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What Happened: October 11, 2021

Tablet’s afternoon news digest: Southwest stops flying; The COVID-19 pill; Global supply chains explained

The Scroll
October 11, 2021

The Big Story

Southwest Airlines was forced to cancel more than 2,000 flights over the weekend and hundreds more on Monday. The canceled flights come on the heels of the airline’s pilots filing an injunction in federal court last Friday seeking to block a new company policy mandating COVID-19 vaccines for all employees. Southwest officials said the cancellations were unrelated to the labor disputes and resulted from air traffic control problems, poor weather, and staffing shortages that were the result of layoffs made during the pandemic. But the Federal Aviation Administration (FAA) seemed to contradict that account. In a statement, the FAA denied that any flight had been canceled due to air traffic issues since Friday. Social media and independent news sites have carried dozens of accounts from people claiming to be Southwest employees who say that the cancellations were the result of a worker stoppage, as pilots protest the mandatory vaccine policy. But Southwest’s pilot union, which filed the motion in court last week asking a judge to block the mandate, insists that is not the case. “We can say with confidence that our pilots are not participating in any official or unofficial job actions,” the union said in a statement. In earlier public statements the pilot’s union has stressed that it is not anti-vaccine but opposes the mandate on the grounds that adverse health impacts from vaccines could impair pilots’ ability to fly.

Read it here:
And here’s the full motion filed in Federal court last Friday by the pilot’s union. Today’s Back Pages: Huntsman Explains the Global Supply Chain Breakdown

The Rest

-Nicolas Chaillan, the Pentagon’s first software chief, resigned from the job in protest over the United States being unwilling to compete with China—a failure he says has already led to defeat in the race toward mastery of artificial intelligence. “We have no competing fighting chance against China in 15 to 20 years. Right now, it’s already a done deal; it is already over, in my opinion,” Chaillan told the Financial Times in his first interview since leaving the post.

-A Chinese tank regiment was deployed to conduct training exercises in the area of Xinjiang along part of the 2,000-mile China-India border after the latest breakdown in talks between the two countries. Both countries’ troop deployments to the contested border region have reached levels not seen in decades as the 13th round of peace talks fell apart Sunday.

-There are 403 Seattle police officers—roughly 40% of the 1,000 person department—who face firing if they do not comply with COVID-19 vaccine mandates by an Oct. 18 deadline. The department’s interim police chief ordered a “Phase 3 Mobilization,” placing all department personnel on standby starting Oct. 13 to respond to 911 calls in the event of a manpower shortage.
Read it here:

-A Navy nuclear engineer and his wife were arrested Saturday after allegedly trying to sell secrets about U.S. nuclear submarine technology to an unnamed foreign power. The plot was busted after the United States intercepted a package that the couple sent to the foreign country last December that contained sensitive U.S. military documents and instructions for establishing encrypted communications, which the FBI used to lure the couple into a sting operation.

-There’s nothing necessarily wrong with the United States and the Taliban holding talks, as they did in Doha, Qatar, over the weekend for the first time since August, when the Islamist group took over Afghanistan. The danger comes from what we’ve referred to here before as the “‘Lebanonization’ of Afghanistan”—the U.S. security establishment’s habit of funneling money into governments controlled by its strategic foes, as it has done in both Lebanon and Iraq.

-Merck is asking U.S. regulators Monday for Emergency Use Authorization for its antiviral pill molnupiravir. Interim data submitted by the pharmaceutical company to the Food and Drug Administration shows that in mild-to-moderate adult COVID-19 patients, the pill lowered the risk for hospitalization by roughly 50%.
Read it here:

-Energy prices are still way up across the globe, with oil prices hitting their highest levels in years Monday, driven by a surge in demand that—together with breakdowns in the supply chain—has already led to significant energy shortages in a number of countries, including China.

-The notorious AQ Kahn, real name Abdul Qadeer Khan, known as the father of Pakistan’s nuclear weapons program, has died at 85. Khan’s designs, which made Pakistan the first Islamic country to become a nuclear power, were exported abroad to other countries such as North Korea and Iran, which used them in their own efforts to build nuclear weapons.

-Rabbi Dr. Moshe Dovid Tendler, a rabbinic expert on science and medical ethics, died on September 28, the same day of the Jewish holiday of Shemini Atzeret. He was 95. Tendler was the son-in-law of Rabbi Moshe Feinstein, one of the foremost Jewish legal scholars of the 20th century.

-Israelis may never have the chance to join in the popular debate over whether Irish novelist Sally Rooney being an overpraised mediocrity reflects more on her lack of talent or the general dullness of our age, of which she is a representative figure. Rooney, a fashionable philistine who supports the cultural boycott on Israel, is refusing to let her new novel be translated into Hebrew.

