A letter I sent to the Atlantic Magazine a few minutes ago
Re: https://www.theatlantic.com/ideas/archive/2020/03/supply-chains-and-coronavirus/608329/
Lizzy O'Leary's piece is a welcome reminder of reality. But it doesn't go far enough. The cure is not to "diversify the supply chain", as implied towards the of her article. It's to change the mindset that maximizing profits is the aim of a business, or worse, that it's the aim of the economy.
It is that mindset that has pared down resilience. A resilient system has redundancies. Redundancies cost money. Removing them reduces the costs, and hence maximizes profits.
Business profitability is one, and only one, of the many numbers that describe the state of an economy. Believing that it is the purpose of the system to maximize that one number is obviously crazy. One might as well say that it is the purpose of eating to maximize the throughput of the digestive system.
Businesses exist to provide what we need and what we want. That is their social, and therefore their economic role. "Profit" is a signal that the business is fulfilling that role. That's all it is.
It's time to rescue the economy from the advice of economists who have a superstitious reverence for profitability.
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