Reality needs to drive decisions – April 2022
Under capitalism companies compete with each other and when one company gains a competitive edge, it can, and sometimes does gobble up its competition. In the U.S., it seems, the trend is for this to happen until there are only a few giant companies manufacturing or producing products consumed by our citizens. As our transportation networks have become more advanced, we see this translating into the same issue worldwide. For a number of years there were three U.S. car manufacturers building cars for U.S. consumers. This changed when Fiat came along and purchased Chrysler to create Fiat Chrysler Automobiles, one of the three remaining companies. GM and Ford got into the act by buying other car manufacturing facilities or forming strategic partnerships with companies throughout the world. They also outsourced the manufacturing of many of their components to other countries in an effort to gain an economic advantage. The label “made in America” for automobiles is tenuous at best.
Economists have theorized that in mature economies manufacturing and other industries trend towards a top three or four companies. This provides some tremendous efficiencies which give these companies a continued edge over their counterparts.
Unfortunately, as we’ve seen, this also opens the process to supply chain problems. When you have three or four companies producing computer chips for cars and you put restrictions on computer chips from one country while having a fire in the computer chip factory in another you suddenly find yourself with some very modern looking cars which can only serve as large paperweights. Worldwide these disruptions are causing serious problems.
One of our Legislative Meeting speakers talked about energy issues and pointed out “how we want things to be” doesn’t always fit with reality for energy. The energy sector is a prime example of how we in the U.S. are using the “how we want things to be” instead of “how they are” thinking process. With the change in administration, we saw a big focus on renewable energy while at the same time instituting policies to move away from fossil fuels. For those folks who are concerned about man-caused climate change this effort is moving ahead without a full understanding of reality. As our speaker pointed out, if the U.S. stopped using fossil fuels tomorrow it would only slow the growth of carbon emissions worldwide by a couple of years. However, ignoring the contribution of fossil fuels to our energy needs and setting about to cripple that source of energy before we have a substitute can have tremendous consequences for our country.
Our European neighbors have been charging down the renewable energy path a lot longer than the U.S. With the invasion of Ukraine by Russia and the subsequent reaction of other countries, they are suddenly facing the reality that fossil fuels still make up a huge portion of their energy source. While the U.S. can supply our energy needs through domestic sources if there is the political will, our allies have found that their move away from local energy sources has left them at the mercy of those countries who have been selling them their fossil fuels. This is the downside of the global economy. It certainly was cheaper for those countries to source their energy from other countries and worldwide we seem to have just a few sources of fossil-based energy exporters. Unfortunately, that also has significant impacts when one country decides to invade another country.
This lesson needs to be taken to heart by our politicians. We have to learn that some items are critical to our country’s wellbeing. Energy is certainly one of those needs and food is another. Nor can we decide policies on “how we wish things to be” but must instead operate on “how they are.”
By Ken Hamilton, Wyoming Farm Bureau Federation Executive Vice President