The Back Pages

Before I learned Ross Kennedy’s real name or the fact that he was a 15-year veteran of the shipping industry, with much of his business in East Asia, I was reading his tweets. Under the twitter handle Huntsman, he offers an insider’s view of the global supply chain along with a sharp 20,000-foot analysis of the major metapolitical trends in U.S. politics.

🚨Thread of Threads on Supply Chains and US Response During COVID-19

At the request of many readers, I’m compiling and pinning a master thread of all the long-form information I’ve prepared since the emergence of COVID-19.

New threads will be appended to this as I write them.

— HUNTSMAN 🇺🇸 (@man_integrated) March 21, 2020

The following excerpts are taken from a longer interview with Kennedy that will run in Tablet in the coming days.

What’s wrong with the global supply chain?

You can explain it on two levels. The first level is that we’ve built an economic model where a lot of things are not made close to home or close to where we buy them. We rely on a very complex, layered system of regulations and transportation nodes to get those things from far away to our door or our shelves. This very complex, easily disrupted system of transportation and regulations is what we rely on to make things and deliver things, including critical goods. To the extent that globalization made an awful lot of sense in the ’90s and even early 2000s, it relied on shared economic interests cooperating in a vacuum.

The minute you introduce competition and conflict, the system goess from a perfectly optimized engine of capitalist creation to a potential weapon. China recognized this far ahead of us. What we loosely call “the two colonels” (referring to two senior Air Force colonels in the Chinese military—ed.) released “Unrestricted Warfare” as an academic paper in 1999, shaping doctrine for the PLA (China’s military forces) and CCP (Chinese communist party). In the United States we had no idea the extent to which the leadership of China really took this seriously because we didn’t understand that the paper was just codifying and evolving doctrine that had existed since Deng Xiaoping (China’s head of state from 1978 to 1989), which is that the needs of the state govern the needs of the private industry.

That explains why global structure was vulnerable, but I’m still wondering about the U.S. role. Why would we willingly make ourselves dependent on such a fragile system?

Reaganomics set the table for it. We started practicing supply side economics filtered a little bit through the Austrian and Chicago schools of economics—which meant that, as a country, we tried to have our cake and eat it too. We said, “We don’t have to make these things that are very expensive. Look at what Japan is doing. Look at what Sony is doing, making better electronics than us at lower prices. Let’s see if we can follow a model of having other countries make our things, and then we’ll just ship it here, like we’re doing with Sony.”

As that happened and American companies began to gradually move parts of their supply chain offshore, generally to the Far East, the companies began to reap huge benefits out of it from a profitability standpoint by being able to reduce labor force, not having to pay as much for emissions controls and environmental controls as we do in the United States because of the EPA. In the early ’90s, a lot of the MBA programs that provided most of the intellectual and managerial talent to the big companies were teaching offshoring and outsourcing as the preferred way of increasing shareholder value. So that was where we began introducing fragility into the system, and we just kept doing it so long as it worked for the quarterly profits and earnings statements.

But for a long time it also seemed to work, right? From the consumer standpoint, if you weren’t one of the millions of people getting laid off, whole industries were outsourced, the shelves at Walmart and Best Buy were always stocked with new stuff, and prices seemed to be getting more affordable. Prior to the pandemic, when was the last time your average American experienced shortages or thought about the global supply chain as something that affected them?

It worked for Wall Street and it worked for Main Street right up until the point it didn’t. The beginning of the end was that it crept into the logistics. We began to apply the same logic to the supply chain as an industry and over-optimize ourselves. The whole thing might have gone on working indefinitely, but we began applying the same short-term, quarterly-profit-driven thinking into the infrastructure of logistics: optimizing driver fleets for trucking, optimizing chassis pools and equipment pools and containers inside the shipping cleats, optimizing port operations. We took out all the flexibility and slack in the logistics system itself. At that point, it became inevitable that with a major disruption, whether it was a pandemic or a war, the system would collapse.

What’s the net impact of all this going to be on the average American consumer over the next six months? Are we looking at shortages of key goods? Price increases? More delivery delays?

From a consumer perspective, the next six months are going to be characterized by reduced optionality and increasing prices. The more specialized the thing is, the less likely it is to be available. Blaming it all on Trump is stupid and blaming it all on Biden is stupid because we’re
at a point now where the only thing we can really do is cushion the landing. The extent to which we make political and economic choices in the next six to 12 months determines just how severe the landing is, but the landing is going to be the same stagflation and deflation that comes next because that’s just an inevitable output of chaos in this particular type of system. For consumers, if they’re used to having 10 kinds of beverages on the shelf that they prefer, maybe they’ve only got five because the ability to make and distribute aluminum cans is constrained, so companies can only have enough cans to sell five kinds of your five most popular flavors of drink. Sorry if you’d like the sixth most popular.

Beyond that, what it looks like is going to really be determined by the severity and extent of the labor strikes on the West Coast and the economic choices that are made by this administration in the next 12 months.

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Tablet’s afternoon newsletter edited by Jacob Siegel.

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