Last September, Toyota, one of the nation’s largest manufacturers of cars with respect to magnitude, announced that the company was going to take a three-week production break. This was due to the company’s slowdown in auto manufacturing across the globe. Workers were allowed to take unpaid leave, work at the plant at various jobs, or take paid time off. This was part of a larger issue that the company is facing as it is cutting global production by 40 percent due to a worldwide shortage of computer chips and vehicle supply parts.
Situations like this often arise when supply chains are not properly handled. California, for example, has become a very weak center for business in this respect. Meanwhile, states such as Texas and Florida have open ports and have invited shipping companies to bring their cargo.
What is the difference? One of the possible reasons is that California policies creates unnecessary barriers to efficiency. For example, California has adopted a law called AB5. This law recategorized truck drivers so that they could not operate as independent contractors working for several companies. In addition, environmental regulations have inhibited the expansion of storage facilities, leading to even more logistical challenges.
It is these kinds of environmental and labor policies that lead to deficiencies in the supply chain. While supplies in Toyota have rebounded and the company plans to make up for lost time, it goes to show how much of an impact a shortage of supplies can have on a given company.
Covid has certainly been a factor in these issues; however, the government cannot use Covid as an excuse for bad policy. On the federal level especially, government has taken prescriptive action for things that do not ultimately help the problem. Anti-contractor legislation, EPA truck emission regulations, and even Biden’s vaccine mandate have all contributed to the nation’s supply chain issues.
Mississippi should seek to counteract these policies as it builds an economy of free-market principles. While they seem justified, government regulations all too often stifle the growth necessary to have a self-sustaining economy. The state legislature should commit to examining the apparent deficiencies in the supply chain system and explore ways to alleviate the burden on private companies that aid the state economy. Giving up government control is the most effective way to manage supply chains.
Agriculture continues to be a token flagship of the Mississippi economy. However, a specific kind of farming continues to grow within the state that has cause for attention. This area of farming is aquaculture, the process of producing farm-raised fish in a water environment.
Over the last couple of years, Mississippi’s aquaculture has grown greatly. According to the most recent data from 2017, the Mississippi aquaculture industry hosts 205 catfish farms, valued at $219.7 million. Mississippi has risen to one of the top producers of aquacultural farming products, so much so that the rest of the country consumes much of what Mississippi produces, bringing in $230.7 million in sales.
This growth is very timely as global demand for seafood and aquacultural products is expected to grow by 70% over the next thirty years thus increasing demand and providing business and jobs. Not only that, but an increase in productivity in aquaculture means an increase in general agricultural business as well. According to a study by the Food and Water Watch, this additional economic benefit comes from the broader agricultural sector producing the food and materials necessary to sustain aquaculture enterprises.
The aquaculture industry is clearly a vital element of the rising Mississippi economy and the state should look to competitive growth as other states expand aquaculture as well. For instance, the New England states have taken advantage of this opportunity and are now generating $150 million annually. The state of Washington also benefits from this, generating $270 million annually.
Expanding this opportunity and taking advantage of this growth would be an excellent area for legislative attention in Mississippi. This is especially true considering that American aquaculture farms have barely scratched the surface of what total demand is necessary to exhaust the industry (America only meets 5 to 7 percent of the current demand for seafood).
Furthermore, when farmers see that one can succeed in aquaculture, new technologies like computer-controlled oxygen monitoring systems have emerged. This enables farmers to monitor and control the oxygen levels in farming ponds. People find something they want to pursue. They find solutions to making that pursuit easier through innovation. That innovation in turn, inspires others to participate. The cycle goes on and on.
This is another perfect opportunity for legislators to make positive changes in Mississippi communities. Fewer regulations and more motivations to participate in markets like these provide opportunities for innovation and growth in the economy. It is a faulty assumption to presume that government needs to compel or even incentivize individuals for growth to occur. The reality is that neither of those things are needed. For growth to occur, as it has in aquaculture, individuals should be able to pursue their interests without fear of undue government interference. If interference is apparent, growth may actually take a downturn. State leaders would do well to further recognize the growth of the aquaculture industry and encourage its free market expansion.
