people? well, in the book we mention the fact that we we can't we don't have a good measure. unreported income income. and there's a tremendous of unreported income, both in all a legal activities and in much of the legal work that is done on an independent contractor basis. if you live in the country and you have somebody come in and do some they want to be paid in cash. and the they're not reporting that income. so it's believe there's substantial amount of unwed reported income, but we have no of measuring it. and when writing a book about getting your facts, you have to

be very careful about making up the. well on you very much for your lecture, for the thank you. peter. i am absolutely thrilled to be here with you and talk about your book, how the world ran out of everything. now, i've spent my career working on global supply chains. i work with leaders leading companies, speaking and writing on this. and your work. your book is very dear to my heart. it's got. yes. and i'm absolutely thrilled that, you know, i'm hoping that together our we can not only talk about your book, but even take a deep dive into some of

these issues. so welcome, everybody. and if we could kick it off, could you start by giving us the genesis? who is the intended audience here and what would you like the readers to get out of it? yeah, i really appreciate that question. you know, the intended audience is everyone. i mean, it really is a general interest book because we all experience together this extraordinary crisis where suddenly things that we just take for granted. medicine as gadgets, exercise equipment, and then life saving, things like like medical devices. the ability to make ventilators in the middle of a pandemic or supply chain broke down. and most of us don't think about the supply chain. we live in a time where we're invited to not have to think about the army of people who are making and delivering things. the transportation networks sort of like the light switch. you know, you flip it on, it works. you don't think about the electrical grid, but when it

fails and especially we in our darkest hour, then we do give some thought to what's going on behind the scenes and that that's where we are with the supply chain. i hope that someone who reads my book will never look at a package arriving at their door the same way again will give a thought to the truck. drivers were counting on the people in warehouses, the shipping industry, the fact that our supply chains stretch across oceans and for years now we've treated factories in southern china the same way we treat factories in southern ohio. and i hope we all give a think to how that's worked out and how it could work a lot better. peter i couldn't agree with you more and i don't want to jump ahead yet, but just so that you know, i'm going to be asking you in a bit in terms of how do we keep this alive? because i'm already seeing probably you are in this post-pandemic era that businesses and people are actually forgetting about it.

so let's hold that thought. but let me ask you if you would just now just summarize for the audience in terms of the key culprits that have ultimately led to this breakdown. and i've personally seen over the years global supply chains increasingly becoming more complex. but you outlined very serious detail. so if you would just kind of enumerate these, i think it'd be helpful. sure. so what's basically happened is we've taken a lot of really sensible ideas within our supply chain, by which i mean, you know, the systems that make goods and then transport them to our doors, to our businesses. we've taken a lot of sensible notions like containerization, you know, back in the 1950s, we standardize the movement of cargo in these standards size boxes that you could lift up with cranes and put them on the backs of trucks and backs of trains. and that made it much quicker and cheaper to load and unload ships. well, we took that combined with

just in time, this very sensible idea that we shouldn't just make products as aggressively as possible. we should think about taking waste out of the system. we should replenish the products that were already sold. we should have components show up on supply chains just as there needed, and then trade deals like bringing china into the world trade organization in 2001, which created a lot of consumer benefits. but layered on top of all of this stuff was shareholder primacy, profit maximization. if you will. the idea that we should organize our economies around making share prices go up, and that's caused us to pervert a lot of these sensible ideas and turn them into systems that are optimized not for us as consumers, not for people who need basic medicines and protective gear in the middle of a pandemic and not even for companies that are dependent upon a steady supply of parts so

they can make their goods and serve us in the ways in which we'd like, but merely for a narrow set of wall street interests, often driven by whatever metric is making sure prices go up at any given time. we can talk about this later, but some point we should note that the result of all this is we had rail cars pulling cargo to the wrong destinations in the middle of the pandemic because wall street was paying for lowered dwell time. the amount of time that a container sat in any given place. and so railroads just started attaching cargo to trains regardless of where they were headed, to just move them out so they could say, look how efficient we are. we've got this perverse kind of efficiency that's taking sensible thinking about the supply chain and has turned it crazy. honestly, i actually really love the fact that you've said sensible. these are sensible. all concepts because i have felt

for a long time i used to train companies on just in time were lean and it's really about eliminating waste. one waste is inventory, but there are all kinds of wastes and it's a philosophy that is much broader. and as you put it, it's a very sensible concept. it really is because, you know, we've kind of seen the discussion with companies going, well, now we're going to go to just in case and before we had just in time, we had bloated inventories that ultimately meant that consumers we ended up paying more for goods. so what i find one size does not fit all. but we really need to be really surgical about the various products and various things that we are moving and storing. do you think in your research, is there a way that we can incentivize businesses to lean into just in time, properly, correctly and really merge just

in time and just in case rather than saying it's one or not? yeah, i think that the investor class has to wake up to the reality that it's been ripped off to. i mean, i think that in the wake of this supply chain disruption and at a time when, you know, it's risen to the level of national security concern in the biden administration and before that, in the in the trump administration supply chains and where we're buying our stuff, there's a tendency now to frame the question around are we going to have cheap prices and efficiency, or are we going to have rising aliens as if these things pull in opposite directions? and the reality is and this is the reality that a lot of people in business are afraid to talk about. but i have tried really hard to expose in this book is we've got a lot of inefficient c in our reckless pursuit of efficiency just in time, if done correctly, is about efficiency. i mean, it's the idea that goes back to toyota at the end of the second world war.

