Inside the Global Supply Chain, Peter S. Goodman
In this must-watch episode of NextGen Industrialists: Rebuilding America’s Dynamism, host Belinda Ephraim engages in a deep dive with Peter S. Goodman, author of the eye-opening book, "How The World Ran Out of Everything: Inside the Global Supply Chain."
Key Discussion Points
The global supply chain crisis and its impact on everyday life
How COVID-19 exposed weaknesses in global logistics and manufacturing
How just-in-time principles and the quest for short-term profits exacerbates the fragility of our supply chains
Practical strategies for building resilient, inclusive supply chains starts with empowering a disenfranchised workforce
The inevitable role of automation, AI, and deep tech in future-proofing supply chains
Economic and ethical considerations in global manufacturing and labor
Resources Mentioned
World Trade Organization, China
Precision Scheduled Railroading
Norfolk Southern: East Palestine, Ohio Train Derailment
Barbara Ehrenreich, Nickel and Dimed
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Connect with Peter S. Goodman
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Introduction
Hello.
Hello. Hello. Hello.
And welcome to NextGen Industrialist podcast.
Today, we have a special guest.
We are going to be talking about the journey through the hidden world of global supply chains. Peter s Goodman, a renowned expert and author of the book, how the world ran out of everything inside the global supply chain. He is joining us today to shed light on the fascinating yet fragile networks that bring products and services to our doorsteps.
Chapter
Impact of the Pandemic on Global Supply Chains
As the COVID nineteen pandemic revealed, our global supply chains are more vulnerable than we ever imagined even four years after the fact. From running out of infant formula and toilet paper to facing critical strategies of semiconductor chips.
These disruptions have impacted our lives and continue to impact our lives in profound ways. Peter's book delves into the reasons behind the shortages and what we can do to build more resilient systems for the future. So stay with us as we explore the intricacies of global logistics, the business decisions that have shaped our supply chains, and the lessons we must learn to safeguard against a future crisis. Let us dive in.
Chapter
Personal Experience and Book Inspiration
Peter, welcome to NextGen Industrialist podcast.
Thanks so much for having me. Great to be here.
Yeah. Great. So we're gonna get right into this. I will I'm really curious to know, at what point did you decide to write this book, and what inspired you to write how the world ran out of everything inside the global supply chain?
Well, it was really quite personal. You know? I I never imagined that I would write a book about the global supply chain, which is a subject that's always been part of other subjects I've written about in the course of writing about the global economy for now, I don't know, twenty five or even thirty years. But I was living in London with my family. I was based there for the New York Times European economic correspondent.
And, I was finishing up my last book, Davos man, how the billionaires devour the world, which is about the rise of right wing populism and the commonality from Brexit to Trump to the rise of the right in Sweden and Italy and France being economic inequality.
And then the pandemic happened. And, we had a a baby born, our our third child, our son on April eighth of twenty twenty. And my wife was, you know, quite stoic about the fact that her parents couldn't fly in from New York to help with the baby, and I could only be in the hospital for an hour given quarantines and lockdowns. And and after we got out of the hospital and got home with the baby, she understood that government offices were closed.
He basically didn't exist on paper. We couldn't take him to the pediatrician's office. But where I remember she really broke down was when we tried to order hand sanitizer, and we couldn't find any anywhere in London on any e com commerce sites. It went around the neighborhood, couldn't even find the ingredients to make hand sanitizer.
We couldn't find face masks.
And of of course, we discovered that everybody we knew was experiencing a similar disappearance of things we had just taken for granted. I mean, ran out of toilet paper to your point. We didn't run out of toilet paper. People hoarded toilet paper, but it was the same thing.
We couldn't find it. And my wife turned to me at one point and said, well, you're supposed to understand the global economy. What's going on? And and I I realized that I didn't fully understand it.
And more than that, it was so bewildering because here's this part of commercial life, of modern life that we really don't think about very much. We sort of like flipping on the light switch. You know? You you don't think about the electrical grid and what energy is being burned.
You just flip it on, the lights come on. Well, if the lights don't come on in a really dark time, you do start to think about what's going on and how vulnerable are we. So I started to do write stories about the supply chain. I started to write stories about, shipping crisis, shortages of containers in China, incredible spikes in the prices of moving goods around the globe.
And I kinda quickly discovered I'm not gonna get a satisfying, answer, to the question of really what is going on without a book length treatment. So I started diving in to look look at the roots of the kind of China centric form of globalization that has been, dominant in most of our lifetimes, the roots of of mass assembly. I started to look at labor markets. It quickly figured out this this merits a book.
No. I mean, that's really incredible. You actually tell this story, in your book about your wife giving birth and having to even delay the birth certificate because they weren't government officials to actually provide this level of service at that time.
And you begin the book by saying the world has fallen apart.
