Supply Chain Issues: how a robust response depends on the free market

 It is psychologically verified that humans dislike loss more than they like gain, all things equal. Thus, the loss, or potential loss, of money is a good motivator for individuals and organizations to fix problems with their supply chains. Private organizations are founded on a balance between income and expenses. When big expenses are expected due to an event or circumstance, the individuals liable for the potential losses will do everything in their power to prevent as much loss as possible; in this case, solving the problem at hand usually is the best course of action. They will apply the innovation and ingenuity of a thousand intelligent and well-paid individuals, each with their own specialty, to the problem. The loss of money causes literal pain--even activating the same parts of the brain physical pain activates. 

Now, a governmental organization, on the other hand, is not tied to profits or losses. An official, even if he is not corrupt, will get his salary and benefits no matter the state of the assets he is managing. This is assuming the best intentions. It's not his money. Thus, if a problem occurs that could cause the loss of large amounts of money, the official is not motivated by fear of that loss. The solution could come after their golf break or Sunday theater excursion. 

Why am I stating this? Because America is experiencing a supply chain crisis right now. The ports of Long Beach and Los Angeles are backed up to a degree that they've never been in recorded history. More than a hundred ships are waiting at the docks. Stores across the nation are experiencing shortages. Some people are saying: what should the government do? 

Well, I want to make it clear. You shouldn't be asking what the government should do. You should be asking what the government shouldn't do. The government shouldn't hinder the natural process of market forces as they work to clear up the backlog. They should step back and let the smart people who have skin in the game to do the problem solving. No sweeping regulations will help this problem. Only a reduction of government hinderance. 

I will make my case. An individual working for the government, as stated before, has no skin in the game. Psychologically, he does not consider the assets he is managing to be his. It is psychologically proven that, once an individual considers something theirs, they are less willing to give it up. Thus, an individual who risks losing something that is in his possession, he is more likely to go to great lengths to retain that possession. 

And the owners in this case are the myriad businesses and stores that are experiencing the shortages. They will stop at nothing to reduce losses. This includes innovation. You do not understand the true ingenuity of a human mind until you threaten them with millions of dollars of personal losses. They will get the problem solved, if you just let them work. They don't give a damn about you. They're just watching out for their own interests. But, by doing this, they serve you, the customer as well. 

My conclusion is that we should step back from the problem as much as possible, and allow those who have skin in the game to do their thing and work hard to remedy the problem. Only then will we have a robust and lasting solution.