they've got very constrained capital. they're dealing with the devastation of the war. japan has got lots of mountains. and so you don't have that much developable land. so they very consciously decide we're not going to do like ford. we're not just going to, you know, build factories that'll make as much stuff as possible. we're going to be more target and we're just going to replenish what's in the pipeline. and that was a very good idea. and it's still a good idea. it was central to making toyota, by many measures, the world's most successful auto company. the problem is that toyota was very intent on having its suppliers clustered close to its factories, and that's something that we willfully forgot as the console writing class. and, you know, i spent a lot of time in the book exposing the role that mckinsey played. but there were others they essentially persuaded corporate ceos of publicly traded companies, hey, just slash inventory. call it just in time. call it lean, just slash inventory. don't stick parts in warehouses as a hedge against the

inevitable trouble. just take the savings from operating warehouses. give it give the savings to yourself as a reward for being smart enough to hire mckinsey. you know, through executive compensation. give it to your shareholders in the form of dividends. they'll love it. and that worked really well on a quarter by quarter basis. it didn't work well when you know, i tell the story of the the lean taliban as the mckinsey crew was known in the midwest, showing up, you know, and an industrial engine factory that made huge industrial engines. talk about just in time, these engines, these job generators, rather, had to be installed at hospital rolls by crane. they were so large. and as a result of the lean taliban prescribing that they should stop stock piling $5 sheet metal brackets so they could demonstrate to their investors that they were going lean and they were being so efficient, they suddenly were missing the deadline on all these orders. and having to pay, you know, extraordinary shipping charges

to get their generator orders to the customer in time. so, again, that quarter, it looked really good. you don't have sheet metal brackets in the warehouse. you've lowered your inventory, your return on assets just went up on paper. but longer term, you have ripped off the shareholder by damaging the reputation of your business and actually reducing your sales while increasing your costs over the long haul. so it crucial to this is the investor class has to start paying attention beyond the next quarter. you know, i am against just be mean here because this is everything that i have talked about for a really long time and because i've been doing this for so long, i am personally really frustrated because just like you, just like everybody else, i was locked in, you know, during the pandemic and frustrated and thinking, why have we not learned these lessons? and everything you said is absolutely correct. and i'm really hoping that

everybody reads this book and really learns from this. you mentioned the short term impact on the balance sheet, which is signify market. is there a way that we could influence boards? and let me just say that, you know, typically board members are in a position longer than senior staff of ceos. and i'm asking that because i'm trying to find a way that we could actually have an impact where the time horizon that we look at is a little bit longer. because if we're all we're looking at its quarterly, then of course we're going to want to slash that inventory. you know, pay ourselves, write these the the profits, bonuses, whatever and then we move on. and ultimately, as a society, we are extremely vulnerable. yeah, it's a really important question. i mean, there is a corporate governance question. we do have to change the incentives that are influencing executives because, you know,

there's no question that having gone through the disruption of the pandemic and by the way, this book is not a history book. it's a book about the present and the future. i mean, as we speak, we're seeing shipping prices up, you know, 400% on routes across the pacific and from asia to europe, because the houthi rebels are opening fire on ships that are headed toward the suez canal and ships are now going the long way around africa. and, you know, i've heard analysts tell me that that's maybe increases their cost by 25 or 35% at the most. but there, again, 400% increases in the last few months. and guess who's paying for that? we are through the continued inflation action and, you know, fatter profit margins for companies that don't have as much competition. so all this stuff is happening again. there are some enlightened companies that are looking for ways to reduce the distance between their factories and their customers. i spent some time with columbia sportswear going to look at potential factories in guatemala. they're looking in el salvador

as well. wal-mart, which is big enough, you know, to weather any crisis, is moving production from china to india to mexico. this is to get out from under first the trump tariffs on chinese imports continued by biden. whoever wins the presidential election in november, we're likely to see that continue. so there are some moves afoot. but the basic incentives to come back to your point about corporate governance, you know, a corporate executive who prescribes let's spend more money right now to build a more resilient supply chain, let's set up redundant factories. let's put more parts in the warehouse. they are making themselves volar bl to activist investors who are just thinking quarter by quarter is the executive who says, let's just keep doing it the way we've been doing it. china looks awful cheap. let's stick with china. they know that they're making their company more vulnerable whenever the next shock shows up, that's inevitable, but it's probably not going to happen next quarter, and with any luck, it'll happen on somebody else's