Yeah. My wife said that.
Exactly. Yeah. And and and you go into, how does the wealthiest country on Earth run out of protective gear in the middle of a public health catastrophe?
How do its parents find themselves unable to locate crucially needed infant formula?
How do its largest companies spend billions of dollars making cars that no one can drive for a lack of chips?
And what led you to Hagen Walker?
Hagen Walker, I believe, was a manufacturer here in the US, a small business Yeah. Who produced, a specific product for Sesame Street, if I recall.
And so by when you talk about getting into the roots of trying to figure out what really happened with global supply chains, you mentioned you pretty much highlight his story from why he decided to produce his goods in China and what he had to go through during the especially during the pandemic because that was at the inflection point that he made the choice to go to China to manufacture his products.
Chapter
Exploring the Roots of Global Supply Chains
Can we you go a little bit into that and how you guys two connected?
Yeah. Well so I knew as I started writing this book that there were discrete areas of the global economy that I was really interested in. I wanted to understand the rise of mass assembly combined with the emergence of the container ship and international trade deals like the one that brought China into the World Trade Organization to explain, you know, why are we so dependent upon this one country on the other side of Pacific Ocean for so many critical goods. And then I wanted to understand, the disruption of the pandemic itself, you know, what happens when you, can't operate your factory at full capacity.
Excuse me. And then finally, I wanted to understand the various transportation networks that we're dependent on to get our goods from factories to where we need them.
Most, immediately, the international shipping industry, but I also want to understand domestically, railroads, history of deregulation, trucking, the dock workers. But rather than just sort of write chapters on each aspect of this, which I thought would be, uninviting to the reader. I wanted a compelling narrative. So I thought the best way to do that would be to find either one company I could look at, who was a larger company that operations around the globe and sort of see how all of these pieces, of the company work together.
Chapter
Finding a Compelling Narrative
Or the idea that I liked the most and that I eventually settled on was find one shipment of goods and follow it from a factory in China, across the Pacific to one of these giant floating traffic jams that I think a lot of us remember, you know, fifty, sixty, seventy container ships floating off the twin ports of Los Angeles and Long Beach. These are the two ports in Southern California that are the gateway to about forty percent of all imported goods reaching the United States by container ship, and then look at trucking and rail and so on.
And so, you know, like most reporters, I get a lot of emails from PR people that I mostly disregard to be quite honest because it's usually some version of, thank you so much for writing this story that you wrote, about this one company. How about you write the same story with my client as the and so, usually, I archive those and forget about them. I started to respond to some of these pitches. Anything that that touched on the supply chain, I would say, no.
Chapter
Connecting with a Company in the Supply Chain
I don't wanna write about how your app is revolutionizing, e-commerce as we know it. But I am really interested in speaking to a company if they will open up to me that will share the particulars of this journey from a factory town in China to some end warehouse in the United States. And, eventually, I got hooked up with this company called Freitas, which is sort of like Expedia for container shipping for companies that are small enough that they don't have contracts with ocean carriers. You know, a company like Amazon is moving thousands of containers around the world per week.
Well, Hagen Walker, the guy that Freightos introduced me to, is running a startup company in his college town of Starkville, Mississippi. He graduated from Mississippi, stayed with a degree in engineering, stayed in town to produce these light up novelty cubes. They these plastic cubes, you drop them in water, they light up. His original market was bars.
Chapter
The Story of Hagen Walker, CEO of Glo Pals
Bartenders could drop a a light up cube and a drink. It was kind of a a fun thing that would happen. They could glance down the bar and see immediately who needed a refill because the light went off. And then somebody wrote to him and said, you know, my child has autism, and, bath time is an absolute nightmare because the sound of rushing water is very overwhelming.
And then we dropped one of your cubes in the bath, and it really seemed to ease our child. Well, this became this idea for these bath toys, and I met Hagan Walker shortly after he signed the most important deal in the history of his startup to make these light up glow cubes, Elmo themed for Sesame Street. And it just so happened that I was following the first order of his that was big enough to actually justify its own forty foot shipping container from Ningbo, this industrial city in China, across the Pacific. And Hagen, the minute I talked to him, was clearly this very engaging, open, young guy, curious about what had happened himself.
I mean, he he's no expert in international shipping, though he knew more about it than I did at that point. And he was willing to let me fly down to Mississippi, sit by his side, look through, you know, reams of emails and documents to sort of piece together this harrowing journey where he barely made it in time for the holiday season of, twenty twenty one with the most important order in the history of his company.
Chapter
Rise of China's Exports and Offshoring Manufacturing
It's a fascinating tale, actually. The value of China's exports multiplied from two hundred and seventy two billion in two thousand and one, the year it actually officially joined, I mean, the World Trade Organization to more than three point five trillion twenty years later.