As the world continues to grow in innovation and technology, it continues to shrink in scale. What would be accomplished in weeks or even months a couple of decades ago can sometimes be achieved in a matter of hours. Trade is no exception to this.
Due to innovation in the transportation industry, it is becoming easier and easier for states to benefit from producing and consuming goods from across the globe. Mississippi would do well to continue this trend as it engages in issues of international relevance.
Mississippi has historically benefitted significantly from international trade and investments. For example, in 2013, Mississippi exported $13.2 billion in goods and $2.2 billion in services across 193 countries. As a direct result of this growth, the Mississippi trade sector saw a 154 percent increase in jobs (from 8.6 percent to 21.8 percent). One of the essential elements for this growth came from the existence of free trade agreements which promoted an increase in growth in trade by 469 percent in just ten years (from 2003 to 2013).
Today, while trade is still part of the economy, Mississippi’s export value has slightly dropped. While explaining the reasons behind this decrease are beyond the scope of this article, Mississippi can certainly do more in promoting its engagement in international trade. Today, it ranks 30th in the United States in exports and 28th in the United States in imports.
The Mississippi legislature should keep in mind several key exports that play a role in Mississippi’s international trade scheme: oil & mineral fuels, precision instruments, motor vehicles & parts, industrial machinery, and electrical machinery. These five goods total approximately $8 billion in exported capital and creates and sustains vital parts of the economy.
One way this can be achieved is by promoting Mississippi’s goods across the globe by educating businesses on how to engage in international trade. This can be a daunting task, especially in a small to medium business context. However, the Mississippi Department of Agriculture and Commerce has found success in this area as it has brought $16.7 billion into the state economy by providing support for exporters engaging in international trade. Agriculture is one of the state’s top industries, but imagine if that same engagement occurred on every other major export in the state. Economic growth would certainly be in the future.
Another area that can promote international trade growth is simply decreasing regulation and trade barriers. As mentioned previously, the existence of free trade agreements, minimizing or eliminating the existence of such barriers, played a substantial role in promoting significant growth.
International trade agreements are a little more complicated than a simple “no regulation” principle (it should often operate on a standard of mutual advantage as well). Yet, the idea still stands that governments should encourage companies to engage in trade without penalizing them at same time through high tariffs and regulatory duties.
The greatest element of these free trade agreements is that they encourage competition and innovation -the very things that have placed America in such a strong international trade position to begin with. Mississippi should proactively seek to engage in more international trade and replicate the success the state has seen in the past.
Tesla is now worth over $1 trillion. Not only is Tesla the first car company in the world valued at over $1 trillion, but Tesla is now worth more than twice the combined total of Toyota and Volkswagen.
Not bad for a car company that was only founded in 2003.
Tesla joins a string of companies, including Apple, Microsoft, Amazon, and Alphabet, worth over a $ trillion (Facebook is not far behind, valued at a mere $914bn.).
What is so striking about these firms isn’t just their astronomical value. It’s the fact that they are all relatively new companies. Microsoft and Apple were founded in the mid 1970s. Amazon and Alphabet in the 1990s.
What also stands out is that they are all American.
The largest companies in Europe today – Volkswagen, BP, Shell – were big companies a generation ago. Many of the largest firms in America hardly existed a few decades ago. New, too, is the underlying technology and economic activity on which they are built.
Perhaps any European reflecting on this should ask themselves where their Teslas and Apples are? Or perhaps, more important, ponder what their versions of Bill Gates or Elon Musk are up to? Working in local government, no doubt.
It seems extraordinary that any American politician should want to make their country more European.
