12 ms·

What everyone is going to have a real hard time wrapping their head around for the next few years: We built a highly efficient economy for a set of behaviors.

by RC_ITR 5y ago

What everyone is going to have a real hard time wrapping their head around for the next few years: We built a highly efficient economy for a set of behaviors. A shock happened that caused a lot people to change their behaviors (probably for a long time, since they've had 2 years of 'practice'). Our economy, which was built for those old behaviors (living in cities, riding public transit, eating at restaurants, travelling internationally, etc.) is doing a bad job of adapting to new behaviors (Living decentrally, driving more, ordering out more, travelling locally. etc.) because we used to think 'People don't change very fast, we can build a just-in-time economy.' But here's the thing about cycles, soon things will adapt to those new baselines. Companies will carry more inventory. (until a new generation of FP&A underlings forgets what a pandemic is) Not enough steel to make enough cars? Here's my amazing ' Airbnb for cars' startup (Hey Sand Hill, did you know, dollar for dollar, they are the most underutilized asset in the world?). Natural gas extremely expensive? Let me introduce you to renewables, which btw are getting better and better every year. It may be a painful few years to navigate that transition, and Bridgewater's (weak) point here is that 'hey, consumers are changing behaviors' and nothing more, which to me is a great reminder why this is happening: https://www.bloomberg.com/news/articles/2021-09-02/dalio-s-hedge-fund-risks-being-dumped-by-pension-on-weak-returns https://www.bloomberg.com/news/articles/2021-09-02/dalio-s-h...