Why is it that everyone all of a sudden decided to offshore our manufacturing here in the US and also globally. Right? Just wasn't the US. Like, what was it about China that was so attractive?
Yeah. You know, China presented an unbeatable combination of scale, logistics capacity, had really, concentrated targeted investments in things like educate basic education for workers so that people had literacy and skills to go work in a factory, and then the infrastructure, ports, highways, the electrical grid, and then entered the WTO in two thousand one as a way to attract more foreign investment into industry. And at the same time, on our side of the Pacific, our own economy became marinated in the mantra that it was just all about making, share prices go up. And, the heads of publicly traded companies perpetually on the prowl for ways to cut their costs, to get out from under unions, to find a haven where they did they could, you know, bypass, workplace safety and environmental standards by cutting in, communist party official.
You know, China beckoned as the ultimate solution to their problems, and it's and, you know, this is not by accident. I mean, I I tell the story of how, the Clinton administration was lobbied heavily by retailers, American manufacturers to get China into the World Trade Organization as a way to crack China open to investment.
Chapter
China's Entry into the World Trade Organization
And and, ultimately, what we got was, you know, what I'd consider to be the the most, ironic and momentous, vent a joint venture in the history of global capitalism between Walmart and the People's Republic of China, this institution forged in a peasant led rebellion in the name of Marxism, becomes the perfect joint venture partner for the world's largest retailer from the citadel of capitalism, the United States, and it was very profitable for Walmart shareholders. It was a consumer bonanza for Americans. It was very costly to the couple of million American workers who lost their jobs in the decade after China entered the WTO.
And and Americans, we we really failed to cushion the blow for for people who who got left behind and and really abandoned, but it became the path of least resistance. So Hagan Walker, by the time he he's got his startup idea, you know, twenty years plus, twenty years after trying to enter to the WTO, he he's intent on actually making his product in the United States. He's he's committed to his local, community, but he just can't find people who can make what he needs. At one point, he tries to get somebody to make the packaging for his, his light up his bath toys.
Chapter
Challenges of Manufacturing "Get It Made In China"
He wants, like, a children's book style pop up book, with etching. And he calls around, and one factory says, look. This is just too complicated. You you should just get this made in China.
And and and if that's what everyone else is doing, then that's where the supply chain gravitates the raw materials, the know how, the design.
It's all available there. Plastics, LED, displays, basic computer chips. It's all available in China.
And is that because of the connection, you know, obviously, the look from a geopolitical perspective, the location of China, in relation to Vietnam, in relation to Taiwan, and, you know, all the the entire industrial hub that exists around that country.
No. I mean, it's it's because, the Chinese government follows a path that had been blazed, though never at the scale that China did, by, countries that had managed to industrialize and focus on manufacturing, export led manufacturing. You know, of course, we're talking Japan, South Korea, Taiwan, then comes the the next wave, the the the tiger economies, Southeast Asian countries like like Thailand, Malaysia, to a lesser extent, Indonesia, which happened later.
And and, the Chinese government studies these successes in terms of lifting people out of poverty, and building wealth and understands, you know, once the Chinese Communist Party, starts embracing this reform path in, beginning in the seventies, but really picking up speed into the eighties and and and the nineties that ideology becomes peripheral to the mission of industrializing and and building wealth. I mean, as as Deng Xiaoping who's who who's the paramount leader during of most import during their former era put it, you know, it doesn't matter if the, cat is black or white. It just matters if it can catch mice. And that's that's that's that's the the mantra as China sets about investing very heavily into, infrastructure, courting foreign investment, engaging in serious industrial policy, to build up industry to scale and focusing on exports. It is the most successful anti poverty program in the history of the world.
Chapter
Impact of US Trade with China
Yeah. For, you know, obviously, for its people, but then I think the negative implications given the pressures from Wall Street's on lowering costs, low prices for consumers, and then profits actually also help to destabilize our labor workforce here in our country and across the globe.
Yeah. I mean, we did that to ourselves.
To a certain extent.
Yeah. I mean, the the the benefits of of US trade with China have been enormous. I mean, it really has been a consumer bonanza. A lot of wealth has been made in the United States, exporting goods and services to China, but importing a lot of increasingly high quality cheap goods. What we failed to do was take care of the people who were in harm's way, the people who lost their jobs to to low priced imports, and we we failed to, craft a deal that would protect us from the the impacts of of China's aggressive subsidies. I mean, government subsidies in the industry, are the standard for workplace safety, for for labor organizing work, you know, minimal to nonexistent.
And that's how the western multinational companies wanted it. They they did not wanna deal with labor unions. That's why they were going to China. But this is something that we've really done to ourselves more than, you know, as the political narrative would would have it, as if we've been victimized, you know, by some sort of conspiracy from China. This is an inside job.