What about Japan? I cannot think of a single significant consumer innovation to have come out of Japan since the Sony Walkman. Japan, which in the 1970s and 80s seemed so promising as a center of innovation and technological advance, has stagnated. Perhaps having an economy dominated by zombie companies, weighed down by debt but sustained by cheap credit, isn’t a recipe for success after all.
America has been the epicenter of innovation precisely because Microsoft, then Apple, were able to compete with IBM. Tesla with General Motors. Dozens of start-ups against AT&T. In Japan and Europe, the equivalents of IBM, GMs and AT&T were able to keep out the competition.
For America the lesson is clear; avoid becoming more European or more Japanese. Keep taxes and regulation low. Make sure that however economically important they might be, no big business is able to rig the market through the rule book.
In 2019, the Mississippi legislature passed the Broadband Enabling Act. This legislation gave Electric Power Associations (EPAs) the legal permission to use their existing infrastructure to bring broadband service to their ratepayers. While this has seen some success in expanding broadband access in the state, some key accountability reforms could cause better outcomes.
To grasp how broadband services are being brought to citizens via the EPAs, it is important to understand how they are structured. Most of the EPAs in Mississippi were founded in the 1930s and 1940s to bring electricity to rural areas. These entities are non-profit organizations operating under the direction of elected board members. They are also known as “electric cooperatives” or “electric co-ops.” They have a monopoly over their service areas, and the costs of operation determine the electricity rates that members pay.
This provides the context for the broadband rollouts authorized by the Broadband Enabling Act. Before the Act, EPAs were not permitted by law to operate as broadband service providers for their members. In the wake of the law’s passage, several of the state’s EPAs began conducting feasibility studies to determine the cost of broadband integration and the effects of such integration on electricity rates.
Upon review of the cost, some of the EPAs opted not to integrate broadband operations directly within their organizations, many due to cost concerns. Instead, some EPAs opted to enter into collaborative agreements with private sector internet service providers that permitted the use of electrical infrastructure for broadband deployment.
However, some EPAs did decide to become internet service providers for those in their services areas. The funding for these operations has been provided through a combination of federal, state, and local grants, along with the revenues generated from the electricity rates themselves.
Because individuals within an EPA’s service territory are subject to potential rate increases because of broadband network operation costs, accountability is important. Unlike a typical free-market context in which there is the element of consumer choice, electricity is different. In Mississippi, the government permits consumers to acquire electricity only from the entity that has been granted that particular service territory.
Thus, in the case of EPAs operating as electricity providers and internet service providers, mismanagement of the EPA’s broadband program can lead to increased costs for electrical consumers if a broadband program cannot sufficiently pay for itself.
This establishes the necessity that EPAs are accountable in the way they finance these broadband operations. While EPAs are required to regularly report to the state’s Public Service Commission regarding the legal compliance and financial records of electrical operations, the law is less clear on the extent of oversight for broadband services. Broadband service is not quite the same.
The Broadband Enabling Act does require an annual compliance audit for broadband-offering EPAs. However, financial and performance audits are not currently required by law. This presents potential issues for the citizens in the service territories of these electrical cooperatives. An EPA might be technically in compliance with the law, but that does not fully account for the finances of the broadband program that could ultimately lead to higher rates for those in the service territory.
In order to see a more financially sustainable future for the citizens who live in service territories under EPAs providing broadband, the state should consider enacting broadband financial auditing policies that will ensure more accountability. Such reforms would help ensure that mismanagement does not lead to electrical consumers paying for unreasonable utility bill increases because of EPA broadband buildouts. Broadband growth has immense potential for Mississippians, and the state should ensure that this growth through EPAs does not lead to unreasonable increases when it’s time to pay the electric bill.
Why is Bitcoin worth as much as it is? For the same reason that anything is worth what it is.
The price of Bitcoin reflects the extent to which people want it relative to the amount of it out there. With the total supply of Bitcoin fixed, the massive rise in the price of the world’s first cryptocurrency – from a few cents to over $50,000 in a few years - is a reflection of soaring demand.
