Source: EconLog
by Jon Murphy
“The argument that protectionism can make supply chains robust is specious. Prima facie, it makes sense: when supply chains are spread out, they’ll be subject to more political, social, and economic factors in a larger area. For example, if a firm’s supply chains go through Argentina, China, Germany, and Canada, then political and social upheavals in those areas could affect the supply chain. If the chain was wholly domestic, then political and social problems in those countries would not necessarily affect the firm. However, some consideration shows the fragility of such an argument. It is common sense, they say, to not put all your eggs in one basket. Rather, diversification is the way to minimize the risk of catastrophic loss.” (09/04/24)