watch. and by that time, they'll be sleeping in a hammock, you know, on some beach somewhere, having cash their stock options. so we need to think about how we pay executives and how we incentivize them. and we do have to incentivize them to think past the next quarter. you hit the nail on the head, too, because you are absolutely correct. right. they're going to be on their hammock enjoying life. and it's this very short term view that is one of the culprits. let me also ask you and i can tell you right now in our is absolutely not going to be enough for me. with you, i will select again. yeah, i would i would love it because, you know, at this stage of my career, i've done this for a long time. i really want to make a difference. i want to help companies. these are things we know. this is not something that is, you know, new. and the whole idea that we don't even understand how global supply chain works is astounding to me, where everybody thinks they can just sort of press the button and, you know, on the

computer and things just sort of massively arrive quickly, let me also ask you, one of the exemplars of lean in action or get in action, if you will, is fast fashion. i had i had kind of hoped during the pandemic that we would move to some of the ideals of slow fashion, simply because fast fashion is a business model, even though we associated with h&m, zara sheehan, and they have differences obviously between them, we see so many companies that are, you know, taking the concept of this business model across industry sector, and that really is lean and action or giti that means low inventories applying the latest technology available in order to move goods and coordinate. is there a way that we can disincentive, buys or

incentivize other kinds of behaviors both on the consumer front and both on the business front? yeah, you know, i think it's healthy for consumers to give a thought to how our behavior is affecting life on planet earth. but, you know, i don't put a lot of stock in consumer was saving us from supply chain problems because we're busy we got kids to look after we got elderly relatives. we got houses to take care of. and we're not all going to become supply chain geeks. and so it's going to require some regulation, it's going to require some more enlightened behavior from companies. it will require a more forward look from from investors. i do think, though, that it's healthy that we're talking about place again because, you know, as we discussed at the outset of our conversation, a bunch of things have happened over the last half century and the key ones are containerization. the rise of the internet, which we haven't talked about, trade

deals like the one that brought china into the world trade organization in 2001 and all of that stuff combined with the logic of financialization, has created, you know, a really impossible wall to resist momentum toward, you know, moving production far away from your customers. so, you know, my key character, i mean, i traced the passage of this single shipping container from china to a warehouse in mississippi. and i look at all of the industries that touched this order, the most important order in the history of the start up company that i profiled in the book, who handled that box along its way. but, you know, that company wanted to make its product in the united states and really couldn't. and larger companies, i mean, you may want to make your products in in the u.s. or at least closer to home. but if you're a competitor is taking the cheapest available terms. right now without factoring in

things like emissions and you know, future regulations on emissions or potential national security dimensions, if you're involved in something like, you know, electric vehicles or or computer chips. well, the the momentum is you can't resist it. i mean, if your competitors doing it and you don't do it, you're going to be out of a job. if you're paying more as a result. so it's a healthy thing that companies are taking some lessons from the pandemic and looking to shorten the distance between their markets and their factories. and if they do that, to get back to your question about fast fashion, it actually becomes easier to do just in time. i mean, if you're in the apparel business and you're serving the north american market and you're now depending upon, you know, factories in china. well, even if everything works perfectly, it's going to take you, you know, 6 to 8 weeks to get a new product across the ocean by container ship. if you do it by airfreight, it's much faster. it's also a lot more expensive. if your factories in mexico,

your name at most, you're two weeks removed from your customer. in north america, you're in the same time zone or relatively closed time zones. the language barriers are fewer and so it's much easier to call up your factory and say, hey, we need a small batch of fashion has shifted. we want to try something new. that's easier if the distance is shorter between your factory and your market. so that that is a healthy outcome. it is one of the challenges that i hear from businesses on the ground in mexico, though, is the lack of infrastructure that it had taken china many, many years to put in the infrastructure in place all the way from, obviously, factories, workers and so forth. i have just recently been hearing companies in mexico say, we want to do this, but it's going to take a little bit of time to really actually build this. any thoughts on this in terms of what the u.s. can do to help this? yeah, i mean, look, it's going

to take decades. i mean, i spent a lot of time in mexico for the book and just came back from a couple of weeks in india where there's also a push to expand export it. and a lot of big companies, again, like wal-mart, are moving some production from china into india in both cases, it's going to take decades to get anywhere close to the infrastructure that china's got. and let's be clear, china is going to remain at the center of global manufacturing for as far as we can see, because no country on earth has that combination of large numbers of working people. wages are up. they're still very cheap in a global context. and the infrastructure is unbeatable. i mean, the ports are huge. they're very efficient. the chinese government, in preparation for integrating with the global economy, built out highways, electrical grids, airports, rail connections. and there are problems. it's patchy. i mean, the chinese system got over whelmed by the pandemic and the surge to come back to