The fact that one Bitcoin is worth tens of thousands of dollars, however, seems to offend some folk. Why is it, they want to know, that a piece of software code should be worth so much?
There are no shortage of those that have compared the Bitcoin boom today with the 17th century Tulip bubble in Holland. Tulip mania saw vast sums invested in tulip bulbs, which ultimately proved to be more or less worthless.
Bitcoin, the skeptics often point out, has little utility. It’s just a piece of code – you can’t use it for anything. So why are so many people pouring so much money into it? Its not even a very effective method of payment, given that the value of Bitcoin is so volatile.
But surely many of the same things could also be said about gold?
Gold, too, has limited utility. Beside jewelry and a little electronics, you can’t really do a lot with it.
Nor is gold, even in coin form, a very good way to pay for things.
Not so long ago, the economist John Maynard Keynes dismissed gold as a ‘barbarous relic’. It was, according to this Cambridge-educated technocrat, absurdly old fashioned that a base metal should serve as a reserve currency.
Twenty years ago, British finance minister Gordon Brown, thought something similar when he ordered the Bank of England to sell off its gold reserves.
But, of course, what Keynes called a relic retained its value long after he had passed on. When Brown began to sell off Britain’s gold reserves, he did so for $275 per ounce. Gold today is worth over $1,700 per ounce.
Gold, like Bitcoin, is not valuable because it does something. It is valuable because lots of people want it, and there isn't much of it about. That is all.
With neo-Keynesians running many of the world’s central banks, I suspect that demand for an alternative to their paper fiat currencies will only increase.
Certifications and training are a key part of occupational regulations. Amid the pandemic, many occupational licensing authorities have allowed applicants to take required education courses online instead of exclusively in-person. While online courses are a good step in the right direction, additional technologies could also carry potential.
Many occupational licensing structures require individuals to take certain courses to get certified and then take additional continuing education courses. In the not-so-distant past, applicants would have to take required education and certification courses at the physical places and time determined by government authorities. In addition to the licensing fees and other burdens, such courses often required individuals to set aside time away from their usual course of business for travel. Sometimes they had to drive many hours to attend a class or take a test.
This can change in the context of online courses and certification. While some licensing, certification, and continuing education generally still occur in an in-person context, there has been an expansion in online courses, particularly after the pandemic. Facing the pandemic reality that many individuals would not be able to meet continuing education and/or licensing requirements without online accommodations, several regulatory boards were all but forced to allow for online integration.
These advances suggest that additional technologies could also carry the potential for occupational licensing reform. For instance, virtual reality (VR) headsets are already being used in a variety of extremely technical contexts, with a great degree of success. The military has used VR to prepare soldiers for the battlefield. The medical sector has used VR training for emergency scenario simulation. Industrial and manufacturing sectors have incorporated VR into technical training, and first responders have utilized it for emergency preparedness.
These technologies, such as online learning and VR have expanding adoption, and there has been real-world success -including in some high-intensity fields. It would make sense for government regulatory agencies to incorporate such technologies as an option in their approval processes. Of course, not all applicants would prefer to use such technologies for their licensing or continuing education requirements, and legacy options should remain available. Yet, having new technologies also approved as an acceptable option for occupational certification and education could encourage occupational participation from tech-savvy citizens -especially the younger generation. Mississippi and other states would do well to consider incorporating emerging technologies into its regulatory licensing systems. New technologies are continually proving their value for training and certification. Occupational licensing is already a big enough burden. The government should make every effort to incorporate effective technologies so that its citizens have greater flexibility in their occupational certification and education.
“Flatten the curve” is a phrase that Americans who lived through the COVID-19 pandemic will never forget. Its arrival in our collective lexicon marked the moment that our daily lives were dramatically changed for months on end. As COVID patients overwhelmed our hospitals, the goal was to lessen the strain by slowing transmission of the virus to levels that hospitals could handle. Those efforts were not enough, so we were forced to face the virus without enough hospital beds and medical personal to treat the sickest among us.