Chapter
The Role of Western Multinational Companies
Yeah. Absolutely. I do agree with you. Talk about Henry Ford. You mentioned him a lot, throughout the book. His philosophy his philosophies on labor and paying fair wages because he sort of foresaw the impact by not really taking care of people, how that can actually affect, again, you know, this idea behind profits and and, success in in being an industrialist.
Yeah. It's a really important point. He knows a thing or two about supply chains.
He knew an awful lot about how to assemble products at a mass scale and, drive down the prices and how to mobilize people and materials at enormous scale. He is the godfather of the modern supply chain. And and I think it is really interesting that he doubled wages for his employees in nineteen fourteen, at at his factories in in Michigan, and he did that in in a way that, you know, caused a lot of, unhappiness in the rest of the industrialized world. People people call him a communist.
Chapter
Henry Ford's Approach to Employee Wages
And he said, look. I'm I'm a I'm a capitalist. I'm just trying to make my goods at scale reliably, and I understand that if I want the full attention of my workers, if I want them doing their best work, laboring hard, bringing me fresh thinking, they can't be bothered by worries about not being able to pay their bills. I don't want them shopping around for other jobs after I've invested in training them, and that costs money.
So I have a more resilient operation if I can pay people decently, and that's what he did. And that is something that we have very much lost, track of as as increasingly the consulting class tends to describe the human beings who are, critical to the supply chain. I mean, just any package that lands at your door, some somebody drove it in a truck or or hauled it in by rail or put it into an airplane by air freight, and people made it and guided the machines and dock workers lifted, containers or or they they were there as as they were guiding cranes, lifting containers on and off the ships.
Chapter
Challenges in the Trucking Industry
There's a lot of people we're invited to not think about. And during the worst disruptions of the pandemic, you know, we were told time and again that, well, we ran out of truck drivers. That's why there were these big floating queues off of, ports like LA and Long Beach, because we didn't have enough truck drivers to haul the containers off the docks. We didn't have enough people working in warehouses.
We ran out of those people too. What we ran out of, if you if you actually look into it as I did, is people willing to sign off on the bargain, that has become driving a truck, a job that's always been hard, has always involved, distant from family, you know, being on the road a lot. It's tough to sit behind the wheel of a truck for ten, twelve hours a day, tough to sleep out on the road. But it used to pay really truly middle class wages, and now it's basically a working poor job.
Chapter
Firsthand Experience of a Truck Driver
And so we have to get back. If if we want reliability, we gotta pay for it.
Yeah. You actually, drove alongside a truck driver on a three day long call. From where to where?
I was trying Yeah. I got it.
You're not you're not just saying this because, you know, as a as a, you know, theory that you came up with, you know, while you're writing the book.
Oh, no.
You actually got into that cab. I think his name was Graves. Was it Graves?
Yeah. Yes. He just retired, actually.
Oh, good for him.
Yeah. Good for him. Right. Yeah. He's he's sitting at home in in, Tennessee now.
Chapter
Issues in the Trucking Industry
Yeah. You know, I'd heard all about the truck driver shortages, and and then I I did a little bit of research, talked to an expert who'd written a book, actually, former truck driver who saw this guy, Steve Viscelli, who's a labor expert at University of Pennsylvania, and, helped helped me understand that this industry has been short of truck drivers for decades.
And it's constantly lobbying the state and federal authorities to subsidize training programs for more truck drivers so so there are more people so we can keep this whole operation going even though there's a lot of predatory scheming involved in this industry. They they hook drivers in with the vision of, you know, seeing the open country, and then they're locked into, they they they pay for their training programs often at wildly inflated rates, and then the drivers have to sort of pay back their training by being committed to that one trucking company. Come what may, they tout, leasing arrangements where drivers buy their trucks at vastly inflated rates.
Chapter
Author's Experience Riding Along a Truck Driver
They have to get their trucks serviced at service stations that are affiliated with the trucking companies at at very expensive prices. And so I wanted to see for myself, you know, what is this job exactly? So I got into the cab of a truck in Kansas City on a freezing cold day. It was, like, minus fourteen in January of twenty twenty two, and I rode along with Stephen Graves for three days down, through, first, Kansas and into Oklahoma and into Texas and down to Fort Worth, Texas near the Dallas Fort Worth airport to a warehouse, and then reversed the journey and and and made the journey back, slept in a bunk at the back of the cab for a couple days and saw, man, this is not a job that you would do unless you didn't have a better way to pay your bills.
Chapter
Challenges Faced by Truck Drivers
Because truck drivers are sitting there just fretting over. How can they be caffeinated enough that they're not gonna fall asleep at the wheel? Steven Graves put it to me. You're not afraid out here.
You're a fool. It takes the length of a football field plus to stop a fifty three foot loaded up tractor trailer.