deleted 5y ago
[deleted]
Guthur 5y ago
I just don't get why everyone maintains JIT manufacturing is bad, it's one of the many reasons we can have such reasonably low cost goods, its efficient.
- grayfaced 5y ago
  Efficiency at a trade-off of resiliency. If you're talking about discretionary purchases, you probably value efficiency over resiliency. If you're talking agriculture, we should value resiliency over efficiency.
  - Gigachad 5y ago
    So we have benefited from decades of cheap consumer electronics and now people had to wait 10 months to get their playstation at RRP so their proposal is to build double the number of playstations for decades and landfill half of them so in the extremely rare case, they will have just enough.
    - grayfaced 5y ago
      I would consider consumer electronics to be discretionary purchases. So what I suggested is the opposite of that. If disruptions are an acceptable risk, then you should prioritize efficiency. Consumer complaints are meaningless if they don't have a viable competitor to shift their money to. But we must prioritize resiliency when an economic shock would result in societal instability. I'm willing to pay more for food to be available 100% of the time versus paying 20% less for food to be available 80% of the time.
      - KittenInABox 5y ago
        Isn't that why the US government has longstanding agricultural subsidies, guarantees on prices, etc.? Do we really have a shortage of food?
        grayfaced 5y ago
        That's the stated purpose. But it has no teeth. Last year we saw aisles empty of meat and lots of news about meat shortages. But during that time domestic pork supplies were down 40% in the same period that pork exports to China quadrupled. Those subsidies failed in their stated purpose of resiliency. During the bad times, all that mattered is where more profit could be found.
        unpolloloco 5y ago
        I'd claim those subsidies worked fine then. The problem wasn't supply - It was delivery. There weren't enough drivers to move stuff around, so stuff didn't get moved around and shelves were empty. The supply chain's weakest link was delivery, so that broke. Exports to China used different infrastructure that wasn't as affected, so they still happened
- RC_ITR 5y ago
  Like nearly all good things, it has outsized consequences when taken to the extreme. JIT iPhones? Sure why not? JIT ventilators and PPE? Maybe not great. Maybe it’s ok to have some slack in the production of those types of things, you know in case of emergency.
- GekkePrutser 5y ago
  It also eliminated deep discounts of old stock. A lot of people would have relied on that kind of thing to be able to afford something. Still, I think for the environment it's a win, not producing anything that's not needed. But in the end most of it would get sold anyway at a discount.
jnwatson 5y ago
Turo* is AirBnb for cars. I’ve used it a few times and it worked well. * http://www.turo.com http://www.turo.com
- ryanSrich 5y ago
  Yeah I imagine Turo is exploding. When I traveled this summer my options for a 5 day rental were $2,200 from all the rental car companies, or $375 from Turo.
  - oarabbus_ 5y ago
    How do they deal with insurance? I'm not sure I'd feel very comfortable trusting a random stranger to use my car for 5 days, unless I was sure I'd be paid out in full (or more) if they were to damage or total the vehicle.
    - lemax 5y ago
      Most companies like Airbnb, Turo, Boatsetter (airbnb for boats) offer some insurance they negotiate with an underwriter like Geico. Getting this sort of insurance individually is much more costly or next to impossible, which is why we don't see people short-term renting expensive assets to each other on Craigslist. I imagine negotiating the ability to dole out these sorts of policies at scale with Lloyd's of London or GEICO is fairly arduous, but it seems like one of more key pieces for these companies to successfully get off the ground to me.
      - the-dude 5y ago
        Isn't the crux of insuring anything 'doing it at scale'? If you are AirBNB, why would you need an insurer at all?
        maest 5y ago
        Insurers can spread their risk along multiple insurance lines. If you're Airbnb, you're exposed to one type of risk: houses getting damaged. If you're Lloyds/GEICO, you're spread out over health risks, housing risk, car risk, maybe some financial assets risk etc
opportune 5y ago
As a company it’s probably better to just deal with 2 years of chaos every few decades than to have tons of unused inventory sitting around all the time.
robocat 5y ago
> Our economy ... is doing a bad job of adapting to new behaviors [because] just-in-time I have been astonished at how well the world has responded to the shock. Our first world economies seem to be amazingly resilient (although perhaps I am biased by being in New Zealand so I am unaware of what is going on elsewhere). It seems to me that just-in-time is helping us, and capitalist price signals are working. So far I personally haven't lacked anything important (albeit, I live in a rich county. I did have to wait a month for an iPad). Sure there is plenty of fail, but I'm not sure the obvious "better" answers would actually improve anything. It is easy to criticise given perfect hindsight, and easy to see from my armchair what should have been done.
- danieltanfh95 5y ago
  We are doing okay because the Chinese supply chain held on even during the pandemic, which is why their orders have grown so much during 2019-2021
- seoulmetro 5y ago
  If the entire manufacturing line is essential, why would a pandemic create gaps? It was only over a year or so of higher demands. Nothing dramatic. 5 years would be hard. 1 year just uses a bit of warehouse space for most consumer items. No one ever stopped making stuff, and they started shipping more where they could. Most people who couldn't get what they wanted would have no way to prove that. Whereas people who got what they think they couldn't, would have that memory strongly planted and even shared.
rsj_hn 5y ago
> Natural gas extremely expensive? Let me introduce you to renewables, which btw are getting better and better every year. Shutting down a natural gas pipeline that people depend upon just before winter, and then lecturing them about solar panels is not a good look. Artificially increasing the price of natural gas causes famines, it causes food and fertilizer to be more expensive, and it makes it hard for people to heat their homes. But one thing it doesn't do is increase reliable renewable energy sources. Solar is not a replacement for home heating oil during the Michigan winters. And renewables do not spring instantly into existence out of suffering. Another thing it doesn't do is help the air, because instead of this pipeline, we will need to run 5000 trucks per day from Canada to the Midwest to deliver that natural gas in time for winter. So it's a good thing we don't have a shortage of truck drivers or any supply chain issues. This idea that we should be punishing end users who need to heat their homes and buy fertilizer instead of actually deploying reliable alternatives is a form of scolding eco-sadism. It may be fine for you to absorb an increase in home heating oil prices, but other people really suffer. It's pure mismanagement and very much has a "let them eat cake" vibe. > It may be a painful few years to navigate that transition The pain inflicted on households in the midwest will be returned with interest in the next election. The next time you wonder why it's 2050 and the US hasn't raised any gas taxes or instituted carbon credits, or really done much to reduce CO2 emissions, then remember that to pass a green agenda you need to win battleground states like Michigan, and then remember back to this moment and the kinds of finger wagging lectures that were being delivered all over the country to people worried about how they will heat their homes in the winter.
- PaulDavisThe1st 5y ago
  The Michigan pipeline shutdown has been discussed for most of this year; back in May the MI governor began her attempts to shut it down by revoking easements issued to the operator. It's not honest to characterize what has been happening in the last few weeks as a last minute action by the administration "just before winter". It's also not honest to focus exclusively on the costs of the pipeline being shutdown without also considering the potential costs of it staying open. I'm entirely open to someone presenting the case that the costs of shutdown vastly outweigh even the worst projected cost of it remaining open, but if you're going to present that case, do it while being aware that there are people (including the MI governor and various Indian tribes) who don't agree with this assessment. MI voted for Biden in 2020, its US HoR representation is split evenly between both parties, and both US Senators are Democrats. If you're suggesting that those in favor of carbon credits and higher gas taxes might lose representation if this pipeline is closed, maybe make that case more explicitly. Also, it's not unambiguously clear that winning battleground states like Michigan is synonymous with winning Michigan, nor that it's necessarily required at all given the steady drifts of some red states into the purply-blue zone.
kevinmchugh 5y ago
Didn't more Americans already live in suburbs then cities before covid? What percent of Americans were regular public transit riders?
- okhobb 5y ago
  Re: % transit riders, seems like not a lot except in NYC: https://www.pewresearch.org/fact-tank/2016/04/07/who-relies-on-public-transit-in-the-u-s/ https://www.pewresearch.org/fact-tank/2016/04/07/who-relies-...
- RC_ITR 5y ago
  8 Million people, which, while a small % of population, is huge compared to the c. 100mn cars that get sold globally per year. And similar to the suburbs point, sure the suburbs existed before COVID, but they are becoming more heavily utilized (extra bedrooms turned to offices reduces the supply of housing) at the same time as an uptick in demand.
_3u10 5y ago
Natural gas isn't expensive. I pay 7.2 cents USD per kW/h and it's still cheaper to heat my house with natural gas. Given that the world is switching to electric cars I only foresee it getting even cheaper (comparatively) given how much hydro will need to be built to service the energy needs of the electric car market.