As we appear to be pulling out of the most recent Delta variant, it’s worth asking: why did it take so little to overwhelm Mississippi’s healthcare system to begin with?
Like most public policy issues, there isn’t just one answer to that question. But there is one answer that stands out as the most obvious and easily fixable one: our state’s “Certificate of Need” (CON) laws.
After all of the efforts to conserve and increase the number of hospital beds – going so far as to set up temporary tent hospitals – would you believe that Mississippi went into the pandemic with a policy of intentionally limiting the number of hospital beds in our state? Shockingly, we did.
Even more shocking are the problems that CON laws were originally designed to solve: a facepalm-worthy fear of too much investment in the healthcare sector. The idea was that competition might lead health care businesses to build too many facilities, and that those facilities would be too large and too fancy, and then patients would receive subpar care and be overcharged for that care to cover the extravagance. Never mind that in every other industry competition increases quality, lowers prices, and spurs innovation.
Just describing the way that CON laws actually work makes it easy to see what is really behind them: protecting established businesses from competition with newcomers. First, a would-be healthcare startup (or even an existing hospital that just wants to add more hospital beds or medical equipment) must complete an application to try to prove to the state government that there is a need for the new facility, beds, equipment, or services. The fees for filing that application can be as high as $25,000, while the cost of paying the lawyers and consultants needed far exceed that amount. The application can take months to complete and years to go through the approval process.
Once the application has been filed, the applicant’s competitors get to take them to court in an effort to prove that the new facility, beds, equipment, or services are not needed, and that the current market participants have patients taken care of just fine, thank you very much.
After all of that time, money, and effort, the application can easily be denied, making all of it a waste. It’s not exactly a business-friendly system, to say the least.
So how did having CON laws work out for Mississippi during the pandemic? According to the Reason Foundation, states with CON laws have exceeded 70 percent of their ICU capacity for an average of 14.99 days per month during the pandemic, while states without CON laws have done so for only 8.65 days per month. Cutting the length of our hospital bed shortages nearly in half during the pandemic likely would have saved lives and spared us from a lot of economic pain.
Mississippi’s CON laws made the pandemic more difficult, but they will continue to lower the quality of our health care, increase the cost of health care, and reduce our access to care well beyond the pandemic. This legislative session, Mississippi should join the twelve other states that have repealed their CON laws and be done with it.
Aaron Rice is the Director of the Mississippi Justice Institute, a nonprofit, constitutional litigation center and the legal arm of the Mississippi Center for Public Policy.
Recent months have seen an economy that is continually struggling with supply chain driven shortages. As the world grapples with these challenges, the evidence suggests that much of these shortages are because of central economic planning based on Covid-driven public policy.
In the complex world of the pandemic, Americans have been inundated with information on the possible causes. Fires in key factories, natural disasters, and the like have been propounded as contributing factors in combination with the “effects” of the Covid pandemic. Yet, the question must be asked how much of these factors are attributable to the effects of people actually falling ill. While the tragedy of these cases is very real, the pandemic's effects have been grossly aggravated by central government planning that determined “essential” and “non-essential” businesses.
Lessons from the Soviet Union Show that Central Planning Leads to Shortages
In order to understand how central government planning causes chronic supply chain shortages, it is helpful to heed the lessons of the Soviet Union. While the concept of shortages is relatively new to Americans, the Soviet Union saw consistent shortages, primarily for consumer goods. Long lines had many Soviet citizens waiting for simple items ranging from clothing to toilet paper. Shortages were so common, that when Soviet Parliament member Boris Yeltsin visited Houston in 1989, he was astonished by how well the grocery stores shelves were stocked, almost convinced that it all must have been staged just for his visit.