And, you know, anybody who's been on the road knows there's all kinds of craziness out there, but they don't wanna caffeinate so much that they're having to constantly pull over to use the restroom.
They're worried about where to park. They're worried about where they're gonna spend the night. Will they have to pay for parking? Will there be a space?
Will they end up having to pull over on the side of the highway with security problems? This is a tough job. Like I say, it's always been a tough job. But before deregulation in the late nineteen seventies, the Teamsters were in charge, another controversial institution, but an institution that demonstrates the power of having a union behind you trying to get your piece of the action.
Chapter
Role of Unions in the Trucking Industry
And and there were plenty of truck drivers then because it was it was a good living.
Yeah. And I think that's probably the difference when you look at the labor supply chain.
You know, the dock workers, vessels, the dray operators. So the dock workers are the guys who again, correct me, you know, if I'm wrong here, but the dock workers are the guys who actually sit, you know, in the cranes or manage the flow of the containers, taking the containers off the ship and onto the the back of the truck. So those would be the dray operators, which if you just park your car off the highway around Long Beach, you can literally see Yeah. The amount of work.
Chapter
Challenges Faced by Dock Workers and Truck Drivers
And so the dock workers actually are unionized, and so they are almost considered kind of like the kingpins when it comes to this labor supply chain. And then you have the truck workers, you know, that actually you know, the the truck drivers who actually now have to drive from point a to point b to deliver the goods to the distribution facilities wherever they are. It it's an and that's not even to mention the railroad the railroad workers, which was really surprising to me that they don't even get paid sick leave.
Chapter
Issues with Railroad Workers
Yeah.
And and for some do now, but Okay.
It's still not not much. And at the time that I started the book, they had no none none of them, these traveling, rail maintenance crews that are on the road for weeks at a time driving thousands of miles from their homes. Yeah. They they, they either when they're sick, they either, keep working or they don't get paid.
Right.
And so and and, you know, you mentioned what happened with I think was it Norfolk Southern, you know, with the capsizing of the rail trains that occurred and, you know, because they Northside, Ohio.
Yeah.
From a maintenance perspective because just as much as they drive the system, maybe not that one particular company because I, you know, I don't want to single out any one company, but it looks as though the system not only strains their workers, but also from a maintenance perspective, do the bare minimum to keep to upkeep the CapEx that they've invested in?
Chapter
Effects of Railroad Duopolies
I mean, the railroads that move freight in the United States are mostly duopolies. You know? There's, like, two two options, and in some places, they're outright monopolies. There's only one option.
And this is, a the outgrowth of deregulation that was driven by the interest of big box retailers, instead of, prices that were posted and available to everyone, and a regulator who could mandate, you know, where which communities would be served.
Chapter
Impact of Market Deregulation
We've got, you know, a free market, quote, unquote, with the addition that or rather the removal of any sort of transparency. So now you can have sweetheart deals between, rail carriers and major players.
And so this is really good for the big players. The big players get the benefits of their scale, and everybody else gets squeezed. And then then you get, shareholder maximization playing out, in, form known as precision scheduled railroading, which is like just in time Mhmm. On the rails.
Chapter
Vulnerability of Railroad Workers
It's really, you know, let's get rid of workers and make the workers who remain do more work than ever. Let's make workers more flexible than ever, which is a fancy way of saying you have to be on call virtually all the time, though you only get paid for the time that you're working. But, you know, at a moment's notice, you could be told too bad that it's your kid's birthday, that your spouse is having surgery, that you yourself need to go see a doctor. You know, you are needed in some town seven hundred miles away, so get in a car and and go.
And this is the system that we are relying on, to move cargo around, and it's proven very vulnerable. It's been good for investors and not good for workers and not good for the people who rely on the rail system because, you know, to your point about that East Palestine, catastrophe, you got people working longer hours than ever.
Chapter
Challenges Faced by Railroad Workers
Morale is low, and trains are longer than ever because precision schedule railroading has involved reducing the number of trains while making the trains that are out there longer. So it's more complicated to manage the traffic and when something goes wrong as it did there, in in in that case, you had a a brake malfunction, that involved, a part of the braking system that had been deregulated by the Trump by the Obama and then the Trump administrations, the results can be really catastrophic. We have these huge, fireballs and and then, a poisoning of of waterways in in that town. It was really an environmental disaster. Yeah.
Chapter
Environmental Disasters and Railroads
Yeah. It it was just really mind boggling.
So continuing on this labor discussion, let's talk about the working poor, which is how you termed it. Right? Yeah. The book says was, you know, trying to, I guess, maybe quantify what this means.
And you mentioned beyond the social implications of this widening inequality, the scarcity of selling communities, the breakdown of faith in democratic institutions, tax payers were footing the bill for the obliteration of labor power.
