Has Just In Time’s time come?

From the New York Times: “Just In Time has amounted to no less than a revolution in the business world. By keeping inventories thin, major retailers have been able to use more of their space to display a wider array of goods. Just In Time has enabled manufacturers to customize their wares. And lean production has significantly cut costs while allowing companies to pivot quickly to new products.

“These virtues have added value to companies, spurred innovation and promoted trade, ensuring that Just In Time will retain its force long after the current crisis abates. The approach has also enriched shareholders by generating savings that companies have distributed in the form of dividends and share buybacks.

“Still, the shortages raise questions about whether some companies have been too aggressive in harvesting savings by slashing inventory, leaving them unprepared for whatever trouble inevitably emerges. …

“And many businesses have combined a dedication to Just In Time with a reliance on suppliers in low-wage countries like China and India, making any disruption to global shipping an immediate problem. That has amplified the damage when something goes awry — as when an enormous vessel lodged in the Suez Canal this year, closing the primary channel linking Europe and Asia.”

Forty years in the wilderness?

I doubt it will be that long but the Remainers have a long wait. Or perhaps not so long if, as I suspect, the UK will wind up with no deal at the end of the year, thus making Brexit even more painful. One thing is for sure, Boris Johnson isn’t going to accept a deal that leaves the UK close to the EU (à la Switzerland) and the EU isn’t going to give the UK access to a Single Market that doesn’t include free movement of peoples. And you can count on the US to exploit its superior bargaining position in free trade talks. That probably means higher prices in the UK for prescription drugs and letting American agricultural products in, GMO or no GMO. At least, we can expect the EU to keep its doors open to the repentant prodigal.

Pass the popcorn

“To side with America rather than the EU, as Johnson has been showing recently, risks committing the UK to far more than Brexit.

“Johnson is a risk-taker: while his gamble on Trump might benefit him today, it also risks breaking Britain, splitting the four-nation Union, and potentially putting it on the wrong side of emerging geopolitical fault lines.”

This weekend, Boris Johnson is making his leadership debut as on the world stage at the G7 in the French resort of Biarritz.

But he said they’re easy to win!

Paul Krugman in the New York Times: “So how will this end? Trade wars almost never have clear victors, but they often leave long-lasting scars on the world economy. The light-truck tariffs America imposed in 1964 in an unsuccessful effort to force Europe to buy our frozen chickens are still in place, 55 years later.

“Trump’s trade wars are vastly bigger than the trade wars of the past, but they’ll probably have the same result. No doubt Trump will try to spin some trivial foreign concessions as a great victory, but the actual result will just be to make everyone poorer. At the same time, Trump’s casual trashing of past trade agreements has badly damaged American credibility, and weakened the international rule of law.”

“U.S. Farmer Income Drops Most Since 2016 as Trade War Losses Mount”

I don’t understand. Trade wars are easy to win and we’re supposed to be tired of winning by now.

Bloomberg: “The report provided fresh evidence of the growing financial strain on U.S. farmers hit by the trade war, low commodity prices and a series of natural disasters including spring floods in the Midwest. With rural voters a key part of Trump’s electoral coalition, it also underscores the political pressure to conclude the China trade war as U.S. negotiators begin another round of talks in Beijing this week.”

International trade 101

Paul Krugman of the New York Times summarizes the findings of a group of economists from Columbia, Princeton, and the Federal Reserve: “The conclusion: to a first approximation, foreigners paid none of the bill, U.S. companies and consumers paid all of it. And the losses to U.S. consumers exceeded the revenue from the new tariffs, so the tariffs made America poorer overall. …

“Putting it all together, the Trump tariffs have raised consumer prices, rather than depressing foreign earnings. Some revenue has been gained, but there has also been what amounts to tax avoidance as consumers turn to other, untaxed sources of what we used to import. But this tax avoidance itself comes at a cost, so the U.S. as a whole is left poorer.”