manufacturing life afterwards. but nobody's going to beat that. but the point is, if you're thinking about resilience, it's not that, oh, mexico becomes the new china that's never going to happen. mexico's too small compared to china or india, which isn't too small. but this is simply too far behind. it's more like op, i'll put it to you this way. you know, 15 years ago, if you were a company flying down to bentonville, arkansas, to go pitch your product to wal-mart, that's wal-mart's corporate headquarters. and you got to go in and see them. you know, it's like going to see the pope. they don't go see you. if you went in to bentonville 15 years ago and they asked you, where are you making your product that you're proposing? we buy and put on our superstore shelves. and the answer wasn't china. they would look at you funny. well, you must not be getting the cheapest price, you know. you must not be making it at the most efficient scale. if you go down there now and they ask you that same question, where are you making your product? and you say only china. they look at you funny, they want to know, well, where else? i mean, are you thinking about

turkey? you got a presence in in central america or mexico, somewhere in southeast asia. they want more resilience in the supply chain. and your and you still have to meet their price. they're not willing to pay more. but this is something that the supply chain has to work out. it's healthy to have our production spread across more places. i very much like you saying that because i've been pushing that all along and i think it's really important for businesses, for consumers, for everyone to understand that we need to create a portfolio where we source from once that is done right, it's like a stock portfolio. all right, you spread your risk because we know things are going to happen. we live in a very connected world regardless. i tell my students, i tell the companies that i work with, i don't know what's going to happen, but something will. the suez canal, as you write about in your book, it could be, you know, anything from an

earthquake to something. and so we have to be prepared in order to be able to withstand that. let me ask you, we know you and i both know that economically and physically it is impossible to make everything at home in large part because there are component it's like rare earth minerals, for example, that we don't have access to. do you think it would behoove us here in the u.s. to invest in certain product categories, certain industries, the chips act was certainly an example of that, but certain sectors that we actually focus on to make here at home as an individual. it was a store needed during the pandemic, peter, that antibiotics, penicillin. is it me? right. right. yeah. look, trade is good, right? my book is not a book about how globalization is evil. and we should go back to some

mythic, logical time when we could just have all the modern conveniences and make everything at home. i mean, if we didn't have trade, we wouldn't be sitting here having this conversation. we'd be out, you know, looking for bark to feed our families. if we're not good at buying food. so that's reality. now, it's also true that when you when you live through a public health catastrophe and discover that you're dependent heavily on a single country, a country china, that not incidental we're having a trade war with to send us basic ingredients to make medicines and components to make ventilators, personal protective gear, the light bulb goes off that that's not the way to do it. and we need to think about more resilience. and so those are examples where, yes, we need to think about self-sufficiency. likewise, the chips act is a healthy start. we should not be dependent on a single island off the coast of china. this is taiwan, 90 miles off the coast of of china, an island that is actually claimed by the

chinese government as part of its own. with this perpetual threat of military force to reclaim it. you know, computer chips are more important than ever. they're the brains of modern manufacturing. and we have lost out on all sorts of things from, you know, our smart the latest smartphone. and we can maybe live without those. there are people with medical devices. i mean, i tell the story in the book of a guy who has sleep apnea and had to wait six months to get the medical device he needed so he could safely go to sleep and know he could take his next breath because the company in san diego that made this device was last in line for computer chips. when we ran out of computer chips, all sourced on the island of taiwan. it's it's a good idea for our political leaders to be thinking about how to remove us from that vulnerable position. they can't do it by themselves. this comes back also to corporate governance. i mean, it's interesting that, you know, intel is vacuuming up the subsidies that the biden administration has put out there

to build semiconductor plants in the united states. you know, one of these semiconductor power plants could have been paid for by what intel gave its investors in the form of share buybacks in the three years leading up to the pandemic. so financialization plays a role in how we got here, too. but yes, certainly there are some things that rise beyond the classic economics textbooks that we got in college or wherever. and it's just common sense that if we can't live without it, we ought to be thinking about how to make it in our own country. i, i agree. and again, i, i think your book is truly showing potent because it really and you know, it's not a history book. i loved the personal stories that you go into and they're really important for people to understand that the stories you outline are people that truly want to make product here, but they cannot. and oftentimes it's one component, one ingredient that

is missing in order to be able to do that. and if we don't correct this, if we don't manage this properly, if businesses don't, it's going to happen again. peter and i think what i'd like to see is your book, create this foundation, and where then we can move forward and actually create better supply chains because this is actually really rooted mentary problems that have simply just gone awry and haven't been corrected. now, i wanted to ask you as well, we talked a little bit about reshoring or near shoring, which is what companies are engaged in. and one of the things, too, that i am seeing, i'm not going to mention names, but i'm seeing in this sort of push to restructure global supply chains, i think there's a little bit of a knee jerk reaction and some of the changes that i'm seeing are the kinds of things i want to say, stop, we've done this before. you're making a mistake.