Chapter
Taxpayer Subsidies for Labor Power
You could see it in the ranks of those who depended on food stamps to feed their families.
More than nine million American families relied on the program at some point in two thousand and eighteen.
And seventy five percent of those families, it wasn't as though, you know, they were unemployed. They actually were working.
Right. So seventy five percent of people who are on food stamps to feed their families have a job.
That's right.
Yeah. I I think you're framing that just right. I mean, the takeaway there is that contrary to, I think, the kind of fundamental values of I don't wanna speak for everyone, but I I I'm tempted to say most of us in this country that, you know, if you work hard, you set an alarm clock and you do your best to go off to work, then you you should be guaranteed something. Right? Like, you should be able to put food on the table for your family.
You should be able to have some health care, the prospect of retirement in, decent circumstances.
Chapter
Decency and Job Security
You should have a roof over your head that is, comfortable and and safe. And, you know, we I think most of us are steeped in this idea that if you if you are particularly innovative, you have some idea that nobody else had, and you you turn that into a business, then you get you get the rewards. You do better than than most people.
I think we're all okay with that as as capitalists in this country. But I think I think our basic sense of decency is if you've got a job, you you should be able to provide for yourself and your family, and that's just clearly not true. We have large numbers of people whose jobs have been downgraded to the point that we, the taxpayer, have to subsidize, the the ranks of fast food workers, warehouse workers. Those businesses can't operate, can't find enough people willing to show up and be fed without our taxpayer funds, going in. I mean, that that is that is an outrageous form of corporate welfare.
Chapter
Consumerism and Labor Supply
Yeah. Because I actually did the research because I was like, well, that was two thousand and eighteen. So then I went, and I looked up at the, I guess, USDA website as well as Pew Research.
And that number from, you know, what, you know, you said, nine million households, I think, I believe, ended up being, as of twenty twenty three, twenty one point six million households. So that was just in five years alone. And I think this speaks to the problem at hand is that there aren't no jobs. There's no such thing as a as a as a as a, you know, worker shortage.
Chapter
Automation and Job Quality
It's just that there's such terrible jobs. Right. Right?
And and and and they don't they don't pay well, and and I know that a lot of states are now doing a lot to increase that minimum wage levels.
You know, kudos to California for that.
But I just feel like a hundred and forty one percentage increase over five years, there is a problem Yeah. Inherent in those numbers.
I mean I mean, that that you put your finger on it.
Chapter
Impact on Basic Living Standards
I mean, narrowly, for the purpose of my book, that's not a good way to feel confident that you'll be able to go to the store and find what you need or come home and discover that the package you ordered is there. More broadly, and this veers into the subject of my last book, Davos man, how the billionaires devoured the world, it's a pretty bad way to run a democracy because, if large numbers of people are working really hard and not earning enough to support themselves, there's a good chance that they're not very happy about it and that they begin to lose faith in basic institutions, and they conclude not without reason that the people running the economy don't put a lot of, importance on their ability to support their families. And we don't know how that goes, but it doesn't go well.
Chapter
Political and Social Ramifications
It creates opportunities for, politicians to then come in diagnosing real problems like the breakdown of of middle class living standards while prescribing, you know, ridiculous solutions, you know, demonizing immigrants, blaming countries on the other side of the Pacific for problems that are, our own making, at at home. And it's part of why our political, dialogue has been so poisoned. It's very hard to imagine, you know, how how you can deal with a pandemic or, you know, the the largest crisis of all climate change if large numbers of people have noticed that their basic, upkeep doesn't seem to matter very much to the people in charge.
Chapter
Challenges of Consumer Demands
Yeah. And also to the people that are, you know, the recipient of those goods and services that are being delivered. Right?
Like Right.
It's almost as though we as consumers, and I'll count myself in there. It's like our heads are stuck in the clouds. We want a T shirt, and we want it in twenty four hours or else all heads will roll. And that's not how it was. You know? And I think by being so demanding and this idea of consumerism, you know, can can lead it actually has consequences to the people who are delivering this service.
Chapter
Concerns about Automation
So let's fast forward to twenty twenty four now. You know, we the pace of automation, which I'm a big fan of, you know, when it comes to reindustrialization and really, you know, okay. Fine. We have this narrative. People don't want bad jobs.
You know, they want to be able to work, earn a good living. You know, when you look at the average apartment rate in the US, I think it's, like, fifth a little bit over fifteen hundred dollars a month.
And then I lived in New York for over a decade, so there was this thing in New York where you wanted to rent an apartment where it had to be forty times the rent. Your gross income had to be forty times the rent. And so if you take that fifteen hundred dollars forty times that, that technically should be for at least a technical skill set, whether that's a production manager I mean, production worker, truck driver. I think it comes out to about roughly maybe fifty, sixty thousand dollars a year.
