Last week the Biden administration fulfilled a promise by
discussing supply chains at length. The good news is congressional work on this
continues (for example, see pages 680–756 of America REPORTS COMPETES). The bad news is the administration, like its predecessor, seems unable to address supply
chains, instead boasting about manufacturing recovery or making empty
recommendations. The US should have started two years ago to eliminate
unreliable participants from a handful of vital chains.

The White House document’s mix with manufacturing
starts with the title “Revitalize American Manufacturing and Secure Critical
Supply Chains in 2022.” One point for honesty, as we didn’t do anything in
2021. Or 2020. Two points subtracted because supply chains are a huge topic
requiring difficult policy choices, and shouldn’t be appended to another huge
topic.

Without care, revitalization of American manufacturing can actually make supply chains less secure. More production and jobs means more materials imports or routing semi-finished products through other countries. An expanding green energy industry can be vulnerable to shutdown due to reliance on Chinese components. The administration needs, but did not provide, detailed mandates to protect expanding manufacturing.

Instead, the White House offers painful political language.
“All-of-government,” “win the future,” and of course “leverage,” are phrases
long used to hide inaction. Not that there’s no action — “agencies will improve
workers’ access to information about their rights, engage with employers to
improve job quality and workforce pathways” — just not relevant action. It’s
more a reelect Biden plan than a supply chain plan.

There’s also a set of agency reports. I didn’t read them all
but, given the topic, the Department of Commerce is most important. The Commerce report is 75 pages of study, seven pages of
recommendations, and zero action. There’s only one dollar figure, for an
existing program, and more of “encourage the inclusion” and “advance
international engagement,” . . . Commerce is still at stage one. As is the
Department of Homeland Security, which covered the same ground.

The Defense Department’s recommendations lead with
expanding capacity, which may bolster supply chain security or just create new
vulnerabilities. Down the list are “conduct data analysis” and “update
acquisition policies.” Did those take a year to think up? There are multiple
pledges to develop or identify, as should have been done already, and invest or
fund, with no funding estimates attached.

The Department of Health has previously responded to
COVID-related shortages. The single most important supply chain now may be
pharmaceuticals. Here the report repeatedly notes lack of information. What
have you been doing the past year? What was the Trump administration doing? The
first questions about this chain were raised four years ago and intensified in 2019.

The Department of Energy goes into useful detail, but again
it’s description, not action. A study, not a policy document. Several agencies
emphasize assured federal demand for products, which may be helpful. But, as
with boosting manufacturing, federal purchasing must be for the whole supply
chain, not just final products. Otherwise, it brings more dependence. And like
so much else, what the government will buy is left vague.

Actually securing supply chains requires the following:

1) Do something, instead of reviewing.

2) Start with a few crucial products. It’s not credible to talk about securing dozens of supply chains at once. Chains are complex, for instance the equipment used has its own associated supply chain to be considered.

3) Target unreliable participants in chains, the most
obvious being the PRC.

One illustration: Chinese chemical inputs hold the high ground in the pharmaceutical supply chain, even if most final products aren’t made in China. It does no good to produce more pharmaceuticals if we need Chinese chemicals to do so. American vulnerability here is stark and difficult to address — just being part of a long list for future action is policy failure.

Another illustration is spending tens of billions to expand
semiconductor production in the US. There are gains from this. But
there will be no change in supply chain resilience without mandates barring
Chinese participation, especially in assembly and packaging, where the PRC has the technical
capacity and can easily subsidize its way into the chain.

In contrast to administration sputtering, the US should define the full supply chain for a few vital goods, require these by law to be independent of unreliable actors, use the government to create demand along the full chain, and use fiscal policy — both taxes and spending — to induce a quick supply response. Or stop pretending to care about supply chains.

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