how do you see global manufacture evolving from where we are now? well, i think it's an open question. i think that it's real that large companies are looking to diversify away from heavy reliance on china. if they've relied solely on china, because they understand that, you know, at this point, the u.s. trade war goes all the way back to 2018 when donald trump took office, continued and really advanced by biden. and again, whoever wins our presidential election in november, you can count on us-china trade tension being there. then they got the disruptions to the pandemic and the shipping crisis. and so there is a, you know, the world what is permanent mean anymore. but as far as we can see and as far as companies are managing, they're anticipating that they can't just lean solely on china for production. that seems likely to continue.

and that does create an opportunity for countries like mexico, like central america, as a region and other places in our hemisphere. for companies that serve the u.s., it creates opportunities in eastern europe and in turkey. for companies that serve western europe, and it creates opportunities for companies that are set up in southeast asia, for those that are that are serving china and that, you know, call it globalization, a term i don't particularly like, because i think that's still a form of globalization. but derisking, if you will, that seems to be real. but until we change these financial incentives, we are in danger. are of corporate executives. will fully forgetting what we've gone through. you know, the first supply chain disruption story, alvaro? it was in 1999 when i was at the washington post and there was an earthquake in taiwan. and at that point, you know, taiwan was already a significant center of computer chips, though nowhere close to where it is

now. there were shortages. we saw shortages of electronics and computer chips after the 2011 fukushima nuclear disaster in japan. a lot of people said, then, we've overdone it with just in time. we've overdone it with long supply chains. there's a book i drawn in my own book called the butterfly defect came out in 2014. the predicted that a pandemic would be the thing that would cause a great supply chain disruption. and each time we forgot which is to say the people who run publicly traded companies went back to the way they'd been doing it because they understood that if they didn't, they were jacking up their short term costs and they were putting themselves in jeopardy until we fix that incentive problem, we will definitely be here again because, you know, none of us know what shock will cost a pandemic war, climate change related disruption. something's going to happen. we don't know when, but we know it will happen.

that will throw our supply chain out of whack. and if we're still heavily dependent on single countries far across the ocean for things we need, will again discover that, you know, if you can't make a ventilator in a supply chain in a pandemic, it's not enough to say, well, at least our share price is high. nobody's going to accept that, nor should they. absolutely. and it's really frightening. but as i already mentioned, in extraordinarily frustrating for me, i think both of us have been doing this for a while and there is a beauty to having experian. yes, i know we live in a world where, you know, it's a it's we get older, experienced. what is it worth? it's actually worth a lot because you've written on this. i've written on this. and you and i both know something is going to happen. we don't know what, but we need to be resilient in order to be able to withstand the shocks. how many companies do you and i

know that have gone under? i'm on a board, an economic board, and one of the things that we've been saying is companies that made it through the pandemic did something right. but now which companies are going to be left standing in the next three years, in the next five years, as we are seeing global tensions, as we are seeing gen ai and technology, cyber issues, we have so many threats that are are going on that i'm just really surprised when i see some old solutions if you will, being applied again, as if we have forgotten what has worked and what hasn't worked and how do we move forward. i wanted to ask you, you had mentioned, you know, in terms of what what businesses can do and should do. but i wanted to ask you as well, you know, scott galloway wrote a book some years ago called the four. he referred to it. he was speaking about amazon,

apple, facebook, and google and the power that they held suggests, well, perhaps more than suggesting that we need anti-itch trust measures to break them up. you do mention in your book you talk about the power that amazon has, that wal-mart has. any thoughts in terms of government policies that would come into play here? oh, antitrust enforcement is long overdue and has got to be at the center of rethinking the supply chain. i mean, one of the things we haven't talked about yet is that a lot of the shortages i mean, you know, the title of my book, how the world ran out of everything, a lot of the shortages are a reflection of engineered scarcity in our modern economy. so the unfunny punch line of every chapter in my book, is that something fails, you know? oh, the shipping industry can't provide enough containers. so shipping prices skyrocket. oh, you know, the trucking companies, they can't find

enough drivers. and so it's very hard to move stuff and freight rates go up. you know, at the end of every chapter is is one of these industries counting and celebrating record profits. and this is a dynamic that we're hearing. again, you know, we're we're being invited to conclude must be so tough for the shipping carriers. now, you know, they they can't go through the suez canal. they have to spend more money on cruise and burning diesel fuel to go a long way around africa to transit between asia and europe and on to the east coast of the us. well, you know, here's prediction you can take to the bank when the books are closed on this period, they'll be looking at very fat profit margins because every time we see a shock in an industry where there isn't enough competition and shipping is basically an unregulated international cartel, there's three alliances sort of like airline alliances. your star alliance, your one world, what have you that are dominant on the most lucrative routes. that's china to the west coast of the united states.