by RC_ITR 5y ago

deleted 5y ago

[deleted]

Guthur 5y ago

I just don't get why everyone maintains JIT manufacturing is bad, it's one of the many reasons we can have such reasonably low cost goods, its efficient.

grayfaced 5y ago
Efficiency at a trade-off of resiliency. If you're talking about discretionary purchases, you probably value efficiency over resiliency. If you're talking agriculture, we should value resiliency over efficiency.
- Gigachad 5y ago
  So we have benefited from decades of cheap consumer electronics and now people had to wait 10 months to get their playstation at RRP so their proposal is to build double the number of playstations for decades and landfill half of them so in the extremely rare case, they will have just enough.
  - grayfaced 5y ago
    I would consider consumer electronics to be discretionary purchases. So what I suggested is the opposite of that. If disruptions are an acceptable risk, then you should prioritize efficiency. Consumer complaints are meaningless if they don't have a viable competitor to shift their money to. But we must prioritize resiliency when an economic shock would result in societal instability. I'm willing to pay more for food to be available 100% of the time versus paying 20% less for food to be available 80% of the time.
    - KittenInABox 5y ago
      Isn't that why the US government has longstanding agricultural subsidies, guarantees on prices, etc.? Do we really have a shortage of food?
      - grayfaced 5y ago
        That's the stated purpose. But it has no teeth. Last year we saw aisles empty of meat and lots of news about meat shortages. But during that time domestic pork supplies were down 40% in the same period that pork exports to China quadrupled. Those subsidies failed in their stated purpose of resiliency. During the bad times, all that mattered is where more profit could be found.
        unpolloloco 5y ago
        I'd claim those subsidies worked fine then. The problem wasn't supply - It was delivery. There weren't enough drivers to move stuff around, so stuff didn't get moved around and shelves were empty. The supply chain's weakest link was delivery, so that broke. Exports to China used different infrastructure that wasn't as affected, so they still happened
RC_ITR 5y ago
Like nearly all good things, it has outsized consequences when taken to the extreme. JIT iPhones? Sure why not? JIT ventilators and PPE? Maybe not great. Maybe it’s ok to have some slack in the production of those types of things, you know in case of emergency.
GekkePrutser 5y ago
It also eliminated deep discounts of old stock. A lot of people would have relied on that kind of thing to be able to afford something. Still, I think for the environment it's a win, not producing anything that's not needed. But in the end most of it would get sold anyway at a discount.

jnwatson 5y ago

Turo* is AirBnb for cars. I’ve used it a few times and it worked well. * http://www.turo.com http://www.turo.com

ryanSrich 5y ago
Yeah I imagine Turo is exploding. When I traveled this summer my options for a 5 day rental were $2,200 from all the rental car companies, or $375 from Turo.
- oarabbus_ 5y ago
  How do they deal with insurance? I'm not sure I'd feel very comfortable trusting a random stranger to use my car for 5 days, unless I was sure I'd be paid out in full (or more) if they were to damage or total the vehicle.
  - lemax 5y ago
    Most companies like Airbnb, Turo, Boatsetter (airbnb for boats) offer some insurance they negotiate with an underwriter like Geico. Getting this sort of insurance individually is much more costly or next to impossible, which is why we don't see people short-term renting expensive assets to each other on Craigslist. I imagine negotiating the ability to dole out these sorts of policies at scale with Lloyd's of London or GEICO is fairly arduous, but it seems like one of more key pieces for these companies to successfully get off the ground to me.
    - the-dude 5y ago
      Isn't the crux of insuring anything 'doing it at scale'? If you are AirBNB, why would you need an insurer at all?
      - maest 5y ago
        Insurers can spread their risk along multiple insurance lines. If you're Airbnb, you're exposed to one type of risk: houses getting damaged. If you're Lloyds/GEICO, you're spread out over health risks, housing risk, car risk, maybe some financial assets risk etc

opportune 5y ago

As a company it’s probably better to just deal with 2 years of chaos every few decades than to have tons of unused inventory sitting around all the time.

