in the US.

bsder 5y ago

Not at all Tragedy of the Commons. In 40 days (one round trip from US to China), the system clogs and the boats can't go running off because they can't unload at all (happening now). At this point the system stabilizes. Sure, it's not a stable point that the shipping companies want, but it is stable. Capitalism has a way to deal with this. It's called "rising prices". However, business managers have gotten far too used to never suffering any consequences for their decisions. The moment actual responsibility comes down the pipe they all start whining and running home to Daddy (the government) for help. Let the ships sit. When the shipping companies lose more money with a sitting ship that can't be unloaded than they gained racing back without empty containers, it will correct.

thephyber 5y ago
That’s idealistic. Do you think people will just tolerate hyperinflation that would cause and sit quietly in line while waiting for overpriced food staples? Riots. Public disorder. Maybe even rebellion against the government. Governments get involved because the individuals in that government fear what happens when we reach the tipping point where basic society breaks down. I think we forget that 95% of all goods (or their inputs) are shipped and over 20% of GDP directly relies on shipping. That’s a massive gamble that the same people involved in the supply chain that is suffering from massive entropy can magically reduce that entropy after it snowballs.
enahs-sf 5y ago
I’m not sure if waging a siege on ourselves is a free market solution here.
takinola 5y ago
Won't there be an equilibrium at some point? Empty ships rush back to Asia but can't load in Asia because all the containers are back in the US. Hence they will sit idle in Asia not earning any money and ships that do carry empty containers back will be rewarded because someone will pay to ensure trade is not blocked in Asia
- notatoad 5y ago
  in a closed system, at some point the containers stuck in the US would become valuable enough in china that the ships would prioritize shipping them back, yes. but it's not a closed system, the chinese are building new shipping containers as fast as they can, and every new container they build lessens the demand for those containers stuck in the US.