that's asia to europe. and so any time there's a shock, they're making more money. i mean, i tell the story in my book of of the the meatpackers. there are four foreign companies that control 85% of the slaughterhouse capacity in the united that's that's 85%. i mean that's a figure that would make the robber barons blush. and at a time when we were having a hard time finding beef on the shelves of many american cities because of supply chain disruptions, we've got cattle ranchers going out of business because they've only got one place to sell their beef because the industry has been so consolidated. and yet the meatpackers are looking at fatter profit margins than they've ever seen because they have no competition. we need more competition in the industries in which we are dependent for goods that are vital, that are fun, that are whatever we need more

competition because our basic understanding economics doesn't work without competition. it's it's really interesting, i think in reading your book, one of the things that really struck me and i think you did it beautifully, was that rather than saying it's the u.s. versus is china versus you know, you name it, right? rather or it was the bifurcation of the leading the businesses that are really heavily profited and labor that labor being not just in the u.s. but being in china, being everywhere and sort of not dividing it or pitting it across nations, but rather pointing out that labor across the board is being taken advantage of. you mentioned some there were some very powerful words with regard to labor in your book that were really moving to me in terms of really in terms of i

think there was and i don't have it in front of me. i'm paraphrasing, but it was this sentence with regard to, you know, being the ultimate philanthropist being the ultimate entity that give of themselves when the compensation that that they're getting is lower than their cost of living and or doesn't meet the cost of living. i'm sorry. so it was it was increase ably moving to me. so how do we make an impact in order to i think the first thing is that we don't forget because again i am seeing already that we are forgetting as a society it's kind of in the rearview mirror. we don't really think about it anymore. right. well, first of all, you're referencing a wonderful barbara ehrenreich quote, who does refer to, you know, the working poor, the ultimate philanthropist, because they are giving up their

labor at a at a at a rate where they can get chills on that. yeah. no, she she she did some some amazing work in her time op, you know, i think it is really important to understand that a lot of the systems that broke down were really people all are unable to continue with the bargain that they've made. i mean nor m.s. in our economy. i mean, we like to talk about when will the supply chain get back to normal? so i can click the buy button on amazon or wherever and wait sometimes just a few hours for packages to show up at my door. normalcy is based on people working in amazon warehouses who don't have personal protective, even while they're putting it in boxes for the people who are able to pay for it. normalcy is traveling a maintenance cruise for railroads, not having paid sick leave, not being able to be home for the birth of children, for surgeries that their spouses are

having, not being able to schedule their own medical care and having to choose between working while they're sick or, you know, not getting paid. normalcy. is truck drivers working at really working poor wages under predatory schemes by large trucking companies that con them into, you know, agreeing to get their training paid for up front so that they're then tethered to these companies that are paying them, you know, just by the mile, not for hours that they're sitting in front of warehouses waiting for loads to land inside their. and that system buckled. once large numbers of people got alternative was when unemployment dropped during the pandemic. you know henry ford whose story i tell throughout the book, very problematic character, you know, a racist and anti-semite, crushed organized labor. but he knew a thing or two about supply chains and. he famously doubled the wages of his workers in 1914.

some people called him a communist. he said, i'm not a communist. i just want to make my products reliably and i need people showing up for work who can give their best hours without worrying about how they're going to afford groceries at home. and he ultimately concluded that any business that's premised on low wage labor is inherently unreliable. he wanted no part it, and we need to get back to that as we come out of this pandemic era and realize that will be here again. we need people paid enough that they're showing up, feeling like it's it's a it's a good thing. the job they've got and not just, you know, the best of a whole crappy assortment of options that they're facing. yes. it really struck me when you when you write about henry ford and i've done i've done a lot of work and i'm an operations supply chain person. so i have a question as well

that has troubled me personally is really it was the 1920s, 1930s, we're talking a hundred years ago that there were these studies called the hawthorn studies that were done in hawthorn, illinois, that showed that workers are motivated by so much more than money. so yes, money is very important, no question. but we need living wage. all of that. but there are other motivations and this gave rise to this whole idea that we can incentivize workers in so many different ways. yet when we look at so many of the working conditions everywhere there across the globe here in the u.s. as well, why haven't we learned this lesson? and i'll just point this out. if you take a lot of companies that are consistently rated as the best companies to work for sas being one of them, i have listened to the president of sas speak where he says it's just good business. it's not even about being nice