Chapter
Challenges of Automation and Job Displacement
And most people who qualify for food stamps actually live below the median level. So now a lot of companies are saying, okay. Fine. We can find these workers. Let's go out there and get robots. Let's go out there and automate our factories.
What are your thoughts around that? Because as much as I like that, I'm very concerned that it might even get worse in terms of the skill sets of the workers that we actually need on these factory floors in in order to to support the automation and cobots?
You know, like, how are companies looking at this from your perspective?
Well, it's a very important question. I I think first of all, we should take a step back and understand that automation, robotics, AI, these things are inevitable.
They're it it's human nature. Right? I mean, we're gonna use our brains to figure out how to lessen our burdens, to take dangerous tasks and unpleasant tasks, and figure out how to put machines in harm's way instead of human beings. The question is, in what system are we deploying these technologies, and who's in control of, determining who gets the benefits and who gets the risk.
That that's the all important factor. You know, I I'm, I I often reflect on this trip that I took to a a big mine in Sweden, a few years ago where, truck drivers were being threatened with the loss of jobs because they were experimenting with self driving And I went there as an American imagining that, you know, workers were gonna be horrified by this and opposed. And what I learned was, you know, everybody I talked to working at this mine said, oh, yeah. We're fine with it.
I mean, this is Sweden. There's very high taxes. There's very, generous social services. There's national health care.
College is affordable. If you have trouble with housing, there are programs. If you lose a job, to trade or technology, they're very robust training programs in contrast to what we have in the US that are also very effective. And and so everybody I talked to said, yeah.
We're fine with it because this will make our company more profitable. And if the company's more profitable, we get higher wages. Again, lots of labor unions there, strong labor unions. So that was not some utopian fantasy.
That was based on their lived experience. They understood the company is more productive than indeed the wages get passed through through these annual labor agreements to to working people. Well, you contrast that with the US where labor unions are weak.
They've been cut down below ten percent of the workforce, where we don't have national health care. We don't have, robust training programs. And if you lose a job, it's a steep, quick way down. You know?
You you can end up homeless, or at least, you know, if you're lucky, if you lose a good factory job that's paying you twenty bucks an hour or more, you'd be lucky to get a job in a warehouse that's paying you half of that. And so our own workers are legitimately looking at new forms of technology that as, you know, from the beginning of capitalism, are often directed at lowering labor costs. I mean, the dock workers, as we speak, there's a potential dock worker strike on the East Coast of United States and and the Gulf of Mexico. Dock workers understand that container shipping, which has been a modern miracle and great for consumers and great for innovation, has been about replacing dock workers with fewer people, machines.
And so so American workers are not crazy when they say this stuff is about shrinking the human dimension in factories and warehouses and transportation networks, because, let's face it, robots don't need bathroom breaks. They don't get pregnant. They don't get sick. They don't have kids waiting for them at at home. They work whenever humans want them to work. And and so, again, we're not gonna stop that nor should we try to. That there's a lot of benefit that comes out of automation, but we gotta make sure that those benefits are shared in a way that's equitable and that creates new opportunities for all of us and that the people who are displaced and some people will inevitably displace are positioned to then get something in the next iteration of the economy.
Chapter
Comparison of Training Programs in European and American Contexts
Right. And I think that's probably what, a lot of European countries, not all of them, but most of them, in terms of robust training programs, we really don't have that here in Right. In in in America.
Yeah. Yeah. We don't. And and even if we did, it would be, okay. Go to go to a two year college or four year college that, you know, you're going to get credits for subject matters that are not even being used in the workforce.
And so how do we retool our education system? At least that's what it sounds like. You know? How do we engage more people by paying them well and taking care of them? Because, yes, maybe in the short term, it might impact costs, which are important. But in the long term, it actually increases profits and is beneficial for all.
My question to you, because from reading your book, this is not about a, you know, trying to point fingers considering the political divide in our country. This is not about this is not a Republican issue. This is not a Democratic issue. This is a united united word, states of America issue where we as the next generation of industrialists can make a difference.
Chapter
The Role of Industrialists in Addressing Automation Challenges
What would you how would you encourage that new CEO who is building an electric vehicle factory, for example, or that CEO who is trying to implement AI into data analytics? Because when you begin the call, you said from a PR perspective, you get a lot of outreach. Yeah. People reach out to you.
You know, hey. I'm working on this app. I'm doing this software.
Right.
Like and you're like, okay. You know?
Tell me something new.
What would be the advice to those kind of founders, CEOs, and even some of the existing Fortune five hundred companies that, you know, maybe at the time, they had to make a decision that really they didn't understand the implications. So maybe they did understand the implications, but they didn't really understand the the the the negative aspect. How can we all work together to include a human connection for the future as we walk alongside technology?
