Opinion — Understanding the economy
Published 6:12 pm Friday, November 19, 2021
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President Biden either does not understand or care about the damage that he has done to the American economy. Whenever he speaks about economic issues, he gives us a better understanding of how out of touch he is. The greatest question I wonder about is this: Are his actions caused by his lack of understanding of economics, or is his “build back better” plan an effort to destroy our current economy in order to rise from those ashes a government-controlled economy more like the Chinese economy. You decide. Consider these points.
FUEL PRICES
When confronted by reporters about gas prices, he deflects the issue by responding that you should be glad you are not paying five-dollar prices like California. He ignores the underlying fact that the prices of fuel started rising when he stopped the pipeline from Canada. Likewise, his executive order that bars natural gas from government land. These two issues were the basis of worldwide fuel prices dropping over the last several years. When Middle Eastern and Russian governments understood that the U.S. was no longer going to control prices, they started raising prices. This affects not just gasoline prices for you; it also affects diesel prices for truckers, which is a driving factor in inflation of everything you use.
INFLATION
President Biden and his spokespeople have told us repeatedly that the current jump of inflation is temporary. Leading people to believe that prices will start to fall next year. How and why? What I think they mean is that the increases will slow down; but why should they? OPEC is now back in charge of fuel prices. Higher wages will force every business that has not yet raised prices to raise theirs. Inflation has already forced a rise in Social Security (however, not enough to match inflation). The same dynamics will force increases in every poverty program.
SUPPLY CHAIN
President Biden believes that part of the inflation problem is caused by the inability to keep the store shelves stocked. This is a part of the problem; but why? The president believes it is because the economy is so strong. The fact is that there are several issues at play. For many months, the federal government was paying many dollars to the unemployed in addition to state unemployment dollars. This caused two things to happen. First, it meant in some cases that it harmed the family’s income to even look for work. Without workers, businesses could not provide services or manufacture products. Second, it meant that households had money and could, therefore, buy those products that were available. Third, merchants, knowing that replacement stock would be more expensive when they arrived, started raising prices in anticipation of those new prices.
The president was made aware of over 150 cargo ships that were simply waiting off the coast of California to be unloaded. He, therefore, thought he could solve the problem with an executive order for the ports to unload ships around the clock rather than just one shift a day. The Longshoremen Union was not happy. They begrudgingly have tried to increase, however, a couple of problems have arisen. You can pay overtime, but you cannot expect the same workers to work 24 hours every day. They too have to find and train the workers needed.
In addition, once a ship is unloaded, the goods must be trucked off the docks. Consider what California has done to make that a greater challenge. In part, this is caused by a California law which requires that all trucks must be 2011 or newer; and a law which effectively prohibits Owner Operator truckers. These two factors have reduced not only the number of trucks serving the ports but, in addition, the hours they are willing to come for loads. On top of these issues, trucking firms in California are not investing in new trucks because California has a law making all trucks that burn fuel illegal in 2035. With new tractor trailers running as much as a quarter million dollars, companies understand they have to get many years of service from them.
Ending on a brighter note, the ports of Virginia are unloading ships with little wait. Trucks are ready to roll, and we have many warehouses ready to receive product.
Frank Ruff Jr. represents Charlotte in the state Senate. His email address is Sen.Ruff@verizon.net.