or kind. it is simply good business. yeah, right. i mean, it's got to be beyond branding. i mean, it's just emphatically clear that work is central to who we are as a species. i mean, we want to be worth something. we want to be part of something that's larger than us. and we want to feel that we're and rewarded. and, you know, let's face it, we spend a lot of our hours at work. we interact with the people we're working alongside god. and if that's unpleasant, that colors the rest of our lives. it's just a hugely important part of of life. it's not just it is certainly about the money. and if there's not enough money from work, that's a that's a defining problem for households. but even even pass the money we need that sense of larger purpose. that's just part of being human. one of the things that's happened in, one of the lessons i took away from the research

for my book is that, you know, part of just in time is not the real just in time, as practiced by toyota, but the just in time very end, the mutant form fed to us by the the consulting class like mckinsey is that human? these are just human workers or infant or to be managed as well. and this was a fancy way of putting the risk on human workers, shifting it from the corporate ranks to humans. so, you know, back when just in time, in lean was the mantra as consulting teams would go in and dig into companies and advise them on how to operate. was you need more flexibility in your workforce which was a euphemism for you need workers who don't know when they're working and when they're not. never mind that they've got kids to look after. they've got shopping, they've got medical they've got the need for rest. you know, forget all that you need a workforce that's

basically on call all the time. and when you need them, they come in. when you don't need them, you don't have to pay them. and that's good. if you're thinking of human beings as just cogs in the machine. and it makes a certain sense, but it breaks down because guess what? people resent it. and once they have the opportunity to go work somewhere where they don't have to be ashamed of the fact that they have kids to look after, they don't have to act like it's some sort of defect that, oh, i need a break to go use restroom or i might need to go to the dentist today. and if they're going to go somewhere where they can be upfront about the fact that i'm a talented, skilled, hard working, creative person. and i'm also a human being. and those two things have to be able to operate together and. ultimately, companies that treat people that way will have an easier time attracting and retaining people. and if our incentives are set up and the other ways, well, we're not just looking quarter to quarter. those companies presumably we

will prosper over the longer term, but we don't have those incentives now. so we can't just pretend that, you know, a company comes out with stakeholder capitalism. now, i'm bleeding into my last book, you know, davos, man, how the billionaires devour the world. we can't come up with some new, you know, pr driven, you know, free days for how companies really care about their that we have to actually live this stuff or we're going to continue to see these crises agree. and when you talk about humans being cogs in the machinery that is exactly what that what we call the scientific management movement. and 1900s or early 1900s looked how it looked at labor. then we learned we'll know if we're actually going to really be productive, really make a difference. we need to motivate workers. and the issue is, is that there are a of things at play. so it's not just about

productivity, it's also about quality. obviously, we see issues that are going on. and at boeing, i'm not trying to pick on boeing, but a good example. well, quality is a huge issue. there are so many cost to companies that come into play. they they come into play when workers are tired, when they don't care. there is something very significant about motivating workers and creating a culture. and again sas has done a fantastic job of it. i am frustrated that we're still talking about this. the companies don't know and are doing the same making the same mistake over and over again when the pandemic hit, which was obviously this global, horrific event. everything that we knew really collapsed. the all the all the fault lines, if you will, gave in. well, are not rebuilding those over the fault lines. we are we have not learned those mistakes. you had mentioned profits. the high level of profits, the

average person and i'm on the radio fair amount i'm asked well why are food prices so high? yes. why are retail prices so high? well, yes, of course, we can talk about the supply chain. we could talk about you know, what's happening, you know, with the bird flu and how it's impacting, you know, cattle and and what it did with the chickens and all of that at the same time, however, we both know about shrinkflation, right? we know the profits that we are seeing with many of these companies and they are not bringing the prices down. they have increased the prices with the defense that they've had do it during the pandemic. those prices have not gone down and. so we are continuing to see those same kinds of things play out. what do we do? well, i mean, we have to enforce our antitrust laws. so there's competition. i mean, if you and i open a

hamburger stand and we charge 25 bucks a hamburger and say, well, that's just we have to pay because of, you know, supply chain problems or whatever some competitor will show up and they'll make a burger for a lot less than 25 bucks. and we'll be out of business that that is not the case for lots and lots of important industries. you know, shipping is one of them. rail i mean, transportation is at the center of this and. lots of types of food as well. there needs to be more competition, but we also need to peel back a lot of the cynicism that drives policies, including, you know, in in crises like this pandemic. i mean, in the book, i tell the story. it's it's the tragic story that's really stayed with me. the most from doing the book. this woman, ten, i, who's a refugee from myanmar, who was working at a slaughterhouse in greeley, colorado, about an hour

north of denver and dies from covid in the first wave, even as her daughter, who's then pregnant with a grandchild who would never meet her, his grandmother, is begging her, please don't go to work. and she says, well, i have to go to work because i'm not going to get paid if i don't go to work. she doesn't have paid sick leave. well, what i learned subsequently when i was doing the research of the book is that the the meatpacking companies actually successfully lobbied the trump administration to drop this executive order that called slaughterhouse workers, essential workers, the real industry, talking points. you know that we would all be hungry, you know, we wouldn't have our hamburger meat if these people didn't labor. well, it turns out that at the very time that order drops and this woman, ten, i dies in the first wave of the pandemic, the meatpackers are sitting on record volumes of frozen meat, and they're actually exporting it around the world. so this woman and others like her, she doesn't die so the rest