Chapter
Short-Term Thinking and Its Impact on Business Operations
Well, I I think we need to make sure that we're not, having the deployment of these technologies directed just by winning the next quarter.
People running businesses, especially publicly traded companies, have this slavish devotion, to whatever make share prices go up in the immediate term, and they're, you know, radically opposed to anything that might dilute the next quarter's earnings. And that that's just in opposition to running a vibrant company. That's that's a setup for, depleting your resilience for the sake of sort of short term sugar highs. You know, I mean, I'll give you an example.
Like, like, during the worst of the pandemic, I mean, this is a story I tell in the book. We had rail companies that were intentionally hauling cargo to the wrong destinations on purpose because Wall Street was hungering for lower dwell time. That's this measure of how long cargo sits in any particular place. So I found this engineer working for Union Pacific out in Idaho who was horrified to discover that he was pulling cargo to the wrong place because some guy running the yep the, rail yard in Nebraska took this imperative to lower dwell time, as an invitation to just attach as many cars as possible to the next train wherever it was going.
So this engineer discovers, oh, I'm hauling, auto parts that somebody's waiting for in California to Oregon because we've lowered dwell time. Well, that's good. I mean, that that's a real strain to call it good. It's good if your objective is to lower a number on an Excel spreadsheet for dwell time because you think investors are gonna send your stock price higher.
That's a terrible way to run a railroad. It's a terrible way to serve your customers. It's a terrible way to serve your workers, and and it's it's a direct outgrowth of this short term thinking that we've gotta be rid of. I also think, you know, what's in my book is a is a warning that the supply chain, procurement, transportation, these are areas of businesses that are generally looked at as unsexy.
You know, who who you you don't you don't join a business so you can understand what's happening in the mail room. You know? You you wanna be in product. You wanna be innovating.
You know, maybe you wanna be in marketing, shaping the story. Like, well, this stuff really matters. And and, you know, back to Henry Ford who you're asking about earlier, there was a conversation that Henry Ford had with Thomas Alva Edison, who he worshiped. I mean, Edison had already developed the light bulb, but they're riding in a rail car after this business event in New York in on Coney Island.
They're riding through Brooklyn toward Manhattan, and they really bonded over their shared dedication to what we we would now call the supply chain. They're trading stories about their inability to get hold of the materials they need, and they realize that you can have the most brilliant ideas in the world. But if you don't have a reliable supply of what you need, whether it's raw materials or human beings who are motivated to do their jobs, you got a problem. And and that's something that people running companies now need to embrace.
Chapter
The Importance of Supply Chain and Resilience
They need to think about the risks to the sort of ruthless on paper form of efficiency that we've pursued, where we've been invited to pretend that, you know, a factory in China might as well be the same as a factory in Michigan as long as it's connected to some port, as long as the Internet's there, as long as you got electricity. Well, that's just not true anymore. We need to focus on place and risks and and resilience, or we will definitely be here again.
Yeah. I just want to read from your book this piece, which you talked about the journalist Barbara Herring.
Herring. Right. Yeah.
Okay. Once described the the exertions of poorly paid employees as a universal subsidy that held down the cost of living for all.
When someone works for less pay, then they can leave on.
When, for example, they go hungry so that you can eat more cheaply and conveniently, then they have made a great sacrifice for you.
They have made you a gift of some part of their abilities, their health, and their life.
The working poor, as they are approvingly termed, are in fact the major philanthropists of our society.
They neglect their own children so that the children of others will be cared for.
They live in substandard housing so that other homes will be shiny and perfect.
They endure private private privation so that inflation will be low and stock prices high. To be a member of the working poor is to be an anonymous donor, a nameless benefactor to everybody else.
A functioning supply chain has come to depend on routine forms of exploitation, and these are false bargains.
Chapter
Closing Remarks and Contact Information
And everybody, I believe, who needs to read this book, not just CEOs, Peter S Goodman.
Thank you. I highlighted so much. I could not put this book down. It was riveting. Glad. It was readable.
Please, where can people follow you and follow your work?
I'm on all the usual places. Twitter, I'm still calling it that. Peter s Goodman. LinkedIn, Peter s Goodman. My website, Peter s Goodman dot com. My New York Times author page.
And I I I appreciate it. I appreciate your careful, thoughtful read and your your terrific questions.
Thank you. Thank you so much. I can't wait for your next book to have you back. I think, it would be fascinating. You have a really unique way of taking such a complex subject and putting it on paper that even somebody without a high school education can actually understand the intricacies inside the global supply chain.
So Thank you for that.
I really enjoyed this.
This was great. I know you have to run, but, again, thank you. I'm sure the audience maybe will have comments once we post this on YouTube and also on all podcasts where we can on, Apple, Spotify, YouTube, and, thank you so much.
Thank you again. Great to talk to you.
Alright.
Take care. Take care. Bye. Bye.
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