The Global Chip Shortage Doesn ’t Demand Supply Chain Nationalism

Scott LincicomeThe global semiconductor shortage roiling the U.S. automotive industry has become the latest pandemic ‐​induced supply chain disruption embraced by economic nationalists to justify their preferred trade and industrial policies — policies that would renationalize global supply chains and supposedly improve America’s economic “resilience” during future emergencies. President Biden is alsoreportedly considering an executive action to address the issue. Leaving aside the fact that the auto industry ’s semiconductor problems are in large part “self ‐​inflicted” (and not shared by better‐​planning car companies), or that North American producers are among theleast ‐​affected automakers in the world, or that automotive companies primarily needlow ‐​margincommodity chips made byolder equipment (not the bleeding ‐​edge chips/​equipment that the U.S. military needs or that the federal governmentwants to subsidize), the nationalist argument suffers from a fundamentally flawed premise that I detail in a new policy analysis. In particular, there is ample evidence that, while re ‐​shoring supply chains might insulate U.S. producers and consumers from external shocks like foreign wars or natural disasters, those same policies can actually make the U.S. economyless resilient — especially when the shock is domestic.And this very flawjust revealed itselfin the case of semiconductors:Severe weather conditions hitting mu...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs