Supply chain bottlenecks seem to be everywhere. Restaurants, auto manufacturers, and home-builders cannot get the supplies to meet the consumer demand that is surging back in the aftermath of the pandemic lockdowns. The unusual economy-wide pervasiveness of the shortages is prompting economic and security concerns about the reliability and resiliency of international trade channels and about whether these significant challenges are systemic and long-lasting.
Failure to respond to these challenges now could have serious consequences. Yet, the U.S. can manage the supply chain risks and benefit from the stability and the prosperity of well-functioning global supply chains of goods and services, without having to turn to the inefficiencies and pitfalls of an “industrial policy.” This will require that private producers review the resilience of their own supply chains, enhance their backup supplier strategy, consider appropriate stockpiles based on both cost efficiencies and elasticity of alternative supplies, and work with public authorities in genuine cases of national security or public health vulnerability.
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