robocat 5y ago

> Our economy ... is doing a bad job of adapting to new behaviors [because] just-in-time I have been astonished at how well the world has responded to the shock. Our first world economies seem to be amazingly resilient (although perhaps I am biased by being in New Zealand so I am unaware of what is going on elsewhere). It seems to me that just-in-time is helping us, and capitalist price signals are working. So far I personally haven't lacked anything important (albeit, I live in a rich county. I did have to wait a month for an iPad). Sure there is plenty of fail, but I'm not sure the obvious "better" answers would actually improve anything. It is easy to criticise given perfect hindsight, and easy to see from my armchair what should have been done.

danieltanfh95 5y ago
We are doing okay because the Chinese supply chain held on even during the pandemic, which is why their orders have grown so much during 2019-2021
seoulmetro 5y ago
If the entire manufacturing line is essential, why would a pandemic create gaps? It was only over a year or so of higher demands. Nothing dramatic. 5 years would be hard. 1 year just uses a bit of warehouse space for most consumer items. No one ever stopped making stuff, and they started shipping more where they could. Most people who couldn't get what they wanted would have no way to prove that. Whereas people who got what they think they couldn't, would have that memory strongly planted and even shared.

rsj_hn 5y ago

> Natural gas extremely expensive? Let me introduce you to renewables, which btw are getting better and better every year. Shutting down a natural gas pipeline that people depend upon just before winter, and then lecturing them about solar panels is not a good look. Artificially increasing the price of natural gas causes famines, it causes food and fertilizer to be more expensive, and it makes it hard for people to heat their homes. But one thing it doesn't do is increase reliable renewable energy sources. Solar is not a replacement for home heating oil during the Michigan winters. And renewables do not spring instantly into existence out of suffering. Another thing it doesn't do is help the air, because instead of this pipeline, we will need to run 5000 trucks per day from Canada to the Midwest to deliver that natural gas in time for winter. So it's a good thing we don't have a shortage of truck drivers or any supply chain issues. This idea that we should be punishing end users who need to heat their homes and buy fertilizer instead of actually deploying reliable alternatives is a form of scolding eco-sadism. It may be fine for you to absorb an increase in home heating oil prices, but other people really suffer. It's pure mismanagement and very much has a "let them eat cake" vibe. > It may be a painful few years to navigate that transition The pain inflicted on households in the midwest will be returned with interest in the next election. The next time you wonder why it's 2050 and the US hasn't raised any gas taxes or instituted carbon credits, or really done much to reduce CO2 emissions, then remember that to pass a green agenda you need to win battleground states like Michigan, and then remember back to this moment and the kinds of finger wagging lectures that were being delivered all over the country to people worried about how they will heat their homes in the winter.

PaulDavisThe1st 5y ago
The Michigan pipeline shutdown has been discussed for most of this year; back in May the MI governor began her attempts to shut it down by revoking easements issued to the operator. It's not honest to characterize what has been happening in the last few weeks as a last minute action by the administration "just before winter". It's also not honest to focus exclusively on the costs of the pipeline being shutdown without also considering the potential costs of it staying open. I'm entirely open to someone presenting the case that the costs of shutdown vastly outweigh even the worst projected cost of it remaining open, but if you're going to present that case, do it while being aware that there are people (including the MI governor and various Indian tribes) who don't agree with this assessment. MI voted for Biden in 2020, its US HoR representation is split evenly between both parties, and both US Senators are Democrats. If you're suggesting that those in favor of carbon credits and higher gas taxes might lose representation if this pipeline is closed, maybe make that case more explicitly. Also, it's not unambiguously clear that winning battleground states like Michigan is synonymous with winning Michigan, nor that it's necessarily required at all given the steady drifts of some red states into the purply-blue zone.

kevinmchugh 5y ago

Didn't more Americans already live in suburbs then cities before covid? What percent of Americans were regular public transit riders?

okhobb 5y ago
Re: % transit riders, seems like not a lot except in NYC: https://www.pewresearch.org/fact-tank/2016/04/07/who-relies-on-public-transit-in-the-u-s/ https://www.pewresearch.org/fact-tank/2016/04/07/who-relies-...
RC_ITR 5y ago
8 Million people, which, while a small % of population, is huge compared to the c. 100mn cars that get sold globally per year. And similar to the suburbs point, sure the suburbs existed before COVID, but they are becoming more heavily utilized (extra bedrooms turned to offices reduces the supply of housing) at the same time as an uptick in demand.

_3u10 5y ago

Natural gas isn't expensive. I pay 7.2 cents USD per kW/h and it's still cheaper to heat my house with natural gas. Given that the world is switching to electric cars I only foresee it getting even cheaper (comparatively) given how much hydro will need to be built to service the energy needs of the electric car market.