That’s not what I said.
Any economy where the tractor manufacturer might be expected to ramp up production at a moment’s notice should maintain a surplus of tires, be it the manufacturer’s decision to stockpile in a market economy, or the central command’s decision to stockpile in a command economy.
The Soviet Union was a complex entity operating in a unique context and I don’t think you can refute allegedly fundamental rules of economics by appealing to its unique economic failures.
~Max
Soviet Union, 1920’s. Government created famine through mismanagement.
Ukraine, 1930’s. Central planning caused a famine in a year of record crop yields
Soviet Union, 1947 - Two million dead due to collectivizartion
China, 1958-1962 - 40 million dead due to Mao’s fixation on industrialization and collective farming.
Cuba, 1990’s - Widespread food shorages caused by brittle supply chains and lack of availability of agricultural machinery and petroleum due to government mismanagement.
Famines in Ethiopia - lack of property rights and routine confiscation of crops by authorities caused farmers to stop growing excess food and storing it. A bad crop year then results in famine. This has happened repeatedly.
North Korea - Multiple famines due to government policy. North Koreans are shorter than South Koreans because of constant malnourishment.
Madagascar today. Last year 75% of children in Madagascar had left school to forage for food. The cause of the famine was primarily the country’s lockdown policy which shut down markets and prevented the annual foreign worker influx to work the fields.
Those are all famines which had the failure of central planning as the main culprit. I did not include famines due to war or dought.
Sri Lanka isn’t currently in famine, but they are having food shortages due to stupid goverment decisions. If the reductions in fertilizer and livestock go forward in multiple countries as central planners in those countries want, we may have more famines to add to the list.
And the tire manufacturer should keep a surplus of rubber? And the rubber manufacturer should keep a surplus of all the things they need just in case more production is demanded? And how long do they keep those surpluses if demand drops?
This is in fact what the Soviet Union did a lot of, which is one reason why their economy performed so poorly. It still didn’t fix their constant shortage/glut problems.
…can you provide any citation (that wasn’t produced by the heavily propagandised local meat industry) to support the chain of events you just outlined here?
Correct me if I’m wrong but Russia was still embroiled in a civil war at the time, and the food scarcity came to a head after a drought, resulting in the execution of the Tsar. The grain was reappropriated from the peasants to support the Red Army, a calculated decision which reduced the peasantry to starvation and cannabalism.
I’ve read sources which credibly frame Holodomor as intentional or even genocide, but this is disputed. So I’ll mark this as maybe. Encyclopedia Britannica disputes your characterization of “record crop yields”,
The Ukrainian grain harvest of 1932 had resulted in below-average yields (in part because of the chaos wreaked by the collectivization campaign), but it was more than sufficient to sustain the population.
It should be noted that there was more widespread famine in the Soviet Union in those years, but Ukraine was forced to meet a particularly high export quota for grain. It should also be noted that the Soviets had just implemented collectivization, so I’m wary of looking at this famine as a fundamental flaw rather than a flawed implimentation or transitional thing.
That’s some assertion. It wasn’t the drought of 1946 which was the most severe drought since 1891, it wasn’t the fact that Ukraine’s breadbowl and Russia’s industry (including tractor production) had been sacked in WWII, it wasn’t the fact that the soldiers returned home and precipitated a baby boom, it wasn’t the government’s decision to continue exporting food to keep up with the U.S. or to continue replenishing a grain stockpile in case of another war.
Except of course all of these things were factors in the famine. It is irresponsible to separate the economic policies and the outcome from surrounding context.
~Max
AIUI, the Madagascar famine was at least equally due to the prolonged extreme drought of the past few years. Which, of course, is significantly related to climate change exacerbated by unchecked market-driven exploitation of fossil fuels. And the seasonal-labor disruption is largely due to the island’s profitable, but risky, market-driven reliance on tourism.
Sure, just go on letting market systems create precariously vulnerable economic patterns dependent on best-case assumptions about ready access to resources, and then put all the blame on governments when they get hit with a significantly non-best case and have to take emergency measures to deal with it.
It’s very easy to blame all such catastrophes solely on governments interfering with markets, if you carefully exclude all the vulnerability and instability contributed to the situation by markets themselves.
It seems like we’re back to assuming capitalism again, am I right?
For Pete’s sake, Sam, you know better than to keep spouting this particular nonsense. The Dutch government isn’t imposing regulations about nitrogen fertilizer reduction for the sake of some woolly bureaucratic generalization about “how to run agriculture more efficiently”. They’re doing it for the specific purpose of reducing dangerous levels of nitrogen pollution, which the farmers themselves have not successfully managed to do in their efficient running of agriculture.
This libertarian bushwa is so predictable. As I said, it consists of ignoring the considerable role that markets played in creating any of these problems, and just blaming governments for their “arrogance” and “stupidity” when they can’t magically prevent all the negative side effects from their efforts to solve these problems.
(See also: climate change in general. Expect long, long decades and centuries of libertarians continuing to whine about every “business-unfriendly” step governments take to try to mitigate climate change, while remaining determinedly oblivious to everything that businesses have done and continue trying to do that makes climate change worse.)
I never said a thing about WHY they are doing it. Central planners always have reasons. Some are even good ones.
You can assume whatever you want. I was answering questions directed at me.
All manufacturers should keep a surplus of materials in case of a supply shortage. This is so basic it should go without saying. Maybe add it to your list of fundamental economic principles. Everybody does it, no matter what economy.