of us can eat, which is a handy political construction. she dies so that we can continue to funnel fatter profit margins to a bunch of monopoly companies. that's something that should get our attention and cause us to demand antitrust, enforce. so there's competition. agree and i think again, i am optimistic that if we can appeal to boards and i say boards again because they in my opinion at least, they have a little bit of a longer term interest. they are with the companies longer because you need to have a longer term horizon. let me you also in terms of when we're talking about labor, how do you see a.i. and technology? you do mention a little bit of it in the book. right. but obviously we're seeing it pushing labor out on so many of the of the jobs.

how is this going to play out? well, it depends upon the system in which the technology is being deployed. so, first of all, you know, i'm not a luddite. we should embrace automation in robotics. i like these are new tools, human beings are always going to innovate. we're always going to figure out how to make work less dangerous, more productive, more efficient, that that's all to the good. but we got to ask ourselves, who's in charge of the technology and who's looking after the people who will be displaced? because in the united states, we've done a very poor job of cushioning those affected. you know, a lot of a lot of reason why the politics has turned against trade and is, you know, demonize china to a degree to which i think is actually unhealthy. and there is because we did a miserable job. we basically a abandoned the 2 million people who lost their jobs to the so-called china shock. you know. autor at mit and other economists have done some some excellent groundbreaking work showing that, you know, roughly

a million american factory workers lost their jobs in the decade or so after china enters the wto, another million who are indirectly affected, you know, truck drivers who don't have products to move around the catering company that used to have a contract to service the factory that doesn't exist anymore, you know, you're talking about 2 million people. that's a lot of people. now, it pales in comparison to the beneficiaries of trade with china. right. anybody who's ever stepped foot inside a superstore or purchased product on amazon. but the scene was not that. we traded with china. the sin was that we let those 2 million people suffer that blow with no help. i mean, we we've got trade adjustment assistance, which is supposed to compensate for jobs lost to trade. it's always underfunded. we don't have national health care in the united states. if you lose your job, there's a good chance you lose your health care. we don't help people with housing, especially when whole communities is discover that housing prices have gone down. so american workers are not

crazy to look at robotics. i other you know automation and say i don't know about this if i lose my job, that's going to be a real problem. and until we deal with that, we're not going to get the benefit. it's and you know, i got to say, i always remember a trip i took to a mine in sweden a few years before the pandemic where there were some tests of self-driving vehicles. and i asked the people working at that mine, how do you feel about that? and they said, oh, you know, we're fine with it because we figure this will make our company more profitable. and for companies more profitable, we'll get higher wages. and that's, by the way, not some fantasy. that's their lived experience. they have very high union density, lots of lots of people are members of unions. the unions sit opposite employers councils and they hash out these labor agreements that take products every gains and pass them to rank and file workers in the form of higher wages. and they said, if we lose, our job will be trained for some new

job. also true because they have very sophisticated, very well-funded job training in sweden, as they do in most of the nordic countries. so we love to think of ourselves as the swashbuckling capitalists who, you know, unlike the nanny state loving european socialists, the reverse is really true. you know, if you don't have social safety net to look after the people who lose their jobs in the form of automation, you have a resistance to automation. you have less reason for risk taking and innovation, productivity, absolutely. i have to tell you, peter, i'm being told i only have a few more minutes. okay. i can tell you i'm not even close to being done in talking with you. i do want to make sure that there is enough time in the few minutes that we have left. if you could please tell me, is there something that i have not asked you or something that has not gotten the attention in your book that you wish it has? yeah, that's really an excellent question. i mean, i would just underscore

that we need to think seriously about how much engineered scarce that either is in our economies. i mean, i guess the thing we haven't talked about is, you know, the shipping industry like we've built this global economy that's premised on the idea that we don't have to think about where we're making stuff or who's making stuff. it's fine if it's china, as long as there's a container ship can get our products across the ocean when we need them. well, with three shipping alliance sources dominating shipping, you know, this explains why the company i profile in my book goes from spending 2500 bucks to move a shipping container across the pacific ocean to north. of $27,000 in just the space of a few months. and, you know, it's very difficult to mad to imagine, you know, without international cooperation in this shipping industry being brought to

account. and so the result of that is we've got to be thinking about diminishing our dependance on goods that are traveling oceans. that's not an argument against globalization. it's an argument for thinking intelligently about place. i agree, peter. i am getting the signal that i have to wrap this up and i cannot even tell you how wonderful it has been. your book is amazing and i'm really glad to have the opportunity. thank you for being here actually. questions i really enjoy this. i did too. thank