There was a reason that a shortage of consumer goods was a way of life in the Soviet Union. Using the Socialist economic model, the Soviet government engaged in centralized economic planning that prioritized certain sectors over others. The Soviets did this via 5-year plans that gave specific priority on outputs for certain sectors. While the plans were made to look good for paper and propaganda, such plans failed to account for unexpected circumstances and were determined by the minds of bureaucrats instead of being informed by the market.
Supply Chains Have Had Disruptions Before, Without Such Widespread Impact
In 2021, a casual read of the headlines could lead one to believe that many of the economic disruptions brought about by Covid just so happened to occur along with other unprecedented supply chain disruptions occurred that were unrelated to Covid. Yet, it is important to note that factory fires, hurricanes, labor shortages, blockages of shipping canals, geopolitical instability, and other factors are not new. These challenges have consistently occurred over the course of modern history.
While the effects of such challenges do have a real impact, the ability of the supply chain to respond to these challenges is the real test of strength. In former days, supply chain shortages in the free world were usually short-term and relatively isolated to specific sectors.
The laws of supply and demand were generally able to alleviate the pressures. As the demand for certain products went up, the cost went up as well. In turn, these additional revenues helped alleviate supply chain challenges. Lower then return as the supply chain system adjusted to the new demand. But as the lessons from the Soviet Union demonstrate, this can only happen when a free market is permitted to operate and respond quickly to unexpected challenges.
“Disaster Socialism” is a Prelude to Supply Chain Disaster
With Covid, many at the highest levels of government decided that the circumstances justified central economic planning based upon a model that many admittingly called “disaster socialism.” “Disaster socialism” is the idea that the free market cannot operate properly in a time of disaster and that government must implement economic controls. Under this application of “disaster socialism” certain businesses found themselves being labeled as either “essential” or “non-essential.” Meanwhile, the federal government did a massive welfare expansion program and moved America forward towards a more thorough economic reset.
Initially, the long-term effects of such policies were not as easily detected. The government simply pumped out money and mailed out stimulus checks to keep the economy afloat. But it wasn’t long before the realities of this arbitrary central planning began to take effect, particularly on the supply chain.
The Model of Covid Central Planning
The federal, state, and local governments adopted a two-pronged model of central economic planning during Covid. While not all jurisdictions applied this model in the same way, the basic tenets were the same. This economic planning model employed:
- Simultaneous ban on the operations of certain businesses that were arbitrarily deemed “non-essential.”
- Pouring federal funds into the economy through unprecedented government spending.
In the area of sector-specific planning, governments determined what elements of the economy would operate based on their priorities. For instance, if a state government could determine that liquor stores should be open (note, a large source of tax revenue) while restaurants should be closed.
While state governments were primarily responsible for lockdowns and the closure of “non-essential businesses,” the federal government stepped in. It provided the additional element of central planning that called for an influx of funds in the economy. This was accomplished through massive spending plans.
The primary effects of such spending plans brought about inflation combined with a decrease in active workforce participation. Regardless of whether or not they had been directly labeled as a “essential” or “non-essential,” all businesses now had to grapple with the consequences of inflated prices and a labor shortage.
The Effects of Central Planning on the Supply Chain
All of these factors come full circle back to the principle of supply and demand and its impact on the supply chain. The logistics sector has now been hit by the same collateral effects of central planning that other sectors have been impacted by. Furthermore, the logistics sector had to deal with additional challenges due to government restrictions on movement and a lack of raw materials.
As the demand for products increases to at or above pre-pandemic levels, the logistics sector has to deal with that demand while still attempting to address the backlog brought about by the effects of lockdowns and a decreased workforce. Like the failed socialism and central planning of the Soviet Union, the American economy is seeing what happens when those in power attempt to orchestrate the economy.
Yet there is a contrast to such failure, in 1776, the economist Adam Smith referred to the forces of the free market as an “invisible hand” that brings about the best outcomes for the economy and consumers. Such a belief in the free market has driven America forward. The whims of central government planning have failed the test of history. To see an effective supply chain in the future, America would do well to return to the free market principles of its past.