You probably do it when you go shopping for goods like toilet paper or toothpaste. Go buy more before you run out - that way you never run out of the goods you need. Always have some materials in reserve in case your monthly shipment gets delayed by a storm or something. That’s all I’m talking about.
(Perishables and on-demand production such as vanity presses / haute coture are slightly tricker.)
There are people whose job it is to answer this question.
~Max
No, they don’t. Just in Time has been standard industry practice for decades. It requires intense coordination, shipment tracking, electronic invoicing, automated reordering and all kinds of complex stuff. Lean manufacturing is related. It’s all about procing only to order, and not to build up ‘reserves’ of goods. If you are producing something no one ordered, you are doing it wrong.
JIT means the surplus is small, but it’s still there. Toyota isn’t ordering waiting on raw materials every time someone orders a car.
~Max
To wit, Toyota’s definition of Just-in-Time:
In order to fulfill an order from a customer as quickly as possible, the vehicle is efficiently built within the shortest possible period of time by adhering to the following:
- When a vehicle order is received, production instructions must be issued to the beginning of the vehicle production line as soon as possible.
- The assembly line must be stocked with the required number of all necessary parts so that any kind of ordered vehicle can be assembled.
- The assembly line must replace the parts used by retrieving the same number of parts from the parts-producing process (the preceding process).
- The preceding process must be stocked with small numbers of all types of parts and produce only the numbers of parts that were retrieved by an operator from the next process.
So if tires are fitted on wheels on the assembly line, there is a parts-producing process which among other things creates/orders the tires. The parts-producing process is expected to keep and maintain a small surplus of parts, e.g. tires, and whenever the assembly line draws down that inventory, the parts-producing process replenishes it.
To have it any other way would create a bottleneck at each step in production.
~Max
If you want to bring Toyota’s methods into it, I’m sure you are familiar with “The Seven Wastes”. Two of the top ones are:
- The waste of too much inventory, both in raw materials and finished goods.
- The waste of overproduction
You are changing the goal posts. Sure, a SMALL amount of key materials are kept on hand in most cases, to handle waste, late shipments, and other very short-term needs. That’s a far cry from maintaining '‘reserve’ inventory to make up for planners who get supply and demand wrong. The gold standard in indiustry would be to take received materials off the truck/train and put it straight onto the assembly line with no intermediate inventory at all. What inventory is kept is just to smooth out the production wrinkles that inevitably arise - not to maintain emergency stockpiles for when orders come in and you can’t get material to make them.
Nonsense. Transparently ass-covering nonsense, and I for one don’t want to see your transparent ass-cover (and have no doubt that the feeling is mutual). You said right there in the remarks that I quoted:
That is, you explicitly claimed that the Dutch government’s requirements for reducing nitrogen fertilizer use were implemented specifically because the government thought that would be a more efficient way to run agriculture than the agricultural industry itself had managed to come up with.
Which is clearly contradicted by the unanimous descriptions of these regulations as implemented for the purpose of reducing dangerous levels of nitrogen pollution, and not for the sake of “efficent running of agriculture”.
If you try to weasel out of that contradiction by claiming that “efficiency” includes environmental health and that’s what you meant all along, yup yup, then you have to acknowledge that those noble sons of the soil “who have made the tiny Netherlands the #2 food producer in the world” actually haven’t been more “efficient” about “how to run agriculture” than those “helping” bureaucrats of the “government” that you were enjoying sneering at. Because they still ended up inflicting that severe nitrogen-pollution problem on the environment.
Or, you could just admit you were talking out of your transparently-covered ass and move on.
Again, as we have seen very poignantly illustrated over and over again in the past couple of years, the lack of reserve inventory can be most disastrous in the case of truly game-changing catastrophes, like a global pandemic.
Textbook illustration of the libertarian bushwa I was talking about:
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Laud to the skies the margin-shaving fat-reducing precarious leanness strategies of market-driven business management that maximize efficiency and profit under most normal circumstances.
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Shut your eyes to the serious downsides of such leanness strategies and the accompanying lack of resource cushions in catastrophic situations where circumstances suddenly become much less normal.
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Blame all the resultant disruption and inefficiency on the government policies implemented to try to cope with the catastrophic situation, rather than on the catastrophic situation itself or the no-fallback-plan “efficiency”-worshiping market strategies that helped make the whole setup so fragile to begin with.
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Pretend that the only reason to have any kind of a fallback plan that requires resources detracting from efficiency and cost savings is because stupid government-bureaucrat “planners” are arrogantly trying to tell markets what to do.
Well, because it’s not an example. The Starving Time was not caused by the free market insisting on planting tobacco.
My last project was to build a data collection and analysis system for data from a chip fab. I was in the group that needed the data, and was also a subject matter expert. I went and held meetings to collect requirements - and discovered that the ultimate customers had no idea of what they needed or what the data would look like. So your customers might not have had the information either.
One more example. An engineer at a Western Electric factory got asked how much it cost to do one process step. He really didn’t know, so gave them a guess, clearly labeled a guess. Some months later the report came out with the cost data, which he eagerly read to see what it really cost. The answer was exactly his guess.
I also saw supposedly real data on how much it cost for a failure at different stages of a product, and it looked suspiciously like the 10X rule we’ve all heard about.
So I agree with your point about central planners not knowing, but individuals often don’t know either. You have to measure - which might be done better not at the lowest level.